Understanding Chinese Contract Law and Negotiation Practice

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Understanding Chinese Contract Law and
Negotiation Practice

• Min He
• China Business Advisor

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Outline

• I. A Comparison
• II. FAQ of Chinese Contract Law
• III. Due Diligence
• IV. Negotiating with the Chinese

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I. A Comparison of Chinese and British Contract
Law

• The Principles

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(No Transcript)
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II. FAQ
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FAQ 1 Forms to Establish A Contract

• Writing form
• Oral form
• Other forms
• Note Clause 36

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FAQ 2 Contents of A Contract

• Names and addresses of the parties
• Specifications
• Quality and inspection or test procedure
• Price and payment terms
• Location and means of contract implementation
• Compensation in case of contract breach
• Means of settlement in case of a dispute

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FAQ 3 Confidential and Manufacturing Agreement

• Identify reliable manufacturers
• Break down your products to be produced by
  different manufactures
• Non-disclosure or confidential agreement
• Protect your IP!

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FAQ 4 How Fast Can you Get to Contract Stage?
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FAQ 5 How to Settle A Dispute?
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III. Due Diligence

• Knowing Your Chinese Counterparts

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Business License
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Try to Get Information Of

• Company ownership
• Main customers and suppliers
• Key management background
• Financial information
• Operational information

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How to obtain financial and operational
information

• Government departments
• Customer reference
• Suppliers
• Employees
• Others

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IV. Negotiating with the Chinese(Ian Crawford
The British Chamber of Commerce, Shanghai)
Western
Chinese
Objective
Start
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Negotiation Tips

• Negotiate with the right people
• Check understanding
• Dont force the decision during negotiation
• Bargaining
• Contract in both English and Chinese
• Using the interpreters effectively
• Dont be pressurised into signing
• Just the beginning!

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Acknowledgement

• PRC Contract Law
• John MacKenzie, Pinsent Masons
• Vince Cunningham, China-Britain Business Review
• THANK YOU!