One of the easiest ways to exponentially increase the difficulty of a debt collection scenario is to introduce the international element. Debt collection can be a complicated process when you are dealing with a debtor who lives in the same community as you. When there are multiple countries and oceans dividing you from the debtor, completing the international debt collection process can be a nearly impossible task.
Because of the differences in language, culture, and government, China has always been a very intimidating place for Americans to attempt commercial debt collection. In recent years, as many businesses have expanded into China to pursue tremendous growth opportunities, debt collection opportunities have also expanded. What was once seen as a very closed country has slowly become more and more business friendly, which also means that the country has become more debt collection friendly.
More Conscious Consumers
One of the major reasons that collection agencies in China have become more and more successful is that consumers in China are becoming more concerned with the contents of their credit reports. Just like in the United States, creditors in China have the ability to record outstanding debts on a consumers credit report.
As Chinese consumers continue to benefit from the countries rapidly expanding economy, having good credit is becoming more and more important. This has led to a huge spike in the desire to clean up outstanding debts listed on credit reports.
Only Domestic Agencies Can Collect
Debt collection laws in China are similar to the debt collection laws that exist in India. Both countries only permit debt collection activities to be performed by agencies located in their country. In China, The Ministry of Public Security and the State Administration for Industry and Commerce has specified that debt collections may only be conducted by Chinese law firms.
Different Rules for Collecting in China
While these types of regulations are quite similar to what we find in other international debt collection situations, there are also many aspects of collecting debts in China that are completely unique to that country. Debtors located in China do not benefit from the same type of regulations that debtors in America are used to. Chinese debt collectors are allowed to be much more creative, and much more aggressive, in their debt collection efforts.
It is not uncommon in China for a debt collector to send notices to a debtor’s co-workers, family, and friends regarding the outstanding balance owed. Chinese debt collectors have also been known to post large signs describing the debt owed outside of the debtor’s residence.
Professional Experience & Contacts
If you are attempting to collect from a debtor located in China, the hardest part of the process is likely going to be understanding the rules and regulations regarding international debt collection in China. It is almost certainly in your best interest to at least consult with a specialist who has experience with international debt collection, and it could be even more advantageous to hire an experienced agency to handle the entire matter on your behalf.
Direct Recovery has extensive experience facilitating debt collection between American and Chinese companies. They are able to conduct collection efforts on the ground in China because of their established relationships with collection oriented law firms there.
Richard Hart, who is the general manager of Direct Recovery, has been quoted in an article describing the ways that his company can pursue collection in China. He has explained the legal aspect of Chinese collections by stating that, “It can be challenging if the debtor is in rural China or remote cities. But in bigger cities in China, you can file a lawsuit.”
As you can see, there are many different moving parts when it comes to debt collection efforts in China. Working with a skilled and experienced company like Direct Recovery can be a huge help towards getting the debt collected quickly and legally.