How to solve disputes with Chinese supplier?

For foreign buyers, common fraud and breach of contract practices when conducting international trade with Chinese suppliers can be summarized into the following categories. Understanding these patterns is the first step in building effective risk defenses.

 

I. Typical Types of Fraud and Breach of Contract

Type	Common tactics	High-incidence industries
1. Price gouging and contract fraud	They attract orders with prices significantly lower than the market rate, then demand higher prices after receiving deposits, citing reasons such as “rising raw material costs,” otherwise they refuse to ship the goods or even disappear.	Steel, commodities, industrial raw materials
2. Quality does not meet specifications.	Products delivered using inferior materials, refurbished or used machinery (especially second-hand machinery), and counterfeit quality certifications (CE/ISO, etc.) are prohibited.	Machinery and equipment, electronic products, building materials
3. Shipping and Logistics Traps	– Delayed delivery : Repeated postponement of delivery without a reasonable explanation. – Quantity shortage : The actual quantity received is less than the quantity stated on the bill of lading or invoice. – Freight forwarder withholding : After the goods arrive at the port, the freight forwarder withholds the goods under various pretexts and demands additional fees.	Various freight forwarding and ocean shipping services
4. Document fraud	Providing forged bills of lading, quality inspection reports, certificates of origin, and other documents.	Letter of credit transactions, bulk commodity trading
5. Payment structure risks	They demand 100% prepayment and then disappear, or exploit loopholes in the letter of credit (documents match but goods do not).	Emerging trading company, first cooperation

 

II. High-risk signal warning

Be highly vigilant if the following signs appear before a transaction:

The supplier’s background is questionable : the company was established recently, the registered address cannot be verified, and the bank account name does not match the name of the contracting party.

Vague contract terms : Key terms such as quality standards, delivery time, and liability for breach of contract are vaguely described.

Communication pressure : Frequent demands for payment, refusal to use escrow (third-party escrow payment) or installment payments.

Refusal to conduct on-site factory inspections : refusing to allow buyers or third parties to inspect the factory/goods for various reasons.

 

II. Prevention and Response Recommendations

 

Stage	Recommended measures
Before the transaction	1. Verify the company’s qualifications through official Chinese channels (such as the National Enterprise Credit Information Publicity System). 2. Request past export records and recommendations from overseas clients. 3. Clearly define the quality specifications, inspection standards, and liability clauses for breach of contract in the contract.
During the transaction	1. Avoid 100% prepayment; use a phased payment method of “deposit + final payment”. 2. Appoint a reliable freight forwarder (FOB terms are recommended). 3. Engage a third-party organization (such as SGS or BV) to conduct a pre-shipment inspection (PSI).
After the dispute occurred	1. Immediately secure evidence : contracts, payment receipts, communication records, photos/videos of defective goods. 2. Consider asset preservation : apply to a Chinese court to freeze the other party’s bank accounts or assets. 3. Initiate legal proceedings : pursue breach of contract liability through arbitration or litigation; if fraud is suspected, report the case to the public security authorities.

 

IV. When is professional legal intervention needed?

It is recommended to seek professional legal assistance immediately in the following situations:

l Suppliers disappear after receiving large deposits or explicitly refuse to fulfill their obligations.

l Goods detained without reason by freight forwarders face demurrage fees and sales losses.

l Large-scale quality defects or non-compliance with specifications are discovered, and the other party refuses to negotiate.

l Suspecting that the other company is transferring assets or deregistering its entity

Our team has extensive experience representing international clients in handling such disputes and is familiar with Chinese litigation, asset preservation, and cross-border enforcement procedures. If you are involved in a dispute, please contact us as soon as possible to assess evidence and develop a strategy.

 

V. Why choose us ?

We not only handle litigation, but we also excel at intervening in the early stages of a crisis:

Evidence Preservation : Guidance on remotely preserving evidence under the evidence rules recognized by Chinese courts/arbitration commissions.

Property preservation : Quickly apply to freeze the other party’s bank accounts or seize assets to exert pressure.

Combining negotiation and litigation : Utilize Chinese legal tools to force the other party back to the negotiating table, or maximize the protection of your rights through criminal charges (such as suspected contract fraud).

We have long served clients worldwide, including those in the United States, Canada, Germany, the United Kingdom, France, the United Arab Emirates, Singapore, Japan, and South Korea . Whether it’s international trade arbitration, maritime court litigation, or complex transnational enforcement cases, we can provide legal strategies that align with international business practices.

 

We offer multilingual (Chinese/English) legal advice and a contingency fee (payment upon successful outcome or receipt of payment) model for eligible cases , truly sharing the risks with our clients.

 

VI . Get professional advice immediately

If you are facing a dispute with a Chinese supplier or logistics company, time is of the essence . Evidence can be easily lost, and assets can be transferred.