Meta Description:Overseas companies often struggle to collect unpaid invoices from Chinese buyers or partners. This FAQ explains practical options for recovering debts from Chinese companies and when to involve local counsel.
1. When does it make sense to pursue debt recovery in China?
If your Chinese counterparty has significant assets, active operations, or important licenses in mainland China, it usually makes sense to consider recovery actions there.Before investing heavily, you should assess:
- Approximate amount of the debt (principal + interest)
- Whether the debtor is still operating and has visible assets or revenue
- Time elapsed since the invoices or payments became due
- Any signs of insolvency, deregistration, or serious legal trouble
A short legal and asset feasibility check with local counsel can quickly tell you whether recovery is realistic.
2. What documents do I need before talking to a Chinese lawyer?
To get useful advice, prepare at least:
- The contract or purchase order, including any amendments
- Invoices, delivery notes, bills of lading, or service completion records
- Payment records (bank statements, SWIFT messages, remittance slips)
- Key email or WeChat communications, especially acknowledgements of debt, excuses for non‑payment, or repayment promises
- Basic information about the debtor: full legal name in English and Chinese (if any), business address, website, contact persons
You do not need everything to be perfect before speaking with counsel, but the more organized your documents are, the faster we can assess your options.
3. Can I freeze the debtor’s assets in China before or during a lawsuit?
In certain cases, yes. Chinese law allows property preservation measures, such as freezing bank accounts or seizing assets, if you can show that:
- You have a prima facie claim (basic evidence of the debt); and
- There is a real risk that the debtor may transfer or hide assets.
Usually, the court requires the applicant to provide security, such as a guarantee or cash deposit, to cover potential losses if the preservation later proves unnecessary.Early discussion with Chinese counsel is important, because preservation applications often need to be filed quickly and strategically.
4. Do I have to sue in China, or can I rely on a foreign judgment or arbitral award?
It depends on your contract clause and enforcement strategy:
- If your contract chooses a Chinese court, you will normally sue directly in China and then proceed to enforcement there.
- If your contract has a valid arbitration clause (for CIETAC, HKIAC, SIAC, ICC, etc.), you may arbitrate and then seek recognition and enforcement of the arbitral award in China.
- If you already have a foreign court judgment, enforcement in China is possible only in limited circumstances, usually where there is a relevant treaty or proven reciprocity.
When most of the debtor’s assets are in China, it is often more efficient either to litigate in China or to obtain an arbitral award that can be enforced there.
5. How long does a typical debt recovery case in China take?
Timelines vary by region and complexity, but for a straightforward commercial debt case:
- Pre‑action assessment and negotiation: 2–8 weeks
- Court proceedings (first instance): roughly 6–12 months in many courts
- Enforcement stage: another 6–12 months, depending on asset situation and cooperation
If the debtor is cooperative and willing to settle once a case is filed or assets are frozen, recovery can be much faster. If assets are limited or heavily contested, the process may take longer.
6. Can I recover interest, costs, and legal fees?
Often you can claim:
- Contractual or statutory interest on the overdue amount
- Certain litigation costs and court fees
- In some cases, a portion of your legal fees, if supported by contract terms and accepted by the court
However, it is rare to recover 100% of all external expenses. When deciding whether to proceed, focus on whether the net recovery (after estimated costs) is commercially acceptable.
7. What are common mistakes overseas creditors make?
Typical mistakes include:
- Waiting too long, allowing debts to age and assets to disappear
- Ignoring China‑specific enforcement issues when drafting contracts
- Relying on unregulated “debt collectors” making unrealistic promises
- Failing to preserve key documents and communications as evidence
- Not aligning overseas actions with a China enforcement strategy
Avoiding these mistakes can significantly improve your chances of successful recovery.
8. When should I involve Chinese local counsel?
You should speak with local counsel as soon as:
- The overdue amount becomes material (for example, above your internal threshold); or
- The debtor stops responding or gives repeated vague excuses; or
- You are considering signing any settlement or repayment agreement governed by Chinese law.
Early advice can help you choose the right forum, structure communications correctly, and avoid actions that weaken your position later.
9. How our firm assists overseas creditors
We support foreign companies and law firms by:
- Conducting quick feasibility and asset checks on Chinese debtors
- Advising on the best combination of negotiation, litigation, arbitration, and enforcement
- Preparing Chinese‑language demand letters and settlement proposals
- Representing clients in Chinese courts and enforcement proceedings
- Coordinating with foreign counsel to align global strategy
If you are facing unpaid invoices or other debts from a Chinese company, you can contact our cross‑border dispute team for an initial assessment of your options.