His friend intended to export nickel to China and he asked me one of the most frequently asked questions from exporters hoping to conquer China – is a contract with the Chinese worth the paper it is written on?

My answer was the same as always – yes it is, but you need to be aware that the Chinese value relationships more than they value legal documentation. It is no good getting your solicitor to draw up an export agreement and simply emailing that to your Chinese distributor and expecting them to agree and sign it in a week!

To do business well in China you need to embrace the concept of guanxi – the art of building a business relationship. You need to have known your distributor for awhile and have nurtured your relationship. Dinners, gifts, multiple visits to China are all encouraged.

It is also important to know someone in common as that will help you infiltrate already strong and tightly held networks. It is only after months of nurturing that you should even think of presenting your potential distributor with a contract. Then when they sign it, of course it will be binding, as the Chinese are bound by a Code relating to contracts and are also signatory to many of the treaties that govern international trade.

Trying to enforce the contract in the event of a breach is another story... one which I might attack next week!

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Lynda Slavinskis is an outgoing, intuitive and commercially savvy lawyer. She has worked in-house at Sussan Corporation and Tattersall’s and now assists small and medium businesses with import, export, leases, franchising, employment and general business advice as principal solicitor of Lynda Slavinskis Lawyers & Consultants. Lynda is on the Victorian State Government’s Small Business Advisory Council.