International Due Diligence Key to Investing Abroad

An Expert's View about Foreign Direct Investment in China

Last updated: 24 Feb 2012

The internet and globalization has now reached the furthest corners of the world, and even central Africa and rural China and other closed societies are becoming connected to the global market place, in one way or another.  Overpopulation and the universal access to the internet has changed the playing field, and now individuals and businesses are armed with more information, more opportunities, and more prospective business partners and investments.  But, this isn’t all that has seen an increase.  Business fraud and scams are up sharply, so the potential opportunities do not come risk free.  Verifying international business partners and companies is now more important than ever.  Ignoring the risk can be a costly learning experience for investors.


International private investigators and law enforcement agencies such as the FBI and Interpol say that scam techniques originating from the internet are growing complex, and more organized.  Scam victims include doctors, lawyers, university professors and CEO’s of major corporations.  Internet scammers and criminals conducting business fraud are good at what they do, and anyone can be a victim.  Criminals often initiate contact through a third party contact, a social networking site like Linkedin, or even an unsolicited email or phone call, or through a trade post online.  Scammers present attractive business opportunities, profitable investments or excellent outsources or supplier offers.  They may understand your industry, present supporting documentation and evidence, and have an impressive website.  But, if you’re an individual or company based in New York or Chicago, how do you really know this person or business based in Shanghai or Hong Kong or Accra or Kuala Lumpur is truly what it claims to be?  Verifying the facts and screening companies and managers is essential.


These days, anyone can build a professional looking website.  False companies in China can even be listed on the NYSE, so if they are legally registered, and a publicly traded company, how could it be fraud?  Simple.  Business registration is easy to do.  In some cases, a company may be real but report false numbers and operations that simply don’t exist.  Corporate “offices” can be PO boxes and so on.  A reputable investigation firm can conduct an international due diligence to verify management and owners, screen the case for fraud, check business registration and court records, search for any history of litigation, and research the company’s operations and reputation.  It is a wise insurance policy to have, and business leaders are increasingly relying on the service to make more informed decisions.  Knowledge is power after all, and investing blind is a bad idea.


Language, traditions, culture and geographical distance challenges can be hard to overcome when trying to screen a potential investment or partner.  Human Resources managers typically have no training in professional investigation techniques, and have no reason to have a trained, professional field investigator on the ground in the foreign country to inspect offices, facilities, etc.  Having an expert investigator on the ground where you need him is crucial.  A reputable international background check firm, such as Wymoo® International, must have investigators on the ground in the local market, who speak the same language, have local contacts with government agencies, who are trained to uncover evidence for clients, verify documentation, and identify risk factors.  In many cases, there is simply no other way to gather evidence and verify the facts.


To avoid financial loss, protect your company’s reputation, and avoid being a victim of identity theft or other business fraud, consult a professional investigation firm prior to engaging in business with an unknown person or company abroad.  Be smart and cautious.  Verify first, and then decide.


All the best,

John Wallace
© 2012  Wymoo International


Posted: 24 February 2012, last updated 24 February 2012

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