The number of fraudulent cases revolving around companies and organizations in China was significantly alarming last year. As a company whose operations involve other Chinese companies whether as clients or suppliers, this was major news to us. We stand behind our due diligence process to protect the company from fraud and delinquents. The term Due Diligence is commonly associated with mergers and acquisitions to ensure value opportunities for both parties. In the world of business, there is no standard when it comes to the process but there could be multiple variations and templates depending on the company.
Due Diligence can be quite complex as it covers a lot of ground. There are four major areas due diligence covers namely financial, operational, legal and strategic. All these areas are assessed by the process to gauge progress, success and potential failures for the benefit of the company and its partners.
We mainly perform due diligence revolving around the concept of legalities. It is safe to say our process is so simple. We only do minimal assessments such as permits and certifications to make sure our clients and suppliers are legal to operate their services. Certifications are also necessary to further prove their credibility and assure we are dealing with authentic clients or suppliers.
The company also checks at least three key products the manufacturer, supplier or client are responsible of. It would be easy for our company to verify their work quality through their most notable products. If they are still new to the industry, we can use their website to research about their company and services, but we cannot include any information of the website to be used in our due diligence report because of its biased nature.
We conduct due diligence not only for checking the authenticity and legitimacy of people we work with, but we are also doing this vital process to look for potential suppliers, manufacturers, and clients we would like to work with, in the future. This process is a great way for us to assess who are the companies we want to have steady relations and further nurture these relationships to become good business partners.
To sum it all up, performing proper due diligence is a necessary process for companies to avoid disastrous acquisitions, legal battles, and other fraud cases. Depending on the size of your operations, you do not really have to cover the four major areas but simply stick to your company’s needs the same way how we do it here in our company.
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