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Originally Published MX November/December 2007

BUSINESS PLANNING & TECHNOLOGY DEVELOPMENT

Legal Differences

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The legal system in China is different from those in many Western nations. Although legal counsel is required in navigating the cross-cultural complexities, it can be useful to keep the following general principles in mind when doing business in China.

  • Chinese courts rely primarily on documentation rather than on people's testimony. Keeping
        as much information as possible about business activities in writing will be a powerful aid in
        any legal action.
  • Be careful to fulfill contractual obligations relating to quality. If a contract specifies that the
        buyer will conduct quality inspections and the buyer fails to do so, it may become more
        difficult to hold the supplier liable for defects later.
  • The contract should make clear how disputes will be resolved before the legal stage. If the
        contract is subject to Chinese law, any independent arbitration should also be done in China.
  • The United Nations Convention on Contracts for the International Sale of Goods (CISG) has
         been ratified by China and is now usable within the Chinese legal system. The CISG
        framework may often be as good a choice as Chinese contracts, or better.

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