Finding a trustworthy business partner when exporting, importing or investing is always a mix of good luck, common sense and thorough investigation.

The EU SME Centre has been stressing the importance of asking to see the business licence of the potential partner. However, recently we have received several enquiries concerning business partners registered in Hong Kong but stating a mainland address in the contract. This is generally the case when the actual factory and the effective seat of the Chinese partner are in mainland China while registration of the company (for different reasons – administration and taxes mostly) took place in Hong Kong. In the cases at hand, only a business licence from Hong Kong could be provided by the Chinese partner while the contract was stamped with a company chop showing a similar company name but an address in mainland China. In such cases it can be very difficult to track and decide the right jurisdiction.

The contract would very probably be considered as null when brought before Chinese jurisdiction and, when not properly executed according to Hong Kong regulations, it will be void according to Hong Kong law, too. We therefore strongly suggest paying attention not only to the name of the company and registered seat on the first page when concluding a contract, but to the last page of the contract, too, which bears the signatures and company stamps, and investigate who is authorised to sign on behalf of the company.

At the EU SME Centre, we have many resources guiding you on how to conduct background checks and preliminary due diligence.