Every company has its history, and evaluating a subject company based in a developing country for the first time can be daunting to avoid unwanted landmines.

It is a non-obligation role but should be a critical step for every business and corporate owners to exercise a reasonable amount of due diligence and evaluation to understand a Malaysian-based partner better to not only avoid getting into unwanted troubles but in fact, having a more smooth and engaging business process with your partner.

Here are 4 quick aspects to look at when conducting a business trade to start off with:

(1) Financial Information

Knowing your business partner’s financial information would be helpful as a starting point to understand your business partner’s growth and overall company. Key ratios, regardless of industry level but not exhaustive, including : (1) Gearing ratio (2) Operating and Net Profit margin (3) Revenue, EBITDA and Profit After tax year-on-year growth and (4) Liquid Ratio. These are helpful to answer some key questions how does your Malaysia business partner conduct business trades, its current operations scalability, and whether there are sufficient cash flow and debt to manage the business well which will potentially bolster and enhance your current trade business process.

(2) Litigation Issues

Knowing the company’s litigation background would be helpful to gain a legal overview of the company. Does the subject company currently have (1) on-going lawsuits with its suppliers ? or (2) past unresolved court issues with its clients ? These are key important aspects as part of your review and discovery exercise to have a better evaluation process of your Malaysian partner to clear any red- flags and landmines upfront throughout the business  activity to provide yourself extra comfort.

(3) Director, Shareholding and Management Checks

Thinking you know your local-based partner well enough ? Doing a quick background check on your business partner of the company will be an essential and critical ingredient of an effective business check in Malaysia, including (1) any past and ongoing directorship from other companies they are a part of, (2) whether they are a legitimate Malaysian citizen and (3) whether are there any personal litigation issue that the directors is currently involved with.

(4) Site Visit Checks

There have been instances where a healthcare distributor has been entering into a trade agreement with a supplier entity based in Malaysia, but it was revealed it is just an empty site with no ongoing business, which has severely impacted the supply chain planning cycle of the healthcare distributor. Understand the subject company’s physical site will provide a first-hand view and conducting a discrete site visit of the company in better will be better to get a sense of the Malaysian partner you will be working with and gain a more accurate insight and assessment whether your local partner is a legitimate entity with operational business activities or just a mere empty land site company as promised.

Introducing CTOS Basis ; Comprehensive Business Information and Credit Reporting

As a proud member of Business Information Industry Association (BIIA), CTOS Basis is a Credit Reporting Agency based in Malaysia with presence across ASEAN serving global clients’ business solutions since 1995. We are proud to be providing registration of company checks from general information, finance, credit checks, litigation review down to discrete site visit report for global companies nationwide, with majority of our customers enjoying a long-outstanding business relationship with CTOS Basis.

CTOS Basis is a fully owned subsidiary of CTOS Digital Berhad, a public listed company specialising in global commercial credit information. For more information, do contact hwaijon.tan@ctos.com.my for more information for a quick call on how we can address your business challenges better, or any of our sample quality evaluation reports that repeated and trusted customers have keep coming back for.

CTOS Basis – a subsidiary of CTOS Digital (KLSE : CTOS)
Unit 1-12, Level 8, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No 8, Jalan Kerinchi, 59200 Kuala Lumpur