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Checking and Cutting Ties with a Chinese Supplier Insights from Red Star Detective Agency

Checking and Cutting Ties with a Chinese Supplier Insights from Red Star Detective Agency

Checking and Cutting Ties with a Chinese Supplier Insights from Red Star Detective Agency

Project description:

Summary:

Company A, a foreign company, engaged Company B, a Chinese supplier, for their products. As Company A increased its orders, Company B changed its pricing and payment terms, leading to delays in product delivery. Suspecting issues, Company A hired the Red Star Detective Agency to investigate Company B. The detectives examined Company B’s history, financial status, and connections, revealing several concerning findings.

Key Highlights:

 

  • Company A hired Red Star Detective Agency to investigate their Chinese supplier, Company B.
  • Company B, owned by two local companies, had a troubled financial history with no sales and unpaid taxes for certain years.
  • The detectives found that Company C was operating from the same address as Company B, sharing office space and personnel, indicating a connection between the two companies.
  • Company B had been poorly managed for an extended period and was losing money, making it unable to pay its debts.
  • Company A decided to terminate its business relationship with Company B upon discovering these issues.
  • The advice from Red Star Detective Agency is for foreign companies to exercise caution when dealing with Chinese partners, especially when they have multiple company names. They should thoroughly understand the connections between these companies, assess their production capacity, and monitor their business practices to avoid unnecessary financial losses. Promptly investigating and addressing unusual behavior in their Chinese partners is also crucial.
Checking and Cutting Ties with a Chinese Supplier Insights from Red Star Detective Agency

Case details:

Company B from China was a supplier to Company A from a foreign country. Lately, as Company A increased its orders for new stuff, Company B started charging a lot more and asked for different payment terms. Even though Company A paid, they didn’t get their products on time. So, Company A thought something might be wrong and got the Red Star Detective Agency to look into Company B, their Chinese supplier. The detectives wanted to know about the people who invested in Company B, how they were doing financially, how the company was running, and where and how they were selling their stuff.

The detectives found that Company B was still in business, but they didn’t want any visitors. They figured out that Company B started in 2008 and was owned by two local companies (a local partnership). But their financial records showed they didn’t make any sales in 2009 – 2010. When the detectives talked to the local tax office, they found out that Company B didn’t pay any taxes during the same time. This raised two big questions: 1. Company B was still running but didn’t seem to be selling anything. 2. Their financial records showed no money coming in during 2009 – 2010, even though they had to get checked every year by the local business authority.

With this info, the detectives dug even deeper into the company. They asked about the people who invested in this Chinese company. One shareholder said that the person who was supposed to be the boss didn’t own any shares, and other shareholders took back their investments. Also, the info about the boss and the shareholders didn’t change from when the company was first registered, and there were no updates about the shareholders and the boss. The detectives also found that another Chinese company called “Company C” was working from the same address as Company B. It turned out that Company C shared the same office and workers as Company B. The boss of Company C was the nephew of the boss of Company B. So, these two companies were connected.

After all this checking and going to see things for themselves, the detectives figured out that Company B was a real company but was managed badly for a long time. People from Company C were doing business for Company B. But Company B wasn’t doing well financially and had been losing money for a while. They couldn’t pay their debts.

When Company A found out all this, they had a meeting and decided to stop working with Company B.

The advice from the Red Star Detective Agency in China is this: When foreign companies do business with Chinese partners, they should be super careful. If they’re dealing with a customer who has two company names, they need to make sure they know how these two companies are connected. They should also look at how much the company can produce and how they’re really doing business. That way, they can avoid losing money for no reason. If a Chinese partner starts acting weird, like changing their accounts, their shareholders, or not delivering stuff on time, it’s important to find out what’s going on quickly and come up with a plan to deal with the problems and risks in the business.

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