2.4 The Validity And Use Of Signatures In China Copy

Page Completion Estimate = 15 Minutes

In the previous units we discussed that the use of company seals in China is deeply embedded in daily business practice and seals replace the function of signatures as used in Western countries. Signatures still serve strong purpose in the process of risk mitigation, but there are a number of aspects that need to be considered.

In the unfortunate event that a dispute arises over business dealings with the third-party Chinese company, the contract party has the burden of proof to provide documented evidence to arbitration or court that the company has been in a commercial relationship with the third-party Chinese company. Company seals and signatures are essential proof.

1         The Use of Signatures by Chinese Individuals

When a Chinese national signs documentation, the following considerations should be made:

  • The full name of the company representative should be written in Chinese characters. preferably in combination with the function title of the position held. Names of Chinese individuals consists out of a minimum of two to maximum four characters.
  • The ((full) name of the company representative written in Hanyu Pinyin should not be accepted. Hanyu Pinyin is the official romanization system for Standard Mandarin Chinese in mainland China. Hanyu Pinyin is a system to support learning Mandarin Chinese but is not an official language. It is a phonetical adaptation of Mandarin Chinese. A name written in Hanyu Pinyin cannot be confirmed to be of the company representative.
  • If the company representative has adopted a Western name, using this name for signing documentation should not be accepted, unless documented evidence is provided that the Western name has been duly notarized and can be confirmed to be of the company representative.
  • The use of a Western-style signature by a Chinese national for signing documentation purposes should not be accepted, unless documented evidence is provided that the signature has been duly notarized and can be confirmed to be of the company representative.

2         The Use of Signatures by Western Individuals

When a foreign (non-Chinese) national signs documentation, the following considerations should be made:

  • Foreign, non-Chinese nationals have the tradition to sign documentation using their signature. In addition to the signature, the full name of the company representative should be written out, preferably in combination with the function title of the position held.
  • Foreign, non-Chinese nationals signing documentation with their Chinese name written in characters is not accepted, unless can be proven that the name has been duly notarized and can be confirmed to be of the company representative. Figures 2.2.3 A, 2.2.3 B and 2.2.3 C provide an example of notarization of Chinese name of a western individual.
  • Chinese name written in pinyin is not accepted, for the same motivation applicable to Chinese nationals.

3         Managing and Minimizing Risk

As discussed in past unit, the last step to perform in the verification process of the company seals is to visit the third party has been discussed. During the visit it should be confirmed which company official(s) are authorized for which purposes and applicable conditions to use which company seals and it should be confirmed whether the person who affixed the seal imprint on the scanned version of the business license is indeed employed by the company.

Preferred outcome of the visit to the company is the creation of a procedure with the third-party Chinese company that the use of a company seal is combined with the signature of documents by a designated company representative.

Documented evidence supporting the procedure is a signature and seal imprint card, which can be used as a reference for verification each time the enterprise receives signed and sealed documentation from the third-party Chinese company. For every relevant personnel change or replacement of seals at the third-party Chinese company, confirm a mutual agreed upon procedure the contract party is informed.