In January 2024, a Thai company, Company A, sought my legal advice regarding a dispute. Company A had purchased a batch of steel pipes from a Chinese trader, Company B. The purchase contract stipulated that the steel pipes were to be manufactured by Hunan Valin Company, with quality standards clearly outlined. However, upon receiving the goods, Company A discovered that the quality guarantee certificate and PED certificate provided by Company B were forged, and the product did not meet the specified standards. Company A had already paid in full and was now facing significant losses.
After assessing Company A's situation, we advised them to initiate a civil lawsuit against Company B in China. The lawsuit aimed to recover the full payment made to Company B and seek compensation for the losses incurred due to the breach of contract. Additionally, we recommended that Company A apply to the court for property preservation against Company B. Simultaneously, Company A filed a complaint with the Chinese public security organ against Company B and its actual controller for fraud.
Ultimately, under various pressures, Company B opted to proactively settle with Company A. This resulted in Company A being compensated for its losses, while Company A managed to avoid liability for breach of contract with its downstream customers.
We strongly advise foreign companies to conduct thorough due diligence on Chinese companies before engaging in business transactions. Obtaining a professional company survey report can help assess transaction risks and mitigate potential losses.