Definitely, it is a big topic to talk about how to do business with foreign counterparts. It is impossible to address the issue deep and comprehensively by several hundreds of words. However, I’d like to share some experiences and lessons I have accumulated during I serve my clients.

First of all, Chinese companies shall know your foreign business partners well, on which I’d like to lay much emphasis. It is very important for Chinese companies to investigate the credibility and financial capacity of foreign companies before entering into agreements with them. The reason is simple, to know well your business partners could minimize the business risks and prevent the potential loss. However, many Chinese companies do not pay enough attention to the issue, either to save time and cut down cost or just trusting to luck. When they incur heavy loss, it is too late to regret. I am currently handling two cases, which are valuable lessons for Chinese companies. In one case, my client is a Jiangsu-based company. The client got to know a “UK Company” through a Chinese famous website; and concluded a purchase agreement with the “UK Company”. According to the Purchase Agreement, my client purchases $ 500,000 of scrap steel and shall down pay 20% of the payment for the goods. When my client down paid the money agreed, the “UK Company” refused to send out the goods by various reasons. After being retained we conducted an investigation upon the “UK Company”. All the information provided by the “UK Company” is false, except for the bank account receiving the down payment. What is more, even the spelling of the name of the “General Manager” of the “UK Company” on the website has obvious errors; my client has not considered the credibility of the “UK Company”. In the other case, a Malaysian guy registered an offshore Hong Kong company and incorporated an international forwarder company. The guy ordered $700,000 of goods from my client at the name of the Hong Kong offshore company, when the international forwarders he incorporated received the goods, the guy disappeared, and my client incurred huge losses.

In addition, Chinese companies shall negotiate and sign a detailed and clear written contract with the foreign partners. A detailed and clear contract could avoid unnecessary disputes in relation to the interpretation of the agreement which could affect the implementation of the contract. What is more, such a written contract could be utilized as evidence when dispute arises. It is not exceptional  that Chinese company do not sign a detailed and clear contract with their business partners, even some Chinese companies do not sign  written agreement with their foreign business partners at all.

So far, the most important institutes abroad responsible for the protection of Chinese companies and individuals are Chinese embassies and consulates in host countries. However, taking into account the astronomical amount of trading value between China and other countries and so many Chinese businessmen worldwide, it is well understandable that the embassies and consulates have not enough capacity to provide assistance for every Chinese companies or individuals. Besides, some Chinese companies and businessmen abroad have formed chambers of commerce or other kinds of organizations, which could provide help for the members. In my opinion, it is valuable and pragmatic way to protect the interest of Chinese companies and individuals to form some kind of mutual-help organizations in the host countries.

Shall disputes arise; Chinese companies should not give up their interest easily, but do their best to defend their legitimate rights. As far as I know, when the foreign counterparts refuse to perform their obligations, many Chinese companies do not claim for compensation due to expensive cost and lack of experiences. However, if Chinese companies always easily give up their rights, not only will they suffer serious loss, but also the foreign partners will be encouraged in a sense to violate agreements and impair the interest of Chinese companies in the future .