Owed a LITTLE Money by Your Chinese Manufacturer? Good Luck with That

For at least a decade, our law firm has probably never gone a week without getting an email from a company that has paid anywhere between $500 and $50,000 for product from a Chinese manufacturer and received either nothing in return or product that clearly is not up to snuff. These days, we are getting one or two of these emails a day.

The writers of these emails all want to know what they/we can do.

In virtually all cases, the purchasing company has never visited the Chinese manufacturer to which they wired the funds and, in most instances, the Chinese manufacturer has stopped responding in any way to the bilked company’s entreaties.

The writers of these emails all want to know what they/we can do (I am repeating this for effect!).

Some of these bilked purchases have already reported the foreign manufacturer to the Chinese Embassy in their home country and/or to their own embassy in China, but with either no response or a form letter back, saying that the Embassy does not get involved in these sorts of civil law matters.

They want to know what they/we can do.

They often have a vague notion that our international litigation lawyers can get some embassy or government official somewhere to come down hard on the foreign manufacturer or that we would be happy to sue the Chinese manufacturer on a contingency fee basis somewhere and bring them to heel.

The following is my typical response to these emails.

We would be happy to review all the relevant documents in your case and write a demand letter in the native language of your manufacturer, but this seldom works. And before we do that, we will need to do at least some basic research to determine whether the manufacturer to which you sent your money even exists and, if it does exist, whether it has sufficient assets to be worth pursuing. For what this entails, I suggest you read this.

Your other alternative is to have us find the right lawyer in the city in which your manufacturer is located and who speaks English and will sue on your behalf. Or you can spend way more than the amount at stake warrants and sue in your home country and then try to attach any assets this manufacturer might have in your home country, but they almost certainly have none. You might also try to find an international debt collection agency to take this on, but my understanding is that few if any that will be interested.

We will charge you hourly to review your documents and draft a short memo setting out your best options. If you hire a Chinese law firm to sue in China, you will almost certainly need to pay them and pay relatively high filing fees. The fact that you do not have a China-centric manufacturing contract means there is a good chance you will not even prevail if you do sue.

I would be remiss if I did not also mention that before we do anything that will anger anyone in China, we should make sure there is nothing the angry Chinese company can do to mess with (or even destroy) the business or manufacturing you are doing in China. This usually involves our making sure everything you are doing in China is being done legally (you would be surprised at how often this is not the case) and making sure your intellectual property assets are not at risk in China due to failures on your part to register them in China.

Going through the above will not come cheaply. So in other words, it is not looking good for you right now and maybe the best thing you can do is mark this all down to experience and be a lot more wary about doing business with China in the future. If the US/Chinese embassies/consulates did anything on these sorts of cases, that is all that they would be doing because my firm alone gets at least two of these a week.

BOTTOM LINE: Don’t let this happen to you. If the amount at stake is higher than that mentioned above, the situation is very different.