Working with China # 5: 14 Business Points
In a previous post ( Working with China # 3 ), quite a few readers voted to learn as much as possible about doing business in the Middle Kingdom. I didn’t forget about it, and for almost a month I thought in what form it is better to implement it. Ultimately, I came to the conclusion that I will form a small list of 14 items, with basic rules and approaches for everyone. Have a nice study!
PS: Many thanks to the specialists from HotTelecom and 898Tele for the comments made.
1. To sign any, even a small contract, a presence in China is required. The conclusion of distance contracts, as in the case of counterparties from Europe or the USA, is fraught with loss of money due to the high level of fraud.
2. It is advisable to have a manager and a specialist in quality control at the place of fulfillment of obligations. If this is not possible, conclude an agreement with an intermediary from the CIS and provide such services.
3. We always check the history of counterparties. With a new company or a company in whose history losses are visible, prepaid work is “ordered”.
4. In order should be not only documents, but also physical addresses. If the Chinese counterparty refuses to show the factory, office, warehouses with goods, citing some problems, in 70% of cases they are resellers. High probability of a scam.
5. The minimum amount of prepayment for starting work with China ranges from $ 15-45k. It does not make sense to negotiate amounts larger than this, at the initial stage, because in the case of unscrupulous contractors, this amount is already enough for the “partner” to go to fraud.
6. The classical scheme of fraud by Chinese counterparties is the products of the chemical industry. The quality of chemicals and plastics used is difficult to verify.
7. The contract for the Chinese side is not a clear, but an approximate plan of action. Everything that is not stipulated and not written down to the smallest detail is not necessary for execution.
Bad example: “There should be Russian-language localization in the party of phones.”
A good example: “The party of phones should have Russian-language localization. Base for translation - Dahl Explanatory Dictionary. Support for encodings X, Y, Z. Verification of the translation work is carried out by organization M, in the manner prescribed by clauses 14, 28 and 198, of agreement L. In case of discrepancies, conditions C are met. At the output, we obtain a result corresponding to GT. ”
8. During negotiations, the Chinese side can easily switch to their native language. Always stipulate the conditions of communication and be sure to bring an interpreter with you during live communication.
9. The Chinese side considers it quite normal to attempt to manipulate the local representatives of your company. For this purpose “massage evenings”, gifts, etc. are organized. actions to collect incriminating evidence.
10. Any technology, the description of which is attached to the contract, in 98% of cases will be copied for third-party use. Be prepared for this. The same applies to the brand. An example of such a case was described by me here .
11. When drafting a contract, try to avoid multiple languages. If this has already happened:
- Indicate which version is prevailing (for example: in English);
- Be sure to check the accuracy of the translation. There are often situations when the Chinese side absolutely spits on the English and Russian-language copies, focusing on the copy drawn up in Chinese, with all the consequences.
12. Pay attention to the wording “prepayment” and “deposit”. According to the norms of Chinese law, the deposit is not refundable to the party that paid it in case of refusal to fulfill the contract.
13. Getting started with China is easiest to do through Hong Kong. Its advantage, as a jurisdiction for the registration of international trading companies, is the absence of VAT.
14. If you doubt the feasibility of opening a local office from the start, the easiest way to start is with a “virtual” / cloud office. About who provides such services is described here .
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