If you’re reading this, you likely know the situation well. You shipped the goods, handed over the bills of lading, cleared customs, and the products arrived at your buyer’s warehouse in Shenzhen, Ningbo, or Qingdao. Then the excuses started: cash flow issues this quarter, quality concerns to discuss, the finance director is on leave. Emails slow down, WeChat messages go unanswered, and eventually your contact stops responding altogether. You’re left with unpaid invoices, shipment evidence, and a tough question: can a foreign company actually sue a Chinese buyer and get paid?
The honest answer is yes—more often than foreign companies expect. Chinese courts handle tens of thousands of foreign-related commercial disputes annually, most involving this exact scenario: goods delivered, payment withheld, and a foreign seller seeking to recover owed money. The system isn’t hostile to foreign claimants. Court fees are reasonable, the process is faster than many international litigations, and Chinese courts have strong powers to locate and freeze a debtor’s assets. What distinguishes companies that recover their money from those that write off debts is rarely the strength of the claim itself. It’s preparation—having the right documents, filing in the correct court, and acting quickly to freeze assets before they vanish. This article explains that process plainly, focusing on the key decisions that affect the outcome.
Why Sue in China?
Before diving into the process, many foreign clients ask: why not sue in your home country? The answer is enforceability. Even if you win a judgment against a Chinese company in Germany, the US, or Singapore, enforcing that judgment in mainland China is difficult. China recognizes foreign judgments based on bilateral treaties or reciprocity, and while recognition has improved—Chinese courts enforced 319 foreign monetary judgments in 2024, up over 11% from the previous year—the process remains unpredictable and often fails without treaty protection.
Suing directly in a Chinese court flips the problem. A Chinese judgment is enforceable in China by definition, through a dedicated enforcement division that can freeze bank accounts (including Alipay and WeChat Pay), seize and auction real estate, detain vehicles and equipment, garnish receivables, restrict travel of the debtor’s legal representative, and blacklist the company publicly, barring it from financing, bidding, and luxury consumption. For foreign creditors whose Chinese counterparties have assets in mainland China—which most do—local litigation is almost always the more reliable option.
Step One: Organize Your Documents Before Taking Any Action
The biggest reason foreign creditors fail in China isn’t the law—it’s poor documentation. Chinese courts decide cases based on evidence, and for unpaid goods claims, the evidence needed is straightforward. You need a clear paper trail linking the buyer, the order, the shipment, receipt, and unpaid balance.
Start with all contract documents: signed sales contracts, purchase orders, pro forma and commercial invoices, and email order confirmations. Add shipment records like bills of lading, packing lists, customs declarations, delivery receipts, and any inspection or acceptance documents signed by the buyer. Include payment history: bank transfer records showing what’s paid and what’s outstanding, linked to specific invoices. Finally, gather correspondence—emails, WeChat messages, and any buyer acknowledgments of debt or repayment discussions.
If the buyer still communicates, the most valuable document before filing is a signed statement of account or debt confirmation—a simple document in Chinese and English listing outstanding invoices, total owed, and a repayment deadline, stamped with the buyer’s company seal. Chinese courts treat such stamped acknowledgments as nearly conclusive, and cases based on them move much faster than those relying on disputed invoices. If the buyer refuses to sign, don’t lose hope; a well-assembled chain of order, shipment, customs, and payment records can still support your case.
Note on timing: China’s statute of limitations for contractual debts is three years from the payment due date. Each written demand for payment resets this clock, so even old debts can be revived by a formal demand letter from a Chinese law firm—often prompting settlement before filing.
Step Two: Choose the Right Court—Geography Usually Works in Your Favor
Jurisdiction may seem dry, but in cross-border debt recovery it’s a crucial practical decision, determining which court hears your case and how convenient the process is.
Chinese law allows filing a contract claim based on the defendant’s domicile or where the contract is performed. For payment claims, the place of performance is where the payment is received—meaning your own business location in China (your subsidiary, representative office, or where payment was contractually due) can qualify. This lets you file locally rather than chasing the buyer to their home province.
If the buyer has no mainland China domicile (e.g., an offshore buyer), foreign-related provisions allow jurisdiction based on contract signing location, performance place, subject matter location, property available for seizure, or the buyer’s Chinese representative office. Review your contract carefully. If it has a valid arbitration clause naming CIETAC or another arbitral institution, you must arbitrate, not sue in court—filing a lawsuit in such cases leads to dismissal. If it specifies a Chinese court, you must file there. Many cross-border contracts lack clear dispute resolution clauses, so default jurisdiction rules often work in your favor.
Step Three: Asset Preservation—The Key Move That Makes Recovery Possible
If you take away one strategic point, it’s this: the most important filing in a cross-border debt case in China is usually the asset preservation application, not the complaint.
Why? Chinese companies often move assets once they learn a lawsuit is coming—transferring funds, real estate, or receivables to affiliates. By the time you win, the debtor may be an empty shell, making your judgment worthless.
Preservation stops this. When filing your lawsuit—or even before in urgent cases—you can ask the court to freeze the buyer’s mainland bank accounts, seize real estate and vehicles, detain goods at port, or freeze receivables owed by third parties. If the buyer is part of a larger group, receivables flowing through group accounts can also be frozen. Courts carefully consider urgency and security; filing preservation simultaneously with the complaint is standard among experienced lawyers to prevent debtor warnings.
Preservation requires security to compensate the respondent if the application is wrongful. Traditional security—a cash deposit equal to the preserved amount—is costly, especially for foreign companies. The practical solution is preservation liability insurance: for a small premium (a low single-digit percentage of the preserved amount), a Chinese insurer issues a guarantee to the court, leaving your capital untouched. This process is quick and routine today.
A caution: preservation must be targeted and reasonable. Freezing assets far exceeding your claim risks a wrongful-preservation damages counterclaim. An experienced lawyer will tailor the request to your actual debt and identify specific, verifiable assets (account numbers, property addresses, receivable details) because vague requests cannot be executed.
Step Four: Centralized Foreign-Related Courts and a Friendlier System for Foreign Claimants
Recent reforms have improved how foreign-related commercial cases are handled in China, benefiting foreign claimants. Since 2023, the Supreme People’s Court established a tiered system where first-instance foreign-related civil and commercial cases are heard by designated basic-level and intermediate courts with foreign-related divisions. Higher-value or complex cases (claims over RMB 40 million in major centers like Beijing, Shanghai, Guangdong, Jiangsu, Zhejiang; RMB 20 million elsewhere) go to intermediate courts.
Additionally, specialized international commercial courts exist in sixteen cities (Shanghai, Suzhou, Beijing, Chengdu, Xiamen, Hangzhou, Nanjing, Qingdao, Ningbo, etc.), staffed by judges experienced in foreign-related cases and supported by integrated platforms for litigation, mediation, and arbitration. This means your case is more likely today to be heard by judges familiar with international sales disputes, comfortable with foreign-language evidence, and understanding the commercial context of delayed payments. Procedures like online filing, electronic service, and remote hearings have also modernized.
Serving process on a mainland defendant is usually straightforward if the defendant is a Chinese company. If the defendant is abroad and service must go through the Hague Service Convention or diplomatic channels, expect delays averaging six months or more—your lawyer should factor this into your case plan and settlement timeline.
Step Five: Winning Is Only Half the Battle—Enforcement Is the Other Half
A judgment isn’t money until enforced. After your judgment takes effect and the buyer still doesn’t pay, you apply for enforcement. The enforcement division then queries the debtor’s bank accounts nationwide via an automated system, freezes funds, seizes property, and can impose escalating pressure: restricting the legal representative’s travel and luxury spending, blacklisting the company publicly, and investigating suspected asset transfers.
If the debtor transferred assets to avoid payment, remedies include targeting the recipient for enforcement or filing a creditors’ revocation action to recover the transfer.
If your buyer has assets outside mainland China—commonly in Hong Kong—the 2019 Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters (effective January 2024) allows mainland judgments to be enforced through Hong Kong courts, greatly expanding your litigation’s reach. Enforcement applications generally must be made within two years of the judgment taking effect, so act promptly.
Costs and Timeline
Foreign clients are often pleasantly surprised by Chinese litigation costs. Court fees are on a sliding scale, roughly 0.5% to 2.5% of the claim value, and are recoverable from the losing party. Attorney fees are usually borne by each party unless the contract states otherwise—a point to consider in your standard terms, as a fee-shifting clause can affect dispute economics. Adding preservation insurance premiums and translation/notarization costs, a mid-sized claim can be pursued for a small fraction of the amount owed.
Timing varies. A straightforward case with clear evidence, preservation, and a cooperative docket can take six to twelve months from filing to judgment. Cases involving overseas service, appeals, or contested trials may take 18 to 24 months. Enforcement can add months, but early asset freezing shortens and improves enforcement success.
Common Mistakes by Foreign Creditors
Several mistakes recur frequently. The most common is waiting too long—each month risks asset movement and limitation expiration. Using unlicensed collection agencies is another; only licensed law firms may legally pursue debt recovery in China, and informal methods can harm your claim and reputation. Signing contracts with poorly drafted or missing dispute resolution clauses—naming unenforceable foreign courts or costly arbitration seats—is a deal-stage error that surfaces only during disputes. Finally, trying to negotiate directly with a silent debtor without a credible Chinese lawyer’s letter and a visible threat of filing and preservation rarely works; letters on Chinese law firm letterhead get responses.
How We Can Assist
Our practice focuses on cross-border commercial disputes in China for foreign companies, with unpaid goods claims among the most common and solvable cases we handle. We start with a frank review of your documents and debtor: evidence, limitation status, buyer’s mainland assets, and the best court for convenience, speed, and enforcement. We can send formal lawyer demand letters that often prompt settlement before filing. If litigation is needed, we prepare and file the complaint with a targeted preservation application backed by insurance, pursue the case in the designated foreign-related court, and assist through enforcement until payment is received.
Where arbitration is required, we represent clients in CIETAC and other proceedings and in enforcing awards under the New York Convention. For buyers with Hong Kong assets, we coordinate enforcement of mainland judgments under the 2019 Arrangement through trusted Hong Kong counsel.
Every step—from notarizing and apostilling your corporate documents abroad, structuring preservation applications, to negotiating enforceable settlements—rewards early, well-advised action and punishes improvisation. If your company has unpaid invoices from a Chinese buyer or wants to understand options before problems arise, we welcome a confidential discussion. The best time to protect a trade receivable is before the buyer goes silent—the second best time is now.