How to avoid disputes in purchase process in china

During the agreement drafting step.

1.Choose a reliable （honest ,good reputaion） manufacturer or supplier

How many employees? How big is the office(factory)? registered in Industrial and Commercial Bureau?2 a foreign natural person or a foreign company ,who will be the buyer?

If the buyer is a domestic company ,including a foreign invested one , or a person no matter but if a foreign company when a litigaiton or arbitration must be commited ,then the identification of the company,(commercial licence),the power of person who will sign all the documents ,the power of a chinese attorey all must be notarized in the registered country and testified by the chinese consulate in this country,Under some particular situation ,it become very difficutl.

I cite one case which i dealt ,an iraq company

A natural person is better for the convenience in legal procedures

3 drafting a good contract

3.1 the elememts necessary and very important but disregardful in a contract

Now in china, phone call recording is a lawful evidence,and you can record the conversation without a judge’s permission. email communication is digital evidence,it is also legal.

I strongly advise you to add the email address phone number in the contract.

When disputes arise ,the communication content like email content,phone reconding, message will be useful to prove the truth. Otherwise ,you have to prove the phone,the email was used for the transaction. Sometime proving this is an impossible mission.

Bank account the representative

3.2defining the goods (standard,specifications) clearly

the standard(international ,domestic ,china)

Special requirements must be described in details.

3.3 sale by sample

3.3.1Your intention(sale by sample ) must be stated clearly in contract.

3.3.2 samples must be sealed up in a suitable way

3.3.3 you can demand the goods both be the same as the samle and be up to the specifications. And state clearly when there is conflicts between the sample and specifications ,which one is the final criteria.

Manufacturing and delivery step

not finish all the procedures(select a supplier,place an order ,cosign for shipment ,etc )by internet or telephone have spot inspections in the factory, use the same person to follow up the order, .. Don’t let anyone who don’t know your products collect your order and do QC, unless they have a physical sample in hand. Open each carton AND each pack, check as more as you can.

Not depend entirely on an inspection report,even an CIQ one .not to say believe the supplier’s promise.

I have recently Dealt with two cases concerning foods exported to Iran and Yemen ,CIQ inspection report and sanitary certificate were attached ,but in the destination country,the food found the goods are not suitable for humanm being.

Two years ago ,a youngman from Syria consulted me a case,he finished all the process by email or phone,not check the company,the goods ,or ask a third person to have a check before puting into the container, the goods were found garbage in the desination port. The value is more than one million Rmb,He was too trustful .

so you have a check on the spot ,particularly when the value of trade is very big. you can’t be wrong if you’re careful enough.

Discharge step,

It is better that the goods be checked when unloaded from the ship,when quality probem turned up, ask test organization( better an international authoritative one like SGS) to have a test ,and collect all the evidence proving the loss,expense.the test report shall include the container number ,seal numbe ,the information of B/l,the manufacturer, brand ,the contact way ,etc as detailed as possible.

It is always too late to have check in your own warehouse.this test report unable to help you trace back to the factory ,it is useless in the court for you to claim against the manufactuer

When quality problem show up ,you shall contact with the other party promptly,and settle the problem as quickly as possibly.the Iranian purchaser found the insurfficient quality ,though contacted with the supplier , but never get to a conclusion ,assumed falsely if purchaser would not claim for his loss,the seller would accordingly give up his claim for the balance.but after nearly two year,the purchser was sued in the court ,then the buyer could not submit any evidence to the court proving the quality fail ,which is useful to offset the seller’s claim.and after two years ,it is too late to collect and prepare these evidence.

in payment process

1Anti-Hacker

Many cases happend ,the big amount lost .Hackers and fraundsters’ intrusion into purchaser or seller’s email.cheating the payment from abroad ask the buyer sent money into another bank account registered in hongkong or guangzhou,etc,

Citing one example,

waiyan@++.cn vvaiyan@++.cn

So when the buyer will be demanded to tranfer the price to another bank account ,you must be carful,comfirm by phone before paying ,or have alternative email for special use like comfirmation.

2 anti -escaping with your money(your representative)

This matter often happens.

Keep the information of your staff,like I.D information

Making agreement defining his obligaiton.

Determine a paticular bank account exclusivly for receiving your money and for paying the suppliers,all the money in this account is presumed yours. The staff report the payment regularly.

Irregularly audit the account and comfirm with the suppliers about the payment,