The Lawyer’s Function in China Enterprise Transactions

Should you’re doing enterprise in China, you is perhaps tempted to ask your lawyer to step in and allow you to negotiate along with your Chinese language counterpart. Nevertheless, this might be an enormous mistake that might jeopardize your deal and your relationship. On this put up, I clarify how legal professionals play a distinct function in China than within the US, and how one can finest talk along with your Chinese language associate with out involving your authorized group.

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The Function of Legal professionals in China vs. america

Within the US and different Western international locations, legal professionals are sometimes key gamers in enterprise negotiations. They’ve shut relationships with their purchasers, who view them as trusted advisors and negotiators. They’re concerned in each stage of the deal, from drafting the preliminary proposal to finalizing the contract that will get signed. In addition they often act as intermediaries between the events, speaking and resolving points or issues that come up alongside the best way.

Legal professionals in China usually don’t play the identical function in offers as legal professionals do within the U.S. Chinese language legal professionals are sometimes seen by their purchasers not a lot as trusted advisors or negotiators, however as technicians whose main function is to draft and finalize paperwork as instructed. They aren’t sometimes concerned within the negotiation course of, which is dealt with by the businesspeople instantly. In addition they are inclined to have a lot much less affect over their purchasers, who usually make selections with out consulting them.

This distinction within the function and notion of legal professionals in China and the U.S. stems from numerous components, equivalent to:

The authorized system and tradition in China are totally different from these within the U.S. China is a civil legislation nation, the place legal guidelines are codified and interpreted by the federal government, somewhat than a standard legislation nation, the place legal guidelines are primarily based on precedents and interpreted by judges, with the help/advocacy of legal professionals. This implies contracts in China are usually much less detailed and extra versatile than contracts within the US, which require extra specificity and readability.
China is a high-context tradition, the place communication is implicit and oblique, somewhat than a low-context tradition, the place communication is express and direct. Because of this contracts in China are sometimes much less essential and extra symbolic than contracts within the US, which require extra negotiation and documentation.

The Dangers of Contacting the Chinese language Firm’s Lawyer

Given this distinction within the function and notion of legal professionals in China and america, it’s usually not advisable in your lawyer to contact the Chinese language firm’s lawyer instantly when negotiating a deal. Doing so may result in a number of misconceptions and unfavorable penalties, equivalent to:

The Chinese language firm and their authorized group may interpret this transfer as a sign that you just’re not taking the deal as critically as anticipated, as when you’re outsourcing the negotiation course of to your authorized group. This might harm your credibility and status with them.
The Chinese language firm and their authorized group may also construe this transfer as an indication of distrust or perhaps a questioning of their competence. This might offend them and damage your relationship with them.
Furthermore, contacting the Chinese language firm’s lawyer instantly would doubtless be futile and unproductive. Chinese language legal professionals are identified for his or her discreetness and deference. They hardly ever disclose any info or opinions with out their purchasers’ consent or instruction. In addition they are inclined to keep away from any confrontation or battle with their counterparts. Subsequently, when you contact them instantly, they are going to in all probability say nothing greater than that they should seek the advice of with their consumer first.

The Finest Strategy to Negotiate with Chinese language Firms

In mild of those dangers, our China transactional legal professionals often advise our purchasers to proceed negotiating with the Chinese language firm by written emails. That is often the best and acceptable technique to talk along with your Chinese language associate for the next causes:

Written communication is most popular by Chinese language corporations over oral communication. It is because their proficiency in written English tends to surpass their spoken English expertise. Written communication additionally permits them to have extra time to evaluate and reply to your messages.
Written communication additionally gives a transparent document of what has been agreed or mentioned between you and your Chinese language associate. This may help stop any misunderstandings or disputes that may come up afterward.
Written communication additionally means that you can contain your authorized group in a discreet and oblique method. You may seek the advice of your lawyer earlier than sending any emails to your Chinese language associate and have them evaluate and revise any paperwork or contracts that you just obtain from them. This fashion, you may make sure that your authorized pursuits are protected and that your contracts are compliant with each Chinese language and US legal guidelines.