What is an irregular registration status for a Chinese company?
What: Chinese companies face increasingly strict rules and regulations, avoidance of which can place them in one or more irregular operational categories. The irregular registration status is one such important list.
Why: Understanding a company’s registration status (and other rankings) can help you make informed decisions about the relationship you’re planning on entering with the Chinese company. Research and due diligence activities are key to ensuring you have the most up-to-date information about a Chinese company.
We’ve previously covered the Chinese company’s registration status and its importance as well as how to identify changes to a Chinese company’s registration status. Below we’ve outlined some of the key irregular registration statuses (登记状态) in which a company could find itself, including:
Revocation of license (吊销)
Business closure (注销)
Business relocating (迁入、迁出)
Suspension of business (停业)
Liquidation of business (清算)
It’s important to note that even if a company finds itself with an irregular registration status, that doesn’t necessarily mean that it is a fraudulent entity or it is engaging in criminal activity. China is a massive country with a plethora of major cities and other provinces, so sometimes the information in changes to a company’s registration status may take time to reach the appropriate government body and be updated in the correct systems. Also given the number of types of business entities operating in China, and the changes that occur almost daily, it’s important to conduct due diligence to ensure that the information you’re receiving one day is in fact correct the following day.
While there is no English-language search service for company registrations in Mainland China, there is a free nationwide Chinese-language search website for searching company registration details known as the National Enterprise Credit Information Publicity System. In addition, you can investigate a company’s status by researching the State Administration for Industry and Commerce’s (SAIC’s) various local websites.
It’s also important to understand the abnormal business operations structure and the restrictions that a company can face should it find itself on that list. This is in contrast to the dishonest practices database which also is in operation. Each of these aspects represents an important dimension of the research and due diligence that you should conduct.
Questions? We can help. At Nuna Network we offer a variety of valuable guides, tips, and other practical information to help you navigate the sometimes complex landscape with Chinese businesses. We remain the partner of choice for small- and medium-sized businesses seeking guidance in researching, developing, and launching relationships with companies in China. We are your go-to resource for valuable information in navigating the sometimes complex landscape of business operations in China.
In addition, Nuna Network offers a range of validation, verification, and due diligence products and services that can help you determine the authenticity of a range of many other documents that are a part of establishing a business relationship with a Chinese company.
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