If you are doing business with China, at some point you will have a dispute. Regardless of who is at fault, how it started or if it is large or small, it’s good to know your options.  We wrote this blog post to help you explore the options. And if you happen to be asking the kind of questions below, then this blog post is for you:

  1. A Chinese company broke the deal, what are my options to resolve the dispute?
  2. Will the embassy or police help me?
  3. How do I sue a Chinese company?
  4. Can I collect damages?
  5. How can I avoid future disputes with my Chinese partners?
  6. And if I have disputes in the future, what can I do to ensure I will win?

Dealing with the local police, local lawyers, local courts, embassies and business associations for dispute resolution in China

 

Reporting Chinese companies to the Better Business Bureau?

Unfortunately there is no Better Business Bureau in China or in most parts of Asia where you can take your grievances.

So you can cross that one off your list of options.

Getting help from the Chinese Embassy?

You can try to contact the Chinese embassy in your country, but in every case I have witnessed in the past 20 years, they will give some excuse why they are too busy or why they aren’t the right people to help you. Basically, they are so overwhelmed with requests like yours that they can’t  possibly get involved unless the loss is massive, like in the millions of USD.

So you can cross that one off your list of options.Most likely the embassy will suggest you contact the police in China.

And that brings up to option 3.

 

File a report with the local police.

Unless you have a very clear case and concrete proof of illegal (not unethical) activities, the police in China will most likely say they can’t help you. If you are lucky, they will ask you to file a report, which must be done in  person. That means you fly to China or appoint somebody.

If the target company has not disappeared and is a real company with real assets, you may have a chance to work with the police and/or have a local lawyer issue a demand letter. But if you aren’t based in China, realize you may need to  appoint power of attorney to a local representative.

 

Tip for working with Chinese police:

If you do end up working with the police, it may help to engage a private investigator. I’ve had success using a 3rd party to collect all the facts and present the file to the local police. Basically, I paid for my representative to do the “police’s work for them”. The investigation can cost 1000’s of USD per day, but if you have a large case and the ear of the police, it may be worth it. 

Dispute Resolution: FAQ’s

  1. Will your embassy in China help solve your dispute with a Chinese company?

Depending on what country you are from, your Embassy in China may be a bit more helpful than the Chinese Embassy back home. I’m sure they also get lots of mail from companies in situations like yours. Most of the time they will suggest you contact the police and they may give you a list of lawyers and some English speaking Chinese government offices that are, in theory, supposed to help you.  So it can’t hurt to contact your Embassy.

But unless your loss has political implications or is very large, I would not expect the Embassy staff to lead the charge to get your money back.

  1. If the embassy and police can’t help, where do I turn to for support?

Consider engaging a local lawyer to issue a demand letter and explore litigation if necessary.

Demand letters actually work in China and litigation is affordable compared to back home in N. America for example. Plus the case will proceed a lot quicker than you may expect.

 

Related content:

Video Tutorial by ABL’s Mike Bellamy

 

Q&A on China Sourcing and IP at the Australia International Sourcing Fair

Items covered:

  • Intellectual Property Registration in China

Question: Can I register my IP in China on my own? 

Question: I have been buying from China for many years. But I never got around to registering my brand. I want to change suppliers, but now I learned that the supplier registered my brand without telling me! What can I do?

Question:  I know somebody else owns the right in China for the brand for the item I want to buy, but I also know that the brand is not in control by that party in Australia and I want to produce an item under my brand in China to sell in Australia. 

  • Buyer Protection when sourcing from China

Question:  Why doesn’t everybody use Alipay and similar services to protect the buyer?

  • Strategies for protecting IP and business secrets.

Question:  I’m pretty sure my competitors back home are trying to reverse engineer my product and have it made in China. What to do?

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