Understanding the issues regarding the language, customs, cultures, and laws that govern a country is extremely important in any business venture – including debt collection. Successfully collecting debt in a foreign country usually requires involving people familiar with the area. The success of particular methods and techniques are often dependent upon the surrounding culture. In the case of China, often a combination of legal action and political influence is the most effective way to successfully retrieve debt.
With many US firms doing business directly with Chinese-based firms, hard to collect debt is on the rise. Additionally, as more and more Chinese nationals visit the United States, there will be more and more bad debt requiring specialized collections attention. Debt from visiting Chinese might include charges for rental cars accidents, medical care, or commercial purchases.
Debt collection has come a long way in China and their efforts have become more and more consistent over the years. The best collections course is definitely to include a firm that is local to the area. In fact, since 1995, only Chinese law firms can truly collect debt. Regulations dictated by the State Administration for Industry and Commerce and National Public Security Bureau deleted non-law firms from making collections.
Legal method are very often employed. However, the use of political and social pressure can be equally effective. by a local firm’s knowledge and connections, the right pressure can often be brought to bear on the debtor without the issue going to court or arbitration.
Debt collection agencies in China to follow general recovery actions. Phone calls and visits are made to the debtor to discuss payment options. Upping the awareness of the debt to both the debtor and already relatives of the debtor is also a well-used practice. In the past years China has started to build a more strong foundation in their debt collection. Debt recovery efforts and results are on the rise.
Should a general pressure and awareness campaign fail, litigation and arbitration can be both comparatively quick and effective for collecting debt. Close understanding of the procedures and laws will determine success and you’ll want to make sure that your local representation is experienced. Once again, it is now Chinese law that the debt recovery must be made by a law firm in China.