A business license is the foundational registration certificate issued by SAMR when a Chinese company is formed. It records the company's exact registered Chinese name, unified social credit code (the 18-character ID used across tax, customs and banking), business scope, registered capital, registered address and legal representative. Without it, an entity cannot open a bank account, hire staff, issue a fapiao or sign contracts in its own name.
Why it matters
For your own company, the license defines what you may legally do: revenue outside the registered business scope can be refused invoicing by the tax system and can attract penalties. For dealing with others, the license is your primary due diligence tool. Every Chinese company's license data is publicly searchable on the National Enterprise Credit Information Publicity System, so in minutes you can confirm a supplier's legal name, check whether its registered capital is paid in, see if it is flagged as operating abnormally, and verify that the person signing your contract is actually the legal representative.
How it works in practice
Before wiring a 30% deposit, a US importer pulls its new supplier's license record. The "factory" turns out to be a trading company with RMB 100,000 registered capital, registered eight months ago at a residential address, with an operating-abnormality flag for an unreachable address. The importer renegotiates: production at the actual factory named in the contract, payment against inspection, and the contract chopped with the exact registered name.
Common mistakes
- Contracting with the English trading name instead of the exact registered Chinese name on the license
- Never verifying a counterparty's license on the public credit system before paying deposits
- Operating outside the registered business scope and hitting invoicing problems
- Forgetting to update the license after changes to address, scope or legal representative
- Assuming a license proves manufacturing capability — it proves existence, nothing more