Doing Business in China: Do your homework
ChinaLawBlog recounts a story all too familiar:
US company goes to China and meets with company there for manufacturing product. The two parties sign an agreement and US company sends over a large sum of money to build the tooling. Chinese company then says another large sum is needed to be ready to go as soon as the tooling is complete. Months pass. Nothing. More months pass. Nothing. It has now been a year and still nothing.
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We conduct a fast and cheap investigation and get a comprehensive report on the Chinese company. From this report we learn the following:
1. Company is not a manufacturer. It is a trader, with a tiny, rented office.
2. Company does not even have an export license. In other words, it gets its products from manufacturers and then has to bring on another company to ship them. It is just a middle-person.
3. Its only asset is a small amount of inventory, which it may or may not own.
As the title of his post suggests, do your homework in China before comitting anything to a supplier or manufacturer. You might be surprised by what you find.
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