China is an attractive market because of its size, potential and location. Many foreign investors are looking towards China to find business partners there, open a Chinese company or acquire an existing business. The Chinese legal system has become more oriented towards foreign investments and more business friendly, however, the level of transparency for doing business may not be comparable to that in other countries with which foreign investors are accustomed to.
Before engaging in any business activities with a Chinese company or before merging or acquiring a company in China, our Chinese lawyers recommend that you perform a company due diligence procedure.
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The company due diligence procedure
When doing business in China, any investor wants to find the right business partner. In order to avoid any frauds and scams in China, it is best to perform a company due diligence before engaging in economic or business activities with another Chinese company, regardless of the type of the legal entity.
Our Chinese law firm is experienced in working with foreign and Chinese companies. Because China does not have a unified Trade Register, where individuals can access public information about companies, our Chinese lawyers can help you find the needed information about a business partner in China.
Our lawyers in China will perform a comprehensive due diligence procedure, starting with finding out the registration information for a specific company, followed by checking the available financial information and making any needed reference checks and third-party evaluations.
Doing business with Chinese companies
Foreign companies that want to merge with a Chinese company or to acquire an existing Chinese business need to determine if the Chinese company they are willing to engage in this type of business relationship is a legitimate one. This is useful in order to avoid litigation cases afterwards.
The easiest way to verify if a company in China is legitimate is to ask for a copy of the business license. Our Chinese attorneys can help you check this document, however, it is advisable to perform more than just this basic evaluation.
By performing a company due diligence when doing business in China, you can benefit from a good long-term relationship with any Chinese business partner. For detailed information and the duration of a due diligence procedure, please contact our Chinese law firm.