The following is from a blog post I put up a few years ago and although it is brief and not as verbose as my other posts, it is certainly in my top ten favorites.
It is not surprising how many companies and entrepreneurs are in such
a hurry to get started in manufacturing, partnering or marketing that
they totally disregard the need for a contract, a simple memorandum of
understanding or something written on a cocktail napkin. It’s also not
surprising anymore (after 10 years in the Jungle) that people come to me
looking to recover losses incurred with Chinese suppliers, factories,
or partners and they don’t even have a basic agreement. Usually I have
to tell them that without an agreement, you really have no chance to
recover and that there are very few lawyers or legitimate collection
agencies in China that are willing to work on a contingency fee basis,
including yours truly.
So, as we enter the second quarter of 2013 and try to reach our
manufacturing goals and sales targets for the year, it might be time to
conduct a thorough review of your contracts. Do you have them? Are
they written in English and Chinese? Are they written by your U.S.-based
lawyer who knows nothing about China? Are they written by your Chinese
lawyer who has little or no obligation to advocate on your behalf and
has never even traveled outside of China?
I thought I would share this blog posting from The International Technology Law Blog
as a reminder that you shouldn’t start without a contract, and if you
have started you must conduct a thorough contract review or you risk not
having any recourse for recovery when you get shafted by your Chinese
factory, supplier or partner. There are many factors that must be
considered when presenting and negotiating a contract with the Chinese
and you better have someone skilled and experienced in China looking out
for your best interests.
by Frank Caruso
IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.