Due Diligence is Serious Business When Investing in China

As the holidays approach and everyone has begun the final run for 2012, scammers and criminal operations in China are more active than ever. As North America works to achieve a trade agreement in Asia, no matter how unlikely it may seem, there is no question that the U.S. and China are interlocked with U.S. treasuries and the huge dollar reserves owned by China. We are enemies that are locked together, each impacting the other and unable to let go due to our economic relationship. China’s economy is still rapidly expanding compares to most nations, and as foreign investment in the country grows, so too is the risk for fraud and business scams.

Money transfers, online banking, fake stocks, fraudulent suppliers, and endless other combinations of fraud are present and growing in China. For those who have not been to China and who do not speak Chinese, verifying an international opportunity or investment there can be nearly impossible. But with the scam victims piling up, the word is out that China may offer great opportunity, but it also poses serious challenges and business risk. Reputable China private investigators like Wymoo® International say that any new relationship in China, whether it’s a business manager or a CEO or a government representative, should be verified. In order to verify reputation, operations, financial condition, business registration and other legal filings and risk factors, it’s essential to have someone on the ground who speaks the same language, knows the culture and government contacts, and can provide you with the hard evidence you need to move forward.

In 2011, fraudsters have been moving large sums of money from the U.S. to banks and fake companies in China, and as the new year approaches, other countries are being included as part of a vast international crime organization. China criminals often have accomplices in other developing countries ranging from Southeast Asia to West Africa. Accounts are often set up using false credentials, and money is taken out the moment it is received, wired abroad and never to be found again. The network of money laundering and shell companies, some of which can even be listed on a major stock exchange, are taking investment scams to a new level of sophistication.

The modus operandi for many criminals operating in China who target investors in the U.K., U.S., Canada and Australia is that they register a company legally to avoid suspicion (easy process to do). Then, the criminal group will set up a virtual office or P.O. box in one or more countries to appear like a brick and mortar company. Next, the company will create a very professional looking and convincing website. Then, criminals will begin to target their prey, and this can happen in many subtle ways that often lead the victim to believe that a scam just isn’t possible.
Business is expanding to countries many can’t even locate in an Atlas. China is booming and everyone is rushing to get in, throwing caution to the wind. Experts say the environment is ripe for the criminals who are expanding here. Don’t be a victim of business scam these days or through 2012. International due diligence is a smart way to lower the risk, and to be more informed before making an important business decision. It can make the difference between major loss and profitability. It can mean building meaningful relationships, or becoming a victim.

All the best,

S. Birch
© 2011 S. Birch