Safeguarding Business Operations in China

The Collaboration of Loudon Far East and the Financial Service Provider

Loudon Far East (LFE) has a wealth of experience in the Chinese market and has witnessed various instances of embezzlement practices that often go undetected. Understanding the need for a comprehensive PDD service, LFE has joined forces with a reputable professional accountancy firm with qualified experts, including members of prestigious accounting bodies. This unique partnership leverages LFE's expertise and connections with police authorities to gain insights into criminal records, where necessary.

Requirements for a Pre Due Diligence (PDD)

The PDD service offered by LFE and this professional firm examine not only the financial aspects of a company but also delve into its internal policies, processes, and informal business practices. This in-depth examination is necessary because, in China, company law and auditing rules may differ from Western counterparts due to cultural and working style differences. The PDD service serves as a crucial preparatory step before engaging expensive Accounting and Legal firms for formal Due Diligence.

Identifying Red Flags and Preventing Financial Malpractices

The PDD service aims to identify potential red flags and financial malpractices that may jeopardize a company's investments. It investigates whether a Chinese entity maintains a separate financial administration, the role of accountants in the company's financial practices, and potential risks during transitions between accountants. The importance of regular internal audits, independent controller outsourcing, and "Trust But Verify" philosophy is emphasized to ensure good business practices. 

The service offers insights into background checks of General Managers and Accountants, looking beyond their CVs to ascertain their business history and potential conflicts of interest. Additionally, the PDD scrutinizes cross-border forex transactions and accounting practices according to China's GAAP, which differs from IFRS but is comparable to other national GAAPs.

Components of the 'Loudon Far East & the Financial Service Provider' PDD

1. The PDD service involves a systematic examination of various factors, including:
2. Frequency of previous audits and their findings.
3. Investigation of approved suppliers, vendors, and clients, along with their associations with the client company's employees.
4. Identification of financial malpractices that divert funds away from approved recipients or investors.
5. Examination of shared bookkeeping processes and financial accounting systems for different commercial entities.
6. In-depth background checks of the China owners and key staff involved in the client's operations.

Do what it takes!

The exclusive PDD service offered by Loudon Far East and the financial service provider is a proactive and essential tool for businesses operating in the Chinese market. By scrutinizing financial practices, internal controls, and key personnel, the service provides valuable insights and helps mitigate potential risks. Leveraging the extensive experience of LFE and the expertise of this partner firm, this PDD service empowers entrepreneurs, SMEs, and MNCs to make informed decisions and safeguard their investments in China. Trusting but verifying, as Deng Xiao Ping advocated, becomes an essential principle in the pursuit of successful business ventures in this dynamic and ever-growing economy.