Consultant with no staff and a high success fee
Treat as introducer risk. Map who is being introduced and where the fee lands before the first invoice.
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Third-Party · 05 Editorial guide
Third-Party Compliance Due Diligence in China
Map distributors, agents, consultants and channel payments to diligence, contracting, monitoring and exit controls. This topic routes; it does not decide the legal outcome on your facts.
First job Map distributors, agents, consultants and channel payments to diligence, contracting, monitoring and exit controls.
Decision railrole → risk tier → UBO/government → commercial rationale → contract → monitor → exit
See routing factsStart here
Key considerations
The first questions are about urgency, governance and preservation — before collection expands or interviews begin.
- What does the third party actually do, who owns or controls it, who selected it and how is it paid?
- Does its role touch customers, tenders, hospitals, public bodies, licences, customs, referrals or other heightened-risk decisions?
- Do the contract, invoices, approvals, services and payment path tell the same commercial story?
Direct answer
What this page decides
Owner
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This page owns onboarding and monitoring of China third parties — agents, distributors, consultants, introducers and service providers — where the compliance question is who they are, why they are paid, and whether the payment path matches the work. It is also the national owner of distributor compliance until a separate channel-pricing intent is justified. RPM and resale-price pressure belong to Antitrust. Distribution-agreement drafting belongs to Contracts. Commercial bribery classification of a specific payment belongs to the bribery L4. Do not treat a completed questionnaire as diligence if UBO, government connections and bank beneficiary were never tested.
At a glance
Which fact changes the next route
Use the fact that changes ownership or urgency to decide the next move.
| Question | Why it matters | Next route |
|---|---|---|
| Who actually owns the counterparty? | Nominee and related-party screens fail here. | UBO and control map before onboarding. |
| Does the role touch officials, hospitals or tenders? | Heightened third-party bribery risk. | Enhanced review; bribery L4 if a payment is already in issue. |
| Commission to a personal account? | Payee mismatch is a classic red flag. | Hold payment; reconcile entity vs beneficiary. |
| Is the issue minimum resale price? | That is antitrust, not diligence theatre. | Antitrust RPM screen. |
| Need contract terms? | Audit, subcontracting, termination. | This page for controls; Contracts hub for archetype drafting. |
| Already an investigation? | Diligence is not the investigation. | Internal investigations L4. |
Scope
What this page owns — and what it does not
Whocompanies retaining China distributors, agents, consultants or introducers.
Eventonboarding, renewal, payment anomaly or exit — not a dawn raid.
This page owns third-party risk classification and distributor compliance routing.
ExclusionsRPM (Antitrust); NNN (IP); manufacturing quality terms (Contracts); criminal defence.
IC08 distributor page is not created as a sibling.
Practical workflow
Action, evidence, legal gate, output
| Action | Documents / evidence | Legal gate | Output |
|---|---|---|---|
| Describe the actual role | Scope of services, geography, customers | No onboarding on a slogan | Role memo |
| Risk-tier | Sector, public-function touch, volume, country | Enhanced vs standard path | Tier |
| Test ownership and government links | UBO, licences, PEP/SOE links | Unexplained opacity = hold | Ownership file |
| Test commercial rationale and payee | Rate card, deliverables, bank account name | Entity on contract must match beneficiary | Payment map |
| Contract the controls | Audit, subcontract, ABAC, termination, records | Paper rights you will actually use | Signed controls |
| Monitor and re-screen | Invoice vs work, ownership change, incidents | Triggers for hold or exit | Monitoring log |
Documents
What to gather before the next call
These items help clarify the file; they are not a legal requirement list.
| Item | Why needed | Who holds it | Risk if missing |
|---|---|---|---|
| Corporate and UBO pack | Who you are paying | Counterparty / compliance | Paying an undisclosed related party |
| Service description and KPIs | Why the fee exists | Business sponsor | Marketing fund with no work |
| Bank beneficiary details | Payee integrity | Treasury | Personal or third-country account |
| Sub-distributor map | Cascaded risk | Channel | Unseen intermediaries |
| Prior audit or incident file | Repeat red flags | Compliance | Re-onboarding a known problem |
Common failure points
Where files usually break
Onboarding because sales already promised the channel.
Accepting a stamp-chopped questionnaire with no UBO.
Paying ‘branding support’ to a personal WeChat-linked account.
Ignoring sub-distributors.
No audit right, or a right never exercised.
Treating RPM coaching as a ‘commercial incentive’ on this page.
Terminating without preserving the evidence file.
Illustrative forks · not case advice
Moments where sequence matters
Distributor asks for a marketing fund
Reconcile deliverables, approvals and beneficiary. If the fund is really a customer kickback, that is the bribery L4.
Sales wants exclusivity plus price floor
Send pricing to Antitrust. Keep this page for ownership, ABAC and audit rights.
FAQ
Narrow follow-ups owned by this page
Is a local licence enough diligence?
No. Licence, UBO, role, payee and government touchpoints are separate tests.
Do we need to re-screen every year?
Re-screen on triggers (ownership change, incident, material volume) and at a defined interval you can actually perform. This page does not invent a statutory cycle.
Where does distributor RPM live?
Antitrust vertical/RPM screen. This page does not own pricing legality.
Can we terminate for a red flag?
Contract and employment/commercial law decide. Preserve the file and use the termination rights you actually negotiated.
Decision map
Keep the question bounded.
- Risk-tier before onboardingMap services, geography, counterparties, government touchpoints, ownership, conflicts, subcontracting and payment route. Apply enhanced review where the facts warrant it.
- Test commercial rationaleConfirm why the party is needed, how compensation was set, what deliverables prove performance and whether bank, invoice and contracting entities align.
- Contract for controlAllocate approval, records, subcontracting, audit, training, conflict disclosure, payment hold, remediation and termination rights to the actual risk model.
- Monitor and exit on evidenceRe-screen ownership and conduct at defined triggers, reconcile payments to deliverables, investigate red flags and preserve an orderly hold, remediation or exit record.
Curated resources
Open the asset that matches this job.
Helpful to prepare
Facts that make the next conversation clearer.
These items are orientation aids, not a legal requirement list.
third party due diligencedistributor briberyconsultant paymentsbeneficial ownershipaudit rightschannel remediation
Related legal file
Stay in this practice; send neighbouring questions to their owner.
Counsel hand-off
What to bring when you instruct
Instruct compliance investigations or distribution counsel. Bring: draft or live contract, UBO pack, payment path, commission history, government-touch map, and any incident already in email.
Local context
Add the city only when it changes implementation.
National routing first. Local notary, court or bureau practice second.
Open city and province guidesCounsel hand-off
Need qualified counsel?
Investigations counsel can define scope, preserve evidence, manage interviews and privilege, and coordinate internal findings with reporting or enforcement risk.
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Who reviewed this guide
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