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How Debt Collection Works in China?-CTD 101 Series

Fri, 29 Apr 2022
Contributors: Meng Yu 余萌
Editor: C. J. Observer

Compared with debtors in your own country, when debtors in China do not pay, you will encounter many different challenges and consequences.

This post was first published in CJO GLOBAL, which is committed to providing consulting services in China-related cross-border trade risk management and debt collection.We will explain how debt collection works in China below.


1. Contact with the debtor

If your Chinese business partner does not pay, we recommend that you always contact him first.

Of course, it is often more difficult to communicate with Chinese debtors, because most Chinese debtors may have poor English and different trade cultures will also influence communication with your debtor.

Therefore, if necessary, you can hire an agent in China to help you do the communication.

2. Debt collection by specialist

Many international collection agencies say they can help you collect debts in China through some kind of network, and they do have such professional ability.

However, if possible, you may also consider directly contacting the local collection agency in China.

Our collectors know how Chinese companies do business, how they think, when they are making excuses, and when they are really having troubles.

We will, before collection, conduct preliminary due diligence on the debtor to understand its business situation.

We will contact them in Chinese on the phone and by written documents in a tone they are used to.

In most cases, the debtor will pay after being contacted by us.

3. Judicial debt collection

If we can’t make your business partner in China pay at the specialist collection stage, we can help you go to court in China, if the jurisdiction allows.

Moreover, you don’t have to come to China in person. If necessary, we can even submit a request that you be allowed to attend the hearings online.

Although in most cases in China, civil litigation costs less time and money. Unfortunately, China has not provided a relatively simple procedure for cross-border litigation.

Therefore, for small claims in international debt recovery, there are no time and cost advantages in China’s judicial system.

That being said, another advantage of resorting to China’s civil litigation still remains for international small claims, that is, the courts have great power in the enforcement of judgments. This allows it to mobilize more law enforcement resources to enforce judgments.

4. Payment to you

If there is important progress in your case, our collection specialist will, of course, inform you of the same in time.

When the debtor makes the payment, they will deposit any and all money into our third-party account or refund it directly to your account. If it is the former, we will then transfer the money from the third-party account to your company.


Photo by Max Zhang on Unsplash


Contributors: Meng Yu 余萌

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