Seeing China for what it really is...
There seem to be a special storage facility in all Chinese airports where foreign business people coming to China gets to check-in their brains and leave it in storage for the extent of the trip.
Why would you sign a contract in Chinese under Chinese law with a Chinese? As a foreign company there is no reason WHAT SO EVER to accept a Chinese contract, Chinese contract law or Chinese legal jurisdiction – be a little smarter…
I have had the unwelcomed pleasure of cleaning up other people’s mess quite a few times, and I am flabbergasted by the mistakes and the excuses made by normally highly intelligent people. If you would not act in this manner in your home country why would you act any differently in China? “That is the way things are done in China”, is just a way to trick gullible people into signing something they would never have signed if they made a business transaction with the business across the road back home. So, why should China be any different???
Let’s be honest about it… For most people, China is far away and its people and culture unfamiliar to most… Why not be a little more cautious then? You would never pay cash up front without some kind of security to a first time supplier from England, so why pay up front (without security) to the factory in China that is promising to produce the same goods at half price? Only suckers do that you might be thinking… So why does it happen time and time again in China?
What rights do you have as a foreign business in dealing with a Chinese business? Contracts are for when shit hits the fan, not when things are running smoothly… How many refer to the agreement they signed when shipments are on time and quality is as expected? NO ONE!!! But, when things are not going as expected one tends to refer to the signed contract to find ways to deal with issues. However, when the contract is written in Chinese, and jurisdiction is the local court house next to your supplier factory, guess what – YOU ARE GOING TO LOSE, AND LOSE BAD…
If a potential Chinese business partner, it being a client or supplier, tells you something that seems strange and you would not consider doing it at home – then do not to it… If they tell you that “This is how things are done in China”, tell them to F@$% OFF, and let them know how the transaction is going to transpire. If they do not like it, then so be it… WALK AWAY…
Find an international legal jurisdiction that is recognized by both China and your home country, make the contract in English only and make sure that no money leaves your account before you know that the quality of what you are buying is as expected. If you are selling, insist on an L/C from a local bank (yes, a local bank – banks across the world cooperate on issuing L/Cs, so even if their bank is the China Construction Bank, you can still get an L/C from e.g. Lloyds), before even starting production – that is what a Chinese manufacturer would do…
Next time you come to China to do business, please do not leave your brain at the airport storage facility but carry it with you on your trip, regardless of how cumbersome it might be.