Doing business in China
As I am sure everyone knows, China has been the engine powering the world recovery from the 2007 — 2009 recession. Up until a few months ago, anyway. In August of 2015, the value of imports fell more than 14%. Their stock market took a serious tumble — about 25%. Withal, it still remains one of the premier places in the world for international trade and commerce.
In selecting a trading partner, the first and most important distinction must be made between private industrial firms and those that are state-owned enterprises. When doing business with a privately owned firm, in theory, at least, a foreign creditor has access to commercial courts. When doing business with a state owned enterprise, the access still exists, but is heavily influenced by whatever position the government seeks to take. Keep in mind that the government is communist to the core: the Communist Party controls what is taught in the law schools, and the state routinely censors and blocks access to international websites. Immigration into China by foreigners is almost impossible. It is fair to say that exporting to China carries considerable risk if credit is extended. It is also fair to say that the size and importance of China as a market almost forces an exporter to be involved in that market.
Our experience has been that the financial and business results of engagement with a Chinese importer or joint venture will often be dependent upon the quality of the credit and background investigation in China: this is critical and it must be thorough.
Have questions about collecting a debt in China? Feel free to reach out to our office and we would be glad to assist you.
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William Victor Gruman