China Justice Observer

中司观察

EnglishArabicChinese (Simplified)DutchFrenchGermanHindiItalianJapaneseKoreanPortugueseRussianSpanishSwedishHebrewIndonesianVietnameseThaiTurkishMalay

How to Spot a Fake Chinese Company?-CTD 101 Series

Thu, 15 Dec 2022
Contributors: Meng Yu 余萌
Editor: C. J. Observer

In practice, there are four common types of fake companies: non-existent companies, companies with abnormal business operations, companies with no previous business, and companies in no community.

This post was first published in CJO GLOBAL, which is committed to providing consulting services in China-related cross-border trade risk management and debt collection. We will explain how debt collection works in China below.

 

1. Non-existent company

To determine the existence of a Chinese company, you’d better get information of its business license.

Furthermore, one should ensure that when referring to this Chinese company, transaction documents all specify its legal Chinese name, which should be consistent with that on its business license.

Many of our clients have encountered Chinese companies with only English names, whose Chinese names provided do not exist in the Chinese Enterprise Database.

In this case, should a breach of contract or fraud arise, you will not be able to indicate to the court whom you lodge a claim against.

2. Company with abnormal business operations

Some companies have not been operating at their registered address for long. If a company cannot be found by the company registration authority, it will be included in the list of abnormal business operations.

And naturally, if the company cannot be found by the company registration authority, its customers may not be able to find it after payment either.

3. Company with no previous business

Some companies have almost no business, which means they are incompetent in specific performance.

Typically, such a company has few assets for contract performance and its capacity to perform is fully dependent on its shareholders. Under the shield of the company’s limited liability principle, its shareholders cannot be required to perform.

4. Company in no community

No peers know the company and the company is not a member of any association or chamber of commerce, as if it is in isolation.

In short, be alert to these four types of companies, as they are very likely to be fake companies.

 

 

* * *

Do you need support in cross-border trade and debt collection?

CJO Global's team can provide you with China-related cross-border trade risk management and debt collection services, including: 
(1) Trade Dispute Resolution
(2) Debt Collection
(3) Judgments and Awards Collection
(4) Anti-Counterfeiting & IP Protection
(5) Company Verification and Due Diligence
(6) Trade Contract Drafting and Review

If you need our services, or if you wish to share your story, you can contact our Client Manager Susan Li (susan.li@yuanddu.com).

If you want to know more about CJO Global, please click here.

If you want to know more about CJO Global services, please click here.

If you wish to read more CJO Global posts, please click here.

 

 

Photo by Zhang qc on Unsplash

 

 

 

Contributors: Meng Yu 余萌

Save as PDF

You might also like

China Enhances Legal Aid Law Implementation

In November 2023, China’s Supreme People’s Court and other top judicial bodies jointly issued measures to implement the Legal Aid Law, clarifying responsibilities and ensuring parties' rights to legal aid.

China’s Wenzhou Court Recognizes a Singapore Monetary Judgment

In 2022, a local Chinese court in Wenzhou, Zhejiang Province, ruled to recognize and enforce a monetary judgment made by the Singapore State Courts, as highlighted in one of the typical cases related to the Belt and Road Initiative (BRI) recently released by China’s Supreme People’s Court (Shuang Lin Construction Pte. Ltd. v. Pan (2022) Zhe 03 Xie Wai Ren No.4).