Why Should I Retain a Chinese Law Firm?

Date: June 26, 2014

Why Should I Retain a Chinese Law Firm?

There are many benefits to hiring a Chinese law firm. Sometimes a representative on the ground is indispensable. Whether you are operating within Aisa or elsewhere, it is always reassuring having someone on-site and ready to respond at short notice. Additionally, there are many procedures and functions that a foreign attorney, even with an international firm, simply cannot perform.

You need competence in the drafting of documents and transactions—specificity is key. Although it may seem beneficial and expeditious to simply pull a template from the internet, even the most expansive generally-termed contract cannot cover everything you have in mind. Every situation is different.

But beneath the obvious need for a Chinese attorney (e.g., drafting bilingual contracts, advising on Chinese law, registering intellectual property locally) the benefits are legion. The rule of law is a burgeoning concept in China. There has never been a more pressing need for competent legal counsel.

You should bear in mind that your presence may be required in China for business. At such times, whether you are looking for, or managing vendors, legal consultation is likely to be needed. For example, product safety is incredibly important. In the U.S. or in Europe, there is a distributor who is the importer of record and, if anything goes wrong, the distributor absorbs the liability (or at most shares liability). However, in China you are likely to be the importer of record. Even if you are completely unaware of or unconnected with any wrong doing on behalf of a supplier (e.g., labor disputes, product hazards) the local government may come after you. Do not relax when a factory manager tells you that they are “globally insured.” Consider for a moment, would a U.S. lawyer go after a Chinese-based supplier when there is a stateside defendant to go after? Generally, if you are a U.S. citizen (or even a non-citizen, but with “minimum contacts” in the U.S.) you are always subject to U.S. jurisdiction. As the importer of record, YOU are directly liable. As such, liability comes with the duty to stay informed of the relevant laws of both the U.S. and mainland China.

Consider another case illustration: when dealing with electronics, whether in the U.S. or Europe, you will be responsible for safety certifications. Even if the factory considers their product CE or UL certified, you are responsible for staying abreast of any developments and changes in the regulations (rubber stamps do not equal compliance). You may have had a great relationship with a genuine supplier for years, but regulations always change. In other words, no matter what, even if you have found a good apple supplier, they may, because of a slight error, be out of compliance.

International shipping is a maze of hurdles that can lead to costly delays. For example, your new product’s customs clearance might require additional paperwork and duties. A quick phone call to your Chinese-based counsel at the border can avoid lengthy and unnecessary delays.

You may remember Jeremy Bentham’s school of thought known as “Utilitarianism.” Among the many principles he espoused, the most relevant here is deterrence. Put yourself in the shoes of a supplier. If a supplier knows that you have retained local counsel, it is more likely than not that he or she will exercise more diligence and care throughout production as your response to any wrongdoing will be much more swift and efficient. Part of avoiding the most common mistakes in China is to make yourself a moving target. This also includes educating yourself about both the remarkable benefits and the unfortunate realities of doing business in China. As mentioned before, even a great supplier can sometimes make a mistake. Thus you and your counsel’s fastidiousness may be mutually beneficial.

At times it may seem more convenient to hire a domestic, U.S.-based law firm. But consider this: even for the most basic tasks, a U.S. firm might consider it more efficient to outsource its in-house responsibilities to a Chinese firm! With this in mind, it is logical to cut out the middle man and connect directly with the firm handling the matter. Another reason clients may hesitate to hire a Chinese attorney is that—well, let’s face it—because it can be such a daunting task finding a good Chinese supplier, it follows it may be just as difficult to find an effective Chinese legal firm. But bear in mind that the key is finding a firm that can communicate not only with you, but also with your associates.

With all the practical considerations, it is always good to know that you have local support in such a land of opportunity as China.


By Mike Bellamy

Mike Bellamy is an Advisory Board Member & Featured Blogger at the not-for-profit China Sourcing Information Center . He is also the author of, “The Essential Reference Guide to ChinaSourcing” and founder of PassageMaker Sourcing Solutions.

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