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A project funded by the European Union - PowerPoint PPT Presentation

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Knowing your partner A project funded by the European Union. Knowing your partner. Majority of Chinese companies are honest and willing to develop sustainable business. Problematic Partners. Fake companies. Paper tigers.

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Knowingyour partner

A project funded by the European Union

problematic partners
Problematic Partners

Fake companies

Paper tigers

A potential partner may not exist at all

A potential partner may promote itself as a leading company in its industry but is in fact an imposter

Parasite companies


A potential partner may rely too heavily on its relationship with local government officials. This may mean the company is operating in a legal grey area and vulnerable to changes in government personnel

A potential partner may possess all the required registration information but no significant assets of active business records

who can be y our partner
Who can be your Partner
  • Importer
  • Distributor
  • Supplier
  • Agent
  • Landlord of your office
  • JV Partner
  • Service provider
what to check
What to check?

There is a lot what you can learn about your business partner:

  • Legal status
  • Financial health
  • Operational conditions
ask for the business licence1
Ask for the Business Licence!!

Business License for Corporation Legal Person

Registered No.: 4xxxxxxxxxxxxx2

NameYong He Consulting Service Co., Ltd.

Address Unit 2-8, 10/F xx Building, Fuhua Road, Haidian District, Guangzhou, Guangdong

Legal Representative Lao Wang

Registered CapitalRMB 2,000,000

Paid-up CapitalRMB 2,000,000

Type of Registration Limited liability company

Scope of Business Commercial consultancy and corporate management consultancy; Information and business process, sub-contracting services such as system application management and maintenance, information technology support and management, financial settlement, software development

ShareholderHe Yong Limited

Term of Business: January 18, 2007 to January 18, 2057

Date of Establishment: January 18, 2007

Passed 2012 Annual Inspection Registrar: Guangdong Administration for Industry & Commerce (Seal)

ask for the business licence2
Ask for the Business Licence!!
  • Can be checked on Administration of Industry and Commerce (AIC)websites and at local AIC branch*
id card examination
ID card examination
  • Learn information contained in the ID card number
  • Check with National Citizen Identity Information Centre
is there a company stamp
Is there a Company Stamp?

Company stamp:

  • Chinese Name must be SAME as on business licence;
  • With a five-pointed star in the middle and in red ink;
  • With a diameter of no more than 4.5cm;
  • Filed with competent public security bureau;
  • Equals to signature of person authorized to sign on behalf of the company in Europe
verify the other mandatory documents
Verify the other mandatory documents!
  • Landlord of your office
    • Ownership certificate – is the office allowed to be rented for commercial purpose?
  • On Importer
    • Import licence for the goods – some type of goods can be subject to licence
  • Supplier
    • Special permit for manufacturing the product
    • Report from Quarantine and Commodity Inspection Bureau when exporting from China
  • Distributor
    • Distribution permit – for certain products a special distribution permit is needed eg. food
  • Service provider
    • Permit for the specific service
special permit for food distribution
Special Permit for Food Distribution

Verify the other mandatory documents!

get information of their financial status
Get information of their financial status

Creditworthiness Letter

  • Both for the company and its shareholder(s)
  • Issued by bank upon request of the partner

Capital verification report, financial statements and audit reports

  • Under certain circumstances financial statements may be obtained at the Administration of Industry and Commerce (local branch)*

Credit history

  • Applied by partner itself at Credit Reference Centre of PBOC

Bank Account

  • Always ask for company account
company operation s
Company Operations
  • Pay a visit at the company's premises – go a few times, sometimes unannounced
    • Organisation
    • Cleanliness
    • Employee conditions
    • Location
  • Visit the distribution network
  • Talk with employees and pay attention whether they understand their business
  • Talk to suppliers, neighbours, competitors
  • Check if it is a member of any official association and contact the association for reference
list of most common scams
List of most common scams
  • An unsolicited requestand paymentof facilitation fees, unknown taxes, gifts
  • Goods being sold far below market value
  • Payment into an unknown bank account