Where things can go wrong with an OEM, distributor, or other potential partner in China (Part 1)
Part 1 – The importance of due diligence
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.
However, 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 instance, 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. It’s also a good idea to check the controlling shareholder of the potential manufacturer is NOT a competitor of yours; doing so will prevent your business from risks such as disclosing any important know-how or sending your industrial model to an unwanted party.
Check out our one-stop due diligence service and see how it can help you with verifying a local business partner.
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Trustiics Recommended Lawyer
Senior Lawyer at Beijing W&H Law Firm Shenzhen Office