Recurring Issues in China Commercial Disputes
Short practical notes on problems that repeatedly affect foreign-company claims in China. These are issue patterns for general information, not descriptions of any particular client matter.
1. The contract company, bank beneficiary and factory are different
This is one of the most important issues to resolve before a supplier claim is filed. A buyer may have a purchase order with one company, be instructed by a salesperson to pay another company, and receive goods from a factory using a third name. The commercial relationship may be obvious to the buyer but legally the entities are separate.
The useful task is to map the evidence: who signed or stamped the contract, who gave payment instructions, who received the money, who invoiced, who communicated as the seller, and whether authority or agency can be established. Filing first and trying to solve identity later can create avoidable problems.
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2. Sending a demand can sometimes reduce preservation value
A demand letter is often useful, but it is not a ritual that must precede every case. If the counterparty appears financially distressed or likely to move assets, the timing of notice should be considered alongside preservation strategy. Conversely, where the debtor is stable and a commercial settlement is realistic, a carefully drafted demand may avoid unnecessary litigation.
The choice depends on evidence, urgency, asset risk, settlement history and the procedural route. The point is sequence: demand, preservation and filing should be planned together rather than treated as unrelated tasks.
3. A strong claim can still be a poor recovery case
Foreign creditors sometimes focus almost entirely on whether they will “win.” That matters, but collection economics matter too. A dormant company with no visible assets, multiple enforcement cases and no operating revenue presents a different decision from a counterparty that is still actively trading.
An early collectability review cannot guarantee recovery, but it can help decide whether to litigate immediately, negotiate, preserve, monitor or limit legal spend.
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4. Foreign-company filing documents can become the avoidable bottleneck
In cross-border litigation, the legal claim may be ready before the corporate and authorization documents are. Evidence of legal existence, representative authority, powers of attorney, translations and applicable Apostille or other authentication formalities should be identified early. Waiting until the statement of claim is complete can delay filing and preservation.
Foreign-company filing documents guide →
Have a China-side dispute that does not fit a standard template?
Send the key documents and commercial objective. The initial issue map can focus on the points that actually change strategy.