To demonstrate the types of projects our team have been involved in the past, we provide several case illustrations.
Issue: A Japan skincare brand distributor, with multiyear exclusive distribution rights in China, faced lost business from uncontrolled parallel imports. The rapid development of eCommerce in China as exacerbated the problem. The client argued the brand owner did not exercise its fiduciary duty to control Japan-origin parallel imports not entering the Chinese market, and subsequently determined to resolve this dispute in an arbitration court.
Work Conducted: To support the client, a Dynamic Research’s team member was responsible for intelligence gathering with regards to the research of the parallel import’s selling channels, sample purchases, field inquiries, store visits, targeted media research, and deep dive analysis of the parallel import’s selling cycle in China. Collaboration was made with Japanese investigators to trace the potential origin of the parallel imports. A 200 pages report was provided to the client and its counsel, along with a detailed discussion of the findings, to support their arbitration needs.
Issue: A Chinese tech company was acquired by a reputable global client with well-established Chinese operations. The owners (hereafter “Subject”) signed the merger agreement to transfer physical assets and intellectual property rights to the client, as well as post-merger management agreement to remain and not engaged in any activities in conflict with the client’s interest. However, after the first year of the merger, the Subject only partially transferred the agreed assets, while they argued that all the asset transfer were completed and were sparsely communicating with the client about business activities. An investigation was launched to identify whether the Subject has bleached the merger agreement.
Work Conducted: Research in publicly available information was first conducted. Based on database searches and relationship analysis, the investigator found that those owners established new entities within proximity of the address of the acquired business. Some of the new entities’ shareholding were suspected to be under the name of proxies. After learning this, the client suspected that some intellectual property assets may have transferred to those entities. Subsequently, investigators conducted multiple fact-finding site visits and in-person dialogues to gather further evidence, though with extreme caution and patience as risk of “tip-off” were high. All findings were packaged into a detailed report, in which the client and its legal advisors extracted information to prepare for a dispute settlement.
Issue: Potential transaction – a Pre-IPO due diligence was assigned by the sponsoring financial institution, with the listco being a China based Education Technology company (hereafter “Subject”). The due diligence had two main Objectives – (1) verify whether the owner has a trustworthy track record and sound character, to quantity potential reputation risk after the IPO, and (2) verify the quality of revenue, as the Subject claims to have many independent distribution channels across the country.
Work Conducted: To evaluate both Objectives, public domain research and strategic field investigative work were conducted. A dozen site visits to the distributors were made, with discreet dialogues carried out to collect relevant information. Findings were gathered and, while no issue were found about the owner’s character, it revealed that a high proportion of distributors were related to or controlled by the owner of the Education Technology company. These non-arm’s length relationships were not disclosed to the sponsor, and as they were generating significant revenue, the findings raised alarm about the validity of the Subject’s revenue, prompting the sponsoring financial institution to take mitigative actions.
