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A project funded by the European Union

Knowing your partner enquiries@eusmecentre.org.cn www.eusmecentre.org.cn. A project funded by the European Union. Knowing your partner. Majority of Chinese companies are honest and willing to develop sustainable business. Problematic Partners. Fake companies. Paper tigers.

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A project funded by the European Union

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  1. Knowingyour partner enquiries@eusmecentre.org.cn www.eusmecentre.org.cn A project funded by the European Union

  2. Knowing your partner

  3. Majority of Chinese companies are honest and willing to develop sustainable business.

  4. Problematic Partners Fake companies Paper tigers A potential partner may not exist at all A potential partner may promote itself as a leading company in its industry but is in fact an imposter Parasite companies Shellcompanies A potential partner may rely too heavily on its relationship with local government officials. This may mean the company is operating in a legal grey area and vulnerable to changes in government personnel A potential partner may possess all the required registration information but no significant assets of active business records

  5. Who can be your Partner • Importer • Distributor • Supplier • Agent • Landlord of your office • JV Partner • Service provider

  6. What to check? There is a lot what you can learn about your business partner: • Legal status • Financial health • Operational conditions

  7. Ask for the Business Licence!!

  8. Ask for the Business Licence!! Business License for Corporation Legal Person Registered No.: 4xxxxxxxxxxxxx2 NameYong He Consulting Service Co., Ltd. Address Unit 2-8, 10/F xx Building, Fuhua Road, Haidian District, Guangzhou, Guangdong Legal Representative Lao Wang Registered CapitalRMB 2,000,000 Paid-up CapitalRMB 2,000,000 Type of Registration Limited liability company Scope of Business Commercial consultancy and corporate management consultancy; Information and business process, sub-contracting services such as system application management and maintenance, information technology support and management, financial settlement, software development ShareholderHe Yong Limited Term of Business: January 18, 2007 to January 18, 2057 Date of Establishment: January 18, 2007 Passed 2012 Annual Inspection Registrar: Guangdong Administration for Industry & Commerce (Seal)

  9. Ask for the Business Licence!! • Can be checked on Administration of Industry and Commerce (AIC)websites and at local AIC branch* • www.saic.gov.cn • http://www.saic.gov.cn/ywbl/zxcx/djqyxxcx/index.html

  10. Website of Hebei AIC

  11. ID card examination • Learn information contained in the ID card number • Check with National Citizen Identity Information Centre

  12. Is there a Company Stamp? Company stamp: • Chinese Name must be SAME as on business licence; • With a five-pointed star in the middle and in red ink; • With a diameter of no more than 4.5cm; • Filed with competent public security bureau; • Equals to signature of person authorized to sign on behalf of the company in Europe

  13. Verify the other mandatory documents! • Landlord of your office • Ownership certificate – is the office allowed to be rented for commercial purpose? • On Importer • Import licence for the goods – some type of goods can be subject to licence • Supplier • Special permit for manufacturing the product • Report from Quarantine and Commodity Inspection Bureau when exporting from China • Distributor • Distribution permit – for certain products a special distribution permit is needed eg. food • Service provider • Permit for the specific service

  14. Special Permit for Food Distribution Verify the other mandatory documents!

  15. Get information of their financial status Creditworthiness Letter • Both for the company and its shareholder(s) • Issued by bank upon request of the partner Capital verification report, financial statements and audit reports • Under certain circumstances financial statements may be obtained at the Administration of Industry and Commerce (local branch)* Credit history • Applied by partner itself at Credit Reference Centre of PBOC Bank Account • Always ask for company account

  16. Company Operations • Pay a visit at the company's premises – go a few times, sometimes unannounced • Organisation • Cleanliness • Employee conditions • Location • Visit the distribution network • Talk with employees and pay attention whether they understand their business • Talk to suppliers, neighbours, competitors • Check if it is a member of any official association and contact the association for reference

  17. List of most common scams • An unsolicited requestand paymentof facilitation fees, unknown taxes, gifts • Goods being sold far below market value • Payment into an unknown bank account

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