Getting money out of China lawyersNot a week goes by without one of the China attorneys at my firm getting an email or a phone call from someone (usually an American or a European) wanting us to help them complete a house sale to a Chinese citizen or with some plan for selling houses to Chinese citizens.

They want to know how their potential buyer can get X dollars out from China to pay for the house or houses. We usually respond to these calls with something like the following:

China generally prohibits its citizens  from sending more than USD$50,000 each year outside China without government approval to send more and that approval is virtually never given for buying a house overseas. There are sometimes legal workarounds — but not often — and for us to know if there are any in this case you will need to retain us and pay us and then we would need to know a lot more facts and conduct a fair amount of research and almost certainly speak with Chinese government agencies as well. But here’s the thing you should be asking yourself. Why are you the one making this call and not the Chinese buyer? The holdup here is happening on the China side so wouldn’t it make better sense for the Chinese buyer to hire his or her own domestic Chinese lawyer in China rather than having an American hire an American lawyer (or when these calls come through our Spain office, having a European hire a European lawyer)? I strongly suspect the reason you have been tasked with this is because the Chinese buyer believes there is no legal way for it to get the money out so he or she is just figuring why not have you spend thousands of dollars to run to ground various ideas for getting the money out.

Our China attorneys have handled a number of large dollar single home deals, but only for sellers who want us to help them justify getting out of a deal with Chinese buyers because they now have a higher offer on the table and they are tired of waiting around for the deal with their Chinese buyers to close. This makes sense.

There are a whole host of quasi-legal ways to get money out of China, such as bitcoin, loans, company to company transfers for alleged product or service purchases, and various other things, but all have various risks.

Success in getting money out of China legally is generally going to depend on the following:

  • The nature of the transaction. Real estate purchases tend to be the worst of all because Chinese citizens must expressly state that they are not asking to send money out of China to purchase real estate.
  • The parties on both sides.
  • The relationship and the history between the parties.
  • The location of the parties.
  • The nationalities and even the ethnicities of the parties (especially the receiving party).

The Chinese government tends to look at all of the above (and more) to determine whether its citizens can take money out or not. Note that the rules for foreigners taking money out of China are far more random, especially when it comes to getting proceeds out on a real estate sale. But very generally, if you have really good documents showing how the money came in and proving that you have paid all necessary taxes and that you don’t owe anyone in China (government or otherwise) any money, you should be legally allowed to get the money out. Would that were always the case and we’ve heard plenty of nightmares from people who have tried, including stories where the amount involved (typically $3,000 to $6,000) was too little to keep trying or to hire an attorney or an accountant to assist them. For foreigners, much depends on who you are dealing with at the bank and how China feels that particular day about its foreign currency reserves.

The more legally interesting calls come from American and European companies facing the following situations:

For more on getting paid from China, check out the following: China Payment Risk and China Payment Risk, Part 2.

What are you seeing out there?

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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.