Recovering money from a Chinese supplier depends less on the legal theory than on four facts: the exact company that received your payment, the evidence you hold, whether that company has assets in China, and what your contract says about disputes. Once those are known, the route usually chooses itself: negotiation or a lawyer's demand for a supplier that is still trading, asset preservation where money may move, and arbitration or court when the supplier will not pay.
- Check the four facts before choosing a route. They decide whether any route will produce money.
- Your contract fixes the forum. A valid arbitration clause sends you to arbitration; without one, a court where the supplier is domiciled or the contract is performed generally has jurisdiction.
- Preservation is often decisive. Urgent applications are decided within 48 hours; after a pre-action freeze you must start proceedings within 30 days.
- Court costs are modest. RMB 13,800 on a RMB 1,000,000 claim; the preservation fee is capped at RMB 5,000.
- Time limits: four years for disputes over an international sale of goods contract (Civil Code Art. 594); two years to apply for enforcement after a judgment's payment deadline.
1. The four facts that decide the route
| Fact | How to check | Why it matters |
|---|---|---|
| Who received the money | Match the receiving bank account name with the supplier's registered Chinese name and Unified Social Credit Code | You can only recover from the party that owes you; payments to affiliates or individuals change the defendant |
| What you can prove | Contract or pro forma invoice, payment records, full chat and email history, inspection reports | Chinese courts decide on documents; an admission in a chat is often the key evidence |
| Whether there are assets | Registration changes, litigation and enforcement history, known bank accounts, receivables, property | A judgment against a company with nothing left does not pay |
| What the contract says | Governing law, dispute resolution clause, language, company seal | Decides arbitration or court, and whether the CISG applies |
2. Which route fits which situation
| Situation | Usually the first move |
|---|---|
| Supplier still trading and admits it owes you | Negotiate in Chinese; get a sealed refund confirmation with dates; follow with a Chinese law firm's demand if payments slip |
| Supplier ignores you | Verify the company and look for assets, then a formal demand with a deadline |
| Assets appear at risk | Prepare the claim and a preservation application together, before any warning |
| Valid arbitration clause | Arbitration at the named institution; apply for preservation through it |
| No dispute clause | Chinese court where the supplier is domiciled or the contract is performed |
| Money went to a different company or a person | Establish who received it before spending on proceedings |
| Company appears insolvent or closed | Check shareholders and unpaid capital before litigating |
| Small amount | A commercial settlement or credit against future orders may cost less than any legal route |
3. The routes, one by one
Negotiation in Chinese
Many disputes end here, especially where the supplier wants to keep the customer. The aim is not a friendly promise but a written, sealed confirmation of the amount and dates. A supplier's written agreement to pay also interrupts the limitation period (Civil Code Art. 195).
A demand letter from a Chinese law firm
A letter on a Chinese firm's letterhead, under its seal, with the handling lawyer's name and licence number and a deadline, gives you a dated, provable demand. It tells the supplier that you now have counsel in China. It does not force payment by itself, and it should not be sent before a preservation application if assets may move.
Asset preservation
A court order freezing bank accounts, receivables, equity or property so there is something to collect. Urgent applications are decided within 48 hours; security is required, commonly through a preservation insurance policy; and a pre-action freeze must be followed by proceedings within 30 days. The mechanics are in freezing a Chinese company's assets before you win.
Arbitration or court
Your contract decides which. Foreign companies can bring claims in both, and usually do not need to travel; the practical steps are in how to sue a Chinese supplier from overseas. If you already hold a foreign arbitral award, it is generally easier to enforce in China than a foreign court judgment; see enforcing foreign awards and judgments in China.
Enforcement
A judgment or award is not money. You apply to the court for enforcement within two years of the payment deadline; the court can search for and seize assets, and a debtor that can pay but does not can be placed on the list of dishonest judgment debtors.
| Route | Typical time | Main cost | Forces payment? |
|---|---|---|---|
| Negotiation | Days to weeks | Time | No |
| Law firm demand | 1–2 weeks | Legal fee | No |
| Asset preservation | Days | Security; court fee capped at RMB 5,000 | Freezes assets |
| Court proceedings | Months | Legal fees; court fee e.g. RMB 13,800 on RMB 1m | Yes, through enforcement |
| Arbitration | Months | Institution's fees and legal fees | Yes, through court enforcement |
Full cost figures are in how much it costs to sue a Chinese company.
4. Situations with their own rules
- The supplier promised a refund and has not paid: Chinese supplier won't refund.
- You paid and nothing shipped: paid a Chinese supplier but no goods arrived.
- The goods arrived but are defective: defective goods from a Chinese supplier.
- You are the seller and the Chinese buyer has not paid: a Chinese customer won't pay.
5. Mistakes that cost foreign buyers money
- Waiting months on promises. The supplier's cash can move while you wait.
- Warning the supplier before a freeze. A threatening email can prompt the transfers you wanted to stop.
- Pursuing the wrong company. The English trade name, the contracting company and the account holder are often different.
- Paying the balance to get the goods released. Without a secure arrangement, you may lose both.
- Relying on screenshots. Export complete chat histories with dates.
When to bring in a China lawyer
When the supplier stops responding, refuses in writing, or shows signs of moving assets, or when the amount justifies formal steps, a Chinese law firm can verify the company, send a demand and prepare preservation and proceedings. Our China supplier disputes page explains how we act for foreign buyers.
Frequently asked questions
It depends on four facts: which company received the money, what you can prove, whether that company has assets in China, and what your contract says about disputes. For a supplier that is still trading, a written refund confirmation or a Chinese law firm's demand often works; where assets may move, preservation comes first; otherwise arbitration or court proceedings under the contract.
Yes. Foreign companies bring claims in Chinese courts and arbitration institutions routinely. If the contract has a valid arbitration clause, you go to arbitration; if it has no dispute clause, a court where the supplier is domiciled or where the contract is performed generally has jurisdiction.
Often not. Court fees are modest, but legal fees, translation and document authentication add up. For small amounts a negotiated partial refund or a credit against future orders may be the better outcome.
A negotiated refund or a response to a law firm's demand can come within weeks. Contested court or arbitration proceedings take months, followed by enforcement if the supplier still does not pay.
It often ends the stalling, because the supplier now faces Chinese counsel with a deadline and a clear next step, and it creates a dated demand for later proceedings. It does not force payment by itself, and it should not be sent before a preservation application if assets may move.
Sources
- National Database of Laws and Regulations — PRC Civil Code, Arts. 195 and 594 (Chinese text).
- DLA Piper — China: pre-judgment attachments and freezing orders — the 48-hour decision, security and 30-day rule.
- Internal: what it costs to sue · freezing assets · a Chinese customer won't pay · China supplier disputes
This article is general information for foreign companies, not legal advice on any specific matter. Rules and practice change; please take advice on your facts.