Guide to Alibaba Gold Suppliers: What Importers Must Know

Alibaba Gold Supplier

Click Here to Get the
Starter Package: All Categories

What can you make of those Gold Supplier badges that dominate the search results of Alibaba.com? The Gold Supplier program is as misunderstood, as it is brilliant.

In this article, you will learn what a Gold Supplier is, and how you can the wealth of verified supplier data to make an informed supplier selection.

In addition, this guide also includes a complete overview of all the information you can find in each Gold Supplier’s TrustPass profile and trade information page.

What is an Alibaba Gold Supplier?

An Alibaba Gold Supplier is a paid member of Alibaba.com, the world’s largest manufacturer and trading directory. It’s still possible to register on Alibaba.com as a Free Member.

That said, the traffic on Alibaba.com goes almost exclusively to Gold Suppliers. In short, being part of the program is a basic necessity for suppliers in China, who want to be found by prospective buyers.

Can I assume that all Gold Suppliers are safe and reliable?

There’s quite a bit of confusion among small business owners regarding the meaning, and importance, of a Gold Supplier Membership. Let me explain:

a. Alibaba Gold Supplier is a membership program for suppliers, advertising on Alibaba.com. It’s not mandatory, but a Gold Supplier get’s more eyeballs than a Free Member (x20 times according to Alibaba Group). It’s also an important revenue stream for Alibaba.com.

b. Alibaba.com ensures that every Gold Supplier is a legally registered company, unlike Free Members who are not verified. As such, Alibaba.com provides extensive information about Gold Suppliers, that can be used during the supplier vetting process. Such information is not provided for Free Members.

c. The Alibaba Gold Supplier Badge is not related to the suppliers’ manufacturing capabilities, product quality or product compliance in any way.

And why should it be? Alibaba.com is open for all sorts of companies, be it high end solar panel manufacturers or startups working from a garage.

But why should I care about Gold Suppliers?

Unlike Free Members, all Gold Suppliers are verified by Alibaba.com. In short, Alibaba.com checks the supplier’s business license, and guarantees that all listed companies are registered businesses.

Alibaba.com could just have left it to verify suppliers, and not share anything else about the suppliers. Luckily, they are a lot more generous than that.

Alibaba shares extensive information about each listed Gold Supplier, that can be used to vet suppliers. In fact, the Alibaba Gold Supplier database is by far the largest verified databank for suppliers in China and other countries in Asia.

Yet, many startups and small businesses are aware of this – and even less aware of how they can use this data treasure trove to avoid unqualified suppliers and zoom in on those that truly matter.

How can I use the information provided by Alibaba.com to select a supplier?

For example, you can use the Registered Capital figure, to determine if the supplier is a proper manufacturer or trading company.

The Year of Registration will tell you if the supplier is a new company, registered just a few months ago, or a veteran that’s been around for decades.

You should not expect to make a final supplier selection exclusively based on the Gold Supplier information. That being said, the information can be used to filter a large amount of candidates down to a more manageable number.

In recent years, Alibaba suppliers also have the option to upload factory audit reports, product certificates and other documents that can be used to make an even more precise supplier selection. Globalsources.com has also implemented similar functionality.

Notice on registered capital (2017)

We have received several reports stating that the registered capital is no longer available in the TrustPass Profile. There is, however, an easy way to access this information:

  1. Copy the suppliers’ ‘Registration No
  2. Go to www.gsxt.gov.cn and paste the number
  3. Click on the company name
  4. In the company overview you can now see the registered capital (注册资本)

Notice that the registered capital is presented in multiples of 10 thousand (万) RMB. For example, 注册资本: 100.000000万人民币, equals 100 x 10,000 RMB = 1,000,000 RMB.

What’s the difference between Trade Assurance and Gold Supplier?

The Trade Assurance program offers a standardized procedure for buying OEM, ODM and wholesale products from manufacturers in China.

If ‘something goes wrong’, the idea is that the buyer can get their deposit back. While this can be fairly complicated in reality, it should be seen as an early stage development, that will be improved.

While the Trade Assurance program is only available to Gold Suppliers, it’s a risk management and payment procedure rather than a membership.

Company Information Overview

Below follows an overview of the Gold Supplier information provided by Alibaba, and how you can use it to make a supplier selection, and manage your risks later on in the process.

Trustpass Profile

The information provided in the TrustPass profile is verified by Alibaba.com.

Date of Issue

This is when the supplier’s business license was issued. However, it shouldn’t be confused with the year of establishment for a new business license can be issued for a variety of reasons, such as if the supplier changes address, business scope or legal representative.

Date of Expiry

This is when the current business license expires. Not a very important piece of information for most importers since a renewal is a simple process.

Registered Capital

This is a strong indication of the size of the company. A large registered capital (more than RMB 10,000,000) indicates a fairly large manufacturer, while RMB 30,000 is a strong sign that it’s a one man operation.

A very small supplier can be a risky choice since they have very limited resources. In a situation where something would go down south during production they might not even afford to repair or remake a defective batch of products.

Company Name

It’s more important than it might seem. Payment frauds are fairly common and it’s critical that you only transfer your money to a bank account whose beneficiary name is matching the supplier name on Alibaba.com.

Country / Territory

The Country where the company is legally registered.

Registered Address

Some companies register at a certain address, but operates from another. There are various reasons for this. You should always stay away from suppliers who subcontract orders to other suppliers.

It might not sound like a big deal, but these subcontractors tend be low end sweatshops who produce cheap and low quality items.

Year Established

The longer a company has been established, the more likely it is to be a decent supplier. Bad suppliers don’t last very long and scammers need to register new companies on a frequent basis.

Legal Representative

This is the person that should sign the Pro Forma Invoice and the Sales Agreement. A document that’s signed by a sales manager or any other employee is not valid.

Legal Form

Limited Liability Companies tend to be more stable than Sole Proprietorships. That’s all you need to know about the Legal Form of a supplier.

Issuing Authority

The Government entity that issued the supplier’s business license. This should be in the same city as the suppliers registered address.

Trade Capacity

The information in the trade capacity page is provided by the suppliers themselves. Hence, it may not be accurate, but can still be used to vet prospective suppliers.

Main Markets

A supplier with a high export percentage is always preferable in comparison to a supplier whose only focusing on the domestic market. However, European and American suppliers need to be careful here since not every supplier is targeting these markets.

Those who are mainly focusing on Africa, Southeast Asia, Latin America or Russia are fairly unlikely to manufacture products that are compliant with American and European product standards – both legal standards and the quality level expected by the customer.

Main Customers

A famous brand as a customer is always a good sign since these companies apply a very strict supplier selection process. Yet, It’s quite rare that Alibaba Gold Suppliers even publish their Main Customers, mainly out of fear from competition.

Total Annual Sales Volume

An indication of the suppliers size and scale of business

Export Percentage

Suppliers who mainly focus on exports are more likely to deliver products of a higher quality. They are also more likely to be aware of certain product certification standards in Europe and America.

Accepted Delivery Terms

All suppliers accept EXW and FOB while most accepts CIF shipping. I recommend beginners to order CIF since it brings the cargo to the Port of Destination.

Accepted Payment Currency

USD is the only relevant currency for American, and also, European importers. Many suppliers are reluctant to receive EUR since it’s been fairly unstable in the last few years.

Accepted Payment Type

All Gold Suppliers are legally registered companies, thus they also have a bank account and can receive T/T (Telegraphic Transfer) payments.

This is the most common Payment Type. L/C (Letter of Credit) is also widely accepted, but small orders (below US$30,000) are in general not accepted if you want to pay using an L/C.

I also recommend importers stay away from Western Union payments, since the money cannot be tracked.

Minimum Order Value

Completely irrelevant in my opinion since the suppliers tend to stick to the Minimum Order Quantity (MOQ) Requirement rather than a Minimum Order Value Requirement.

Nearest Port

This is the place from where your cargo will be loaded and shipped. Should be in the same province as the where the supplier is legally registered.

Disclaimer

This article is provided only for informational purposes only and neither the author nor any companies and/or service providers mentioned in this text makes any representations as to the accuracy, completeness, currentness, suitability, or validity of any information in this article. This article only represents the views of the author and is not endorsed by any company and/or service provider mentioned in this text.

Do you want to launch your own private label or custom designed product?

It can be hard to go from a design drawing to finished product. To help you manage the entire process – from creating a specification, to sampling and quality control – we created a Starter Package:

a. Private Label & OEM Product Manufacturer Lists

b. Product Specification Templates

c. Product Label Samples

d. Tutorials, Video Walkthroughs and Task Lists that guide you step-by-step through the entire process

In addition, you can also book quality inspections, lab testing and shipping directly from the platform. Click here to learn more.

  • Tags:

    16 Responses to “Guide to Alibaba Gold Suppliers: What Importers Must Know”

    1. Rose June 20, 2014 at 2:39 pm #

      Hi Fredrik..I’m planning to buy a ceramic products from China and shipping to Malaysia. This is my first time. I’ve read your article about Gold Supplier and thinking how should I know the company exist? Or even it exist, how to confirm I’m dealing with the right person – worker from the company? Please advise. Tks.

    2. Boris August 21, 2014 at 2:34 pm #

      Good article Fredrik

      I happen to stumble upon company that has been established 14 years or so but has its business license issued for 8 years only. I thought it must be some kind of subsidiary of main company that has been operating 8 years.

      If a company is registered at a certain address, how do I verify if it operates from another if such happens to be the case? If there was something like “Operates From”, it would help importers but a good way to check would be to inform about “factory inspection” because serious supplier would not hide this information.

      Does Pro Forma invoice document also confirm supplier’s accepted quote? What if company has factory at one place but uses bank account in another place? Does that mean both Pro Forma and sales agreement must be signed and stamped by more than one person like legal representative, sales manager and factory owner/manager? Is sales agreement same as purchase order?

      About supplier’s main customer. I happen to stumble multiple times on those that advertise popular international brands. I think this was more often the case with trading companies and here’s where I have a question about private labeling. What if I stumble upon supplier that advertises big brands clients but allows MOQ of products they make for these big brands? How can I be safe knowing that same Disney for example that funded supplier with custom tooling, QMS and product safety standards certifications allows final product to be sold to competition i.e. us small importers? I heard about license that brand allows supplier to reproduce and sell.

      Even with something that looks to be generic item, what if it’s not and actually is replica? Am I correct assuming that all generic items are items that fall in the following categories?

      1. Replicas/knockoffs made by manufacturer without permit
      2. Items that manufacturer has brand’s permission to make for importers
      3. Items that manufacturer has his own IP rights to make
      4. Items that are general on their own and free to be made for everyone

      Did I miss something? The last 2 categories are most preferred by importers due to no risk of violating someone’s IP rights?

      • Fredrik Grönkvist August 25, 2014 at 4:35 pm #

        Hello Boris,

        1. There are many reasons a company could have a new business license. They may have changed address, or registered a new company managing exports (thus acting as the selling entity).

        2. Yes, if one entity is acting as seller (which is the case when you are invoiced from a HK company), and another entity is the actual manufacturer, then both companies must be mentioned on the agreement (and sign + stamp). Otherwise, the manufacturer can simply sidestep the agreement by saying that they are not responsible.

        3. I am 99.99% sure that Disney, and other large companies, would never give a license to a Chinese factory to sell their items to other companies. That said, there may be agreements in place prohibiting them to use molds and other tooling, financed by another buyer.

        Actually, any company could sign such an agreement, not only big companies. While such an agreement is only binding between the owner of the tooling, and the supplier, you may run into serious issues in case items are based on a registered design and/or patents held by a company outside China.

        3. I would say that #2 is basically non existent.

    3. Boris August 25, 2014 at 5:28 pm #

      3. I read there may be suppliers that sell registered design and/or patents of a brand that didn’t give them license to do so. I don’t remember what blog it was written on but there may be cases when supplier “betrays” brand and sells its product to competition by getting their attention in showroom and that only brand that has deep pockets goes after supplier.

      And question about supplier that illegally sells products that have registered design and/or patents say in kitchen category. Excluding above case where supplier “betrays” brand, can there be such thing where they acquire injection molds illegally to make replicas of products?

      • Fredrik Grönkvist August 25, 2014 at 9:38 pm #

        Well, a supplier don’t need to acquire an injection mold illegally. All they need is a sample, and manufacture a mold based on this sample.

        It is common that suppliers use designs provided by their buyers. That’s why it’s important to register patents, or otherwise protect IP, in important markets such as the EU and US (however, separate registration is required to cover China).

        • Boris August 30, 2014 at 9:06 am #

          Hi Fredrik

          Remember I emailed you recently with an idea about intellectual property for your next post? I am only aware about US trademarks and patents search-based service which allows you to find out what is protected out there and what is not. I am wondering if there are registered designs and inventions applicable locally or worldwide and whether importer has to check on local or international level.

          I enjoy your risk-management posts about doing business with Chinese manufacturers and think that among other risks, trademark and patent verification topic deserves its discussion. It would be great to learn from you about it and steps to take so everyone can be confident about doing his/her homework properly to make sure not to violate IP if there is.

          Thanks!

          • Fredrik Grönkvist August 31, 2014 at 6:50 pm #

            Yes, it’s on our schedule but we have plenty of other topics to cover before that. In the following weeks we will also publish several new interviews on EU and US compliance that I think you’ll find very interesting!

    4. Boris C. March 20, 2015 at 2:42 pm #

      Hello Fredrick

      I have noticed something that is unclear to me when checking suppliers’ profiles on “Contacts”.
      There’s left tab which mentions year supplier was established and their experience. Sometimes these do not add up and below I have given example of what I mean:

      Experience:
      Established 2014
      10 years OEM

      If they have 10 years of experience, then how are they not established in 2004? Could it be they created new profile for some reason and Alibaba actually refers to date when profile was established rather than company? What if they try to hide their past reputation and changed their Alibaba store name so nobody can track their past history?

      • Fredrik Grönkvist March 20, 2015 at 2:51 pm #

        Hi Boris,

        Yes, you are absolutely right and I’m quite puzzled myself about this. I’m not sure where Alibaba gets this data from. That said, a supplier may basically claim anything, and refer to entities held by the same owner previously, even though the ‘latest entity’ was registered rather recently, for some reason.

        That said, the incorporation date is present on the Business License, so I assume this is the data Alibaba refers to. And yes, companies trying to hide their past track record is certainly not unheard of, so you got all reason to be careful. That said ,the fact that you note these things means that you have a sense for detail, which is what it takes to get through the process.

        • Boris C. March 21, 2015 at 11:37 am #

          Being attentive to details has it’s upsides for better risk management but also downsides as you potentially filtering out good suppliers who unintentionally “made mistake” which triggered your filter.

          Plus you also give reason to factories to avoid you for obsession over details?

    5. Boris C. April 11, 2015 at 2:54 pm #

      Do you think Fredrik that Gold Supplier who claims himself to be a manufacturer but has a small registered capital in “On-Site Report” like 100,000 can be a sign of trader or small trading company? I think this could be a way that would help vet traders from suppliers.

      • Fredrik Grönkvist April 13, 2015 at 4:07 am #

        Hi Boris,

        In general, yes. However, there are exceptions. Chinese authorities tend to require that the registered capital equals the expenses for the first year. As such, small manufacturers can (or could, at least) obtain a business license with only RMB 100,000.

    6. Terry W. Mohr July 1, 2016 at 6:31 pm #

      For a fee, would you be available to serve as the co-between on a transaction to import a food concession trailer from China to Wilmington, North Carolina USA

    7. Theo February 14, 2017 at 11:13 am #

      Hello Fredrick,
      I stumbled upon your website and I have to give credit where credit is due. I’m planning on importing some furniture from China to Cyprus and I’ve been looking at alibaba for a freight forwarder. I found a few but some of them look dodgy. I found a couple that offer trade assurance though. Is this somewhat of a guarrantee they are legitimate? Thanks!

      • ChinaImportal February 18, 2017 at 7:05 am #

        Hi Theo,

        No, that is in no way a guarantee for them being legit. Supplier vetting is far more complex than that.

    Leave a Reply