Cultural & Business Guide

The contract at the end


Contracts with Chinese companies are more formal than contracts in the West. Meetings with the Chinese, especially the signing ceremony, usually ends with a dinner or Karaoke, where also some minor business issues can be settled in such informal settings. After all, signing a contract and having a banquet, particularly the latter, is a sign that everyone is friends again, all the major issues worked out, and minor post-signing issues that could be just thrown in at the very end.

Sign, seal, and deliver a contract

Contracts with your Chinese partner are considered an international contract and they are commonly written in two or more languages, always in Chinese and English. Somehow, this duality of language does pose big problems if not handled properly. When a contract is both in Chinese and English, it is absolutely necessary to specify which language is the official language of the contract, as in case of a dispute litigating on one contract is expensive enough, so there is no need to litigate on two. It all depends on where you would most like to see disputes resolved. However, it is common practice that the Chinese language is agreed as the official language, and Chinese courts will be the place to resolve conflicts, since it is quite rare that a Chinese manufacturer agrees to go for arbitration in English. Please bear in mind that Chinese courts or arbitral bodies will deem the English language contracts valid anyway. Obviously, during the signing ceremony, when all the documents are ready for acceptance, it needs to be absolutely clear and declared in the records which language version is decisive in case of a dispute.

For the validation of a contract, all Chinese companies have a legal representative and a company seal. A significant part of signing ceremony is writing your initials on each page of the contract, and official signing the documents at the end. After all signatures, the contract is sealed. Many foreign companies do not use chops. For a Chinese company, the chop is the most important for the document to be valid. A common practice in China is to always keep the chop in a company safe and taking it away from the safe for the contract sealing. After signing and sealing the contract, the chop comes right back to the safe. An official contract should have both the company seal and the legal representative’s signature, but sometimes a company seal without signature can validate the contract too.

For Europeans a signature is more important than a seal, but historically in China, a seal is binding while a signature is insignificant.

A seal represents much more power than a signature in China. Although Chinese Contract Law states that a written contract is legally binding when it is signed or sealed by the parties, the majority of Chinese still honour a seal more than a signature. Therefore, it is prudent to make sure that a contract with a Chinese company has both the signature of the company’s legal representative and the company’s seal. In any event, at least the company seal with its purpose to seal and validate the contract should be used.

Definition of a sufficient written format for a contract varies between the West and the East. While for European companies a PDF containing a signed contract, scanned and sent via email may be sufficient, Chinese companies will probably require a hard copy of the signed and sealed document to be physically delivered to them.

There are three main aspects that need to be carefully arranged. First, the signature on the contract comes from the Chinese company’s legal representative. Prior to the signature, you need to check with the company’s business license who exactly is the company’s legal representative and, therefore, is empowered to sign the agreement.

No matter what type of contract you are going to involve your company with in China, you always need to see the Chinese partner company’s business license for verifying the Chinese company’s registered name, address and its legal representative. If the Chinese company hesitates in giving you their license for verification, you should interpret it as an alarm, since to encounter fake business license is not uncommon in China.

Moreover, you should view any unwillingness to do so as a major red flag!

Second, it is also important to have an explicit decision from the Chinese company’s board approving the contract and authorizing the legal representative to sign it.

Finally, it is mandatory to seal the contract with the company chop or the Chinese company’s contract seal.

Chinese banquet: unwritten rules

There is much more to a Chinese banquet than just a nice meal. The Chinese formal banquet is almost comical to Westerners, but it is something they have to cope with.

Just like back home in Europe, you have a job description and a specific responsibility, in China you should learn to play the game according to Chinese rules as well.

When you are invited to a Chinese banquet, it is an honour to be seated on the right side of your Chinese host.

The Chinese always start the banquet with toasts: as soon as the first dishes arrive on the table, and people take a wine glass and walk around the room toasting other guests. After a few rounds of toast guests may finally start eating. After a few hours of the feast, comes the time for thanking the guests for attending. At the end, the final toast is made, such as 万事如意 (wanshi ruyi) ten things your wish for, or 一路顺风 (yilu shunfeng) Bon Voyage, is expected from the Chinese host to close the banquet.

There are many differences between Chinese and Western customs, and attending a Chinese banquet is a notable demonstration of these discrepancies. To behave properly at a Chinese banquet you truly need real-life practice.

Do not worry, it is not a mandatory business practice to host a banquet at the conclusion of a deal, and it would even be considered a bad practice in a business context for the Chinese company to insist you do so.

How to improve the relationship with your Chinese partner during a banquet?

In China, personal and business relationships are much closer than in the west. It is easy to turn personal relationships into business relationships. It is absolutely necessary to cultivate your awareness of etiquette, because your business can really benefit from the right behaviour.

Anyway, to survive a Chinese banquet and avoid possible deadlocks and embarrassing situations, the top tip is to follow your host lead: The Chinese are well aware that a banquet may be very disconcerting for Westerners, therefore take a breath, relax and enjoy the company: it may turn much funnier than you thought.


Chen Yingqun (June 26-July 2, 2015). “Chinese banquet tips dished out by finishing school institute sarita offers foreign executive lessons on how to survive business dinners”. Retrieved from China Daily European Weekly VOL 6. NO 230 ISSN 2045-7995 Page 26.

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