Demand Letters to Chinese Companies: Facts are Optional

My regulation firm’s intercontinental dispute resolution legal professionals generally produce desire letters to Chinese businesses that owe cash or have failed to abide by a deal. These letters are various from what we create to American and European businesses.

Our demand from customers letters to American and European firms are usually quite long. They extensively explain the information and the relevant law. Then they explicitly explain what we will get from a court docket or arbitration panel if the recipient fails to comply with our requests. They then set out what the receiver have to do to take care of the situation and point out how it is in “everyone’s most effective interest” to realize resolution.

The recipient of these letters typically responds by pointing out holes in our client’s situation. The reaction letter usually gives its have intensive factual and lawful recitation, then points out why they will prevail. It is ordinarily more time than the demand from customers letter that precipitated it.

China tends to be different.

In When Your Supplier is not Arguing to Gain, David Dayton (who essentially has a Ph.D in Chinese Enterprise Anthropology), explains some of this change, and posits that Chinese firms just do not care about arguing toward rational conclusions:

Individuals tend to argue to resolve specific points (words and phrases, dates, stats, and so on.). Preferably individuals unique details will be acknowledged and inevitably the argument will achieve a “logical” conclusion—each side’s precise points have been solved to some mutual agreeable degree. I guess you can say that you “win” an argument by obtaining as lots of of your precise fears settled to your fulfillment as doable (with out supplying up far too many to the other aspect).

But in 12 yrs in China, I can say that I’ve only experienced this progressing-to-a-rational-summary sort of argument a couple of moments. It appears to be to me that both equally the place of and the system of arguing is entirely diverse in China.

Our lawyers have continuously observed that 1 to two page letters that contain really little by way of specifics or legislation are greatest for all but the greatest Chinese companies. Our demand letters (generally in Chinese) normally just point out that the Chinese business owes our client X dollars from its failure to do Y. They then tell the Chinese firm what we will do if it does not fork out our customer straight away.

The Chinese enterprise commonly responds by saying it will hardly ever shell out our shopper something. It usually also delivers some vague purpose for this, these types of as “your customer is a liar” or “your shopper said it would make a different purchase from us” or “your customer does not recognize China.” We then reiterate what will materialize to the Chinese enterprise if it does not pay out rapidly and then the Chinese corporation possibly responds to show that it would desire to settle. Or not.

For much more on how to cope with a dispute in opposition to a Chinese company look at out How to Sue a Chinese Corporation: The Extended Edition.