On April 16, 2009, Diaz Reus presented on several topics related to Debt Collection for Chinese companies in Pudong, Shanghai. Diaz Reus attorneys Joe Zhang and Samantha Hu presented the topics and led the discussion afterwards. Several Chinese attorneys and other individuals attended and joined in the discussion.
Mr. Zhang and Ms. Hu explained the various legal systems around the world and the general procedures in place in order for Chinese entities to recover their outstanding foreign debts.
Generally, a Chinese entity must gather and organize the evidence (contracts, emails, shipping documents, etc.). Then the attorney will review and send a letter to the foreign debtor. If the debtor replies, then the attorney will begin negotiations. This is all done free of charge.
If a settlement amount is agreed upon and tendered by the debtor, the attorney will then collect a percentage which is negotiated before work begins.
If the debtor does not respond or disputes the claim, then the next step is to file a lawsuit. Typically, the Chinese creditor must finance the litigation (which is usually between USD 1,000 – 15,000 depending on the complexity). Also, if the proceedings move to this stage, a representative from the China entity will probably need to make themselves available in the forum in order to make a statement before a court officer.
Though this stage can be quite cumbersome, as long as the debt is genuine and can be sufficiently proved, then a judgment in favor of the creditor is likely. Court costs and sometimes attorney fees can be included within the judgment.