Doing business in China is commercially indispensable for many Dutch companies. At Musch Legal, we handle cases involving Chinese suppliers, JV partners, and clients almost monthly. Chinese law has had a new Civil Code since 2021 and is developing rapidly. At the same time, IP protection, language requirements, and cross-border enforcement remain challenging. Knowing the right instruments — bilingual contracts, NNNs, arbitration in Hong Kong — significantly reduces risk.
What is the legal problem? (What is different about doing business in China?)
China has its own legal system with different principles than the Dutch one. Contracts are often seen as the starting point for the relationship, not as the conclusion. Oral agreements and relationships (guanxi) play a major role. Enforcement of rights across borders is complex. Inadequate contractual protection leads to delivery problems, quality disputes, and IP issues.
What does the law say? (Which Chinese frameworks apply?)
Since January 1, 2021, China has had a new Civil Code that includes Contract Law. China is a Contracting State to the Vienna Sales Convention — automatically applicable to international sales unless excluded under Section 6 CISG. For IP, Chinese Trademark Law (2019), Patent Law (revised 2021), and Anti-Unfair Competition Law (2019) apply. China is a Contracting State to the New York Convention of 1958.
Judgments of Dutch courts have limited enforceability in China under the principle of reciprocity. Since 2017, China has increasingly recognized foreign rulings under presumed reciprocity.
Point of attention
Approach for China
Contract language
Bilingual EN-ZH, Chinese version prevails
Dispute route
HKIAC or SIAC arbitration; Avoid Dutch courts
IP protection
First-to-file: register trademarks before production
NDA
NNN agreement under Chinese law
Quality control
Pre-shipment inspection by SGS or Bureau Veritas
Point of attention
Approach for China
Contract language
Bilingual EN-ZH, Chinese version prevails
Dispute route
HKIAC or SIAC arbitration; Avoid Dutch courts
IP protection
First-to-file: register trademarks before production
NDA
NNN agreement under Chinese law
Quality control
Pre-shipment inspection by SGS or Bureau Veritas
What risks do companies face? (What goes wrong with Chinese partners?)
You risk deliveries that do not meet specifications, stolen designs, counterfeit products, and opaque subcontracting. Chinese judges may interpret contracts in English strictly and require a Chinese translation. Judgments by Dutch judges are virtually unenforceable in China. Late trademark registration can lead to trademark squatting by third parties. Without a well-considered legal structure, importers suffer structural financial and operational damage.
Practical example from our practice (How did we win a Chinese quality dispute?)
Musch Legal represented a Dutch importer with an English-language contract with a Chinese manufacturer and a choice of forum for a Dutch court. After a quality dispute, the client obtained a Dutch judgment. Enforcement in China was unsuccessful. Upon renegotiation of the contract, we opted for a bilingual contract (English-Chinese, Chinese version leading) with arbitration at HKIAC, NNN protection, and Chinese trademark registration via the Madrid Protocol. In a subsequent quality dispute, this resulted in successful enforcement within eleven months.
What can you do? (What do you arrange for every Chinese business relationship?)
Make the contract bilingual and determine which version prevails (often the Chinese one). Choose arbitration at HKIAC, SIAC, or CIETAC instead of a Dutch court. Establish clear quality specifications with pre-shipment inspection. Conclude an NNN agreement under Chinese law with an established penalty clause. Register trademarks, patents, and designs via the Madrid Protocol prior to production. Engage Musch Legal with Chinese counsel.
Contracting with Chinese suppliers