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Due Diligence in Finance: A Must-Know for US Companies in Japan
Despite Japan’s reputation for fair dealing, there are still instances of companies that may be less than scrupulous or have legitimate but concerning business or financial problems. For US companies, navigating the complexities of doing business in Japan can be challenging, especially when it comes to obtaining trade financing and credit.
Importance of Due Diligence
While Japanese law does not require US companies to use a local attorney for filings, registrations, contracts, or other legal documents, retaining a competent lawyer is essential for success. In fact, establishing due diligence procedures is crucial for evaluating the bona fides of Japanese agents, distributors, and customers.
Benefits of Due Diligence
By conducting thorough background checks on potential business partners, US companies can:
- Reduce the risk of dealing with unscrupulous or financially troubled entities
- Identify legitimate concerns or issues that may impact their business relationship
- Make informed decisions about partnerships and investments
- Comply with regulations such as the Foreign Corrupt Practices Act of 1977
International Company Profile (ICP) Service
The US Commercial Service in Japan offers an ICP service designed to help US companies evaluate potential business partners by conducting company background checks. However, it’s important to note that this service should not be considered a substitute for a comprehensive due diligence review.
US Commercial Service: A Valuable Resource
The US Commercial Service is a valuable resource for US companies looking to expand their global reach. With offices in over 75 countries and a network of experts across the United States, the agency provides international marketing expertise and support to help US companies sell their products and services worldwide.
For more information on how to find a trade specialist near you, visit export.gov/usoffices.