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:
2 The Use of Signatures by Western Individuals
When a foreign (non-Chinese) national signs documentation, the following considerations should be made:
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.