This is the body of a presentation that I give for Global Sources at the China Sourcing fairs. Global Sources asked for a presentation that was aimed at helping new buyers to China understand what some of their options for financing are now that the world economy is so bad. There are, to be honest, no new options (TT’s and LC’s are still the standard), but there are some unique situations that may offer some new opportunities for buyers coming to China.

Read the rest of “China: Sourcing in Bad Economic Times – Part 1” or post a comment >>

By Matthew Kowalak.

There are, unfortunately, times when contracts, for whatever reason, need to be voided. The problem is, when can contracts legally be voided in China? There are specific circumstances when this indeed can be done. But to make it work, you have to meet specific legal criteria.

The key to understanding these types of contracts is to note when they are actually voidable. There are three situations in which you have the option of voiding a contract in China.

1. A contract made by a “significant misconception” – This one is tough, because there are not really enough cases on the books in China to even attempt to take a guess at what “significant” implies. Tentatively, if you are able to prove that in some aspect of the contract, one of the parties made significantly misleading promises that are not in sync with industry standards, you may meet this standard.
2. Contracts that are “significantly unfair” – This has more to do with contracts in which
   some aspect of the agreement has changed significantly from the time the contract began to be effective to the time of performance by one of the parties.
3. A contract signed “under duress” – While this seems like a straight forward idea, no one can somehow force you to sign a contract and force you to perform it, in reality duress can be difficult to prove.

Read the rest of “Voidable Chinese Contracts” or post a comment

By Navjot Singh

Prior to the conclusion of the twentieth century, Asia’s two largest neighbouring countries, India and China, were, with all due respect, not close in any economic, social or political ways. Relations have been improving since the early twenty-first century following four decades of hostility over a border dispute that resulted in a short conflict in 1962.

Thankfully, with the change of the times, there have been a number of key events to celebrate the re-emergence of Sino-Indian relations. In recent years, the Elephant (India) and the Dragon (China) have established friendship years (2006 and 2007 respectively), joint military exercises, and exchange visits by political figures as well as captains of industry. Economic and political ties have been boosted since the 2006 visit by President Hu Jintao to India, when a myriad of trade agreements were signed. On an equal footing in return, Indian Prime Minister Dr. Manmohan Singh’s first official visit to China in January 2008 was a progression on a similar visit by China’s President Hu to India, as the two nations agreed to pencil down eleven trade agreements which would boost trade to $60 billion by 2010 from the current 2008 level of almost $40 billion. Read the rest of “India and China: Neighbours, Global Economic Powerhouses, and Now Friends As Well” or post a comment

By Stephen Lou

Introduction

In the wake of the economic crisis, there have been stories of foreigners in Dubai abandoning anything from their automobiles, newly purchased real estate, and other belongings while leaving the country for fear of facing criminal liability due to unpaid debts. China too has seen similar trends regarding foreign investors abandoning their manufacturing plants, liquidating existing bank accounts and leaving unpaid debts to creditors and employees. China’s relevant ministries have responded with the issuance of the Working Guidelines on Cross-border Pursuit of Liability and Initiation of Legal Action by Relevant Interested Parties in Connection with Abnormal Withdrawal from China of Foreign Investors, to assist Chinese parties to initiate legal action against such foreign investors.

The Guidelines can also affect foreign investors, who have not necessarily “abnormally withdrawn”, but who have not gone through the proper closure/de-registration procedures of a company. Read the rest of “New Guidelines For Legal Action Against Foreign Investors: More reason to Properly Closing Your Company” or post a comment

By Maarten Roos

Common is the story of the foreigner who thought he was buying from a Chinese company, only to find out later that the Chinese company never existed – making any claim for repayment futile. This extreme example serves to illustrate the need to know one’s Chinese business partner beyond the rituals of exchanging name cards and sharing food and drink; with cultural and language barriers clouding mutual perceptions, it is all the more important to understand whom you are dealing with.

How deep an understanding is appropriate depends on the transaction at hand. To acquire a Chinese target company and all its existing liabilities, an in-depth legal and financial due diligence is recommended, while for a simple commercial transaction a copy of the Chinese company’s business license may be sufficiently re-assuring. In many cases, the middle way is to check a target company’s Company File. Read the rest of “Chinese Trends in Company Investigations” or post a comment