Whereas foreign companies carrying out business in China occasionally find themselves confronted with disputes with Chinese individuals, companies, or even the Chinese Government, I would like to talk about how to avoid business disputes and how to resolve business disputes (including conciliation, mediation, arbitration and litigation) in China. The information provided is by no means comprehensive, and is not legal advice. We suggest foreign enterprises considering entering the Chinese market should retain a local qualified business lawyers.

 Good planning can help you avoid disputes. We recommend foreign companies consider the following:

1. Make sure you know your partner. Do your “due diligence" and do it well. Choose your partner carefully and only after a careful examination of experience and dependability.

2. Make sure you get paid. A contract with an insolvent partner or customer is worthless.

Pay careful attention to how you get paid, when you get paid, and in which currency. If you have agreed to be paid in Chinese Yuan, verify that you can convert profits to U.S. dollars. Use letters of credit or other financial instruments to protect yourself.

3. Do a thorough risk analysis. Be realistic about how much risk you are willing to accept in your business venture. Make sure you use reliable sources for this assessment. Use more than news media sources or your immediate partners to evaluate the risk.

4. Have clear contract terms. Specify exact terms of payment and performance standards. Set time lines. Include specific dispute resolution clauses, including details on the procedure and maintenance of operations during the pendency of a dispute. Pay careful attention to details, such as initialing pages of contracts and signing properly. Make sure the Chinese version of the contract is consistent with the English version. Do not attempt to enter into an agreement without sound legal advice.