Due Diligence in China - Make sure you really know who you’re dealing with.

Commit your money and resources to any kind of business relationship with another company and you expose yourself to risk. No matter which country you’re dealing with, it’s important to follow a due diligence process before you agree to work with another company.

As far as China is concerned, failure to do so could:-

• Disrupt a supply chain that’s taken many months to construct.
• Damage your reputation for delivering quality or delivering on time with your own customers.
  
• See your intellectual property rights flouted.
• Lumber you with real estate that cannot be used for the purposes for which it was bought.
• Result in your having to write off precious investment capital.

Why Diligence in China is so important

When dealing in China, the chances are you’ll encounter one of the many new companies that has emerged during the country’s phase of rapid economic expansion. In other words, a company who’s ability to withstand hard times has not yet been put to the test. For that reason due diligence is all the more important.

How we can help you with Due Diligence

Red China Business offers a comprehensive due Diligence service to help you assess potential partners and asset purchases in China. To do this we work with a number of highly professional investigative partners in China. Once you’ve identified a company we can gather information to help you find out:-

• How stable are they financially? What are the chances that they’ll still be there in 3 months, 1 year, 3 years etc?
• How good is their management? Do they have a reputation for delivering quality products and services?
• How honest are they? For example do they have a history of disregarding intellectual property rights?
• Are they operating within the law? How seriously do they take local laws and regulations?
• Does the entity you’re dealing with actually own the facilities they are offering you?
• How sound are their environmental practises?

We can also provide you with basic due diligence reports with information drawn largely from official records detailing items such as:-

• Ownership.
• Trading history.
• Annual Turnover, P&L and Balance Sheet information.
• Auditing procedures.
• Quality Control Processes.
• Number of employees.
• International Standards Certification – eg ISO 9001.
• Permitted uses for land and factory premises.
  

To find out more information about conducting due diligence in China please contact Sarah Yue.