Legal News

The Lawyer’s Role in China Business Transactions

Negotiating with Chinese Companies

When negotiations start stalling between my firm’s client (typically an American or European or Australian company) and their Chinese counter-party, our client will often request one of my law firm’s China lawyers step in. The clients often think the problem is linguistic and one of our Mandarin-speaking attorneys can solve that problem by talking directly with the Chinese company or with the Chinese company’s Chinese attorney. Other times, our lawyers are asked to step in to explain to the Chinese lawyer on the other side why his or her client just doesn’t get it.

We typically refuse because lawyers stepping in does not usually make sense in the context of China business transactions. I recently explained by email to a client why this is the case:

Our contacting the Chinese company’s lawyer would be viewed as bad form in China and it also is unlikely to advance anything in this matter. Lawyers in China do not play the same role in deals as lawyers do in the United States. Chinese lawyers generally do not have close relationships with their clients, who view them as little more than technicians who write up what they are told.

This being the case, we are concerned that if we contact the Chinese company’s lawyers, the Chinese company (and their lawyers) will view you as not taking the deal as seriously as you should. We are also concerned they will view our stepping in as a lack of trust by you towards them and maybe even as you questioning their competence. On top of that, Chinese lawyers keep things close to the vest and when we do talk to them they usually say nothing more than that they have to talk to the client.

Deal points are nearly always handled client to client in China, not via the lawyers and this is true of in-house lawyers as well. Though it is often useful for us to talk to an in house or outside lawyer when it is a question of how to draft a provision to which the business people have already agreed, it is almost never useful for us to initiate such contact when there is no agreement, when there is on-going negotiation or when there are open issues or concerns. Those sorts of things need to go through proper channels as determined by the business people. Chinese legal staff usually do not participate in negotiating contracts, which are viewed as a business issue. The best way to handle these things is typically via an email from you the client. Chinese companies tend to prefer writings over oral communications in any event because their written English tends to be better than their spoken.

In other words, it usually makes sense in a China context for negotiations to be business to business, not lawyer to lawyer or lawyer to business.

4 responses to “The Lawyer’s Role in China Business Transactions”

  1. “In other words, it usually makes sense in a China context for negotiations to be business to business, not lawyer to lawyer or lawyer to business.”
    “Mano a Mano”….

  2. Uh, so you’re saying there’s no role for the lawyers in business transactions or negotiations with Chinese companies. I guess another way of putting it is a lot of deals get ‘over-lawyered’.  

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