Due Diligence Studies

• Due Diligence Services

Investment projects in China are connected with a range of questions to be answered and tasks to be performed. The following table provides a list of such questions and tasks, and also provides the services Fiducia can provide regarding the respective matters. The description does not necessarily follow chronological order.

During the decision making process it is imperative for foreign companies to have available, reliable and precise data about their potential Joint Venture or co-operating partner.

Generally speaking, it is difficult in China to obtain reliable information from the potential partner or from third parties. Reports from credit agencies in China are not of the same standard as those available for example in Europe. Furthermore, corporate data is only partly available for public inspection (possibly not up to date) or is classified as "internal" and thus not available to outsiders.

Audit firms are often engaged to carry out a due diligence study. Experience has shown that auditors primarily concentrate on the key financial data, e.g. profit & loss account and balance sheet. However, later it transpires that the accounts do not reflect the actual situation of the company.

Fiducia has experience in carrying out due diligence analysis in China. These may for example entail:

Economic background of the company Core activities and "other" activities Connected companies Business politics in marketing and Sales. Business success on the basis of contacts or competence? Market position SWOT analysis, e.g. in purchasing, production, administration, marketing, sales, after sales service Productivity the actual existence of a distribution structure and its efficiency

reputation with clients / suppliers mortgages and debts long-term contractual obligations value of fixed assets competence of the company and its key management Personnel structure: qualification and relation/ guanxi of the management (including business dealings with relatives) motivation factors for management and staff

Success is based on our proven research methods plus an extensive network of informants in China. Where possible, information gathered is cross checked with third parties.

Subject to the clients instruction, the due diligence analysis will be carried out using one of the following methods:

• Open, meaning our activities are known
• Anonymous, concealed