The invoice is sixty days overdue. The WeChat replies have thinned to one-line apologies, then silence. The factory still posts on its official account as if nothing is wrong. For overseas suppliers and service firms, this is the moment the question stops being commercial and becomes legal: what can actually be done inside mainland China to recover the money?
The honest answer is that quite a lot can be done — but the tools are sequenced, and skipping steps usually costs more than it saves. Below is the practical map we walk clients through.
Start with leverage, not litigation
Most successful China debt recovery does not end in a courtroom. It ends with a structured settlement triggered by credible pressure. Before drafting a complaint, three things are worth doing in parallel.
First, verify the debtor properly. Pull the National Enterprise Credit Information Publicity System record, check whether the company is listed as an "abnormal operation" entity, look for existing judgments against it on China Judgments Online, and check whether shareholders or legal representatives have been listed as judgment defaulters (失信被执行人). A counterparty already on the defaulter list changes your strategy entirely — you may be queuing behind dozens of other creditors.
Second, send a formal demand letter in Chinese, on PRC counsel's letterhead, citing the contract and the specific overdue invoices. This sounds modest, but in our experience it resolves a meaningful share of disputes outright. A letter from a bar-admitted PRC lawyer signals that the foreign creditor is no longer drifting and that the next step has been costed.
Third, look at the relationship's pressure points before they disappear. Is the debtor about to renew a licence, list a subsidiary, raise funding, or ship goods through a port where they can be intercepted? Leverage that exists today often does not exist in six months.
The civil claim route
If pressure fails and your contract points to a PRC court, a civil claim is the default path. The mechanics are familiar to anyone who has litigated commercially, but a few features are distinctive.
Jurisdiction is taken seriously. PRC courts will scrutinise whether they have proper jurisdiction under the contract and the Civil Procedure Law, and a defective jurisdiction clause is one of the most common reasons foreign claimants lose months at the threshold. If the contract is silent, jurisdiction typically follows the defendant's domicile or the place of contractual performance.
Evidence rules are stricter than many common-law practitioners expect. Foreign-language documents generally need certified Chinese translations. Evidence formed outside mainland China — board minutes, signed PDFs, email chains — often requires notarisation in the country of origin and, depending on the document and the current treaty position, either consular legalisation or an apostille. Building this evidence pack early, before filing, prevents the most painful adjournments.
Timelines vary by court and complexity, but a straightforward contract claim with a cooperative defendant can move faster than foreign counsel expect; a contested matter with appeals can run well beyond a year. Court fees are calculated as a percentage of the claim and are paid up front by the claimant, then recoverable.
Arbitration through CIETAC or SHIAC
Where the contract contains an arbitration clause — and for cross-border commercial contracts with PRC parties, it often should — the route changes. The two institutions you will most commonly see are CIETAC (China International Economic and Trade Arbitration Commission) and SHIAC (Shanghai International Arbitration Centre). Both handle foreign-related commercial disputes routinely, publish their rules in English, and maintain panels of arbitrators with cross-border experience.
A few practical notes:
- Drafting matters more than the institution chosen. A clause that names the institution clearly, fixes the seat, language, and governing law, and avoids hybrid wording ("arbitration or litigation") will save you a jurisdictional fight later.
- Awards are enforceable abroad. China is a contracting state to the New York Convention, so a CIETAC or SHIAC award can in principle be enforced in most jurisdictions where your debtor holds assets — useful if you suspect the money has already moved offshore.
- Interim measures from the tribunal are limited. PRC arbitral tribunals themselves do not grant asset-freezing orders; those come from the courts (see below), and the arbitration institution forwards the application.
- Confidentiality is the default. This cuts both ways: you lose the reputational pressure of a public filing, but you preserve commercial relationships you may want to rebuild.
For high-value or technically complex disputes, arbitration is often the cleaner route. For straightforward unpaid invoices against a small domestic debtor, litigation in the local court can be faster and cheaper.
Asset freezing: the underused lever
The single most overlooked tool in China debt recovery is property preservation — the PRC equivalent of a freezing injunction. A claimant can apply to the court, either before filing or alongside the claim, to freeze bank accounts, equity interests, real estate, and certain receivables of the debtor up to the value claimed.
Two features make this powerful. First, it is available in support of both court proceedings and arbitration (with the arbitration institution acting as conduit). Second, it can be granted quickly — sometimes within days — which matters when a debtor is visibly moving cash.
The trade-offs are real. The applicant must usually post security, often in the form of a guarantee from a licensed Chinese guarantee company, covering potential losses to the debtor if the freeze turns out to be wrongful. Specifying the assets accurately is the claimant's responsibility; vague applications get rejected. And a freeze that hits operating accounts can collapse settlement talks as easily as it can accelerate them — it is a lever, not a default move.
Used well, an early freeze converts a debtor's "we have no money" into a negotiation. Used badly, it burns the relationship and the security deposit.
Cross-border enforcement: thinking two moves ahead
If your debtor's assets sit only in mainland China, a PRC judgment or award is what you need. If assets are spread across Hong Kong, Singapore, the UK, or elsewhere, plan the enforcement route before you choose the dispute resolution forum.
- Mainland judgments are enforceable in Hong Kong under the reciprocal enforcement arrangement, subject to its conditions.
- Arbitral awards travel further than court judgments thanks to the New York Convention.
- UK courts will recognise certain foreign judgments under common law principles, but the path is more involved than for arbitral awards.
The choice of forum at contract-drafting stage is, in effect, a choice of enforcement geography years later. Treat it that way.
Serene Jade's Chinese Lawyer service pairs overseas businesses with bar-admitted PRC and Hong Kong solicitors for exactly these matters — demand letters, CIETAC and SHIAC arbitration, civil claims, and property preservation applications.
FAQ
Q: My contract is in English and signed only by email. Is it still enforceable in a PRC court? A: Generally yes — PRC law recognises electronic contracts and foreign-language contracts — but you will need a certified Chinese translation, and you should expect the court to scrutinise authenticity. Notarising the email chain at origin strengthens the file considerably.
Q: The debtor company looks empty but the boss drives a Porsche. Can we go after him personally? A: Only in specific circumstances — typically where you can show shareholder commingling of assets, undercapitalisation, or fraud sufficient to pierce the corporate veil. It is a real remedy in PRC practice but a high evidentiary bar; gather bank flows and related-party transaction evidence early.
Q: Is it worth pursuing a debt under roughly USD 30,000? A: Often yes, if the debtor is solvent and locatable, because PRC court fees and lawyer fees on a clean contract claim are proportionate to the sum. The calculation changes sharply if the debtor is already a listed judgment defaulter — at that point, recovery prospects, not legal merit, drive the decision.