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

Written on November 18, 2021.

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

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.