Guide – Risks and How to Manage: Taking Investment from China

UK Government | Nov 11, 2020

A guide for UK digital and tech businesses receiving investment from China, the risks you should be aware of and how to manage them.


Receiving investment from China presents significant opportunities for UK digital and tech businesses to grow and to improve their reach and expertise, but there are challenges to be aware of. You may need specialist advice on the legal, commercial and ethical risks when engaging with Chinese entities. This site offers you a starting point to successfully accept investment from China including, the risks you need to be aware of, what you can do to manage them and where to get further advice.

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Before Accepting Investment from China:  Ask Yourself These Questions
  1. Do I want to use investment to grow my business, or to fund my expansion into China?
  2. Have I discussed the possibility of securing investment from China with existing shareholders, investors and key stakeholders?
  3. Am I fully aware of regulatory requirements for working with Chinese investors, such as anti-money laundering regulations and China’s rules on outbound investment?
  4. Have I registered my intellectual property for the China market? This might include filing patents, registering trademarks or obtaining copyright protection.
  5. Have I conducted due diligence on potential investors?
Who introduced you to, or made you aware of, the company? What checks have they done and how reliable are they? Checking corporate filings is helpful, but superficial. Do not rely on global blacklist databases, as they rarely capture Chinese names accurately and can generate false positives. What services does the company provide? Are they integral to my business and how much value do they add? What else can I do to understand the risk profile of my partner company? Ask a Chinese-speaking colleague or contact to spend some time on Baidu or Google researching the company. This will help to detect any issues of concern such as court cases, bribery allegations, or unexpected commercial or political ties.

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What can I NOT find out in China? Public records are limited in China. It is important to be aware that it is illegal to obtain full paper corporate filings held by the AMR business registration authorities (these contain financial data and other information beyond that in the public accessible online version), individual household registration records and a complete list of an individual’s corporate interests.

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