Before starting any commercial negotiation with a Chinese counterpart, it is a good practice to conduct some appropriate preliminary checks to protect your interests.
First of all, it is advisable to always ask your Chinese partner for a copy of the "business license", which indicates the personal data of the company (date of incorporation, registered office, share capital, corporate purpose, legal representative). These data can also be verified on the public portal "National Enterprise Credit Information Publicity", having available the company name in Chinese characters. Any other more in-depth information can be verified through a local detective agency.
It is also advisable to ensure that your Chinese counterpart holds all the licenses required in China to carry out its business in relation to a specific sector (e.g. food, medical, etc.) or business (import, export, sale, production) . If the product is to be imported into Europe, it will be necessary to check whether the Chinese seller has obtained CE certification.
Once you have passed all the preliminary checks, you can start negotiating with your Chinese counterpart. In addition to the cultural aspects to consider (which were analyzed in a previous article), attention will also have to be paid to a series of formalities to ensure that the contract is valid from a legal point of view. Among these formalities we can mention the following:
1.The signed contract must also include the official chop of the Chinese company. Here is an example of official chop:
2.The signed contract must include the original Chinese company name indicated in Chinese characters. In commercial practice, chinese companies often present themselves with names in English that are the result of a free translation and that do not always correspond to their official company name.
3. An original copy of the contract signed and stamped by the other party must be obtained by post to provide valid proof in the event of any future disputes.
From a substantive point of view, it is also important that the contract is tailor made and drawn up in a simple and clear way based on the will of the parties. It is not advisable to use standardized contract formats drawn up on the basis of different legal systems (for example the Anglo-Saxon ones), as this could create problems in the interpretation and execution of the contract. From a linguistic point of view, to contain translation costs it is possible to draw up the contract on the basis of a language of common knowledge of the parties (for example English), but it is always advisable to translate the final agreed version into Chinese, if the contract must be performed in China.
In less complex cases, the Contract may be replaced by a purchase order or invoice, provided that it contains all the essential conditions of the sale (payment terms, applicable forum, quantity, quality and description of the product, delivery times, etc.) and is chopped and signed by the other party.
Avv. Lifang Dong and Avv. Chiara Civitelli
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