Tuesday, June 21, 2011

International investment is flooding into China, and the country continues to boom from an economic and population standpoint. Its influence and reach is global, and everything today seems to be made in or sold in China. It is the new powerhouse and place of growth and influx of capital. As global investors and individuals and businesses seek to participate in the growth, private investigators report a significant increase in China scam and fraud activity. In fact, in Beijing and Shanghai, China private investigators have been overwhelmed with background check and due diligence requests to minimize the risk.

A recent investigation conducted by the Beijing Times, the English newspaper of Beijing, indicated that fraud and scam cases are rising most rapidly among stock market and foreign investment opportunities. Too many foreign companies and even individual investors are trying to get access to the Chinese financial market, as investment opportunities in other global sectors and markets remains limited. In this mad dash to chase financial gains, few investors are taking the necessary due diligence. The result? Market bubbles aside, business and investment scam cases, according to one Beijing private investigator, are up nearly 50% compared to 2009 levels and experts say the fraud risk is only expected to get worse.

Because bad news is bad for business (and China), law enforcement and government officials have yet to acknowledge the problem publicly. Efforts by law enforcement in China are lackluster at best. International private investigators say what the public needs to be aware of is that there is an increased need to conduct proper due diligence or a background check prior to entering into a Chinese business deal or investment. Scammers and criminals are taking advantage of the fact that many companies seem to be willing to invest in any idea in China, and many investors are learning the hard way. Reportedly, the estimated loss for financial scams and stock market fraud in China for 2010 was over $1 billion USD. The risk is real, and investors should consider a background check as a form of insurance, a way to minimize the risk and verify.

Whether or not the economic growth in China will continue is uncertain. It is a market of speculation and uncertainty. What is clear, however, is that criminal operations are on the rise in China and new business contacts, investment opportunities and stock purchases should be verified and due diligence is key. Law enforcement and private investigators agree that Chinese investment offers a classic risk-return relationship, and with high potential returns and reward, there is increased risk. To avoid being a victim of fraud or scam, investigators urge consumers and businesses to be prudent and do their homework. For complex cases or when information is not so transparent (common in China), contact a Beijing private investigator or reputable Shanghai or Beijing background check service for confidential verification.

Best of luck,

A Hathaway
© 2011 A. Hathaway

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