Know the Reasons to have a China Law Firm by your Side

There are huge queries faced by the China lawyers from the American and European companies seeking remedies in identifying the strength behind their pleas for getting paid on indemnification or settlement agreements or for breaches of investment or merger contracts.

 

China is the most competitive manufacturing nation, with cost competitiveness being a significant factor. Although there are many important parts involved in getting your product(s) manufactured in China, the most important is your contract. Foreign companies doing business in China usually maintain three types of manufacturing agreements with a Chinese factory:

 

  1. Original equipment manufacturing (OEM): Used when a foreign buyer purchases a product already being made by the factory and simply adds its own branding to it.

 

  1. Contract manufacturing (CM): Used when a foreign buyer has a fully developed product design, which is then brought to a factory for commercialization and mass production.

 

  1. Original design manufacturing (ODM): Used when a foreign buyer approaches a factory with a basic design and specifications, but the factory actually makes the commercial design and ultimately the production.


Foreign Companies Should Undertake Patent Lawsuits In China

China has Basic, Intermediate, and Higher People’s Courts, in addition to the Supreme People’s Court. Until the end of 2014, there were 32 Higher People’s Courts with jurisdiction over patent cases. The existence of this large number of courts makes it simple to undertake patent-related cases and getting a swift verdict. Monetary and injunctive remedies are both available for patent cases in China. The judges of the specialized IP courts of China are competent in intellectual property matters, both factually and legally.

 

There is one solution foreign service providers can take in order to reduce the risk of tax deduction. The solution is to shift all of the payment-related risks onto your Chinese customers. Put a provision while signing a service contract that all payments must be made net of taxes and fees. If the invoice amount is $50,000, the overseas service provider will receive exactly $50,000. On behalf of the overseas service provider, it is the Chinese customer who is going to pay all the fees and taxes. It is perhaps the best possible way to tackle the tax deduction issue.

 

How a reliable China law firm helps you at every stage-

Many times, it has been experienced by the foreign companies that in spite of being a part-owner of a Chinese company they are not receiving any profit. It is the tech-companies that go through this type of situation most. The best way to get rid of this problem is to get your ownership documents properly checked by a reliable China lawyer.

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Carry Out Business Operation Seamlessly with the Help of China Business Lawyers

Most companies and entrepreneurs are sourcing from China for two main reasons. The first reason is the long-term objective of creating a market presence in China for the purpose of serving the economy. The other reason is a short-term objective of taking advantage of low labor costs in this part of the world. Forming a distribution contract in China is the best possible option for foreign businesses to distribute their manufacturing goods in Mainland China.

 

As an overseas company, if you are not willing to appoint agents in China to act on behalf of you, then going for a distribution contract is the ideal way to operate over here. The risk is less and the gains are enormous.

 

Working with Chinese manufacturers

Working with Chinese manufacturers is not easy because you have to be very careful regarding the agreement prepared for the same purpose. Price, delivery deadline, and quantity are the most important elements in the agreement as they are critical to the business establishment. These vital factors must be addressed right at the beginning of preparing a contract by the Chinese business lawyers.

 

A Chinese lawyer is required to draft a contract by clearly explaining these terms right at the beginning.

 

Incorporating these fundamental terms right at the onset can be done in two ways.

 

FIRST- The manufacturing contract drawn for the purchase of goods is a binding one for a particular quantity of product to be delivered within a stipulated time frame and a fixed price. The outstation purchaser has an obligation to purchase while the manufacturer is compelled to sell. Failure in any of these will be considered a breach of the agreement. A letter of credit is often attached to this kind of agreement.

SECOND- A contract stating the purchase of goods is formed only after the foreign purchaser submits the purchase order which is also accepted by the Chinese manufacturer for which the terms and conditions are laid earlier. This contract is however not formed when the foreign buyer does not provide a purchase order and the Chinese manufacturer does not have anything to accept it. In case there is no submission of an order or there is a rejection of order these are not considered a breach of contract. This type of agreement comes without a letter of credit.

 

China is really unpredictable in its measures for curtailing corruption. Also, it is unpredictable regarding enforcing those laws frequently. Chinese government’s behavior with foreign companies has always been that of a foster child. They always strike more on foreign companies to safeguard the interest of the homegrown companies. It has struck down and still continues to strike on the foreign companies a lot more. As a result, the foreign companies have been hit the worst in this regard.

Another very important point is that, in case, you are doing business in the Chinese environment with such a thing that is politically sensitive, then you have to worry a lot more and be extra careful. You may be hit anytime. This is a common practice in the Chinese business environment.

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