When a Chinese supplier fails to ship goods, delivers defective products, refuses to issue a refund, stops responding to messages, or simply disappears, foreign buyers often look for someone in China to help.
A common mistake is to appoint a general business agent or commercial intermediary to investigate the supplier, negotiate with the supplier, and even try to arrange legal action through that intermediary.
In most cases, this is not an efficient approach.
For a serious supplier dispute, the foreign buyer should communicate directly with a qualified Chinese lawyer as early as possible.
1. A Business Agent Cannot Create Legal Pressure
A general business agent may be able to contact a supplier, make telephone calls, visit a factory, or collect basic information.
However, these activities are very different from legal representation.
A business intermediary generally does not have the professional qualifications or legal authority to:
- assess the legal merits of a claim;
- determine the appropriate legal cause of action;
- issue a lawyer’s demand letter as a lawyer;
- represent the foreign client in legal proceedings;
- properly evaluate evidence for litigation or arbitration;
- advise the client on litigation strategy;
- take legally significant procedural steps on behalf of the client.
A supplier who is willing to ignore a foreign buyer may have little reason to take a business intermediary seriously.
The situation can be very different when the supplier receives formal communication from a Chinese lawyer.
A lawyer can assess the contractual relationship, payment records, invoices, purchase orders, communications, product evidence, shipping documents, and other relevant materials and determine what legal measures may actually be available.
2. A Business Agent Usually Cannot Represent the Foreign Client
One of the most important problems is often overlooked.
A business intermediary may be able to provide commercial assistance, but that does not mean the intermediary can legally represent a foreign party in a Chinese legal matter.
If the dispute ultimately requires a lawyer, the client will still need to engage a Chinese lawyer.
This creates an unnecessary additional layer:
Foreign Buyer → Business Agent → Chinese Lawyer → Chinese Supplier
Instead of:
Foreign Buyer → Chinese Lawyer → Chinese Supplier
The intermediary does not eliminate the need for a lawyer. In many cases, it simply becomes another person through whom information, instructions, documents, and money must pass.
3. The Lawyer Needs to Hear the Facts Directly From the Client
Supplier disputes can become legally complicated very quickly.
For example, a buyer may say:
“The supplier did not deliver the goods.”
But the actual situation may involve several different issues:
- the supplier shipped only part of the order;
- the goods failed inspection;
- the goods were manufactured according to incorrect specifications;
- the supplier used the buyer’s trademark without authorization;
- the supplier promised a refund but never paid it;
- the supplier changed the bank account before payment;
- the supplier stopped responding after receiving a deposit;
- the supplier sold the same products to another customer;
- the supplier claims that the buyer breached the contract.
The details matter.
A lawyer needs to understand the entire history of the transaction before deciding what should be done.
When information passes through a third-party business agent, there is a risk that important facts will be omitted, misunderstood, or inaccurately summarized.
Even a small misunderstanding can affect the legal strategy.
For this reason, direct communication between the client and lawyer is usually much more efficient.
4. Third-Party Communication Can Distort the Case
A business intermediary may summarize the case for the lawyer based on what the intermediary believes happened.
The problem is that the intermediary may not have seen all of the documents or all of the communications between the buyer and supplier.
The lawyer may therefore receive a simplified version of the dispute rather than the actual facts.
For example, the client may have evidence showing that the supplier expressly acknowledged a quality problem.
But if the intermediary only tells the lawyer that “the goods were defective,” the lawyer may not initially understand the importance of the supplier’s admission.
Similarly, a supplier may have made several promises regarding repayment. If those communications are not properly preserved and presented, valuable evidence may be overlooked.
The safest approach is therefore to allow the client to provide the original communications and documents directly to the lawyer.
5. The Client Should Make the Important Decisions
Another problem with using an intermediary is that the intermediary may gradually become the decision-maker.
But it is the client—not the business agent—who ultimately needs to decide important questions such as:
- How much money should be claimed?
- Is a settlement acceptable?
- Should litigation be commenced?
- Should the supplier be given additional time?
- Should the buyer terminate the contract?
- Should the buyer pursue the supplier, its shareholders, or another party?
- How much should be spent on legal action?
- Is the expected recovery worth the cost?
A lawyer can provide legal analysis and explain the risks and options.
The client can then make an informed decision.
A third-party business intermediary should not become an unnecessary decision-making layer between the client and the lawyer.
6. Be Careful About Legal Fees Quoted by Intermediaries
There is another practical risk.
Some business intermediaries may tell foreign clients that they can “arrange a Chinese lawyer” and then quote a legal fee to the client.
The client may not know:
- how much the lawyer actually charges;
- what services are included;
- whether the intermediary has added a markup;
- whether the lawyer has actually been formally engaged;
- who is responsible for the legal work;
- whether the client will communicate directly with the lawyer.
This can create unnecessary costs and misunderstandings.
A foreign buyer dealing directly with the lawyer can normally obtain a much clearer understanding of:
who is providing the legal service, what the service includes, what it costs, and what the next step is.
7. Lawyers Also Prefer Direct Communication With the Client
From the lawyer’s perspective, dealing with an intermediary can make a case significantly more difficult.
The lawyer needs accurate information, original documents, clear instructions, and timely decisions.
If every question has to go through a third party, the process becomes:
Lawyer → Business Agent → Client → Business Agent → Lawyer
This wastes time.
It can also create misunderstandings about the lawyer’s advice, the client’s instructions, and the status of negotiations.
For this reason, lawyers will generally prefer to communicate directly with the actual client or an authorized legal representative.
A business intermediary may still provide useful commercial assistance in appropriate circumstances, but it should not unnecessarily stand between the client and the lawyer.
8. What Should a Foreign Buyer Do Instead?
If you are dealing with a Chinese supplier that has failed to ship goods, supplied defective products, refused a refund, stopped responding, or disappeared, a more efficient approach is:
Step 1: Stop adding unnecessary intermediaries
Do not automatically appoint a general business agent simply because the supplier is located in China.
First speak directly with a Chinese lawyer.
Step 2: Preserve all evidence
Keep:
- contracts;
- purchase orders;
- invoices;
- payment records;
- bank transfer records;
- Alibaba or other platform records;
- emails;
- WhatsApp and WeChat conversations;
- photographs and videos;
- inspection reports;
- shipping documents;
- supplier quotations;
- refund promises;
- company information.
Do not delete or selectively edit communications.
Step 3: Explain the entire history directly to the lawyer
Tell the lawyer what happened from the beginning, including facts that may appear unfavorable to you.
The lawyer needs the complete picture—not only the part that supports your claim.
Step 4: Let the lawyer evaluate the legal options
Depending on the circumstances, the lawyer may consider negotiation, a formal demand, preservation of evidence, asset investigation, arbitration, litigation, or other legal measures.
Not every supplier dispute should immediately become a lawsuit.
The appropriate strategy depends on the contract, evidence, amount in dispute, supplier’s assets, jurisdiction, limitation issues, and other factors.
Step 5: Make decisions directly with your lawyer
The client should receive the legal assessment directly and then decide how much time and money to invest in pursuing the claim.
Conclusion
A Chinese supplier dispute is a legal problem when the supplier refuses to perform its obligations, refuses to refund money, provides defective goods, or disappears after receiving payment.
A general business agent may be useful for certain commercial tasks, but a business intermediary is not a substitute for a Chinese lawyer.
In many cases, involving an unnecessary third party creates additional communication, additional costs, additional opportunities for misunderstanding, and no additional legal authority.
The most efficient structure is usually simple:
Foreign Client → Chinese Lawyer → Chinese Supplier
The client provides the facts and evidence directly.
The lawyer provides the legal analysis and handles the legal work.
The client makes the final commercial decisions.
When a supplier dispute has already gone wrong, the last thing a foreign buyer needs is another unnecessary layer between the buyer and the person who is actually responsible for handling the legal problem.
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.
Legal Contributors
Legal professionals contributing to this article and related legal analysis.
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.