In the last two years, Kreller has completed over 350 reports in China, including more than 100 Level A reports and over 150 custom or special corporate investigations, such as ethical sourcing, corruption, grey market, conflict of interest, and lifestyle inquiry investigations. This also includes Kreller Level B (in-depth investigation) reports and minor investigations.
Our lead investigator in China served over 20 years in law enforcement in China and Hong Kong. His work in the private sector began in 1995 and has specialized in due diligence, business intelligence, intellectual property protection, and risk management/protective services. His intimate knowledge of the local business culture provides a distinct advantage in sensitive corporate investigations. He has a postgraduate degree in International Politics and has a keen understanding of Chinese law and foreign policy.
To better understand the due diligence challenges in China, you need to know how to conduct proper due diligence in China. The investigators must be fluent in Mandarin, English, and Cantonese in both written and spoken form, which our lead investigator possesses.
The corporate registry is maintained in Chinese, and there can be more than one possible English language translation of a company name. Additionally, when a company name has a brand name, it will have no definitive English language translation. Suppose only the anglicized version of a company’s name is known. In that case, it can be challenging to reverse the process of obtaining the Chinese language name, significantly limiting the information obtained through government agencies.
Common names are a challenge in China, as the population in 2017 was approximately 1.4 billion. Although there are thousands of Chinese family names, the 100 most common are reportedly shared by 85% of the population. The three most common surnames in Mainland China are Li, Wang, and Zhang, which make up approximately 22% of the population, or over 300 million people. This creates challenges when researching individuals; while techniques can streamline media research, it can be difficult to distinguish the individual under investigation from name matches in media articles. For example, research on the common name “Li Wang” in our proprietary database produced over 70 name matches for various politically exposed persons and adverse media records, which did not include personal identifying information such as date of birth or ID number. As you can see, it becomes imperative to have identifying information other than a name when researching an individual.
Government ownership of businesses at all levels of government (e.g., central, provincial, and municipal governments) is widespread in China. The ownership structure of companies can be complicated, and government involvement in a company may only be evident once the investigator traces the ownership of a company entirely. Additionally, membership in the Communist Party and participation in civil service among the Chinese is also widespread. Most of these records do not include personal identifying information such as date of birth or ID number with which to eliminate these name matches.
It is often difficult to obtain quality Character and Reputation inquiries. This is attributed to the nature of conducting business in China and individuals' high suspicion and fear of such inquiries. As a result, companies and individuals are unlikely to respond to unsolicited Character and Reputation requests with meaningful comments.
Legal filings research on an individual is conducted using the individual’s ID number. However, Kreller also conducts a name-only search on the individual to ensure all pertinent records are found. The name-only search provides results of all cases in which the individual’s name appeared in the available records. For example, a name search was conducted on “Xia Li.” The results indicated that 321 cases involved that name. This does not mean that in all 321 cases, “Xia Li” is a Plaintiff or Defendant; it may mean that “Xia Li” is a witness in a case. Therefore, it is essential to have the individual’s ID number when searching legal findings for common names.
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In the last two years, Kreller has completed over 350 reports in China, including more than 100 Level A reports and over 150 custom or special corporate investigations, such as ethical sourcing, corruption, grey market, conflict of interest, and lifestyle inquiry investigations. This also includes Kreller Level B (in-depth investigation) reports and minor investigations.
Our lead investigator in China served over 20 years in law enforcement in China and Hong Kong. His work in the private sector began in 1995 and has specialized in due diligence, business intelligence, intellectual property protection, and risk management/protective services. His intimate knowledge of the local business culture provides a distinct advantage in sensitive corporate investigations. He has a postgraduate degree in International Politics and has a keen understanding of Chinese law and foreign policy.
To better understand the due diligence challenges in China, you need to know how to conduct proper due diligence in China. The investigators must be fluent in Mandarin, English, and Cantonese in both written and spoken form, which our lead investigator possesses.
The corporate registry is maintained in Chinese, and there can be more than one possible English language translation of a company name. Additionally, when a company name has a brand name, it will have no definitive English language translation. Suppose only the anglicized version of a company’s name is known. In that case, it can be challenging to reverse the process of obtaining the Chinese language name, significantly limiting the information obtained through government agencies.
Common names are a challenge in China, as the population in 2017 was approximately 1.4 billion. Although there are thousands of Chinese family names, the 100 most common are reportedly shared by 85% of the population. The three most common surnames in Mainland China are Li, Wang, and Zhang, which make up approximately 22% of the population, or over 300 million people. This creates challenges when researching individuals; while techniques can streamline media research, it can be difficult to distinguish the individual under investigation from name matches in media articles. For example, research on the common name “Li Wang” in our proprietary database produced over 70 name matches for various politically exposed persons and adverse media records, which did not include personal identifying information such as date of birth or ID number. As you can see, it becomes imperative to have identifying information other than a name when researching an individual.
Government ownership of businesses at all levels of government (e.g., central, provincial, and municipal governments) is widespread in China. The ownership structure of companies can be complicated, and government involvement in a company may only be evident once the investigator traces the ownership of a company entirely. Additionally, membership in the Communist Party and participation in civil service among the Chinese is also widespread. Most of these records do not include personal identifying information such as date of birth or ID number with which to eliminate these name matches.
It is often difficult to obtain quality Character and Reputation inquiries. This is attributed to the nature of conducting business in China and individuals' high suspicion and fear of such inquiries. As a result, companies and individuals are unlikely to respond to unsolicited Character and Reputation requests with meaningful comments.
Legal filings research on an individual is conducted using the individual’s ID number. However, Kreller also conducts a name-only search on the individual to ensure all pertinent records are found. The name-only search provides results of all cases in which the individual’s name appeared in the available records. For example, a name search was conducted on “Xia Li.” The results indicated that 321 cases involved that name. This does not mean that in all 321 cases, “Xia Li” is a Plaintiff or Defendant; it may mean that “Xia Li” is a witness in a case. Therefore, it is essential to have the individual’s ID number when searching legal findings for common names.
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Resume fraud has become a growing concern for employers worldwide. This practice involves hopeful employees fabricating their resumes to secure jobs, even though the information provided on the resume is inaccurate.
A major global retailer received a hotline allegation that underage workers were at a factory producing one of their suppliers in China. Kreller was asked to conduct a surprise audit, utilizing the right-to-audit clause in their contract.
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Our team is comprised of highly experienced due diligence consultants, investigators and business analysts around the world.
Kreller investigators bring diverse backgrounds and global perspective and experience, and detail-oriented mindset to their work. Our blog series highlighting employee expertise and insight continues with this recent conversation with Senior Analyst of Special Investigations, Zack DeGeorge.
Due diligence is the background research and analysis that informs business decisions like investments, partnerships, mergers, acquisitions, or sales.
Director-Partner Engagement, Former FBI Senior Executive, Intelligence Analysis, and Analytical Tradecraft Expert
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