China Company Research Due Diligence

Looking to do business with a Chinese company? About to send a Chinese company some money? Want to know whether that Chinese company is worthy of your business and your trust? How do you do get information on a Chinese company when certain private investigatory work in China is illegal?

Our clients often ask us to “find out what we can on the Chinese company” with which they are looking to do business. Our research in those situations usually depends on the value of the deal, what is already known about the Chinese company and, how much our client wants to spend. Based on these three things, we conduct various levels of research on the Chinese company.

The first thing we often do is conduct a Chinese-language internet search on the potential Chinese counterparty. This sort of search is not enough to move forward on a $50 million deal, but it frequently can reveal enough negative information to convince our client not to do any deal at all, no matter how small it is. Pretty much every week, a company will write us to say that they sent money to XYZ Chinese . company and got nothing back in return and pretty much every time, minimal research on that company would have revealed enough for us to have told that company not to have sent the money in the first place.  See Beware The Potemkin Chinese Company. 

Company research and due diligence is a critical aspect of any successful relationship with Chinese companies (and every other company you do business with domestically and internationally). No matter what relationship you plan to form with the Chinese company, a combination of research tools and strategy can reduce your risk in doing so. Here are some useful tools for searching publicly available information on Chinese companies:

1.  National Enterprise Credit Information Publicity System

China’s National Enterprise Credit Information Publicity System (NECIPS) is a website hosted by the State Administration for Market Regulation (SAMR) and its provincial and local offices. The SAMR is a result of a 2018 consolidation of three separate government agencies: the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), the China Food and Drug Administration (CFDA), and the State Administration of Industry and Commerce (SAIC). The SAIC’s local offices used to serve as a company registration and general market regulation authority.

The NECIPS website is helpful for getting a rough idea about a Chinese company. Here you can find basic company information that’s often shown on a company’s business license, such as the company’s legal representative, its business scope, and its registered capital. You can also often find helpful additional information like the company’s shareholders, directors, special permits for certain industry or business activity, annual reports, and past changes of any registered information. It is important to check these things before you decide whether to do business with a Chinese company. For example, suppose someone in China tells you he is a shareholder or a director of a company and he can help you design and manufacture your widgets, but a search shows he is neither a shareholder nor a director and manufacturing does not come within the company’s approved business scope. All of these are major issues and should not be ignored. Our China lawyers see these sort of red flags all the time, and they tell us our client would almost certainly be better off not investing in any sort of relationship with this company.

Almost all of the NECIPS website is only in the Chinese language, and it is difficult to access even if you fluent in Chinese and familiar with the website. It can be slow or even inaccessible at all from the United States or Europe. If you manage to load the website, it will require you to verify that you are not a robot before showing you the search results. That verification is sometimes familiar and straightforward (like a simple math question), but sometimes this verification requires you to analyze a pop-up image containing several Chinese characters and clicking on them in a certain order, such that they make up a term that makes sense in Chinese. If you are not truly fluent in written Chinese, you oftentimes will not be able to get in at all. Sometimes these verifications are so difficult that our lawyers born and raised in China get them wrong. Some days, the system is so slow we give up and have one of our people in China do the search for us.

2. Chinese Business Credit Reporting Companies

Many Chinese business credit reporting companies offer comprehensive reports on Chinese companies. Some of the popular ones are Qixin, Qichacha, and Tianyancha, all of which provide similar subscription  services for a fee. If you search for a Chinese company on any of these three websites, you can find basic company information, its ownership structure, any related companies, its registered trademarks and patents, its current and past judgments, and public bidding information, along with other information. These Chinese credit reporting companies can provide those reports because they aggregate company information not only from NECIPS, but also from other government websites as well as other online business directories such as:

For most of these private company search service providers, you will be able to get some information for free, but you will need to subscribe if you want premium services. For example, you may not be able to see the actual controlling person of a company if you have a free account, but you can see that information if you are a paid subscriber. Among the three websites mentioned above, Tianyancha’s homepage is currently inaccessible outside mainland China. But if you enter a company’s name plus the Chinese word for Tianyancha, your search engine will be able to show you results on Tianyancha, which you can visit.

When the government websites are difficult to access, these private websites are a good starting point. These companies do a good job gathering raw data but they do not provide any analysis. In addition, the bulk of these websites are also in Chinese only.  We do not recommend you use these services for any more than obtaining the most basic information, unless your Chinese is really good (Google translate does not count) and you have a good understanding of China’s legal system and corporate governance fundamentals.

3. Other Resources

Depending on the company, we also sometimes use other helpful resources such as stock exchange websites for public company information, industry specific publications, trade association websites, or import and export records. Those are another topic for another day. On really big deals we will do company research the old fashioned way, by having one of our China business advisors call around about the Chinese company or even meet with those who do or did business with the company, work (or worked) for the company, or just know the company by being in the same industry.

China’s corporate governance is different from the U.S., and online information may not always be the most up to date. Regardless, it is important to do your due diligence to learn as much as you can and as much as makes economic sense about your China business partners before you put your time and money on the line with them. For more information, see our prior posts:

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Photo of Sara Xia Sara Xia

With a background working in Hangzhou, Shanghai, and Seattle, Sara Xia has earned a reputation for overcoming communication barriers and helping people of diverse backgrounds connect with one another. She is uniquely equipped to identify and solve issues related to Chinese entities, while…

With a background working in Hangzhou, Shanghai, and Seattle, Sara Xia has earned a reputation for overcoming communication barriers and helping people of diverse backgrounds connect with one another. She is uniquely equipped to identify and solve issues related to Chinese entities, while providing clients with critical insight on the cultural customs and procedures necessary to successfully conduct business in China.

Sara works out of Harris Bricken’s Seattle and Beijing offices, advising clients on legal practices in both China and U.S. Her practice focuses on cybersecurity, data protection law, and privacy law. She also works on mergers and acquisitions, corporate formations, business litigations, and matters involving China’s foreign exchange control policies.

Photo of Jonathan Bench Jonathan Bench

Jonathan focuses on international and domestic business transactions and securities. He discovered his love of foreign locales, people, and languages in his early adult years after moving from “small town” Wisconsin, to Hong Kong and then to Sichuan, China. Jonathan is fluent in

Jonathan focuses on international and domestic business transactions and securities. He discovered his love of foreign locales, people, and languages in his early adult years after moving from “small town” Wisconsin, to Hong Kong and then to Sichuan, China. Jonathan is fluent in Mandarin and Cantonese Chinese and consistently works to enhance his language and business expertise so he can best assist his clients at Harris Bricken with their varied international and domestic projects.

Jonathan studied international business and international law at The George Washington University in Washington, D.C., earning both JD and MBA degrees. He describes himself as a businessperson who went to law school rather than a lawyer who studied business. Jonathan’s business clients value his ability to think like a business owner as he provides sound legal guidance while maintaining key business issues at the forefront of the discussion.

In his spare time, Jonathan enjoys spending time with his young family, bouncing on their trampoline, playing hide-and-seek, enjoying the outdoors, playing any sport involving a ball, learning guitar, and working on his Spanish.