Due Diligence in China
Operational due diligence to confirm the identity and legitimacy of business partners – It is mandatory for Chinese companies to register with State Administration of Industry and Commerce (SAIC) or local SAICs. This data enables information provided by the local company, such as the registered capital, registered legal person, registered address, business scope and licence expiry date, to be verified.
Financial due diligence when considering joint ventures or mergers and acquisitions – A Chinese company’s financial accountability should always be assessed, especially before significant transactions.
Reference Check and Third-Party Evaluation – A well-established company should always be open and ready to provide references. The company’s suppliers, customers, even competitors, are all good references. A company with a single supplier or limited market may entail more risk.
On-site inspection – Due to geographical distance, it is often difficult to know your partner’s background, capability, credibility and performance. For sizable deals, on-site inspection or on-the-ground presence is important.