In the last few months, our China lawyers have been seeing shifts in what is happening to Western companies that are doing business in China or seeking to do so. Among other things, we have noticed the following:
1. An increased number of people contacting us regarding problems with their China manufacturers. In far too many instances, the problem is that the Chinese manufacturer has not provided any of the product ordered or has provided only half of it. I find these phone calls and emails frustrating because much of the time the caller/e-mailer has no recourse that makes economic sense. I very nicely told this to a caller today who is out about USD$40,000 and she went into a long diatribe about how nobody in China can be trusted and how America needs to bring its manufacturing home. I tried to steer her into a more productive conversation and she then revealed there is “one” company in China that can be trusted because she has had a great relationship with that company for about a decade. Anyway, the best advice we can give to prevent these sorts of situations is to do your due diligence on the factory, pay as little as possible upfront, and have a good China Manufacturing Contract.
2. Some of our commodity clients (paper, iron ore, etc.) are telling us about Chinese buyers cancelling their contracts or seeking to renegotiate. Last time we “saw” this was back in 2008.
3. Chinese companies are starting to “market” to our clients. A couple clients told me their Chinese manufacturers were contacting them to offer steep discounts if they would order larger quantities right away. Both clients said this was the first time this had happened. I warned them to be very careful. See China Smells Like 2008: The Gloom and Doom Edition.
4. Access to public China business records has been curtailed. Not sure if this is directly related to the economy, but it may be.
What are you seeing out there?