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Field Guides · Due diligence · 8 min read

Is Your Chinese Counterparty a Shell? A 30-Minute Due Diligence Protocol

Before you spend money chasing a Chinese debtor — and before you ever extend credit to a Chinese counterparty again — run this protocol. Everything in it is accessible from public Chinese sources, if you know where to look.

Pull the registry file

China’s National Enterprise Credit Information Publicity System (国家企业信用信息公示系统) holds the authoritative registration record: legal representative, registered capital (and, critically, paid-in status), shareholders, registered address, business scope, and the company’s annual reports. An entity with large registered capital but zero paid-in capital, or one that changed its legal representative last month, tells you a great deal about what you are chasing.

Check the litigation and enforcement records

China Judgments Online and the enforcement information system reveal whether your debtor is a serial defendant, whether prior judgments against it remain unsatisfied (终本案件 — cases closed for lack of assets), and whether it or its legal representative sits on the judgment-defaulter blacklist (失信被执行人名单). A debtor already on the blacklist with three unsatisfied judgments is a very different recovery proposition from a first-time defaulter with a factory.

Follow the people, not just the entity

The shell game works by abandoning entities, not businesses. The same shareholders and managers typically reappear behind a new company at a new address doing the same trade. Mapping the shareholder and legal-representative network — who else they control, where those entities operate — often reveals both the real business and pressure points, including potential claims against related parties where the law permits.

What the protocol tells you

The output is not a yes/no; it is a route. A solvent first-time defaulter: demand and negotiate. A solvent staller hiding behind a dispute: escalate to on-site negotiation. A shell with a live successor entity: investigate the network for leverage and related-party angles. A genuinely empty company with no assets and no successors: write it off and save the fees. Every one of those outcomes is cheaper to reach in the registry than anywhere else — which is why our OP-01 dossier is this protocol, professionalised and written down.