China sourcing: Are bilingual contracts necessary?

After AsiaBridgeLaw.com’s presentation regarding the importance of bilingual contracts at the Hong Kong sourcing fair hosted by Global Sources, some clients wrote me asking more about bilingual contracts. A few clients wanted to know, “Do you really think Bilingual contracts are necessary?”

I understand clients’ concerns. China sourcing issues are something that we deal with everyday; if something goes wrong, many clients doubt a good contract will protect them from trouble. Periodically I hear comments like: ‘the Chinese legal system is slated against foreigners.’ I agree that China’s legal system is far from perfect, but I don’t think it’s slated. A Chinese person could feel just as confused as any foreigner when dealing with all these changing laws and regulations, although foreigners do face the cultural difference and language barrier.

The truth is, it’s not easy for Chinese to win a case, and it’s more difficult for them to recover his or her money, even if the judge rules in his or her favor.

So, why do we need a contract?

First, a well prepared contract gives out the signal: I care. Other people will think before acting against you.
Second, a good contract provides remedy if anything should go wrong. Although it’s not easy to win a case, if you do yourhomework, you will find you can win!

In my opinion, doing business without a good contract is akin to parking your car in public with a broken window.

What do you think? Let us know in the comments below…