Major Shareholder Under High-Consumption Restrictions, Yet the Company Continues to Accept Orders!
Last year, a European procurement team nearly signed a $2.5 million contract with a Chinese valve supplier. The company had a professional website, responded promptly to RFQs, and even offered favorable payment terms. But one thing went unnoticed: its major shareholder was under high-consumption restrictions. By the time the buyer discovered this, the supplier had vanished—taking a large advance payment with them.
Understanding High-Consumption Restrictions: What It Means for Businesses
High-consumption restrictions are court-imposed measures typically applied to individuals who have failed to meet legal obligations such as debt repayment or tax payments. These restrictions prohibit affected parties from engaging in luxury spending—including air travel, hotel stays, and property purchases.
If a company’s major shareholder is restricted, it often signals serious financial distress or legal disputes. More importantly, it indicates that the business may not be able to fulfill contractual obligations reliably. Yet many companies continue normal operations, luring unsuspecting B2B buyers into costly partnerships.
The Hidden Risks Behind a Seemingly Active Company
You might think signing with a seemingly active supplier is safe. But what if their major shareholder is under court restrictions? Would you still place an order if you knew the CEO couldn’t even buy a plane ticket?
Behind polished websites and smooth negotiations lie complex risk layers. A company may appear financially stable but could be facing:
- Judicial auctions of core assets
- Multiple unresolved legal cases
- Tax arrears exceeding millions
- Abnormal business registration status
This isn't just bad luck—it’s preventable risk. And the solution starts with early detection.
Why Traditional Vetting Falls Short in Cross-Border Deals
Traditional supplier vetting methods rely on outdated manual checks and incomplete data sources. They often miss crucial red flags like:
- Dishonest被执行人 (失信被执行人)
- Final execution cases
- Shell company indicators
- Zombie enterprise signs
In cross-border trade, these blind spots can cost millions. One anonymous customer shared: “We were about to sign with a supplier who had failed to comply with 7 judgments and owed over CNY 93 million. Fortunately, CheckSonar flagged the issue before any money changed hands.”
How AI-Powered Risk Intelligence Can Prevent Costly Mistakes
CheckSonar leverages AI-powered analytics and official Chinese data to deliver comprehensive risk assessments in just 30 seconds. Our system scans 100+ compliance dimensions across judicial, financial, and operational domains, covering 340 million entities nationwide.
Unlike traditional tools, CheckSonar provides:
- Real-time risk scoring
- Multilingual report generation
- Industry-specific insights
- Cost-efficient due diligence
Our dynamic models reduce the probability of fraudulent cooperation by 85%, giving global buyers peace of mind before signing contracts.
Real Cases: Companies That Avoided Losses Using Advanced Screening Tools
“The legal person of the enterprise providing the quotation is restricted from high consumption, and the enterprise is suspected to be a zombie enterprise. Thanks to CheckSonar’s report, we avoided the risk.”
“Swindled out of 700,000 yuan in payment by a Quanzhou garment factory, it was discovered through CheckSonar that the company had long been deserted and turned into a shell company. It is crucial to emphasize early risk assessment of enterprises.”
These stories aren't isolated incidents—they reflect real-world supply chain threats that CheckSonar helps users identify before irreversible damage occurs.
What You Should Look For Before Signing Contracts
Before finalizing any supplier agreement, ensure your due diligence process includes:
- Verification of executive and shareholder restriction status
- Legal dispute tracking
- Tax violation screening
- Business anomaly detection
- Historical ownership changes
With CheckSonar, all these checks happen automatically—saving time while increasing accuracy.
Conclusion: Protecting Your Supply Chain Starts With Knowing the Truth
Appearances can be deceiving. A company may look legitimate, but behind the scenes, it could be drowning in debt or facing enforcement actions. Don’t let misleading surface-level information lead to irreversible business decisions.
Run a full check on your suppliers today—before it’s too late. Get instant access to critical corporate data in just 30 seconds using CheckSonar’s AI-powered platform.
Do the 340 million covered social entities include enterprises outside of China?
No, CheckSonar currently focuses on Chinese domestic entities only.
What risk types can CheckSonar detect?We analyze 100+ compliance dimensions including judicial auctions, dishonest被执行人, consumption restrictions, tax violations, zombie companies, and more.
Is customized report supported?Yes, our system allows tailored reporting based on industry-specific needs.
How much faster is the processing speed compared to traditional methods?Up to 200x faster than manual processes.
How to optimize purchasing decisions through CheckSonar?By identifying high-risk suppliers early, businesses can make informed sourcing decisions and avoid costly disruptions.