How to get your money back!

Justice In China Demand Letters And Letigation

How to get money back from a bad supplier in China?

Executive Summary

This page was created to help victims of bad suppliers understand the full range of options available in China. It answers the key questions:

  • Who can help you?
  • What are the chances of success?
  • If you need a lawyer, how much does it cost to hire an English speaking lawyer in China?
  • What are your legal options in China?
  • What tactics work best to recover funds?


Legal Disclaimer: 

The article below is based on blog posts written by the English speaking Chinese lawyers in the AsiaBridge Law network and is reprinted with their permission.  The following content is intended to serve as general information about options in China; it is not legal advice nor intended as legal advice. Please contact a lawyer if you need assistance in China. (SBL) does not provide legal services nor represent the attorneys/service providers mentioned on this page and website. SBL, its staff (including volunteers) and associated companies, disclaims all liability for any loss or damage arising out of or in any way related to interactions with these 3rd parties.



Who can help in China?  5 Options


Can the Better Business Bureau in China help get your money back? 

Unfortunately there is no Better Business Bureau in China where you can take your grievances. That’s the main reason was created.



Can the Chinese Embassy in your home country help get your money back?

It can’t hurt to contact the Chinese embassy or consulate in your country, but keep your expectations realistic. They will likely explain (in varying degrees of politeness) why they are too busy and that you should contact the local police. The number of cases is so large that the embassy and consulates don’t get involved unless the case has political ramifications.



Can Lawyers & Collection Agents help get your money back?

In our experience, collection agents in China are very hard to find and expensive to hire. In the past 10 years, the Chinese government has seriously cracked down on the “traditional collection tactics”.  You can no longer engage a “tough guy”  to harass a target company.  The collection agents that do operate in China these days tend to rely on legal leverage rather than “muscle”. As collection agents can keep 50% of the recovered funds for their services, you may be better off directly engaging a lawyer in China on your own, to review your case and suggest a strategy to recover funds.  Most professional lawyers (who are registered to practice law in Mainland China) will work by the hour rather than charge a large contingency fee or keep the lion’s share of the recovered fund.



Can your Embassy in China help get your money back?

Depending on what county you are from, your embassy in China may be a bit more helpful than the Chinese embassy, but do not expect the embassy staff to lead the charge to get your money back. Most of the time they will suggest you contact a local lawyer.



Can Chinese Police / Interpol help get your money back?

Unless your loss is very large, you will find little support from the police in China or Interpol as they are simply overwhelmed. If you are lucky enough to get the attention of the Chinese police, you will be asked to file a report, which most likely must be done in person and in Chinese. That means you fly to China or appoint somebody to represent you.  Be careful when granting a power of attorney!  And be VERY careful approaching the target company in person in a foreign county, for obvious reasons.

Sometimes, if your loss is large enough, Interpol can assist you in coordinating the local police in China. While Interpol and China have had success cooperating on high-level cases involving human trafficking, smuggling and cybercrimes, we have not witnessed much success getting support from Interpol/Chinese police when recovering losses under $100,000.

While you may feel the Chinese supplier’s actions are criminal, the Chinese police will almost certainly view your loss as corporate dispute and offer little help.   The Chinese police and government in general are very hesitant to get involved in cases where there is not a potential win for the “China side”.  Working with Interpol to catch Nigerian scammers targeting Chinese businesspeople may interest them.  But don’t expect the Chinese police, court system or government to offer proactive help in getting $5,000 back from a Chinese supplier who sent you a load of defective merchandise!



Which option is best for your particular situation?

Where NOT to look for an attorney that can help recover money from a bad supplier in China?

Americans in particular often think they can use a US-based lawyer to “scare the Chinese company into corrective action”. In most cases, this is a total waste of time and money because Chinese suppliers know that a US lawyer has no authority in China.  A US court has no jurisdiction. There are no treaties between the US and China that allow for a ruling in one country to be enforced in the other.

If you do open a court case back home, it is unlikely the Chinese entity will even show up to defend themselves unless they have assets in the US. The vast majority do not own property or have subsidiaries in US, so they have no exposure to losing a US court case.  That means a win is meaningless and a US based lawyer has little leverage.

A much more effective approach (that has worked for buyers who have listed underperforming suppliers right here at!) is to take the fight to China using Chinese lawyers.


Is it realistic to get money back from a bad Chinese supplier if you go to court in China?

Yes, BUT, keep three very important facts in mind.

ONE: It IS realistic to get a level playing field in a Chinese court but the process is a bit different than back home.

Check out this blog post for answers to the following questions:

  • Can a foreign person or foreign company sue a Chinese person or Chinese company in China?
  • Does the loser pay the court fees in China?
  • In China, can I sue for indirect damages?.
  • Is the winner able to collect punitive damages in China?
  • What kind of testimony and types of evidence work best in a Chinese court?
  • I don’t have a signed contract with the company I want to sue. Can I still win in China?
  • If I win the court case, how to collect the compensation awarded by the court?
  • I’m worried the Chinese company will go out of business or hide assets before I win the court case.  Can I freeze their assets?

TWO:  Your chances of using a lawyer in China to successfully recover money IMPROVE SIGNIFICANTLY if you can check off some of these items:

  • You have a written contract.
  • There is clear proof the contract was broken.
  • Your accountant can clearly demonstrate direct and indirect losses.
  • The contract is bilingual or in Chinese.
  • The jurisdiction of the contract mentions China.
  • There is no arbitration clause and/or arbitration was pre-agreed to take place in China.
  • Arbitration outside of China has taken place and you won.
  • The Chinese entity signed the contract with their official “chop” (an ink stamp).
  • The most recent communication with the Chinese entity regarding the order in question are not more than a few years old.
  • The Chinese entity has admitted they made a mistake.
  • The Chinese entity is an actual company, active with assets rather than an individual or paper company that can close easily and go into hiding.
  • The bank account (where you sent the money), contract jurisdiction and physical presence (office, factory, home, hard assets) of the target entity are all in Mainland China.  For example, It gets very complicated if you sent money to the Hong Kong account of a mainland Chinese factory under an English language contract with dual jurisdiction and arbitration in a 3rd country!

THREE: Going to Court is probably NOT the best next step

Unless you are sure you have an “open & shut case” and all negotiations with the target company have been exhausted, in the interest of time and budget, it is probably not in your best interest to take the target company to court as your next move.  Consider having a China registered lawyer issue a demand letter first.

Demand letters leverage the threat of legal action. Since demand letters don’t cost nearly as much money or time as a formal court case, they are almost always the logical next step. If the demand letter does not resolve the situation, you can go to court later.

How to find an English-speaking Chinese lawyer that is licensed to practice law in China?


First off, as the question implies, finding an ethnic Chinese lawyer back home is not the same as hiring a China based Chinese lawyer.

So step One is to look in the right place to find a licensed lawyer in China: China!

There are essentially 3 types of law firms operating in China:

Type 1: Large multinational firms with offices in your home country and partners in China.  They target large clients with large bank accounts. They usually offer excellent service, have dedicated account managers and are set up to tackle legal issues for clients that involve multiple jurisdictions.

Type 2: At the other end of the spectrum, there are lots of local lawyers in China with variable degrees of professional and affordability, yet they often lack the foreign language, project management and customer service skills to successfully engage overseas clients. But they are low cost.

Type 3: In the middle you will find China-based, foreign-operated law firms and bilingual Chinese attorneys. They offer excellent service at reasonable prices. The lawyers who helped prepare this article fall into this category.

Keep in mind that foreign lawyers are generally not allowed to practice in China. So most of the non-China-based law firms have structured partnership arrangements with local law firms. Going direct cuts out the “middleman” and can reduce your fees, assuming you found the right local lawyer.

Step Two:  Due diligence on your China lawyer: Essential questions to ask to help find the right lawyer in China for your particular needs.

  • Check out references: If the lawyer can’t give you a few references to happy clients, run away.
  • Find out what is outsourced? If outsourced, to who exactly? Your legal issues are sensitive and you deserve to know the parties involved.
  • How many years have they been in business?  Be very concerned if it’s a start up and you are their first customer!
  • Who will be your account manager?
  • How many projects do they handle at any given time?
  • How are their communication skills?  You want to avoid getting drawn in by the polished English skills of the sales team, only to learn that the firm’s local staff will handle your projects and they don’t speak fluent English.  Attention to detail is critical for legal projects. Be sure the firm is up to the task.
  • How many lawyers in the firm?
  • How many clients?  Ensure they are large enough to have experience in your areas of concern, but small enough that they take your project serious. Avoid being a big client of a small firm or a small client of a large firm.

Step Three:  Make sure you have a service agreement in place with your China lawyer

It’s not a good sign if the service agreement, quotation or invoice from the local lawyer is poorly written. You are hiring them to represent you in your business dealings, and if their business dealings with you are sloppy, you should expect the same on your project.

  • Make sure your agreement is very clear in terms of who is doing what, when for how much money.  It also helps to have the contract list legal fees separate from government fees. No surprises later.
  • Are you paying by the hour or by the project? Make sure in advance.
  • List out the project gates in your contract and state what happens should these gates not be achieved? Link your payments to the lawyer’s performance.



How to get money back from a bad supplier in China? Conclusion


 If your loss is substantial, don’t be afraid to take the fight to China! 

But if the combination of direct and indirect loss is less than 6,000 USD it probably doesn’t make sense to pursue legal action in China.  You would be better off spending your money on things like due diligence, bilingual contracts and pre-shipment inspection to ensure your future orders don’t have problems.