As per the title, I’m looking to use a company in China for some interior design work.
How does one check on their financial stability/safety?
I would be spending a fair amount of money so it would be good to know that they’re financially ‘safe’, and not going to disappear with my money.
Well, in most countries you can pay to get solvency reports on companies but that is not necessarily any more sophisticated than checking their last set of filed accounts, which will be out of date, and checking their credit rating if they have one. However the recent financial meltdown in the western world has taught us that many companies manage to appear solvent on paper whilst in reality are on their arse financially.
things you could try would be asking to speak to former clients about their work and the solid-gold-it-works-anywhere-in-the-world tip of not paying them until the work is completed. If they won’t accept this then at least agree staged payments linked to stage completion milestones. If they won’t let you talk to former customers then run forrest run!
Generally, only public offerring companies disclose their financial statement. Moreover, in China, even listed companies can deliver frauded reports.
I agree with pungnan, install payment may be the better way with reduced counterparty risk and it’s common when doing business in China.
Of course, you can also negotiate to pay 30% down payment, and pay rest untill all work is completed and accepted.
I ended up contacting an auditor who checked with the city tax department. Turns out the company only made a half million in sales last year (in RMB) and none this year.
And the workers’ social income tax hasn’t been paid at all this year.
Signs of a failing company?
[quote=“Baas Babelaas”]As per the title, I’m looking to use a company in China for some interior design work.
How does one check on their financial stability/safety?[/quote]
The highlighted word should be a big red flag.