We’re currently preparing to take a supplier to court in China.
The amount in dispute is modest — around $1,000 USD. The evidence is solid: a signed contract, a complete WeChat conversation history, clear breach of delivery terms. In Chinese court, with a properly registered Chinese entity filing the claim, this is straightforward. No lawyer required. Walk in with the contract, file the claim, let the process run.
We’ll likely win. And we’ll get our client’s money back.
Now here’s the question worth sitting with: what would happen if our client had gone directly to this supplier themselves?
How This Started
A long-term client of ours ran into a supply chain problem last year. One of their suppliers — a company we had vetted and worked with for years — developed cash flow problems and couldn’t fulfill an order. We caught this early, warned the client, recovered the advance payment, and sourced several alternative products for their consideration.
The client wanted the original product. The exact model. Nothing else.
So they went to Alibaba themselves and found a trading company they had worked with briefly years ago. The owner — we’ll call him Mike — claimed he could supply it. The client asked us to manage the relationship and handle the order on their behalf.
We signed a purchase contract with Mike’s company. We paid a deposit. We waited.
The delivery date passed. Then another. Mike’s responses became evasive, circular, and then essentially meaningless — the same message repeated in different words: keep waiting.
Out of curiosity, we contacted the actual factory we knew supplied this type of product. They confirmed Mike was sourcing from them. They also confirmed they couldn’t deliver yet. We didn’t tell Mike we knew this. We simply asked for our deposit back.
What followed was a masterclass in bad-faith stonewalling. Non-answers. Deflection. The same instruction on repeat: wait.
We stopped waiting. We’re going to court.
The Math That Kills Most Claims Before They Start
Here’s where this story becomes relevant to every overseas buyer who has ever lost money to a Chinese supplier.
If you are a foreign company — US, UK, Australian, European — and you need to pursue legal action against a supplier in China, the process looks like this:
Foreign lawyers cannot appear in Chinese courts. You must retain a Chinese-licensed attorney, preferably bilingual with cross-border experience. And the fees, as of 2026 in Shanghai and Beijing, start here:
- Small claims (under 500,000 RMB / ~$70,000 USD): 15,000–30,000 RMB (~$2,100–$4,200 USD) in attorney fees
- Standard commercial disputes: 30,000–80,000 RMB (~$4,400–$12,000 USD)
- Complex cross-border cargo disputes: 50,000 RMB and up (~$7,400 USD)
- Bilingual attorney with cross-border experience: 80,000 RMB and up (~$12,000 USD)
- Hourly rates at premium firms: 2,000–5,000 RMB per hour, five-hour minimum (~$300-750 USD per hour)
For a $1,000 dispute, the attorney fee alone would cost more than twice the claim. For a $5,000 dispute, you’re still looking at legal fees that exceed what you lost.
This is the reality for the vast majority of overseas buyers sourcing from China. Most orders fall well below $70,000 USD. Which means most disputes, by the time legal costs are factored in, are simply not worth pursuing.
The supplier knows this. Some of them are counting on it.
The Structural Problem With Freelancers and Unregistered Agents
Many overseas buyers — particularly those new to China sourcing — work with individual freelancers or informal agents. Someone they found online, recommended through a forum, or hired through a platform. Someone with good English, strong communication, and a convincing knowledge of Chinese manufacturing.
Here’s the problem no one talks about clearly enough:
If a dispute arises between you and a Chinese supplier, and your only representative in China is a freelancer with no legal entity, that person cannot help you in any meaningful way. They have no standing to file a claim. They cannot appear in court on your behalf. They cannot sign a purchase contract that gives you enforceable rights under Chinese law.
They can send emails. They can make calls. They can express frustration on your behalf. That’s the limit.
If your contract is between your overseas company and the Chinese supplier directly, you are a foreign entity pursuing a claim in a Chinese court. See the fee schedule above.
How the Right Structure Changes Everything
This is why the legal structure of your sourcing relationship matters as much as anything else.
When Tom Sourcing manages a procurement engagement, the purchase contract with the Chinese supplier is signed by our Chinese registered entity — not by you, and not by an individual agent. Our Chinese company is the buyer of record. The supplier’s legal obligation runs to us.
If a supplier breaches that contract — late delivery, quality failure, refusal to refund a deposit — we can file a claim in Chinese court directly. As a locally registered Chinese business, we have full legal standing. In clear-cut cases with documented evidence, we can do this without a lawyer. We walk in, file the paperwork, and let the process run.
This is not theoretical. We are doing it right now.
Your relationship is with Tom Sourcing — a US-registered company, operating under US law, with all the protections and accountability that implies. Our Chinese entity executes the supply chain on the ground: sourcing, quality control, inspection, logistics. The money and the goods flow through us. That structure — US company facing you, Chinese company facing your suppliers — is deliberate. It exists to give you a layer of legal protection that a direct relationship with a Chinese supplier, or an informal agent, simply cannot provide.
What This Means in Practice
Ask yourself the following question about your current China sourcing arrangement:
If my supplier takes my deposit and stops responding tomorrow, who has the legal standing to do something about it in China?
If the answer is “my overseas company, working through an expensive cross-border attorney” — you are exposed.
If the answer is “nobody, because I’m working with an individual agent who has no registered entity” — you are more exposed still.
If the answer is “a locally registered Chinese company with a signed contract, full documentation, and the ability to file a claim directly” — that is a meaningfully different position.
We have spent years building the structure that makes the third answer possible for our clients. It is one of the reasons we insist that payments and goods flow through our company rather than directly between clients and suppliers.
That structure costs nothing extra. It is simply how we work.
And right now, it is working — in a Chinese courtroom, on behalf of a client who would otherwise have been told to write off a loss and move on.
If you want to understand how our structure protects you, let’s talk.
Tom Sourcing is a US-registered sourcing company with its own office and warehouse in China. We provide end-to-end sourcing, product development, quality control, and supply chain management for US and EU brands.
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