Who can afford to be banned from investing or working in China?
With the economic crisis in full swing many small and middle sized companies, often second or third tier suppliers, are now collapsing. The management has to file for insolvency and an insolvency administrator will be appointed to work out a solution for keeping the company alive or – if this is not an option anymore – to properly liquidate the company. Surprisingly many of these distressed companies are having subsidiaries located in China. They are generally limited liability companies governed by the Chinese Company Law. The common set-up is that the Chinese subsidiary has only one customer: The parent company in Europe or in the US. In consequence, the Chinese subsidiary will be dragged down together with its parent company.
