Purchasing and importing from China can be complex and probably many times we will feel that we are trying to move forward against the wind. One of the most recurrent problems are contracts.
If you are a new, this sector of importation of products and hardware from China is likely that makes you feel fear, making transactions without a signed contract. A purchase and sale contract in China between two parties offers the guarantee you need to make sure you are covered in your transaction. However, contracts in China do not have the same reliability than in the West.
You will learn how you can get the purchase guarantee you need:
- We recommend you that, only if you have a multinational company with stable benefits and legal service, you should carry out contracts on all transactions. If it is not so, contracts will be expenses that you cannot afford.
- Purchase and sale contracts are only for our “peace of mind”, but they do not provide any guarantee. Putting a legal claim for breach of contract in China can cost you up to 3-5 years of lawyers, and involves you should travel to the country on several occasions. In the event that you do not reside in the country, this will lead you to many losses. Thus, the contract serves only to have written the clauses that you want to be met.
- Many importers in China only make a first purchase and sale contract when they work for the first time with a provider. This is an option to make you feel safer, and to make the supplier feel more depressed to meet your requirements. In addition, he will feel you are strict and more serious with your work, so he will probably work better.
- In some occasions, the supplier is who ask to sign the invoice where the terms of the order are included. This is usually a good sign, since it indicates that the provider implies more formally than usual.
- There are two types of contracts, exclusivity and confidentiality. You should sign the first one if you want to make sure that your supplier manufacture a specific product only for yourself or to ensure that it will not be distributed in the country where you want to import. In general these contracts are met, and are only changed if the supplier has a better offer from the competition. Then he will improve his conditions with you.
On the other hand, confidentiality contracts are signed if your Chinese supplier is going to manufacture a product through your molds and technical specifications. The information must be registered through a confidentiality agreement.