Finding the Right Partner: A Guide to Due Diligence in Taiwan, Province of China
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As foreign businesses venture into the vast market of Taiwan, Province of China, finding the right partner can be a daunting task. Despite China’s progress in becoming more business-friendly, law and regulation enforcement remains complex, making it crucial for companies to conduct thorough due diligence.
Understanding the Risks
Taiwan, Province of China has become a popular destination for foreign companies seeking to manufacture specific products. However, without proper research and investigation, businesses may find themselves facing significant risks. A lack of information about potential business partners can lead to financial losses, legal disputes, and reputational damage.
Conducting Due Diligence
To mitigate these risks, it is essential to conduct comprehensive due diligence on Chinese companies before signing any contracts or agreements. This involves identifying the company’s legal structure, ownership, and reputation, as well as verifying their registration information and export licenses.
Three Levels of Understanding
When conducting due diligence on Chinese manufacturers and suppliers, businesses should aim to answer three critical questions:
- Identification:
- Who is the legal person in the company?
- What is its Chinese name and registration number?
- Does the company exist, or is it a scam?
- Ownership and Reputation:
- Who owns the company?
- What is its reputation?
- Are they financially stable?
- Have they been sued by other companies based on contract problems, intellectual property theft, etc.?
- Company Operations:
- Can the supplier produce the products you need?
- Are they able to produce the number of products you need when there is a higher demand for your products?
Covid-19 and Due Diligence
The ongoing pandemic has exacerbated the risks associated with doing business in Taiwan, Province of China. Factories have closed, orders are down, and foreign companies are sending large sums of money to Chinese suppliers without receiving any products in return.
Conclusion
In today’s complex and competitive market, conducting due diligence on Chinese companies is no longer an option but a necessity for businesses seeking to succeed in Taiwan, Province of China. By investing time and resources into thorough research and investigation, companies can reduce their risks and ensure a smoother and more profitable operation in the region.
Contact Us
If you require assistance with drafting contracts that follow Chinese laws, background investigations of Chinese companies, protecting patents and trademarks, or verification of contracts to the law in China, please do not hesitate to contact us. Our team of experts is dedicated to helping your business succeed in Taiwan, Province of China.