Blog · 2026-09-24

Five red flags - and what each one actually means

The five red flags on our free checklist are the minimum threshold signals we picked out of hundreds of public records. Seeing one does not mean a company is fraudulent - it means it is worth ten extra minutes to ask the right question.

They are not conclusions - they are starting points

Public records can only tell you what happened; they cannot tell you why. The right way to use a red flag is not as a verdict, but as a specific question to ask the supplier. A good answer makes the company more credible, not less.

Flag 1: Registration status is not "存续" (active)

This is the hardest one. Cancellation, revocation of licence, and listing on the abnormal operations register - these three have very different legal meanings, but the answer to "can I safely sign a contract right now?" is roughly the same for all of them: no, or not with confidence.

Flag 2: Enforcement and失信 (dishonest debtor) records

An enforcement record means someone is chasing payment with a court judgment in hand. A dishonest debtor (失信被执行人) record means they have money and refuse to pay. The second is far more serious than the first, and they are often lumped together. Always check them separately.

Flag 3: Shared registered address

When dozens of companies from completely unrelated industries are all registered at the same address, it usually means a bookkeeping firm or a virtual registration address. This is not illegal, but it does mean you should recalculate your answer to "can I find someone if something goes wrong."

Flag 4: Social insurance headcount does not match the claimed scale

A company that claims to own production lines and export tens of millions a year, yet only has single-digit people on its social insurance roll - that number is not enough to draw a conclusion on its own, but it is worth asking "where is the line, and who is running it."

Flag 5: Key personnel appear in multiple deregistered companies

On its own this is a weak signal. But when the same group of people keeps appearing in companies that have all been deregistered, it is worth pulling out the timeline and looking at how each one ended.

How to re-check these signals

Public records change all the time, which is why every red flag check should carry the date it was run. Our practice is to archive the date, the source, and a screenshot of the result together - so that when you look back three months later, you know exactly what you saw at the time.