How Do I Get My Money Back From a Chinese Supplier? – Debt Collection in China
How Do I Get My Money Back From a Chinese Supplier? – Debt Collection in China

How Do I Get My Money Back From a Chinese Supplier? – Debt Collection in China

How Do I Get My Money Back From a Chinese Supplier?

If a Chinese supplier commits any default or fraud, there are four measures you can take to get your money back: (1) negotiation, (2) complaint, (3) debt collection, and (4) litigation or arbitration.

1. Negotiation

Negotiation is the most cost-effective measure to get your money back, but the key is how to persuade the Chinese supplier to refund.

In order to succeed in a negotiation, you should gain some “bargaining chips” by legitimately inflicting losses on the supplier.

For example, if you know other customers of the supplier, you can reveal to them that the supplier is owing money to you, and then copy the relevant correspondence to the supplier. In this way, your supplier may negotiate with you to maintain his credit with other customers.

Nevertheless, you should ensure that no obligation of confidentiality to your Chinese suppliers is violated in this correspondence.

Apart from that, you can also add pressure on the supplier by making complaints.

Please keep in mind that you cannot use these tactics to claim additional benefits, otherwise, it constitutes a crime, at least under Chinese law.

2. Complaints

(1) to Chinese Embassies and Consulates

You can make complaints to the Chinese Embassy or Consulates in your country. In some cases, the embassy or consulates will refer your complaints to the law enforcement agencies and trade promotion agencies in China, who have the authority to mediate your dispute with the Chinese supplier.

(2) to Local Law Enforcement Agencies in China

You can also make complaints to the Chinese government. Under normal conditions, it makes no sense to complain to the central government and its departments, since usually these departments are only responsible for policy formulation, not law enforcement. Instead, you should turn to government departments at local levels where the Chinese supplier resides, such as the local authorities for administration for market regulation or the local commission of commerce.

With the aim of maintaining the local business environment, these local law enforcement agencies will be more than willing to help you settle the dispute. After all, export trade is a significant source of revenue for many local governments.

But, there are times when some local law enforcement agencies may ignore your complaints, especially if the dispute involves very little money. This is because many local law enforcement agencies in China only act on orders from above, rather than on their own initiative.

In any case, complaints is a relatively low-cost measure. Thus, you can give it a try, or ask your Chinese agents to do so.

(3) to Business Associations or Chambers of Commerce

If you find that the Chinese supplier has joined a business association or chamber of commerce, you can make complaints to these organizations.

The organizations they join can be local or international.

Some suppliers need to maintain their good reputation with these organizations, so they fear being tainted with scandal.

Some suppliers have spent a great deal of money to join these organizations, so they fear being removed on account of an adverse record.

3. Debt Collection

You can also entrust a debt collection agent in China to communicate with the Chinese supplier on your behalf.

These agents will adopt legitimate measures to urge the debtor to pay up.

In many cases, Chinese suppliers dare to commit any fraud or default simply because you don’t have agents in China. The long distance and national borders make them believe that they bear no liability for fraud or default.

Once you have agents in China, these Chinese suppliers will show more restraint.

4. Litigation or Arbitration

Litigation or arbitration against the supplier in China can be used as a last resort.

You can refer to our previous post titled “Suing in China vs Suing in Other Countries: Pros and Cons” to learn more about the differences between litigation in China and litigation in your home country. It can help you decide whether to litigate in China or not.

If you need to estimate the cost of litigation in China, the post titled “Sue a Company in China: How Much Does It Cost?” can be helpful to you.


Do you need support in cross-border trade and debt collection?
CJO Global's team can provide you with China-related cross-border trade risk management and debt collection services, including: 
(1) Trade Dispute Resolution
(2) Debt Collection
(3) Judgments and Awards Collection
(4) Anti-Counterfeiting & IP Protection
(5) Company Verification and Due Diligence
(6) Trade Contract Drafting and Review
If you need our services, or if you wish to share your story, you can contact our Client Manager: 
Susan Li (susan.li@yuanddu.com).
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5 Comments

  1. bernybaf

    If you purchase some products from a Chinese supplier who then breaches the contract, you can hold the supplier liable for breach of contract, for example, requiring the supplier to continue to fulfill the contract and compensate you for your losses or pay you liquidated damages. See Do I Have the Legal Right Standing To Sue When a China-Related Trade Dispute Arises? If there is neither arbitration agreement nor an exclusive jurisdiction agreement where a foreign court is chosen, you can file a lawsuit with Chinese courts.

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