Part 1
The Importance of Due Diligence
Prologue
It would be important to check the business scope of the potential OEM to confirm whether it has the authorization to carry out the project before making your deposit.
Here is our tip of the week about Due Diligence for doing business in China.
Do you own a small business? If so, you may think that due diligence is beyond your reach. After all, it can be costly and time-consuming. You will probably check the company’s registered location, directors, and general manager. However, you may not be able to do a thorough factory audit as large multinational corporations do.
But when planning to do business in China or any other unfamiliar country, don’t skip due diligence. Insufficient information about your future business partner can create serious risks for your company.
For example, it would be important to check the business scope of the potential OEM to confirm whether it has the authorization to carry out the project before making your deposit.
Verifying the controlling shareholder of the potential manufacture is NOT a competitor is also critical. This will prevent you from disclosing any important know-how or sending your industrial model to an unwanted party.
end
Doing Business in China?
Access vetted and English-speaking Chinese lawyers on your personal dashboard in just a few clicks and get your legal questions answered anytime, anywhere. Visit us at Trustiics.com or send us an email at support@trustiics.com
"China Legal Tip" is a weekly post from Trustiics. The content provides practical tips from leading business lawyers. We aim to help international SMBs navigate China's complex legal and regulatory framework. Follow us on LinkedIn share your comments with us.