Export-Control Due Diligence in M&A

Diligence the item, the history, the licences, and the foreign-list overlay before signing.

Ask what the target exported (goods and technology), to whom, with which China licences, and whether catch-all red flags were ignored. Review classification memos, MOFCOM correspondence, customs holds, and ICP reality versus the binder. Map US-origin content, US-person involvement, and EU dual-use if the group touches those systems. Unreliable Entity List, AFSL exposure, and pending investigations belong in the same workstream. SPA warranties are not a substitute for a look-back; they allocate known risk. Integration must freeze risky shipments on day one. Verify current lists at signing and closing — they move.

The classification screen

4 questions before you choose the route.

This page identifies the right question and evidence. It does not determine the legal outcome on a reader’s facts.

What does the target actually make and send abroad?

SKUs, tech, remote support, engineers.

Scope

Is there a real classification and licence register?

Dated memos vs folklore.

File

Any government touch in the look-back?

Queries, denials, seizures, penalties.

History

What foreign-law overlay travels with the deal?

EAR, EU, owner nationality.

Stack

Working rule: Ask what the target exported (goods and technology), to whom, with which China licences, and whether catch-all red flags were ignored.

What changes the answer

The signal ledger.

These facts move the question beyond a label and into a product, money-flow and control analysis.

Signal

Ask the operating question

Why it changes the route

No memos

Can nobody show a list version used last year?

Assume unlicensed-export risk until proved otherwise.

Mineral or dual-use line

Did they ship through a notice change without re-classifying?

Look-back spikes around announcement dates.

US content undocumented

Is the BOM silent on origin?

Buyer inherits EAR re-export risk.

Prepare before you escalate

Bring a compact evidence docket—not a pitch deck.

Give a compliance team or counsel the operating facts that reveal the perimeter.

01Product and tech mapWhat could be controlled.

02Licence and memo archiveApplications, denials, conditions, shipments.

03ICP and trainingWhether the programme is real.

04Government and customs fileHolds, penalties, pending questions.

Common confusions

Questions people ask before they build.

Short answers for orientation. The right result can change with the service model and current rules.

Can we close and fix licences after?

Past unlicensed exports are not cured by a post-closing ICP. Price, holdback, or walk. Do not treat it as a day-two chore.

Is this only for defence targets?

No. Minerals, machine tools, software, and ordinary factories with a military customer all show up in China M&A.

Primary authorities

Reviewed sources support orientation, not a fact-specific assessment.

PRC Export Control Law (gov.cn)

MOFCOM

National laws database (NPC)