Deal with Chinese Counterparts (1): Conducting a Online Due Diligence before the Deal
Updated: Nov 22, 2020
Are you thinking about trading, or is currently trading with a Chinese company which you have never heard of before, nor have you ever traded with companies located in this country? Have you ever come across with Chinese suppliers online and considered ordering goods from them?
If so, you should know about online due diligence, and how it can safeguard your transactions.
Generally speaking, a due diligence is investigating into a company that you are, or about to deal with to help you making informed business decision. a due diligence report could reveal critical information of a company, such as its status of running, performance of operation and any legal action involved.
Based on the information collected, the due diligence report could help you gain a simple but modest understanding of the opposing company, just so you could make critical decisions such as continuing the transaction, or to commence litigation or arbitration proceedings — it is not worth it at all if the target company is a fraudulent practice.
Successful relationships in business hugely depend on the honesty of all parties; however, we have observed through years of representing clients against malicious Chinese business that such principles are seldom upheld in this country. Conducting online due diligence may help you in keeping your business activity away from fraudulent practices and out of the frustrating process of cross-border litigation.
By conducting online due diligence, we provide a due diligence report, which contains legitimate and comprehensive information of the target company for our clients. By searching for registration details, financial information and litigation proceedings on information publication platforms and any other websites, we identify the state of running of the target company, and its subject of litigation. Also the process of collecting the information will not alert the target company.
Here are some of the information included in a due diligence report:
* List of shareholders
* Registered capital
* Actual paid-up capital (if disclosed)
* Beneficial owner and actual controller (identified by the database)
* Registered address
* Contact details
* Tax Registration Information
* Board of directors and other senior management
* Related Parties (Parent company, subsidiary, and other related companies) Company assets
* Subsidiaries, equity investment in other companies
* Number of total employees (if disclosed) and the total amount of social securities paid (if disclosed)
* Trademarks, patents and copyrights
* Real estate (if disclosed)
* Ongoing or concluded litigation
* Ongoing or concluded enforcement information
* Administrative penalties
* Abnormal operation status
* Company public announcements and news (if any)
* Financing information (if disclosed)
* recruitments information
If you don’t conduct a due diligence before making the business decision, you could be putting your business into risky transactions. The complexity of litigation process involved in a multinational dealing means it could take a considerable amount of time and effort to claim back your money. Here at Landing we provide to clients information they need in order to go through the deal. Combining our extensive knowledge of international commerce and our expertise in Chinese laws, we ensure to provide answers to all your questions.
If you would like to further discuss how we can help your business, please contact us.
Larry Zhou, Partner
Landing Law Offices China
Mobile& WhatsApp: +86 13342931852
Linkedin: Larry Zhou