Trust Across Borders Chapter 4 — When Trust Is Tested
Trust Across Borders
Chapter 4 — When Trust Is Tested
Published as part of the Trust Across Borders series.
When Trust Breaks Down
Trust is easy to understand when everything goes well.
A supplier delivers the goods.
A buyer makes the payment.
Both sides follow the contract.
Everyone is satisfied.
But international business becomes much more complicated when something goes wrong.
A shipment is delayed.
The quality is different from what was agreed.
A payment is made but the goods never arrive.
A company stops responding to emails.
A supplier suddenly demands additional money.
At that moment, something more important than the contract begins to change.
Trust begins to disappear.
The Moment Everything Changes
Most commercial disputes do not begin with a lawsuit.
They begin with a small change in communication.
An email is no longer answered.
A promised shipment date passes.
A phone call is ignored.
A new explanation appears.
Then another.
Eventually, the buyer begins to ask a simple question:
“Can I still trust this company?”
This is often the turning point.
Before that moment, the relationship is commercial.
After it, the buyer begins thinking about risk.
And once trust has been seriously damaged, every subsequent action is interpreted differently.
A delay that might once have seemed normal suddenly looks suspicious.
A request for additional payment may appear unreasonable.
A vague explanation may be interpreted as an attempt to avoid responsibility.
The commercial relationship has changed.
Trust Does Not Disappear All at Once
In many disputes, trust does not collapse because of one single event.
It deteriorates gradually.
First, communication becomes slower.
Then explanations become less convincing.
Then promises are repeatedly postponed.
Then the parties begin arguing about what was originally agreed.
Eventually, the buyer stops asking:
“When will you deliver?”
and starts asking:
“How do I get my money back?”
That change is extremely important.
It means the commercial relationship may no longer be capable of being repaired through ordinary business communication.
At that point, continuing to negotiate without a strategy can sometimes make the situation worse.
Distance Makes Problems Bigger
A commercial disagreement between two companies in the same city can sometimes be resolved over a meeting.
The parties can sit down together.
They can inspect the goods.
They can visit the factory.
They can speak directly with the decision-makers.
International transactions are different.
The buyer may be thousands of kilometers away.
The supplier may be located in another legal system.
The contract may be written in another language.
The payment may have passed through several banks.
The evidence may be scattered across emails, messaging applications, online platforms and documents.
Every additional layer creates uncertainty.
This is one reason trust is particularly important in international business.
Research on interorganizational trust in international business has repeatedly identified cross-national communication challenges, uncertainty and differences between organizations and countries as factors that make trust especially important.
When a Business Problem Becomes a Legal Problem
Not every commercial disagreement is a legal dispute.
A shipment can be delayed because of a genuine logistical problem.
A product can be defective because of an honest manufacturing mistake.
A payment can be delayed because of a banking issue.
Good businesses understand this.
They do not immediately treat every problem as fraud.
The difficult question is determining when a normal commercial problem has become something more serious.
Consider a simple example.
A supplier says:
“The shipment will be delayed for one week.”
That may be manageable.
One week later, the supplier says:
“There is another delay.”
That may still be manageable.
But then the supplier asks for additional money, refuses to provide evidence, stops responding, and still does not deliver the goods.
The situation has changed.
The issue is no longer simply delivery.
It may now involve breach of contract, recovery of payment, preservation of evidence, and potentially other legal issues.
Recognizing that transition early can make a significant difference.
Do Not Confuse Anger with Strategy
When money is lost, anger is natural.
A business owner may want to immediately accuse the other party of fraud.
They may want to publish negative reviews.
They may threaten criminal complaints.
They may send dozens of angry messages.
Sometimes these actions make the situation worse.
The objective should not be to make the other side feel afraid.
The objective should be to maximize the possibility of a successful resolution.
That requires discipline.
Preserve the evidence.
Understand the contractual position.
Identify the correct legal entity.
Determine who received the money.
Find out whether the company has assets.
Assess the available legal remedies.
Then decide what action is most likely to produce a result.
Emotion may explain how we feel.
It should not determine our legal strategy.
The Importance of Evidence
When trust breaks down, memory is not enough.
People remember conversations differently.
Business relationships evolve.
Employees leave.
Messaging accounts disappear.
Websites change.
Documents can become difficult to obtain.
That is why evidence should be preserved before a dispute becomes serious.
Contracts and purchase orders matter.
Invoices matter.
Bank records matter.
Emails matter.
Messages matter.
Shipping documents matter.
Photographs matter.
Company records matter.
Even apparently unimportant communications can become relevant later.
A buyer may initially believe that the most important document is the contract.
Sometimes it is.
But sometimes the most important evidence is what happened after the contract was signed.
What did the supplier promise?
What did the buyer pay?
What did the supplier acknowledge?
What explanation was given for the delay?
Did the supplier admit receiving the money?
Did it later demand additional payment?
Did it refuse to refund the buyer?
The history of the relationship can become the foundation of the dispute.
The Other Side of the Border
There is another important principle.
A foreign buyer should not assume that a Chinese company is automatically difficult to deal with simply because it is in China.
Likewise, a Chinese company should not assume that a foreign buyer will simply give up because the buyer is overseas.
Modern international commerce creates relationships that cross borders every day.
The parties may have completely different expectations about communication, negotiation and dispute resolution.
A buyer may expect a direct answer.
A supplier may prefer indirect communication.
One side may see a delay as unacceptable.
The other may consider it commercially normal.
These differences do not automatically mean that someone is dishonest.
But they can create misunderstandings.
Trust therefore requires not only verification.
It also requires understanding.
The Lawyer’s Job Is Not to Restore Trust
When I become involved in a commercial dispute, my job is not necessarily to make the parties trust each other again.
Sometimes that is no longer possible.
My job is to determine what happened, what rights the client may have, what evidence exists, and what practical options are available.
Sometimes the best solution is negotiation.
Sometimes it is a formal demand letter.
Sometimes litigation is necessary.
Sometimes, after examining the evidence and the company’s financial position, the most responsible advice may be not to spend additional money pursuing an unlikely recovery.
That last answer may be difficult for a client to hear.
But professional advice should be based on the client’s interests, not on the desire to continue a case at any cost.
Trust Can Be Rebuilt
The breakdown of trust does not always mean the end of a business relationship.
Sometimes a dispute is resolved.
The supplier refunds the money.
The goods are delivered.
The parties agree on a new timetable.
A mistake is acknowledged and corrected.
In those situations, trust can sometimes be rebuilt.
But rebuilt trust is different from the trust that existed before.
It is usually based on new evidence.
New procedures.
New safeguards.
Better contracts.
More careful payment arrangements.
And clearer communication.
In other words, trust becomes stronger when it is supported by systems.
The Real Lesson
The lesson is not that international businesses should distrust everyone.
That would make international commerce impossible.
The lesson is that trust should have boundaries.
You can trust a business partner while still verifying the company.
You can respect a supplier while still using a carefully drafted contract.
You can believe someone’s explanation while still preserving evidence.
You can hope that a dispute will be resolved while still preparing for the possibility that it will not.
Trust and caution are not opposites.
They work together.
The strongest international business relationships are not built on blind faith.
They are built on confidence supported by evidence.
And when trust eventually breaks down, the companies that prepared in advance are usually in a much stronger position to respond.
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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.