Commercial Law in China

Chinese law allows parties to a contract for the international sale of goods a wide scope of choice in selecting governing law, and they may, of course, choose to have Chinese law apply to their transaction.

Prior to signing the contract, the foreign business partner should verify whether the Chinese business partner is qualified to enter into and perform the contract (e.g., registered as a Foreign Trade Operator, up-to-date business registration, sufficiently broad business license, entitled to participate in foreign trade, power of attorney for signing authority). Foreign trade law permits all companies and institutions with independent legal person status, as well as national and foreign private persons, to engage in import and export transactions, provided that they have the respective registration. If there is no registration as a “Foreign Trade Operator”, a qualified import/export company must be used as an intermediary.

China is a signatory to the UN Convention on Contracts for the International Sale of Goods, and the Convention will usually apply to sales contracts between a foreign company (from a member state) and a Chinese party unless a different governing law is named in the contract.