Understanding a company’s registration status (and other rankings) can help you make informed decisions about the relationship you’re planning on entering with the Chinese partner. Research and due diligence activities are key to ensuring you have the most up-to-date information about a Chinese company.
We’ve previously covered the Chinese company’s registration status and its importance as well as how to identify changes to a Chinese company’s registration status. Below we’ve outlined some of the key irregular registration statuses (登记状态) in which a company could find itself, including:
- Revocation of license (吊销)
- Business closure (注销)
- Business relocating (迁入、迁出)
- Suspension of business (停业)
- Liquidation of business (清算)
It’s important to note that even if a company finds itself with an irregular registration status, that doesn’t necessarily mean that it is a fraudulent entity or it is engaging in criminal activity. China is a massive country with a plethora of major cities and other provinces, so sometimes the information in changes to a company’s registration status may take time to reach the appropriate government body and be updated in the correct systems. Also given the number of types of business entities operating in China, and the changes that occur almost daily, it’s important to conduct due diligence to ensure that the information you’re receiving one day is in fact correct the following day.
While there is no English-language search service for company registrations in Mainland China, there is a free nationwide Chinese-language search website for searching company registration details known as the National Enterprise Credit Information Publicity System. In addition, you can investigate a company’s status by researching the State Administration for Industry and Commerce’s (SAIC’s) various local websites.
It’s also important to understand the abnormal business operations structure and the restrictions that a company can face should it find itself on that list. This is in contrast to the dishonest practices database which also is in operation. Each of these aspects represents an important dimension of the research and due diligence that you should conduct.
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