Make no mistake about it, even in these allegedly enlightened times, a whole lot of stereotyping and ethnic profiling goes on in international business. The other day, I was telling an American client how it was time for us to look start seizing assets of a Norwegian company that owed my client a lot of money and appeared to be making no effort to pay it. My client’s explanation for not wanting to pursue litigation was that he has been dealing with Norwegians for twenty years and when they can pay, they always do: “I am not going seize assets from a Norwegian company.”
In the last six months or so, I have started hearing a lot of wrong-headed ethnic profiling from Asian companies (mostly Korean and Chinese) who are telling me they always believed American companies always pay. Sadly, some of these companies literally built their businesses on this belief, not even imagining that things could be otherwise. Let me explain.
I met with a Chinese company owed mega-millions by a US company and its story, though sad, is surprisingly typical. This company makes one fairly expensive product. It started out mostly exporting this product to Korea, Vietnam and Thailand. Soon it realized it could sell this product for a tiny bit more to the United States. Soon it realized it could huge quantities of this product to one good-sized American company, that, in turn, would essentially distribute it through US retailers. Soon, this Chinese company pretty much ceased selling its product to anyone other than this one large US company. It still sold to Korean, Vietnamese and Thai companies that would place orders, but it completely ceased trying to expand its business in those countries.
Now the problem. The US company has owed the Chinese company mega-millions for months and yet still wants to buy more product on credit. The US company has a good reason for being unable to pay and there is the possibility it will at some point be able to do so. But, right now, this Chinese company is hurting so badly financially that it is questionable whether it will be able to stay in business. It is trying now to revive its sales channels to other companies in the United States and in Asia, but now is not exactly the best financial climate for capturing new customers.
When I asked them why they were coming to me so lot for ideas on how they could assure payment from this American company, their response was that “they never even imagined it would not pay: “We thought American companies always pay.”
This company has export credit insurance from the Chinese export insurance company and there was a time where that government owned company paid fairly quickly on such claims. Now though, it is not paying, instead it is claiming it needs to try to collect the money from the American company first. I have dealt with these Chinese export insurance companies and seen them in action enough to be able to give the following advice to this Chinese company:
1. You might get paid by the American company in time to save your business if the money the American company is expecting comes in.
2. You might get paid by the American company in time to save your business if our suing it persuades it to pay you before its other creditors.
3. You almost certainly will not get paid in time to save your business if you wait for the China export insurance company to get paid by the American company and then pay you.
Things are tough out there. What are you seeing?

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Dan Harris

I am a founder of Harris Bricken, an international law firm with lawyers in Los Angeles, Portland, San Francisco, Seattle, China and Spain.

I mostly represent companies doing business in emerging market countries. It has taken me many years to build my network and it takes constant communication and travel to maintain it. My work has been as varied as securing the release of two improperly held helicopters in Papua New Guinea, setting up a legal framework to move slag from Canada to Poland’s interior, overseeing hundreds of litigation and arbitration matters in Korea, helping someone avoid terrorism charges in Japan, and seizing fish product in China to collect on a debt.

I was named as one of only three Washington State Amazing Lawyers in International Law, I am AV rated by Martindale-Hubbell Law Directory (its highest rating), I am rated 10.0 by AVVO.com (its highest rating), and I am a SuperLawyer.

I am a frequent writer and public speaker on doing business in Asia and I constantly travel between the United States and Asia. I most commonly speak on China law issues and I am the lead writer of the award winning China Law Blog (www.chinalawblog.com). Forbes Magazine, Fortune Magazine, the Wall Street Journal, Investors Business Daily, Business Week, The National Law Journal, The Washington Post, The ABA Journal, The Economist, Newsweek, NPR, The New York Times and Inside Counsel have all interviewed me regarding various aspects of my international law practice.

I am licensed in Washington, Illinois, and Alaska.

In tandem with the international law team at my firm, I focus on setting up/registering companies overseas (via WFOEs, Rep Offices or Joint Ventures), drafting international contracts (NDAs, OEM Agreements, licensing, distribution, etc.), protecting IP (trademarks, trade secrets, copyrights and patents), and overseeing M&A transactions.