Shanghai is a relevant commercial location for international buyers sourcing from China. Shanghai is a major international commercial and industrial center with sophisticated manufacturing and supply-chain services. A dispute involving a supplier in this market should be considered in light of both the contractual relationship and the practical characteristics of the local supply chain.
Why is fraud so difficult to establish under Chinese law? Attorney Qiang Lyu often receives inquiries from clients saying, “Attorney Lyu, I’ve been scammed. I shipped the goods but received no payment, or I paid in full but got no delivery. This is fraud, and I want you to help me report it to the police to pursue criminal liability.”
In such situations, I always tell my clients directly: fraud is not as easy to prove as you might think. To establish a criminal fraud offense, at least three key elements must be met:
The offender fabricated facts or materially concealed the truth.
The offender possessed the intent to defraud from the very beginning.
If the offender defrauded three or more victims, it is more likely to be recognized as fraud.
In legal practice, most fraud reports submitted to the public security authorities are not accepted as criminal cases. Instead, the police will issue a written notice advising the victim to file a civil lawsuit in court.
Just put yourself in their position: If every dispute over non-payment for goods or non-delivery after payment were treated as criminal fraud, there would be no need for civil courts at all.
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Local Supply Chain Risks in Shanghai
International buyers dealing with Shanghai companies may be sourcing products or services connected with automotive, electronics, machinery, technology and advanced manufacturing. Typical issues may include complex commercial disputes, OEM disputes, quality claims, technology-contract disputes and payment disputes. For complex international commercial transactions, buyers should pay particular attention to the contracting structure, governing-law and dispute-resolution clauses, documentary evidence, payment records and the identity of each relevant legal entity.
Shanghai is located in Shanghai and is supported by a highly developed international business, logistics, manufacturing and professional-services ecosystem. For cross-border transactions, this background can be useful when assessing supplier verification, contract enforcement and dispute-resolution options.
Resolving a Supplier Dispute in Shanghai
Where a commercial dispute has developed, an overseas buyer should avoid relying solely on informal communications. Reviewing the contract, identifying the correct legal entity, preserving documentary evidence and assessing the available dispute-resolution mechanism are usually important before deciding how to proceed.
The appropriate legal strategy depends on the specific transaction, the supplier’s conduct, the evidence available and the applicable legal framework.
The information provided in this article is for general informational purposes only and does not constitute legal advice. Laws and legal procedures may vary depending on the specific facts and applicable jurisdiction. No lawyer-client relationship is created by reading this article or contacting us through this website. For advice regarding a specific matter, please consult a qualified lawyer after a formal engagement has been established.
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Qiang Lyu
His practice also includes China company law, intellectual property matters, and commercial contract disputes involving foreign-invested businesses and cross-border commercial activities.