This article has been written to introduce our Chinese Company Ownership Charts - a popular element of our company verification reports.
Introduced as a feature in our "Pro" & "Full Scope" company verification reports since October 2017, these charts help clients to better comprehend a Chinese company's shareholding structure by providing a visualization of available ownership data.
Understanding whether you are dealing with a solely-owned business or a complex array of stakeholders can be vital information and is easily identified with our Chinese company ownership charts.
In each of our Chinese company verification reports we include a table listing the company's direct shareholders. For companies with a simple ownership structure this can be sufficient to give a full understanding.
But what about companies with corporate shareholders? Who owns those companies? Who are the ultimate beneficial owners?
Our ownership charts were developed to address these questions by providing a visualization of the company's ownership structure with multiple degrees of shareholders - allowing clients to dig deeper and get a more complete picture.
They are like a "family tree" of ownership which identify multiple levels of individual shareholders, corporate shareholders, offshore shareholders and even governmental shareholders.
The appearance of our Chinese company ownership charts varies markedly depending on the complexity of the Chinese company's ownership structure.
As the saying goes, a picture is worth a thousand words, so let's take a look at some examples.
As is shown in this example, many Chinese companies, particularly smaller ones, are simply owned by an individual or a group of individuals.
In such cases there are only "1st-degree shareholders" and the company's ownership chart is very straight forward.
In the above example, ownership of the subject company is split between an individual and a corporate shareholder. The corporate shareholder is subsequently owned by two "2nd-degree shareholders".
For this example the ownership structure is already getting quite complex. This example company has four 1st-degree shareholders, one of whom is a government body.
Included in the 2nd-degree shareholders are two companies registered outside Mainland China - one from Hong Kong, who we can get ownership information for, and one registered offshore, who we can't.
Each of the 3rd-degree shareholders are individuals. To calculate an individual's overall ownership of the subject company just multiply the percentages. E.g. "Zhen Xiansheng" owns 6% (50% * 40% * 30%) of "Beijing Yangpin Baogao Co., Ltd.".
I'm not going to try to explain this example ownership chart as it would take too long and hopefully our system will make sense to you by now.
If not, maybe the two points below will help to clarify.
When a Chinese company is wholly or partly owned by another company the question raised is "well, who owns that company?".
And if that company is also owned by another company, who owns that company?
We quickly realized that trying to explain the different levels of ownership is very complicated so have devised this concept of "Degrees of Ownership".
Occasionally we come across Chinese companies with extremely complicated ownership structures that would could literally take us days to research.
For this reason we limit the degrees of ownership which we guarantee to include in our Chinese company ownership charts. These vary depending on the report ordered:
As you can see our charts often need to include a multitude of information so we have devised a color scheme to identify different types of shareholders.
You can see what the different colors represent in the key below:
Here we introduce some Chinese business gifts which are commonly presented to customers, guests and employees by companies in China.
Like elsewhere in the world, giving gifts is a good way of communicating and to build relationships, but the traditions in China are likely to be a bit different to in your country.
Exchanging gifts is an important part of Chinese business culture and giving the wrong gift can lead to embarrassment and misunderstandings, so we have covered some of the Chinese business gifts to avoid in this article too.
We often come across China company English names which we feel are misleading.
They are misleading for a number of reasons - some accidental, some deliberate, some cynical - but the root cause is that companies from Mainland China are registered in the Chinese language, not in English.
Here we give some background on China company English names and introduce the 5 ways in which we find they can be misleading.
China Customs Enterprise Classification is a system used by China Customs to grade companies which engage in foreign trade.
Following a long implementation phase, a new classification system was confirmed in May 2018. It had been updated primarily to reflect China's broader implementation of a nationwide social credit system in recent years..
Under the new China Customs Enterprise Classification system, companies are no longer ranked AA, A, B, C or D - there are now 4 different categories which are introduced in this article.