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:
- 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.
- 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.
- 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.