Investor From China Wants To Buy Your Business? It could be a scam…
The China Law Blog today posts an article titled, “The China Fake Investment Scam: Does that Chinese Company Want to Invest in Your Company or Steal Your Technology?”
It describes how some Chinese companies pose as investors or buyers, make offers to acquire businesses in the West but who have ulterior motives.
Very often the offer is for an intial acquisition of only part of the company. It may be as little as 5% of the shares. They then use that to argue that since they are partners in the firm, there’s no reason to enter into an NNN Agreement or any other agreement to protect intellectual property.
Our company will become one of the owners of your U.S. entity. And since will be co-owners of the technology underlying your product, there is no reason for you to protect the technology from us. There is no reason to enter into an NNN agreement or a Product Development Agreement. We will work product development together. In fact, our Chinese entity will not even require payment from you. We will do the product development without charge to ensure that the product is brought to market as quickly as possible. We do not want legal or financial hurdles to get in the way of the IPO that will make us all wealthy.
So the foreign company provides its technical information to the Chinese manufacturer it now sees as its partner and benefactor and…Read the whole story here.