Tips for the Businessmen Doing Business in China

 
All Contracts to be Concluded Must be Sound and Reliable

Investors should receive legal consulting services and all contracts should be straightforward and reliable. Investors should not rely on the recommendations of the Chinese partner in legal matters.

The Feasibility of the Projects, Should be Thoroughly Investigated through Receipt of Professional Support:

During the determination of the prospects of profitability of a business project, the principal motive should be the estimates for rational profitability rather than the attractiveness of the incentives offered or the promises received; and in due consideration of the difficulties of making forecasts about the future in a rapidly growing economy,  endeavors that offer profitability in the long term should be avoided. The patience that is required in market penetration and in the exerting of the required efforts, should not be confused with the periods envisaged for the achievement of profitability. 

In Case of the Establishment of Partnerships, Adequate Knowledge Must be Acquired on the Partner:

In the event of disputes, in order not to lose the existing rights at the Chinese Courts,   the composition of agreements can be based on the “win-win” formula; moreover, the investors are also strongly recommended to pay ultimate attention in the selection of their partners.
 
Investors Should be Well Acquainted With the Relevant Chinese Legislation:

Investors should not pay serious attention to the words of the local authorities asserting that the rules of the Central Governments are not applicable in their own regions. As an imperative, legal consulting should be obtained regarding the applications of the central government, and it should be kept in mind that the rules of the central government of which the local authorities  assure that they are not valid in their regions may suddenly become valid and binding in the occurrence of a problem.

A Thorough Investigation Should be Conducted on the Potential Problems Before Such Problems Actually Occur:

A planning must be developed regarding the losses that can be tolerated  in case everything goes worse than expected. It should always be kept in mind that personal relations in China are very important; that the partners sometimes do not approach in a realistic manner towards  the potential problems in order not to create effects that might adversely effect the corporate image and not to impair personal relations and interests; and more importantly, that they might be exposed to the pressures of the Chinese partners, the Government, the Party and the Professional Organizations. 

A Realistic Risk Analysis Should be Applied:

During application of risk analyses, the investors should avoid thinking from the standpoint of the conditions of the  other countries, and should not hesitate to withdraw from the project if it appears too risky.  

A Particular Attention Must be Paid to  Conditions of Payment :

During a sale transaction effected in China,  the exporter’s acceptance of the opening of a letter of credit corresponding to a minor portion of the payment, and the payment of the outstanding balance within a specific maturity, will be construed in China as  the exporter’s “inexperience on the way things work in China” and that he can be easily deceived. Therefore, the investor must be act cautiously and avoid the deferment of the collection of his receivables  after the delivery. The investor should know that the deferment of receivables covering substantial rates; hence, undertaking such a risk is not an acceptable application in the sales realized by the firms in China. 

Investors Must Take the Necessary Precautions Against Imitation Products :

Investors must be aware about the obligation concerning the performance of registration and patent procedures in China, even if the registration and patent procedures within the scope of the Berne Convention Concerning the Protection of Intellectual and Industrial Rights have been performed already. 

Investors Must Ensure That All Foreign Trade Operations are Based on Contracts and Letters of Credit:

Especially during the imports to be realized from China,  the quality and the quantity of the products must be ascertained at the customs prior to the completion of the import transaction. It should be kept in mind that  once the product is drawn from the customs line, any complaints to occur with respect to the failure of the compliance of the quality of the product with the required quality standards, or with respect to the deficits in the quantity of the product delivered, are highly unlikely to be resolved. Moreover, the method to apply in the resolving of the conflicts and disagreements that might arise among the parties should be determined  in the contract; if such conflicts and disagreements are to be resolved through arbitration or courts, the competent jurisdiction where such conflicts and disagreements will be resolved, must be clearly specified in the contract. 

Precautionary Measures Must be Adopted :
Investors should keep in mind that unless the course of action defined above are duly adopted; the recovery of any losses arising from a transaction in foreign trade will entail tremendous labor, time and expenditures.

A Particular Attention Must be Paid to the Standards:

Especially before the transportation of the products that are subject to mandatory standards during their importation,  compliance test   must be applied in China; and it should be kept in mind that the solving of the problems that might occur in connection with the tests and supervisions that are planned to be applied in Turkey for purposes of saving time, will involve higher costs.