How to Verify a Private Dropshipping Agent Before You Send Money: 9 Checks

To verify a dropshipping agent, ask for their business licence and check the 18-character Unified Social Credit Code against China's official company registry at gsxt.gov.cn, which is free. Then run eight more tests: business scope, live video on your clock, a dated SKU photo, stock ownership, independent tracking, defect policy, an itemised cost split, and payment routing.

Most take ten minutes and none require you to speak Mandarin.

First, the fair part: most private agents are honest

I have worked with private agents and plenty are excellent. A good one knows a cluster of factories personally, answers at 2am your time, and chases a delayed batch harder than any platform would. The problem is not dishonesty. It is that your whole supply chain sits inside one person's chat window, and you cannot tell a great agent from a convincing one until money has moved.

So the question is not "do I trust this person." It is "what can I verify." The US Commercial Service strongly encourages more due diligence in China than American companies would normally do at home. Each check below has a good answer and a dodge. The dodge matters more.

Checks 1 and 2: the paper, in ten minutes for free

Check 1: The business licence and the 18-character code

Every registered company in mainland China has a business licence (营业执照) carrying an 18-character Unified Social Credit Code. The licence also shows the Chinese-character name, legal representative, registered capital, establishment date, address, status, and business scope. The code is the master key: it should appear identically on the licence, on invoices, and on contracts.

What to ask: "Send me a photo of your business licence and confirm the company name in Chinese characters."

Then verify it yourself. Run the code or the Chinese name through the National Enterprise Credit Information Publicity System at gsxt.gov.cn, the official registry operated by China's State Administration for Market Regulation. Every field should match character for character. Two notes: search in Chinese, because English translations often will not resolve, and the site is frequently slow or unreachable from outside China. A paid lookup service pulls the same record.

Good: the licence arrives within hours, unedited, and the record matches.

Red flag: it never arrives, fields are blurred, the registered name differs from the one on your invoices, or the status is not active.

Check 2: Business scope, which quietly tells you what they are

The business scope field (经营范围) is not marketing copy. It is a filed registration setting the legal boundary of what the company may do, and it settles the manufacturer-versus-trader question.

Look for the verbs. Manufacturing terms are 制造 (manufacture), 生产 (production) and 加工 (processing). Trading terms are 销售 (sales), 批发 (wholesale) and 零售 (retail). A scope with only trading verbs is a trading company, whatever the website says. A product outside the registered scope means the company is operating beyond its permissions, which becomes your problem if the contract is tested.

None of that makes a trader a bad partner. Traders consolidate, carry credit risk, and handle volumes factories refuse, as covered in factory vs trading company cost math and Yiwu agent vs direct factory sourcing. The issue is only ever the lie. On an agent pretending to be a factory, the China lawyers at Harris Sliwoski put it this way: "If they lie about this, they will lie about other things too." Their advice is to walk.

Good: "We are a trading company, we work with four factories in Cixi, here they are."

Red flag: "We are the factory," from a company with no manufacturing verb in its scope.

Checks 3 to 5: is there actually an operation

Paper proves a company exists, not that anything is happening.

Check 3: Live video, on your clock

Every agent has a warehouse video. Well lit, forty seconds, possibly filmed at somebody else's facility. The test is the scheduling, not the video.

What to ask: "Can you do a live call from the warehouse floor tomorrow at 10:15am your time. I want to see the packing benches and my SKUs on the shelf." Ask them to read a shipping label off the wall and to pan the whole aisle, not one shelf.

Good: a chaotic call at the time you asked, with background noise and tape guns. Real warehouses are loud and untidy.

Red flag: "The warehouse is 2 hours away, I will send a video." Rescheduling. A call that only shows the same two square metres.

Check 4: The dated SKU photo

The cheapest proof-of-possession test in sourcing.

What to ask: "Send a photo of SKU-1147 next to a paper with today's date and my store name handwritten on it." No stock image or catalogue shot satisfies that. If they hold the goods it takes ninety seconds. Vary the object each time: a colourway, the carton label, the count.

Good: lands within the hour, badly framed, correct date.

Red flag: a beautifully lit render. The date cropped out. Any version of "our warehouse does not allow photos."

Check 5: Who owns the stock, and where it sits

The one that hurts most in a dispute. When you prepay for 500 units on a shelf in Shenzhen, whose units are they, and where?

What to ask: "When I pay for inventory, who owns it until it ships. What address is it stored at. If we stopped working together next month, how do I get it back."

Good: you own the goods on payment, a real address, a stated exit process, in the agreement rather than in a chat message.

Red flag: confusion about ownership. No fixed address. Stock "at the factory" that moves depending on who is asking. Any answer treating your prepaid inventory as their working capital, which is what it is.

Checks 6 to 8: what happens when something goes wrong

Anyone looks good on a first order. These test the relationship under stress.

Check 6: Tracking you can verify without them

An agent who controls the tracking narrative controls your customer service. If the only source of truth about a parcel is a screenshot in a chat, you cannot answer your customers.

What to ask: "Give me three tracking numbers from parcels you shipped last week to my market, and which carrier they land on." Check them on that carrier's own site: are the events real, do the timestamps match, and is the last-mile carrier one your customers recognise, such as USPS, Royal Mail, La Poste or DHL.

Good: live numbers that resolve on a carrier site, with a first-scan-to-delivery window matching the quote.

Red flag: numbers that resolve nowhere, or only on one obscure aggregator. "Tracking updates after 7 days" as a standing condition. Refusal to name the carrier.

Check 7: The defect question, asked before the defect

Ask in week one, not in month four with 60 units of a broken batch.

What to ask: "A customer receives a unit with a cracked housing. Who pays for the replacement, who pays the shipping on it, how long does it take, and what changes if it is 40 units instead of one."

Good: an unglamorous policy with numbers in it. A defect rate they take responsibility for, a replacement window in days, a rule for who eats the freight. Specific beats generous.

Red flag: "Don't worry, we take care of you." That means there is no policy, so in month four it gets invented by whoever is holding your money, which is not you.

Check 8: The cost split, itemised

Ask for the number to come apart.

What to ask: "For this SKU, give me product cost, shipping cost, and your fee as three separate numbers."

An agent who will not itemise is not disorganised, they are protecting a spread. With one blended number you cannot tell whether a price rise came from the factory, from freight, or from them widening their cut. Undisclosed agent markups typically run 30% to 60%, and the blended quote is what hides them.

Here is the difference on one SKU. These are illustrative numbers, not a real Peregrine quote.

Same headline number, different negotiating position. When the factory raises 8%, the itemised buyer sees exactly which line moved. For your own SKUs, the dropshipping profit guide covers the unit economics and the calculator prices every variant with goods, shipping and fees as separate lines.

Good: three numbers, same day. Red flag: "It is all included." A different total each time you ask. Fees that surface after you commit.

Check 9: Payment routing

The hardest one last, because this is where the real money goes. The FBI's Internet Crime Complaint Center recorded 24,768 business email compromise complaints in 2025 with $3,046,598,558 in reported losses, the second largest crime type by loss out of 1,008,597 complaints and $20.877 billion total. 86% of reported BEC losses moved by wire or ACH (IC3 2025 Annual Report). This is the most common way importers get cleaned out.

The sourcing version is the bank account switch. Someone on a compromised or spoofed email thread waits for a real invoice, changes the payment details, and forwards it. In an analysis of 44 fraudulent transfers, Harris Sliwoski found 84% went to accounts in China and Hong Kong, where recovery is extremely difficult. Their guidance: pay into mainland accounts rather than overseas ones, send a small first wire to confirm the account, verify any change of bank details by voice, and refuse to pay if the payee name is even slightly wrong.

What to ask: "What is the registered company name on your bank account, and does it match the business licence exactly." A clean early test from the same firm: buy a sample and pay for it into the company account.

Good: the account name matches the registered name character for character, given without friction.

Red flag: a personal account. A name unrelated to the licence. A sudden change of bank details, especially with urgency attached. Any of these stops the payment until you confirm by voice.

The nine checks on one page

Nine for nine is not the bar. One clean red flag on 1, 2 or 9 is enough to stop. Vagueness across three or more of the rest is enough to slow down.

When to pay someone else to verify

Past a few thousand dollars per order, paid verification is cheap insurance:

The audit is also a behavioural test. Harris Sliwoski's point is that a serious factory welcomes the suggestion, because it wants the business. How your agent reacts to "I am going to have someone visit" tells you as much as the report will.

One warning on certificates. An ISO 9001 PDF is trivial to fake, so do not read the PDF. Look it up in the accredited database. A certificate that cannot be found is not a certificate.

What verification looks like when it is structural

Every one of the nine checks exists because the information you need is held by a person who benefits from you not having it. You are auditing an individual, every time, forever.

We built Peregrine to remove that audit rather than pass it. One company holds the whole chain: 30,000+ verified factories, our own Shenzhen warehouse, QC, dispatch, customs and last mile, for 1,000+ Shopify brands into 65+ countries. Checks 3 through 9 stop being questions. Stock ownership and location are fixed, because there is one warehouse and it is ours. Tracking is branded on the local carrier your customer already trusts, verifiable on that carrier's own site rather than on our word. Cost is itemised by default: goods, shipping and the $1 per processed order fee as separate lines, with 0% agent markup against the 30% to 60% typical of undisclosed agents. QC is policy at a 99.6% QC pass rate and 99.8% delivery accuracy, with sub-24h dispatch.

The limits, straight: we do not warehouse in the US or EU, so if you need domestic US stock we are the wrong answer, and support is email and the dashboard. Plans are Free at $0, Pro at $49 and Brand at $79 a month, no setup fees and no minimum order volume, so pricing is a page rather than an interrogation. Both routes are weighed in choosing a China sourcing agent and what a China dropshipping agent does. If you already know what you want made, start at sourcing.

Run the nine checks either way. Trust that survives verification is worth something. Trust that cannot be verified is a feeling you are financing.