Company A is based in Florida. It’s a new business that plans to sell slip-on shoes with funky new designs. To ensure getting the maximum profits from their sales, Company A chose to work with Company B, which is a Chinese manufacturer.
Company A orders $50,000 worth of shoes from Company B. As a precaution, Company A sent over a contract that was drafted in accordance with laws in Florida and the United States. The contract was promptly signed and sent back online.
The deadline for the product came but Company B asked for an extension. The next deadline arrived and the manufacturer had another excuse. This happened several times until finally, Company B stopped responding. Company A tried to reach out but then they found out that the manufacturer had ceased to operate.
The Long Arm of the Law Isn’t Long Enough
In the scenario that we have laid out, Company A can try to sue Company B in an American court. In practical terms, however, that’s not going to do any good. Even if Company A wins the case, it cannot be enforced.
So having a contract and agreement is not enough. That contract should also be enforceable. The truth is you’re going to have a hard time enforcing a foreign contract within China. Not only that, it can be costly.
Third Party Services to Safeguard Working with Chinese Manufacturers
Problems with manufacturers in China are rare. Still, you cannot take the chance when you’re dealing with tens of thousands or even millions of dollars worth of orders. You need to safeguard your business.
The good news is that there are services that can help you in dealing with Chinese manufacturers. We have listed here some of those third party services.
A Law Firm Familiar with Chinese Commercial Law
In the example we have cited, Company A had a contract but it proved to be useless. This does not mean a contract is unnecessary, it just has to be enforceable. There are a few things that a contract must meet for it to be helpful.
The Contract Must Be Governed By Chinese Law
This increases the chances that a Chinese court will enforce a contract. Keep in mind that it’s not a guarantee.
Enforceable By a Chinese Court That Has Jurisdiction Over the Manufacturer
This means the contract is enforceable by a Chinese court that has jurisdiction where the manufacturer has its place of business.
Does your contract have those qualities? If your answer is no then you need to get one drafted now.
You need to find a firm that’s familiar with Chinese commercial law and has experience in drafting contracts with foreign companies.
You can have your contract written in English and then get help from a company that provides quality translation services. Tomedes is an all-rounder that can provide translation services in different media and fields which is why it is a top choice in the industry.
Why is it necessary to have the contract translated into Chinese?
There’s a very simple reason for this. Chinese courts will only work with Chinese documents. It would be so easier if you worked with a translator right from the start. The output of these companies are certified so you can be confident that what’s written on your contract is accurate.
The translation services can translate the necessary documents into the required language.
Translation services can also come in handy during negotiations with the manufacturers. They can help make sure that you are getting the most out of your money or at the very least not get cheated.
Translation companies can help you understand the full picture as they are capable of real-time translation to translate emails and also help with interpretation.
Another third party service that you need to get is that of an inspector. These inspectors visit the manufacturer’s factory and check the products on your behalf. They can provide you with a comprehensive report about the status of your products. It’s like being there in China without actually going there.
Warehousing & Shipping Services
Having your products manufactured is just one step in getting products from a foreign supplier. Getting those products to your location is the next major step. There are companies that can help you to warehouse your products and then ship them.
While the manufacturers can ship the product themselves, it makes sense to have a warehousing company if you’re dealing with multiple manufacturers. The warehousing company can consolidate all of your orders and ship them all together.
Shipping your products can be a tricky business since the shipping rates can fluctuate each week. The rates have reached $20,000 per 40-foot box in August 2021. Letting someone experienced in dealing with shipping can save you money in the long run.
The Chinese manufacturing output reached $3,853.81B back in 2020. The pandemic did not stop the growth of the manufacturing industry there. Western businesses are still turning to Chinese companies right now. If you’re planning on working with a Chinese manufacturer, you should consider getting the services listed here, especially those that can help you in creating contracts.
Don’t be like Company A. Make sure that your contract is actually enforceable in case there’s a problem.
Christian Ray Pilares is a professional writer who has been writing about legal, financial, and language-related topics for years now.