The Lawyer’s Function in China Enterprise Transactions — Not Direct

For those who’re doing enterprise in China, you could be tempted to ask your lawyer to step in and enable you negotiate along with your Chinese language counterpart. Nonetheless, this could possibly be a giant mistake that would jeopardize your deal and your relationship. On this publish, I clarify how legal professionals play a distinct position in China than within the US, and how one can finest talk along with your Chinese language associate with out involving your authorized workforce.

The Function of Attorneys in China vs. the US

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. Additionally they often act as intermediaries between the events, speaking and resolving points or considerations that come up alongside the best way.

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

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

• 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, moderately than a typical legislation nation, the place legal guidelines are based mostly 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, moderately than a low-context tradition, the place communication is specific and direct. Because of this contracts in China are sometimes much less necessary 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 position and notion of legal professionals in China and the US, it’s typically not advisable to your lawyer to contact the Chinese language firm’s lawyer immediately when negotiating a deal. Doing so might result in a number of misconceptions and unfavourable penalties, resembling:

• The Chinese language firm and their authorized workforce may interpret this transfer as a sign that you simply’re not taking the deal as significantly as anticipated, as if you happen to’re outsourcing the negotiation course of to your authorized workforce. This might injury your credibility and popularity with them.
• The Chinese language firm and their authorized workforce may also construe this transfer as an indication of distrust or perhaps a questioning of their competence. This might offend them and harm your relationship with them.
• Furthermore, contacting the Chinese language firm’s lawyer immediately would possible be futile and unproductive. Chinese language legal professionals are recognized for his or her discreetness and deference. They not often disclose any info or opinions with out their purchasers’ consent or instruction. Additionally they are likely to keep away from any confrontation or battle with their counterparts. Due to this fact, if you happen to contact them immediately, they’ll most likely say nothing greater than that they should seek the advice of with their shopper first.

The Finest Approach to Negotiate with Chinese language Corporations

In gentle of those dangers, our China transactional legal professionals often advise our purchasers to proceed negotiating with the Chinese language firm by way of 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 evaluation and reply to your messages.
• Written communication additionally supplies a transparent document of what has been agreed or mentioned between you and your Chinese language associate. This might help forestall any misunderstandings or disputes that may come up in a while.
• Written communication additionally lets you contain your authorized workforce 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 evaluation and revise any paperwork or contracts that you simply obtain from them. This fashion, you may be certain that your authorized pursuits are protected and that your contracts are compliant with each Chinese language and US legal guidelines.