News

Due Diligence on China Companies

 

Confidental Due Diligence and Investment Screening

Financial statements and news releases alone aren’t sufficient to identifying appropriate investments in China.   There are many situations in which investors do not wish to identify themselves when they first consider a merger, acquistion, significant investment or RTO.  At all times, clients have their identity withheld in strictest confidence until (and if) more substantive interaction is desired.  My due diligence approach is uniquely tailored to each client’s needs, usually focused on one of the following aspects:  Site Visits, Strategy Evaluation,  and Executive/Board Evaluation. 

 

Not that brave though.............my experience when I was based in China in due diligence included many somewhat laughable events, but not the threat of jail time.  This seems to be changing.  This reflects the government's increased sensitivity to this issue.  The article In China, the Dangers of Due Diligence  from the New York Times, spells this out perfectly: Perils of Due Diligence

And the difficulty continues:  the approach taken by the authorities in China, of limiting access to information, is not the roadblock it may appear.  Given that the information is likely, ahem, based only on truthiness, due diligence is not that significantly affected.   The Article in China Law and Practice highlights what, on the face of it, may be a problem:

 

Roadblocks to corporate due diligence
Company records were once easy to access in China, but a series of high-profile scandals
in 2012 have caused a clampdown. John Kuzmik and Xu Changrong look at how the SAIC
has to strike a balance between privacy and legitimate public access to corporate records
Issue: November/December 2013