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Contracts? Just a start.. E-mail
City Life - Blogs & Columns
Written by David A. Dayton
No matter how long I’m here, this will always be one of the things that I just can not stand. Maybe I am just too American. Maybe it is just that I hate negotiating the same thing over and over again, but I just hate this part of doing business in China.

Latest example is the landlord of one of our offices—she has decided that “everything in the office is hers since she rented the office to us at “such a low price.”Yea right. Never mind the fact that we have a contract that clearly states that the office was rented “empty” and that all “decorations and furnishings” are the tenant’s (my) responsibility. She wants to start negotiations from the point of “it’s all mine” and “I won’t give you your deposit back” unless we give her all the furnishings. I’m at a loss for words. It’s flat out extortion but it’s also business as usual in China.

So what to do?

Well, we hired a lawyer–Dan, I wish you guys were in Shenzhen. Then we completely stopped talking with her. Now she’s scared and giving us concessions like they were candy.

But I’m just amazed that she’s even got the guts to try to pull off something like this. She treats us, as do many factories, like we don’t know about contracts, legal proceedings and have no recourse buy to work with her on her terms—classic Chinese power play. Most threats are a show. The show is half the battle—if you can win the stage show you’ve got a great chance of getting what you want, or at least more than what you originally contracted for.

If you are ever in a situation where you are scared that you could lose what you’ve already contracted for, remember you have a contract (and it better be in English or you’re probably already dead) and China’s fledgling legal system does give you some rights and you can pursue those to their legal ends. It not too expensive to hire legal representation in China and if you have some representation chances are you will turn the tables on whomever is pressuring you—they’ll claim to have hired a lawyer, but probably have not.

In China most negotiations are never written down so it’s up to you to record everything. And I mean everything! *Side Note—Text messages can be used in court but faxes can’t.* Notes from meetings should be detailed, translated and sent to all parties—if you’re the instigator of these records then you’ve got the upper hand because you know that your Chinese antagonist will most likely not do it. Phone calls to your secretary, to the factory or whomever else, people that phone to tell you that they’ll be late or are changing something in the contract; these are the killer—you’ve got to keep track of all these changes. In addition to conversations, record that you’ve agreed to post-contract as well as what they’ve offered that you didn’t agree to. More often than not what they end up pushing in the end will turn out to be something they asked for but didn’t get in the beginning.

Make sure that you are following the law to the letter. Don’t cheat, lie or sneak you way into the country. Don’t double cross your Chinese partners and don’t play them for fools. If you expect the law to be on your side you had better be on the right side of the law yourself. It is the best feeling in the world to go into a negotiations session knowing that you have been completely honest and have the records to support your position. I’m sure its tons easier for your lawyer too.

NEVER NEVER NEVER change you contract—it’s like opening Pandora’s Box and once it’s open you’ll never get it closed again.

Lastly, wait out those putting pressure on you. Usually demands or changes are made when some party thinks they are in a position of power or thinks that you don’t have time to accommodate changes. If you are in a rush, you may be in trouble. If you are not in rush you can call their bluff.

David A. Dayton is the CEO of Silk Road International (SRI), an U.S.-owned and managed international procurement agency based in China. Click here to visit SRI's Website.

Our valuable Editor David A. Dayton has been with us since Monday, 02 November 2009.

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+1 #2 jack holmeson 2009-12-12 20:23
i met more shameless people like these in china than anywhere else.
i always got my right when going to the court in china. china has laws to protect contracts and one should use it. still, why this people like the landlord you described make so much unneccessary stress for their environment even though they KNOW they have no f.... right for/in what they demand!?
+1 #1 Burberry James 2009-12-10 02:30
i couldn´t agree more david. the mentality of most people here is so incredible ridiculous and absurd! or concerning contracts or in other situations: i have had an encounter with a chinese car driver who almost killed me (i was riding my bike) with his f**** car. he did not respect the red light and almost got me that bas****. well he said, that foreigners in china have no right to drive a bicycle in china, only chinese can!!! therefore it was his right to break the law by not respecting the RED traffic light!! he was completely serious and insisted of being right right right, because he is a chinese and this is china and the whole crap. WTF! well right before my first angry p...towards his f..., the police came by...that saved him ;-) incredible.

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