The story enough fishy to look like a scam even by Chinese standards.

1. Doing business in China? Do it without govt. involvement. The less you see those guys the better.

2. Never do any joint ventures. Never deal with stocks, and public companies.

3. See a well wisher popping up on your doorstep with a business proposal? Turn the guy around, he is a scam.

4. Don't be public about your business, be as obscure as possible. Operate on online platforms. Have disposable shell company structures.

5. Don't ever get sued, and this is why you keep shell companies. Chinese legal system is almost as "sticky" as American one, if not more. Once the legal "casus belli" is established, and the court takes on the case, the plaintiff can keep suing you for all eternity.