Provides advice on how to perform due diligence and in what areas it is necessary for a U.S. company. Includes information on the U.S. Commercial Service International Company Profile service.
Although Japanese companies generally have a well-earned reputation for fair dealing, as in any market there are inevitably some companies who are less than 100% scrupulous or may have legitimate but concerning business or financial problems. Customers, importers, wholesalers and distributors, regardless of size, may find it difficult to obtain trade financing or other credit for a wide range of reasons.
For information about structuring payment options, see our article on Methods of Payment in the “Trade and Project Finance” section in this series.
Although U.S. companies, whether resident in Japan or not, are not legally required to use a Japanese attorney for filings, registrations, contracts or other legal documents – these can be prepared by in-house staff – retaining a competent Japanese attorney (bengoshi), patent practitioner (benrishi), or other legal professional is a practical necessity. Projects and sales in Japan, as in the United States if not more, require constant attention.
U.S. companies are advised to establish due diligence procedures and check the bona fides of their Japanese agents, distributors and/or customers. To assist with due diligence, the U.S. Commercial Service in Japan provides the International Company Profile (ICP) service designed to help U.S. companies evaluate potential business partners by conducting company background checks.
Please note the ICP is not intended to be a substitute for a comprehensive due diligence review to meet obligations under the Foreign Corrupt Practices Act of 1977.