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Due diligence with an OEM, distributor, or other potential partners in China (Part 2)

Tags: Company Verification, Due Diligence, OEM, SMBs and SMEs

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Estimated reading time: 2 minutes

The “top three” things to check when you are considering a potential partner

Due diligence helps evaluate a company’s credibility. It can therefore, help assess your potential international business partner’s ability to fulfill their legal duties towards you.

Here are the top three things you should check by conducting a due diligence:

  • The registered and paid-in capital of the Chinese business partner
  • Whether this company is in the process of bankruptcy
  • Whether it has defaulted in repaying debt, or has any outstanding court judgments.

A legal expert can verify other things if you want to go deeper. Here are two examples:

  • Does your potential business partner have all the qualifications and licenses required by Chinese laws and regulations?
  • Are they involved in any serious unresolved litigation, especially concerning product quality and IP infringement?

Reduce your legal risk before going to arbitration. Have a legal expert conduct due diligence service and provide an insightful report. You will then know if a Chinese manufacturer, supplier, distributor, or business partner is legitimate and in good standing.

This article is provided by Mary Mao.

Ms. Mary Mao

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Senior Lawyer at Beijing W&H Law Firm Shenzhen Office

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