Filtering RCB (Random Chinese Buyers) has been a large part of the work we do at the China Investors Club. We are often asked by UK firms seeking investment from Chinese investors whether the companies or agents they have been talking to actually have the cash or commitment to see an investment through. Here are three pointers we work to in assessing the viability of an investment approach:

Key economic buyer

If you have a direct meeting with the founder and CEO of the Chinese company then you are at a good starting point. As most private Chinese companies are only 10-15 years old, the originator of the wealth will have a much clearer idea of how and where investment will be made. Aside from that, you should treat with caution any other 'titled' introducer as they will not be the ultimate decision maker.

Proof of funds

Ever tightening Chinese regulations are limiting the amount of cash able to be sent out of China. Transactions designed just to facilitate movement of cash are heavily controlled however investments into intellectual property related to life science and healthcare, advanced engineering or education receive a more favourable reception. While we do not recommend asking for proof of funds outside of China in your first meeting, it is certainly something you need to 'put on the table' for discussion at subsequent meetings.

Investment rationale

You would expect that an approach by a UK, European of an American to invest in your company would come from a company in the same industry sector as yours. However as a large part of Chinese wealth has been created from the real estate sector and other industries are still relatively young, it is highly likely that your Chinese investor will have limited knowledge of your business. Don't let this put you off as what is likely it that the investor has plans for how to take your innovation and apply it to the Chinese market place through their own distribution network. Having such a partner take an interest in your business is valuable in its own right but could provide you with a China market entry strategy that you had not yet considered