International Law

Owed A Little Money By A Chinese Company? Good Luck With That.

By Dan

Just about every week, we get a call from an American company that has paid anywhere between $5,000 and $50,000 for product from a Chinese company and received either nothing in return or product that clearly is not up to snuff.

They want to know what they/we can do. 

In virtually all cases, the U.S. company has never seen the Chinese company to whom they wired the funds and, in most instances, the Chinese company has stopped responding in any way to the American company. 

They want to know what they/we can do (I am repeating this for effect!).

Many of them have already reported the Chinese company to either the Chinese Embassy in the United States or the United States Embassy in China and received no succor. 

They want to know what they/we can do.

They often have a vague notion that we can get some embassy somewhere to come down hard on the Chinese company or, if not, that we can sue them somewhere and bring them to heel.

The following is my typical response is as follows: 

We will review all documents in your case and write a demand letter in Chinese to the Chinese company. This works less than half the time. Your other alternative is to find a lawyer in [the city in which the Chinese company is located] who speaks English and will sue (good luck with either of these) and then pay that lawyer and court fees. Or you can spend way more than the amount at stake warrants and sue in the United States and then try to attach any assets this Chinese company might have in the US. You might also try to find an international debt collection agency to take this on, but my understanding is that can be pretty difficult.

In other words, it is not looking good for you right now and maybe the best thing you can do is mark it down to experience. If the US/Chinese embassies/consulates did anything on these sorts of cases, that is all that they would be doing because my firm alone gets at least two of these a week. 

BOTTOM LINE: Don't let this happen to you. 

Full post as published by China Law Blog on August 19, 2010 (boomark / email).