Beyond the Company’s Account: Understanding How the Business Really Operates

About FUWA LAB and Why In-depth Interviews Are Central to Our Research

In recent articles, we used anonymized cases to examine facts behind customer relationships, growth expectations, and management capabilities that warranted further verification.

In this article, we introduce FUWA LAB, the clients we serve, and why in-depth interviews are central to our research.

An Investment Often Comes with Plenty of Information

By the time a China-related investment reaches formal evaluation, the investment team usually has no shortage of information. Management presentations, data room documents, financial data, legal opinions, industry reports, and expert interview notes are already on the table.

But having more information does not mean the questions have been answered.

Different documents sometimes depend on the same underlying source. Management presentations come from the company, as do the documents it provides to the data room. The company takes part in management interviews, while external reporting and industry research may also cite its public disclosures. If five documents rely on the same account, they do not constitute five independent pieces of evidence.

What investors often need to know is something else: beyond the company’s own documents and explanations, what evidence from actual business activity supports the investment thesis?

FUWA LAB establishes an independent route to answering that question. We help institutional investors independently verify the actual operations, management, and commercial relationships underlying a China-related investment.

Who We Are

FUWA LAB is an independent research firm based in Kobe, Japan, focusing on China-related Commercial Due Diligence, Management Due Diligence, and Independent Primary Research.

Our approach draws on more than 25 years of my own investigative experience.

I was among the journalists conducting in-depth business investigations in the early years of the 21st Century Business Herald, a Chinese financial newspaper. In the mid-to-late 2000s, I joined JL McGregor & Company (JLM), moving into independent primary research on the Chinese market for global hedge funds and institutional investors. I went on to provide investment-related research to private equity funds, hedge funds, and corporate investment and M&A teams in China and internationally, and later established my own investigative research firm in China, maintaining long-standing relationships with several institutions. In total, I have participated in more than 500 investment-related research projects across manufacturing, IT, consumer businesses, healthcare, and other industries.

FUWA LAB carries forward the approach that has remained consistent throughout that experience: field research, in-depth interviews, repeated verification, and cross-checking, bringing fragmented information together to reconstruct facts that can inform decisions.

The Questions We Address

Clients typically come to us when the information they already have does not adequately explain an operational issue that matters to a decision, and verification through sources independent of the counterparty is needed.

The questions take different forms at different investment stages.

Verification of a listed company’s actual operations can also support research before establishing a position, ongoing assessment during ownership, and exit or risk reassessment. It is not limited to the post-investment stage.

The specific subjects vary by project: why customers continue purchasing; whether corresponding product flows can be observed in distribution channels; whether the conditions supporting growth remain in place; which specific contributions account for management’s past achievements; and whether a new business already has the organizational capabilities it requires.

These questions share a common feature: company documents and management interviews alone rarely provide a complete answer. They require information from people who have actually been involved in the business.

Our Place in the Due Diligence Process

Financial Due Diligence, Legal Due Diligence, and Independent Primary Research do not replace one another.

In many institutional investment projects I have worked on, accountants and lawyers conducted financial and legal verification through formal procedures with the target company’s cooperation. At the same time, the independent research team selected external sources according to the research questions, interviewing customers, suppliers, channel participants, former employees, competitors, and other industry participants, alongside desk research and field verification where necessary.

Independent Primary Research does not begin with a presumption that management should be distrusted. The same company can naturally look different to management, customers, suppliers, and former colleagues. Our task is to separate facts, explanations, and forecasts, seek evidence for each, and assess whether different sources support one another.

When independent sources corroborate one another, the basis for an investment judgment becomes stronger. When differences emerge, the value of the research lies in identifying where they arise, what might explain them, and which issues require further examination by financial, legal, or technical teams.

In-depth Interviews Are Our Core Strength

In-depth interviews are often understood as “speaking with a few more experts.” In our work, they have a more specific meaning.

First, finding people with direct knowledge of the facts.

An interviewee’s value depends on more than title or background. More important is their vantage point: whether they personally participated in the business being examined, and which geography, product line, and period they observed. We identify sources according to the research question, rather than arranging interviews around whoever is easiest to reach.

Second, moving from general assessments to verifiable facts.

“The relationship has always been good.” “This person is very capable.” “Growth has been strong this year.” Such answers can provide initial leads, but they are insufficient on their own to support a specific investment judgment. During the conversation, the interviewer needs to understand the business context, distinguish firsthand experience from secondhand accounts, follow the chronology and causal relationships, and move from assessments to specific people, events, decisions, and outcomes.

Third, assessing whether information sources are genuinely independent.

Experts with no apparent connection to one another may be citing the same IPO filing or industry forecast. Ten experts repeating the same number does not mean that number has been independently verified ten times. We examine not only who said what, but why they believe it.

Fourth, reframing the question when new facts emerge.

An interview guide can cover only the issues recognized before the research began. A lead that changes the assessment often appears in a supplementary comment that falls outside the prepared questions. The researcher needs to recognize whether it changes an existing premise, translate a sense that “something does not fit” into a verifiable question, and adjust the sources and sequence for the next stage of research.

These requirements can be incorporated into a research process. Executing them, however, still depends on the interviewer’s ability to understand and assess answers as the conversation unfolds. They require sustained interview training, reference points accumulated across industries, and a habit of comparing interview findings with external information such as corporate registration records, judicial records, public announcements, tender and award records, and industry data.

Why We Maintain a Small, Experienced Team

FUWA LAB deliberately remains small.

Every project manager qualified to independently conduct core interviews has at least ten years of sustained interviewing experience and responsibility for research judgments. In almost every project, I am personally deeply involved in framing the research questions, selecting key sources, conducting important interviews, reviewing conflicting information, and forming the final assessment.

Document organization, source mapping, and evidence management can be shared across the team. But experienced researchers remain directly responsible for deciding what to ask next, which anomalies warrant further investigation, and how far the evidence allows a conclusion to go.

This arrangement limits the number of projects we can undertake simultaneously. We determine our capacity carefully, based on the time experienced researchers can commit.

For clients, this means that the people responsible for understanding the problem, conducting key interviews, and developing the assessment remain involved throughout the project, rather than appearing only at the kickoff and final presentation.

What We Deliver

Our final deliverables address the client’s questions with assessments whose supporting evidence and limits are clearly stated. They explain:

• Which facts have been corroborated by multiple independent sources.

• Which explanations are more consistent with the available information.

• Which frequently repeated claims may originate from the same underlying source.

• Which questions still cannot be independently confirmed under the circumstances.

• How the findings relate to the client’s original investment thesis.

We therefore distinguish between expressions such as “We are inclined to conclude,” “The available information supports,” and “We cannot independently confirm at this stage.” Each reflects a different state of the evidence. When the evidence supports a positive assessment, we state it clearly. When issues warrant attention, we explain their factual basis and the scope of their implications.

We also place importance on confidentiality. Client identities, transaction information, and interviewee identities are protected during our projects. In published case articles, we remove or generalize information that could identify clients, companies, or interviewees while preserving the factual relationships necessary to support the central assessment.

Starting with a Question That Is Not Yet Fully Defined

Clients do not need to prepare a complete investigation checklist before contacting us.

Sometimes, they already know that a particular customer relationship or an executive’s professional history needs verification. At other times, they simply see a gap between the information available and certain developments in the business that remains difficult to explain.

We can start with that gap and work together to determine which questions could affect the current decision, what information is worth seeking, and how much can be verified within the available time and conditions.

To discuss China-related investment, M&A, or post-investment operational verification needs, please contact research@fuwalab.net.