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Doing Business In China. Do Not Pass Go. Do Not Go Directly To Jail.

Posted in China Business, Legal News

Got a call the other day from an American company wanting to sell its food products into China. And fast.

The problem this company is facing is that one cannot “just” sell food into China immediately. To sell food legally into China, Foreign companies must first pass certification before China’s General Administration of Quality Supervision, Inspection and Quarantine, better known as AQSIQ (中华人民共和国国家质量监督检验检疫总局).  The food company told me that its research had revealed that it typically takes around a year to secure this certification, but that someone in China was promising they could do it in “around six to eight weeks.”

The food company was calling me (based on a referral) to hire us to secure their certification in “six to eight weeks.”  My response was essentially as follows:

If your research is telling you that it typically takes a year, there is absolutely no way we can do it in eight weeks.  Maybe we can do it in ten months, but that would only be if absolutely everything goes our way.  In fact, we do not even do this sort of work because there are plenty of really good companies that do nothing but assist foreign companies in securing AQSIQ certification and you should contact some of those. You do not need a lawyer for that; you just need someone experienced and honest.

As far as the company that is claiming to be able to get your AQSIQ approval in six to eight weeks, RUN away.  And fast. That company is doing one of two things and neither will be good for you or your company.  It is either paying bribes or it is going to fail.

If it is paying bribes, you are paying bribes because it is your agent and let me tell you, if the Feds sue you for an FCPA violation, I’m not going to want to be the lawyer to stand in front of the jury and explain how you had no clue that the extra fees you were paying this company was going to be used illegally to speed up a foreign registration.

Let’s just say this company succeeds and you jump to the front of the line and get your AQSIQ certification.  Do you want to always be at risk of having Beijing pull your AQSIQ certification when it finds out what happened?  I don’t know what the chances of that are, but I know they are considerably higher than zero.

If that Chinese company is not paying bribes, my worry is that it will simply pocket your funds and disappear.  Trust me when I tell you I have heard many stories about this sort of thing and companies that offer to pass on bribes are prime candidates for stealing.  Or, at best, it will succeed in about a year and just have all sorts of excuses as to why it took so long.

Retain a good company and do it right. Trying to cut corners just isn’t worth it. This holds true for doing business in China in all areas, not just AQSIQ.

The American company thanked me and vehemently agreed.

  • KD

    It’s funny how much of the good advice in China basically boils down to your last paragraph. For all the “China is different” talk, the bottom line is you need a viable product or service to sell and you need to make a good faith attempt to follow the rules (plus more than a bit of hard work). There certainly are differences, but that’s the same basic advice you’d give anybody going into business in the US.

    • http://www.chinalawblog.com/ Dan Harris

      Exactly. That’s the theme of my two minute “China isn’t Mars” speech that I find myself giving to clients from time to time.