Risk alert

A real and fresh case about why only checking business registration information is insufficient to avoid scams

Knowaco Editor

Apr 11, 2023 — 2 min read

In our last post, we explained why verifying a business license is not enough to avoid scams. Today our analysts noticed a real case in the news about the risk of fake business registration information.

According to some domestic media in China, a few days ago, a private company named Guoheng Foundation Holding Group Co., Ltd. (hereafter “Guoheng Foundation”) updated its registration records to change its sole shareholder from a private company to several large enterprises owned by central governments and state-owned funds, such as State Power Investment Group Co., Ltd. and China Energy Investment Group Co., Ltd.

However, just two days after the change records were publicized, two companies registered as the new shareholders issued official statements that Guoheng Foundation falsified the shareholder information by forging relevant documents submitted to the registration authority. The new shareholders have no business ties with Guoheng Foundation.

The purpose of Guoheng Foundation in deceiving the registration authority through false shareholder information is to create a powerful appearance. By conducting a few more checking procedures, we may find inconsistencies that the Guoheng Foundation exaggerates its business capabilities.

Our analysts conducted a more detailed background check based on Guoheng Foundation's company search report (Riskplus) automatically generated and have some observations.

1. The company was established in recent months with zero paid-in capital and shared the same business address with several other companies

2. The company reduced its registered capital by RMB 240M (80%) in recent changes, and at least two new shareholders clarified that they have no business connections with the company

3. Abnormalities noted in other companies having the same Legal Representative as the Guoheng Foundation

In 2018, another company, represented by the Legal Representative of Guoheng Foundation, was marked as cannot be contacted in a government inspection;
The numbers of employee with social insurance coverage were from zero to one in companies having the same Legal Representative; and
Operational records, such as WeChat public accounts, websites, emails, and promotional information, cannot be found.

New feature: Search with image

In our services over the past two years, some users have raised their "pain points" when using the product - I do not understand Chinese and cannot type out the names of companies from business cards, business licenses, or photos in Chinese for searches, which greatly hinders the

Understanding the 8 Business Registration Statuses in China

In China, the Administration for Market Regulation (AMR) maintains a comprehensive business registration system. This system tracks each company's status, providing information about its operational health and potential risks. Understanding the eight critical business registration statuses can be crucial for making informed business decisions and assessing business opportunities.

Log in to view summary of purchased reports and search history

Recently, we have added a login feature to the website. The initial design of Knowaco.com aimed to provide services with minimal user information logging. With the increase in service volume, more and more users wish to view summarized search records and purchase histories and independently and conveniently merge past

New Company Law clarifies that the registered capital must be fully paid within five years

On 29 December 2023, the National People's Congress of China voted to pass the newly revised "Company Law of the People's Republic of China" (hereinafter referred to as the "Company Law"). The revised "Company Law" will come into effect on