It is advisable to conduct counterparty due diligence to more securely enter into transactions with new suppliers and customers, as well as to ensure cooperation with law-abiding partners. This approach also allows you to make informed and best decisions when selecting suppliers and customers, which helps improve business efficiency.

There are many services and databases that will be useful when vetting Chinese companies. The following are the main services to look out for when conducting counterparty due diligence.

STATE SERVICES AND DATABASES

State-wide open registry
Internet site: https://www.gsxt.gov.cn/

The authority responsible for the registration of business entities is the General Administration of State Administration for Market Regulation of the PRC. It administers various legal forms of organizations such as enterprises, partnerships, sole proprietorships and sole proprietorships.

The register contains basic information on enterprises, including:

Basic information: official name, unified code of public creditworthiness (registration number), type of entity, amount of authorized capital, name and surname of legal representative, date of establishment, status (active activity, temporary suspension, liquidation process or deregistration), location (legal address), subjects of activity (specific activities specified in the statute).

Information on participants: names of individuals and organizations that are participants of the organization.

Management data: this section will contain the names of the members of the board of directors (or executive director if the board of directors has not been established), members of the supervisory board (or observers if this board has not been established), and the general director (managing director).

History of changes: information on changes to the registration data, including changes in membership, management, name, address or subject matter.

If an enterprise is included in the list of organizations with irregularities ("grey list") or the list of enterprises with serious offenses ("black list"), such information will be reflected in the state register. In addition, the register may contain data on branches, shareholdings in other organizations, intellectual property rights, licenses, inspections, administrative penalties and debts for the enforcement of court decisions.

In order to get full access to the information, it is required to go through the registration process on the website, during which it is necessary to provide a Chinese phone number and ID number. In the absence of registration, only basic information about the counterparty will be available.

Since 2014, registration authorities in China have been required to enter most information about business entities upon their registration or upon the occurrence of data changes into an open registry. In addition, all business entities are required to submit an annual report and timely disclose certain information (e.g., payment for equity interests and transfer of interests in the company), which must also be included in the registry.




REGIONAL REGISTRIES

In China, in addition to the national public registry of business entities, there are also regional online portals designed to disclose information on the creditworthiness of enterprises. Regional registries usually contain duplicate data from the national registry, but may also include additional detailed information that is not disclosed at the federal level but is required to be disclosed under existing regulations.

As an example, the registries of three major cities:
(do not operate outside the PRC)

Beijing Regional Registry

Internet portal for disclosing information on the creditworthiness of enterprises in Beijing
Website: http://qyxy.scjgj.beijing.gov.cn/

Internet portal of Credit China (Shanghai)
Website: https://credit.fgw.sh.gov.cn/

Ceredit Shenzhen (深圳信用网) portal
Website: https://www.szcredit.org.cn/

JUDICIARY IN THE CPN

Website: https://wenshu.court.gov.cn/

China Judgements Online (中国裁判文书网) is the official online portal for judgments and rulings issued by Chinese courts. The service was developed and is maintained by the Supreme People's Court of the People's Republic of China to increase the transparency of the judicial system and provide access to the acts of the people's courts that have already entered into force.

The online portal publishes all valid court decisions, rulings and judgments, except for the following categories:
a) Acts affecting state secrets or privacy;
b) sentences in criminal cases involving minors;
c) determinations in cases finalized by the conclusion of an out-of-court agreement;
d) other judicial acts not subject to publication in accordance with the legislation.

According to the current rules, when publishing judicial acts, the names of individuals involved in certain types of cases (e.g. inheritance disputes, disputes in family cases, certain criminal cases) are deleted. However, the names of the parties remain in the court acts, which makes it possible to check the history of civil cases of companies (disputes with counterparties) and administrative cases (disputes with state authorities).



REGISTER OF BAD DEBTORS

Website: http://zxgk.court.gov.cn/
 (not available outside the PRC)

In 2013, the Supreme People's Court of the People's Republic of China established a register of bad faith debtors to publish information on individuals and organizations that refuse to voluntarily execute court orders. Specifically, the registry includes information on individuals who fail to pay monies ordered by court judgments to others.

The bad debtor registry includes persons who have the ability to execute a judgment or determination but instead:
a) attempt to falsify evidence, hinder the execution of judicial acts by means of violence or threats of violence;
b) evade execution by concealing their property;
c) refuse to provide information about the property;
d) violate the order on limitation of consumer expenditures;
e) refuse to fulfill a previously concluded settlement agreement.

Once an organization is included in the register of unscrupulous debtors, its participation in public procurement, tenders, obtaining licenses and permits, and receiving subsidies is subject to restrictions by government agencies. Moreover, information on the inclusion of the organization in the register is transferred to credit bureaus and financial organizations. Given its presence in the register, an organization cannot be considered a reliable counterparty, so when conducting an audit, it is necessary to find out whether it is an unscrupulous debtor.


CUSTOMS CREDITWORTHINESS SYSTEM

Website: http://credit.customs.gov.cn/

Enterprises engaged in exporting or importing goods or providing customs representative services must register with the PRC Customs. After registration, information about the enterprise is entered by the General Administration of Customs of the PRC into the customs creditworthiness system ("enterprise export and import creditworthiness disclosure platform").

The information of enterprises that have been registered with the customs is contained in the customs creditworthiness system. This information includes the name of the enterprise, date of registration, customs office, status (consignor/consignee or customs representative) and the presence or absence of offenses. In addition, the official website lists enterprises that are authorized economic operators, enterprises with serious offenses, and enterprises that have lost credibility.


INFORMATION ON PLEDGE OF MOVABLE PROPERTY

Internet site: https://www.zhongdengwang.org.cn/

The Credit History Center of the People's Bank of China is responsible for the registration and disclosure of pledge of movable property and property rights. From the beginning of 2021, this function also includes the registration of pledge of movable property and property rights.

The web resource of the credit history center has data on the registration of pledge registration of movable property such as production equipment, raw materials, semi-finished goods, finished goods, claim rights, certificates of deposit and warehouse and other movable property rights.

Generally, the registration of a movable property pledge means that the counterparty has raised a loan using its property as collateral. The existence of outstanding loans and the bank's ability to demand repayment of pledged property from a Chinese company should be considered when establishing a business relationship with the company.


WEBSITE REGISTRATION VERIFICATION

Website: https://beian.miit.gov.cn/

Under current regulations, any website created in the PRC must be registered (ICP registration). All websites created in the PRC are listed on the website of the Ministry of Industry and Informatization of the PRC (beian.miit.gov.cn).

The website beian.miit.gov.cn allows you to check whether a Chinese company's website has been registered by domain name or organization name. In this way, you can verify that the Chinese company complies with the legal requirements of the PRC and conducts its business in China. If the website is not registered in the PRC, it is most likely owned by a company overseas that is not located in China.



COMMERCIAL SERVICES

In addition to government registries and databases, the PRC has several
commercial counterparty verification services.

QCC (企查查)
Internet site: https://www.qcc.com/
(some do not operate outside the PRC)

QCC (Qichacha, 企查查) is one of the main counterparty verification services in the PRC. Registration on the website is required to obtain detailed counterparty information.

Under current regulations, any website created in the PRC must be registered (ICP registration). All websites created in the PRC are listed on the website of the Ministry of Industry and Informatization of the PRC (beian.miit.gov.cn).

The website beian.miit.gov.cn allows you to check whether a Chinese company's website has been registered by domain name or organization name. In this way, you can verify that the Chinese company complies with the legal requirements of the PRC and conducts its business in China. If the website is not registered in the PRC, it is most likely owned by a company overseas that is not located in China.



COMMERCIAL SERVICES

In addition to government registries and databases, the PRC has several
commercial counterparty verification services.

QCC (企查查)
Internet site: https://www.qcc.com/
(some do not operate outside the PRC)

QCC (Qichacha, 企查查) is one of the main counterparty verification services in the PRC. Registration on the website is required to obtain detailed counterparty information.

TIANYANCHA (天眼查)

Website: https://www.tianyancha.com/
(closed to overseas users)

Another commercial service in the PRC that provides information on Chinese companies and sole proprietors. Tianyancha is only available within the PRC.

Different sources and methods are used to collect information on commercial services, such as automatic data collection from official registers and websites of government agencies. However, the variety of technologies used can affect the accuracy and completeness of the information obtained. When searching for basic information, the probability of errors is low, but for reliable verification of the counterparty, it is recommended to compare the obtained data with the data specified in the state registers.

Ensuring the reliability of Chinese partners is an indispensable stage of successful business and cooperation, as it provides an opportunity to avoid potential risks, assess the financial stability and reputation of companies, as well as to ensure compliance with the law.