Many view China as the world’s greatest manufacturer, and as such the chances of having to deal with a Chinese company are big with potentially big profits. But there is a lot more than manufacturing. According to a report published by the National Bureau of Statistics in 2020, the service industry accounts for 54% of the country’s gross domestic product and it continues to expand. China’s dominant industries also include agriculture, banking, e-commerce, infrastructure, finance, insurance, real estate, and technology. Foreign investors can find a wide variety of opportunities in China, and despite the government’s measures to push for self-sufficiency, businesspeople welcome this plan as another chance to invest in China. While the pandemic plunged major world economies into recession, China’s economy expanded. The bottom line is that business with Chinese companies remains strong, but it shouldn’t be confused with risk-free.  Far from it.

Many of the fears of doing business in China still prevail. The political situation creates a lot of tension and makes some investors hold back. In the past year, the government has applied a number of unilateral sanctions against certain foreign organizations and individuals in relation to their involvement in activities they consider contrary to China’s national security and interests. This is one of the main concerns, but not necessarily the one that creates the greatest risks.  Doing business in China is a high-risk venture and one that requires a unique and complex set of risk mitigation practices.

Business fraud is a rampant issue in China. The rise of the internet, especially online payments, has exacerbated the problem by making scams easier to execute and harder to trace. The worst part is that it has no easy fix. While Beijing has made a big push to put scammers behind bars, and the number of annual arrests has increased over the past three years, a significant number of fraudsters continue to be successful by operating abroad and hiding their identity with better technology.

In this scenario, company verifications in China have become the most effective way for investors and companies to mitigate risk, and fight against fraud and scams. Businesses are relying more on private investigations that can help solve any mysteries and tie up loose ends, whether it is on a big corporate level or an employment screening.

Private investigators in China, who know the culture and speak the language, will be a lot of help in obtaining proper information and reducing risk. Corporate investigations, like due diligence or company verifications, are often the difference between successful business relations and failure. A professional investigation will provide the information you need to decide whether your Chinese business partner or the company you are investing in are trustworthy and who they claim to be. Having the right information may save you from lawsuits and financial loss and it will also ensure that fraudsters do not take advantage of your business. Evidence is key to finding the real opportunities, as it helps investors recognize whether a potential business is the real deal or just a fraud.

Chinese fake entities pretend to be legitimate manufacturers, law firms, trademark, copyright, domain registration or patent agents, freight forwarders, shipping companies, and the list goes on. Scammers never run out of variations. One of the more sophisticated scams even involves non-Chinese individuals acting as employees of the fake Chinese company. Regardless of the difference in tactics, the scammers’ goal is to extract money from foreign investors and businesspeople without providing anything in return.

If you or your company are planning to close a business deal in China, make sure you know the facts first! business  We can verify if the business and representative is registered, conduct a criminal and court records investigation to make sure it has not been involved in fraud in the past, check references and reputation, verify any documentation, and verify the claimed representatives actually work there. Contact us for a free and confidential China investigation quote.  We can help.

C. Wright
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