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How To Change Your WFOE Legal Representative. It Ain’t Easy….

By Dan Harris on Posted in Legal News
Over the years my law firm has been called in a number of times to try to get rid of an out of control Legal Representative of a WOFE.  Typically, the company calling us thinks that it ought to be able to rid itself of its WFOE Legal Representative simply by issuing a resolution making it so.
Wrong.
The last time we executed a change of Legal Representative for a Beijing WFOE, we had to draft/provide the following:
  1. Amendment of the Articles of Association in Chinese. Four originals.
  2. Amendment of the Articles of Association in English.  For reference only.
  3. Application letter for commercial bureau in Chinese.  Two originals.
  4. Application letter for commercial bureau in English: For reference only.
  5. Application letter for SAFE in Chinese.  Two originals.
  6. Application letter for SAFE in English. For reference only.
  7. Appointment letter in Chinese. Four originals.
  8. Appointment letter in English. For reference only.
  9. Introduction letter in Chinese. One original, with Beijing company chop.
  10. Introduction letter in English. For reference only.
  11. Letter of undertaking in Chinese. Four originals.
  12. Letter of undertaking in English. For reference only.
  13. Removal letter in Chinese. Four originals.
  14. Removal letter in English. For reference only.
  15. Resolution of the Investor/WFOE owner in Chinese. Four originals
  16. Resolution of the Investor/WFOE owner in English. For reference only.
  17. Power of attorney in Chinese for seal record. Two Originals.
  18. Power of attorney in English for seal record in English. For reference only.
  19. Power of attorney in Chinese. Four originals.
  20. Power of attorney in English. For reference only.
We also needed the following documents from our client:
  1. Business license. Original and two copies with Company Chop.
  2. Approval certificate.  Original and two copies with Company Chop.
  3. Most recent full year audit report.  Two copies with Company Chop.
  4. Most recent capital verification report. Two copies with Company Chop.
  5. Foreign exchange IC card. Original.
  6. Enterprise code certificate. Original and one copy.
  7. Tax certificate. Original and one copy.
  8. Custom registration certificate. Original.
  9. Financial certificate. Original and one copy.
  10. Registry Book for Foreign-Invested Enterprises. Original.
  11. Notice of annual inspection. One copy with Company Chop
  12. Annual examination certificate. Two copies with Company Chop
The above was what was required the last time we did this in Beijing.  The requirements vary by city and even by district and by examiner within each city.
Bottom Line:  Choose your legal representative wisely because it will take a lot of time and a lot of effort to remove him or her involuntarily.

What Is Right With China?

By Dan Harris on Posted in China Business

If you haven’t been reading ChinaFile’s twice weekly “Conversation,” you should be.  It basically consists of a bunch of knowledgeable China people getting together and discussing one (usually deep think) China issue. I particularly liked the most recent one, the topic of which was “China: What’s Going Right?”  This conversation was with Michael Zhao, James Fallows, Orville Schell and Jeremy Goldkorn.

Zhao likes how China is spending money on scientific research.  Fallows is impressed by China’s “national movement and ambition.”  Schell cited to China’s “commitment to dealing resolutely with certain kinds of problems, such as clean energy, the building of infrastructure, supporting education, investing in scientific research” that “have created a spirit …. that, instead of conveying an air of being hemmed-in by an era of limits, conveys the feel of a society hell-bent on building a more prosperous and stronger country. ”

I liked Goldkorn’s bullet pointed answers best.  Instead of citing one big issue, he listed a bunch of them.  I also liked his preface to his list, which consisted of the following:

I’ll answer this question with an off-the-cuff and very personal list. Some may say these points are not actually good things, or that China isn’t actually doing these things well, or that the outcomes will not be copacetic. One of the very negative things about China is that if you look deep enough into any feel-good story, you’ll find something wrong or rotten, but this is a list of positives, so I won’t qualify my point with an acknowledgement of the counter arguments.

He then gives us his list and here is some of that:

  • Continuing to lift millions and millions of people out of poverty (that’s the big one).  I gave China kudos for this just last month.
  • A culture of hard work, thrift, and diligence that emphasizes the importance of education.  Agreed
  • Investing in Africa, seeing developing countries as potential markets rather than basket cases.  I sort of agree. I wish American companies were more aggressive in going into frontier markets so I agree with giving China kudos for this. But at the same time, Chinese companies are not exactly winning friends and influencing people in these places.  
  • Infrastructure.  Absolutely.
  • Internet humor, Internet-based literature.  Yes.  
  • Real family values: China is a culture that supports families; you can take a baby anywhere and no one will give you nasty looks about crying, etc.  Very true.
  • Food.  Amen.
What do you think?  What is right with China these days?

Doing Business In China. What’s Trust Got To Do With It?

By Dan Harris on Posted in China Business

A few weeks ago, I met with Scott Markman and John Yang of the Monogram Group, a Chicago advertising, branding, and market research company.  What differentiates the Monogram Group and what led to our meeting is their China practice, which they describe as follows:

In 2007, Monogram established the first branding practice in the US dedicated to creating brands for Chinese companies in the US market.

Our clients have ranged from large industrial to consumer product companies, and they include Goldwind Wind Turbines, Donghua Chain, Dongfeng Tractors, Wensli Silk, Asianbag Dashboard Mounts and GreenShip Pots & Planters.

In addition, we have published three national tracking studies on US consumers’ attitudes towards China and Chinese brands. These studies and our branding work for Chinese companies have been covered by media outlets worldwide, including Xinhua (China’s official press agency), Wall Street Journal, AdAge Global, Industry Week, ARD German TV, Chicago Tribune, Crain’s Chicago Business, China Daily USA, The China Business Network and others.

During our meeting, the three of us talked at length about the differences in how business is done in China as compared to the United States and at one point John spoke about the differing roles that trust plays in the two countries.  I loved what he said, how he said it and I particularly loved that he was speaking as a Chinese with extensive knowledge regarding the business cultures of both countries.  Both this blog and the entire China blogosphere are frequently criticized for our Western views on China and I cop to that.  As an excuse, what can I do?  Well, what I can do is to try to pull other viewpoints into this blog.

And that is what I have done here.

I asked John to write a guest post on the differing role of trust in China business as compared to US business. The following is John’s post.

 

Everyone doing business in China or with Chinese knows “Guanxi” — relationship. There are two types of “Guanxi”: connection based and money based relationships. As an American company, we don’t want bribe our way in, so let’s put money based relationships aside.

The most important factor in connection based Guanxi is “Xinren” — trust. What makes it difficult to do business in China is not lack of Guanxi but lack of trust. Whether you are American, Chinese, German, Japanese or Russian, we all need trust to do business with each other. When we do business without trust, things fall apart. However, there is a difference between Chinese and Americans on how to build trust.

Simply speaking, trust in America is built on social and legal systems, while trust in China is built on personal relationships.

In the US, we are taught to be honest and frank with each other. Chinese are taught the same thing in school. We are not only taught to be honest but also to do what we are taught. You can’t do business or even make friends without being trustworthy. The social system in the United States rewards honest people and punishes liars and cheaters. It is in everyone’s own best interest to be honest. Moreover, it is not just maintained on a moral level, but also a legal level. We do have bad guys here in the US as well, but that’s when the legal system takes care of them. There is no market for them.

In China, people don’t trust the legal system because it can’t always protect them. They can’t trust business partners they have just met for a few times because there are so many bad guys lying and cheating every day. They can’t tell if you are one of them, or not. People doing business with each other rely on their personal faith in those who they are working with.

There are many reasons leading to today’s status quo, including the following:

  1. Broken Legal System. China is a young country when we count how many years it has operated with a free market and Western laws. The laws are incomplete. What makes it worse is ineffective execution because of bureaucracy and corruption.
  2. History and Culture. China is a society that went directly from feudalism to communism. Chinese are still highly influenced by the rules/philosophy played in wartime. According to “The Art of War” by Sun Tzu, “nothing is too deceitful in war.” These rules are still valuable in politics and military, but they create negative side effects in business, where we are not fighting but collaborating with each other for our own benefit.
  3. Bureaucracy and Corruption.Because government officials are appointed by superiors rather than elected by the citizens, they only need to work for the interests of their superiors. A high level official in Jiangsu province wrote a letter of 8 golden doctrines to his son who decided to get into politics career.
    • Rule #1: Your objective is to not to find the truth but what’s right for you. Your superior is always right.
    • Rule #2: You should not only learn how to tell a lie but be really good at it. The careers of a hooker and an official are very similar. The difference is an official is betrayed by his mouth.
  4. Materialism. The opening up and reforming brought in the free market but also materialism and money worship. It’s like the gold rush era in the 1850s in the US. When I was in elementary school, honest people were praised. By the time I went to high school, suddenly, people preferred to marry their daughter to “sharpies and liars” because they were “smarter” and more suitable for society. Their years of experience after opening up and reforming told them sharpies and liars were making more money in society and becoming managers of companies, while honest people were staying as farmers and workers.

So what should companies do in China to protect their interest and overcome the hurdles?

  1. Contracts. The number one rule to doing business in China is not to completely rely upon contracts. People break contracts all the time. That doesn’t mean you don’t need contract; you always do. You just need more than a contract.
  2. Find the Right People. You are doing business with a company, but really, you are doing business with individuals inside that company. I’m sure you can find the good guys in China. It is just much harder to find them.
  3. Build Personal Friendship beyond Business Relationship. In the US, we need to build mutual interest to do business with each other. It is also true in China. However, it is equally, if not more important, to build personal friendship.
  4. Build An Effective System. It is critical to build an effective system (rules/procedures) to avoid giving the chance for bad behavior. When I was in college, my professor told us a simple rule of trust. “If you give me 5000 RMB and want me to keep it for you, you can come at any time to get it back. If you give me 50 million RMB and want me to keep it for you, I will calculate my risk, and may take it and leave.”

 

China Importation 101. Part II.

By Dan Harris on Posted in China Business

China is evolving and certain things that were “no big deal” five years ago are a big deal now. Dealing with China customs law is a prime example of that. If you are a foreign company doing business in China that involves importing products into China (or exporting, but less so), it behooves you now more than ever to get things right.

This is part two of a series of posts by Shawn Mahoney designed to help you avoid China customs problems.  Go here for Part I, China Importation 101, which dealt mostly with the core concepts related to importing product into China.

 

A good friend wrote me after reading last week’s post and asked me three questions. Why didn’t I discuss the Harmonized Tariff Schedule differences, similarities to US and EU laws and the Enterprise Classification and Management (MCME) system? I am sharing my answer with you the reader: The MCME is best discussed as part of my upcoming China Customs post as it is a GACC (The General Administration of Customs) program, and the other two are best discussed as part of today’s post. This post covers the seemingly mundane basics of the importation process in China.

China’s laws and regulations regarding imports are very similar (sometimes exactly the same) to US and EU laws and regulations. It is important to note this similarity while simultaneously understanding the differences in China’s real world enforcement and execution. A great example of this is HTS (Harmonized Tariff Schedule) codes. For those in the trade you know HTS codes are virtually the same in the US, Europe and elsewhere. In China, there is a slight difference; small enough to go unnoticed by many exporters, but large enough to cause issues when utilized incorrectly. You see, though the first six digits are the same most of the time, the 7th and 8th digits, and the 2-digit suffix, are often different from what we use in the US. To add to this confusion many items that use a full 10 digits in the US, only use 8 digits in China and vice-versa.

I guarantee some are reading this right now and saying to themselves, we use the same HTS and we have never had a problem. I am sure this is true. The question is not are you currently having a problem, the question is are you properly classifying your goods? This is important for obvious reasons, since if your goods are misclassified, you may not be paying the correct tariff and duties. If you are not paying the correct tariff and duties and you get audited, you may owe GACC a lot of money. This end result is very similar to the US, in that you will not escape without large amounts of money being spent on attorneys, fines, over due tariffs or all of the above.

In addition to the correct HTS code, there are certain items required on all shipping documents (yes even samples!) to China. If any of these is wrong or differs from the other documents you have provided (more on this in my upcoming post about GACC), it is a sure-fire way to get your shipment stopped. On all your shipping documents to China you need the following:

  • The correct HTS code
  • The importer’s CR (Customs Registration) Code
  • Product name with description
  • Product quantity
  • Country of Origin
  • Quantity of units, boxes, and pallets
  • Unit Value and Total value
  • Weight

Sometimes you also will need:

  • Part Number
  • Lot Number – Production date – Expiration date

A quick sidebar on CR Codes, the Customs Registration Code is a unique number given to every importer in China as part of registering with GACC. No company can import anything, except documents, into China without a CR Code/Number. Many foreign companies are unaware this number is required or that all companies must have this number to legally import anything into China. I will discuss in my upcoming posts the importance of understanding these types of requirements in your interactions with GACC and AQSIQ.

Knowing what to put on your documentation for selling into China is only part of the battle. Knowing which documents are required is equally, if not more important. All shipments to China require the following documents:

  • Invoice on Company Letterhead (address must be included)
  • Packing List on Company Letterhead (address must be included)
  • Certificate of Origin
  • Airway Bill/Ocean Bill of Lading

Documents that may be required (product dependent)

  • US Department of Agriculture Health or other Certificate
  • Local Health, Sales and Operations Licenses
  • Certificate of Analysis
  • MSDS with Proof of Content (also applies to food, wine and other categories, in these cases content must be on letterhead with no MSDS)
  • Certificate of Free Sale
  • Bottling/Production/Manufacturing date on Letterhead
  • CCC Mark or other special import license documentation

There is also a difference between shipping your goods for the first time and all subsequent importations. First time imports usually require greater documentation than all repeat importations. This is typically true for products where additional licensing is required (retail products, food, chemicals, items requiring CCC mark etc.).

Labels are the final area I will cover in this post. Chinese language labels are required for all products that will end up on retail shelves. What is required varies from product to product with the standards for electronics and food/beverage being the most stringent. One requirement that crosses all product lines is that the Chinese label cover the foreign language label.  Common requirements include:

  • Product Name
  • Raw Materials/Ingredients
  • Country of Origin
  • Date of Production (Year/Month/Day)
  • Expiration Date (Year/Month/Day)
  • Storage Condition
  • Distributor Name and Address

To be continued….

Five Tips For Good Translations At Your China Meetings

By Dan Harris on Posted in China Business

Though Steve Barru only recently started his China Business Hand Blog, I am already a big fan.  Steve is just back in the United States after 25 years in China and it would be no exaggeration to call him a China hand.  I spoke with Steve for a spell a few weeks ago and at the end of our conversation I asked if he would do a guest post on our blog focused on something key to doing business in China well.  The below is Steve’s post.

By:  Steve Barru

Recently in the China Law Blog LinkedIn group, a discussion about problems Americans have negotiating with Chinese quickly morphed into a discussion about problems with translation. I was reminded of sitting through more than a few meetings and conferences in China that were savaged by poor quality translation. In some cases bad translation resulted in deals that did not happen because both parties had no clue what the other was talking about.

An American friend who used to manage a joint venture in China estimated that anywhere from 10% to 20% of any given meeting he sat through was lost in translation. In addition to straightforward mistranslations, he noted that nuance and tone tend to disappear from translations. Keep in mind, cultural differences make it tough for both Chinese and Americans to read each others’ non-verbal signals and body language, creating more room for misunderstanding.

Encounters across two languages are never going to be perfect, but there are steps you can take to protect yourself against losses caused by incompetent or untrustworthy interpreters. Most importantly, come up with a plan for how you are going to handle language and translation issues before you get involved in meetings with Chinese. The following five tips for good translations at your China meetings can help.

1.  BYOI – bring your own interpreter.   Never rely on your counter party’s interpreter. Would you ask your counter party’s lawyer to determine if the partnership agreement you want to sign is a sound deal? Of course not. So, why would you base what you know about a meeting on what your counter party’s interpreter tells you?

2.  Bring a second Chinese speaker.  In addition to an interpreter, you want a second Chinese speaker accompanying you to meetings. First, this person is there to intervene when inaccurate translations threaten to derail a meeting. Second, they are there to keep interpreters honest. The last thing you need is an interpreter who adds his or her interpretation to your message. Or an interpreter who, unbeknownst to you, is colluding with the people across the table to wring concessions out of you.

Rather than participating in the back and forth discussion, this person can follow the flow of a meeting and be a source of invaluable insights.

You need somebody you know and trust in this role, even if you already have a full time interpreter working out of your existing China office. If you are going to pick up a temp interpreter from an agency in China, a set of bilingual ears at your side is all the more important. Hire and pay to bring along someone from the United States if necessary. You will not regret it.

3.  Remember that English is a foreign language for Chinese people.  Help your interpreter get it right. Whenever possible, use simple, grammatically correct sentences and teach yourself to speak clearly and to enunciate each word. “How are you doing?” not “Howyadoin?” Speak two or three sentences at a time and then pause for translation. Even the best interpreters will have trouble with long, rambling monologues. Lastly, remove Americanisms from your speech. Bilingual China meetings are not the place for expressions like “can you ballpark that for me” or “we need to get our ducks in a row”.

4.  Test the interpreter before the meeting.  Sitting down at your first meeting with an interpreter you met twenty minutes earlier is a recipe for trouble. Before you hire an interpreter from an agency, quiz the candidate. Have a (non-confidential) discussion about your business and your industry. Work with a Chinese staff member or the Chinese speaker who is accompanying you to test the interpreter’s bilingual language skills. Do your best to ensure that your interpreter is familiar with general conditions and terminology in your industry before you head out to meet anybody.

5.  Your interpreter is not necessarily your friend.  Temp interpreters are just that: temps. They may speak great English and “feel” like someone you can trust, but this does not mean they are trustworthy. It is a mistake to make assumptions about personal character based on foreign language ability. Be cautious. Tell temp interpreters what they need to know to be effective in business meetings. But do not let them sit in on your strategy sessions or give them access to your confidential business information.

Translation disasters are mostly avoidable. A bit of advanced planning and a dose of common sense are all it takes to get it right.

Where To Form Your China WFOE? What’s Law Got To Do With It?

By Dan Harris on Posted in Legal News

Twice in the last couple of months while working on registering WFOEs for clients, clients have come to us and asked our thoughts about switching their WFOE formation cities.  In both cases, their basis for questioning came from having heard that some nearby city was easier for a China WFOE formation and had better labor laws.  Our response in both cases was essentially as follows:

City A (the city for which we have already undertaken company formation work) is not known for being one of the easiest places in China to register a WFOE, but it it also is not known for being one of the toughest either.  We have registered a number of WFOEs there without any major problems.  Might it take a few weeks or even a month longer to register your company in City A than in City B (the newly proposed city)?  Yes, it might.  Then again, it very well might not.
I am not aware of the labor law being any tougher in City A than in City B, though City A does have a higher minimum wage and I believe that its various employer taxes are a bit higher as well. But unless you are planning to hire a number of employees at the minimum wage (which you are not) then this probably isn’t much of a factor for you.

This person telling you that you can set the company up in City B and have operations in City A is correct, but it will not be nearly as easy as he is making it out to be in that to do this you will almost certainly need to set up a branch office in City A to do so.  Also, if your operations are in City A and your employees are in City A, you will be bound by City A’s labor laws in any event.  You will always be better off forming your China company in the city where you will be conducting your proposed operations. What is being proposed  is a type of “virtual office” arrangement, which is almost never a good idea for China. Even in the unlikely event you save some time in company formation, the problems that would follow later would far outweigh any time benefit in the formation process.

If you would like we would be happy to do a comparison between City A and City B in terms of their labor laws and their employer taxes, but those will still be only one of many factors that you should consider in terms of where to locate.  Or do you have other reasons to favor City B over City A?
As you have probably guessed by now, the point of this post is that rarely should one choose their WFOE location based on legal considerations.  There is though one glaring exception to this “rule”: trading companies, as not all cities/provinces allow those.

Legal Guides To China

By Dan Harris on Posted in Legal News, Recommended Reading

Just got an email complimenting us for being on the US Library of Congress’s China section to its Guide to Law online.  This was actually news to us as was the existence of this site at all.  But present company excluded, its list of legal guides to China is a good one, and here it is:

Anything outdated in the above?  Anything that should be added?  What do you think?

Protecting Against Trademark Infringement in China. The Basics For Fashion Apparel.

By Dan Harris on Posted in Basics of China Business Law, China Business, Legal News

A few weeks ago, one of the lawyers in my office, emailed me an article co-written by a law school friend of hers.  The article was on trademark infringement in the clothing industry and on what clothing companies/fashion companies should do to protect their China trademarks, written by Yujing Shu and Hai-Ching Yang of KLGates.  The note with the email said that she thought I “would be interested in the article because we represent so many clothing companies with their China IP.”  I was very interested in the article for those exact reasons, but then chose not to write about it because it did not say anything “new.”

Since then, one of our IP lawyers spoke at a “Legal Protection in Fashion” event and later told me of how interested the audience (and even the other panelists) were in how to protect fashion IP in China.  Then the other day, I spoke with a large clothing company and was surprised at their lack of knowledge regarding how to protect their IP in China.  They essentially did not even know it was important or even possible.

All of this is my incredibly round-about way of noting that I should have weeks ago written about the article that was emailed to me.  The article is entitled What Your Company Should Know About Protecting Against Trademark Infringements in China’s Fashion Apparel Industry and it does a nice job setting out the basics of what fashion apparel companies need to do to protect their IP in China.  And though the article does not contain anything particularly new, that is only because the way to use China’s legal system for trademark protection has not changed in quite some time and does not vary much by industry.

Here is their spot-on advice:

  • Register your trademark as quickly as possible.  Since China follows the “first to file” policy, registering your trademark as quickly as possible is the key to protecting your IP.  
  • Properly register your trademarks by registering multiple categories and subcategories of goods.  As a preventative measure, companies should register their trademarks in as many closely related categories and sub-categories of goods.
  • Vigilantly monitor infringement actions and use China’s administrative process.  Companies should use the administrative process to cease infringing products and tools, impose fines, and seek court imposed raids if necessary. 
  • Use court proceedings to seek damages and to obtain well-known trademark status.  As courts have become the main channel to protect IP, companies can use litigation to serve as warnings for other violators.  Companies can also seek the court’s recognition of “well-known trademark” status in current or future cases for increased trademark protection.

Just what every China lawyer has been saying for years now to companies in all industries.  We have been saying it because it is true and necessary.  Here are some more tips on protecting against trademark infringement in China, all of which apply to the fashion industry:

  • Register your trademark or copyright in your home country.  Typically it makes sense to do this before you start doing business with China.
  • Before doing business in China, consider which provinces do the best job of protecting intellectual property.
  • Review and revise your own Web site with an eye towards removing anything that makes for a good target for intellectual property thieves.
  • Stay ahead of the copiers by rapidly introducing new products, improving on your existing ones and building your brand image.
  • Have a contract with your Chinese factories that clearly forbids copying and specifies liquidated damages for violations.
  • Use tracking technology to monitor the product you are having made in your Chinese factories.
  • Have anti-counterfeiting elements put into your products and/or packaging.  I am always amazed at what can be done in this arena.
  • Monitor your manufacturers.

What else?

Think You Have A China Trademark Or China Company? Check Again.

By Dan Harris on Posted in China Business

A loyal reader sent me an article this morning regarding a Chinese citizen who had fabricated his ownership in a US bank and used that fabrication to gain power in his hometown. This happened about a year ago so not sure why it was sent to me today, but the reader sent it with a request that we highlight “the fake service businesses that are all over China.”

I am not even sure what the reader means by fake service businesses all over China and I have an email out to him to clarify.  In the meantime though, I will write about the two fake service companies we see most often in our China law practice: the fake entity registration company and the fake trademark registration company.

Every few months or so we are retained by a foreign company (almost always a US-based company) to have us figure out what they have in in terms of a China company and about half the time, we have to go back to them and tell them that they don’t have a thing.  The big problem with most of the fake company registration services we have encountered is that they not only fail to register the company, as promised, they also run off with the registered capital. We also are sometimes asked to check on China trademarks and we are finding that about half the time the registration that was paid for was never done.  Our numbers are no doubt high because those who come to us already have suspicions, but if you have any doubts about what was done for you, it would certainly behoove you to find out.

Do you-all have any good stories to add?

Your China Contract Should Be In Chinese. Here’s Why.

By Dan Harris on Posted in Basics of China Business Law, Legal News

It is widely believed by American lawyers that their clients should do whatever they can to avoid finding themselves in a Chinese court.  This widespread belief is usually wrong.  It is usually wrong because most of the time it is the American company that will want to sue the Chinese company, not vice-versa. That being the case, the best place to sue a Chinese company is in China.  Is suing a Chinese company in China a great thing? No.  Obviously not.  But if you sue a Chinese company in China and you win, you have at least a decent chance of collecting on your judgment.  If you sue a Chinese company in the United States and win, you have almost no chance of ever collecting.  Chinese courts do not enforce US judgments.  Ever.  So unless the Chinese company against whom you get your judgment has assets in the United States (or in some third country that enforces US judgments), your US judgment is of zero value. Zero. For more on this, check out the following:

So if suing Chinese companies in China usually makes the most sense, your contract with that Chinese company should be written in such a way as to maximize your chances of prevailing in China at the lowest cost.  How do you do that?

Well the most important thing is to put that contract in Chinese.  We have always done this and we have done it because if it is in English the Chinese court will translate it into Chinese itself.  This effectively means that you will not know the exact contract on which you are suing until after the court comes back to you with the Chinese version.  Certainly it makes better sense to have your lawyers dictate what your contract says as opposed to some Chinese court.  But lately I have been hearing that a number of Chinese courts will not enforce English language contracts at all.  There is no law that says no enforcement, but various courts have taken it upon themselves to hold English language contracts void.  I have heard this from two “China people” I greatly respect but I have no personal experience to back this up.  One of these people told me that a number of Chinese lawyers had told him that “English language contracts are only admissible only IF the court so chooses. They also have the right to dictate how and who translates the contract.”  Another person told me that he had his English language contract rejected by a court in Chengdu as invalid.

Would love to hear other experiences with trying to enforce an English language contract in a China court.  In the meantime though, do your China contract in Chinese.  Okay?