Disputes with US Buyers: A Practical Guide for Chinese Suppliers
- Jeff Chang
- 16 hours ago
- 9 min read
You've been doing business with a US buyer. Maybe for years. The orders came in regularly, the payments arrived more or less on time, and the relationship felt solid. Now something has gone wrong. The buyer is not paying. Or claiming defects on goods that were fine. Or threatening to sue. Or your shipment is held at a US port for reasons no one will fully explain.
What comes next is often unfamiliar. The US system handles commercial disputes differently than what you may be used to in China. The pace, the procedures, and the costs can all surprise you. And the decisions you make in the early weeks of a dispute often shape what is possible later.
This article covers the situations that most often bring Chinese suppliers and their US-based representatives to US counsel: when a US buyer won't pay, when you're sued in the United States, when Customs holds up your shipment, and the mistakes that make each of these situations worse.
The Disputes Chinese Suppliers Most Often Face with US Buyers
A few patterns come up regularly:
The US buyer takes delivery and stops paying, citing some defect or claim they never raised until payment came due.
The US buyer cancels orders mid-production after your factory has already incurred cost on materials or labor.
The US buyer sues you in a US court, often filing first to gain leverage in what would otherwise be a payment dispute.
The US buyer points to tariff changes or other trade policy shifts as the reason they cannot perform, or as the reason they need a discount.
US Customs detains a shipment for reasons related to forced labor, country of origin, or evasion of duties, leaving the goods stranded.
The US buyer files for bankruptcy with significant payment still owed to you.
The US buyer alleges that you are infringing trademarks, copying products, or otherwise asserts intellectual property claims against you.
Most of these situations have one thing in common. They are easier to resolve early, and harder to resolve as time passes and positions harden.
When a US Buyer Won't Pay
The most common situation. The goods shipped, the buyer received them, and payment is not coming. The buyer may be ignoring your messages, citing a quality issue that did not exist before payment was due, or asking for an extended payment timeline that keeps moving.
A few practical realities to understand.
Recovery depends on what the buyer has. If the US buyer has US bank accounts, US inventory, US real estate, or US receivables from their own customers, there are real paths to collection through US legal process. If the US buyer is a small operation with limited US assets, or a shell company that holds nothing valuable, collection becomes much harder regardless of how strong your legal claim is. This is one of the first questions a US lawyer will ask.
Arbitration is often more effective than litigation, when it is available. If your contract has an arbitration clause (whether the arbitration would happen in China, Hong Kong, Singapore, or the United States), an arbitration award can typically be enforced against US assets through an international convention (the New York Convention) to which both China and the United States are parties. Arbitration tends to be faster than US litigation, and arbitrators with experience in international commerce often understand the cross-border context better than a US trial court would.
US litigation is available but slower and more expensive than many Chinese suppliers expect. A typical contested commercial case takes more than a year to reach trial, and longer to reach a final judgment. Discovery (the process of exchanging documents and testimony before trial) is broader and more intrusive than what is typical in Chinese commercial proceedings.
If the buyer files for bankruptcy, the rules change. In most cases you become an unsecured creditor along with many others, and recovery is usually a fraction of what is owed. There are exceptions worth knowing about: goods you delivered shortly before the bankruptcy filing may be entitled to better treatment, and in limited circumstances recently delivered goods can be reclaimed. Payments you received in the months before the filing may be subject to "preference" claw-back, meaning the bankruptcy trustee can demand that you return them. This is one situation where retaining US counsel quickly matters, because deadlines begin to run quickly once the bankruptcy is filed.
When You're Sued in the United States
A US buyer can file a lawsuit against your Chinese company even if you have no US offices and no US employees. The formal notice (called service of process) typically reaches you through international legal channels (the Hague Service Convention) that can take several months to complete. During those months, the US lawsuit is moving forward.
The single most damaging mistake we see Chinese suppliers make is to ignore a US lawsuit, on the assumption that a US court has no power to do anything to a company in China. This is wrong in several ways.
If you do not respond, the US court can enter a default judgment against you. That judgment becomes an asset of the buyer that can be enforced against any US property you have, any US receivables owed to you, and potentially against you in other countries that recognize US judgments. It can also be a serious problem for your future US business, because US customers and partners often check for outstanding judgments before doing business.
If you do respond, you may have defenses that a Chinese supplier in your position can credibly assert. The US court may not have personal jurisdiction over you. The contract may require disputes to be resolved in a different forum (Chinese courts, CIETAC arbitration, Hong Kong arbitration). The claim itself may be weak on the merits. But asserting these defenses requires retaining US counsel and engaging with the US process, not ignoring it.
Discovery in US litigation also creates real challenges for Chinese suppliers. Chinese law restricts the cross-border transfer of certain data and documents. US courts expect broad document production. Reconciling these is not always straightforward, and the answer depends on the specific facts.
When Customs Holds Up Your Shipment
Customs detentions can affect Chinese suppliers even when the US buyer is the importer of record. Depending on your shipping terms, the detained goods may still be at your risk, or your payment may depend on the buyer actually receiving and accepting them. Either way, a detention usually means the goods sit at the port accruing storage charges while the situation is resolved, and the commercial fallout lands on both sides of the transaction.
Three Customs scenarios come up most often.
UFLPA detentions. Under the Uyghur Forced Labor Prevention Act, US Customs has authority to detain goods that are made wholly or in part in the Xinjiang region of China, or by companies on a specific government entity list. The presumption is that such goods are made with forced labor. To get detained goods released, the importer (typically the US buyer) must respond with documentation, either showing that the goods have no connection to Xinjiang or a listed entity, or, where such a connection exists, meeting a much higher bar to overcome the presumption. As the supplier, you are often the only party who can actually provide the underlying supply-chain documentation. Your willingness and ability to produce that documentation often determines whether the goods are released.
EAPA investigations. When CBP suspects that imports are evading antidumping or countervailing duties (often through transshipment through a third country, or through misclassification), it can open an investigation under the Enforce and Protect Act. These investigations can subject shipments to extended scrutiny, duty deposit requirements, and delays, and a finding of evasion can result in retroactive duty assessments and Customs scrutiny of future shipments.
Country of origin and classification disputes. When CBP questions whether goods are correctly described, classified, or originated, your records and your willingness to provide them can resolve the situation quickly or delay it for months.
In each of these scenarios, the practical answer is similar: prompt, complete, and accurate documentation. Customs procedures are evidence-driven. Suppliers who can produce supply chain records, manufacturing documentation, and origin information typically move through these processes faster than suppliers who cannot or will not.
Common Mistakes Chinese Suppliers Make
A few patterns we see frequently:
Ignoring legal notices that arrive from US courts or US agencies. Even if you believe the US has no power over you, the situation almost always gets worse if the notice is ignored.
Sending angry messages, threats, or admissions in writing. Anything you write can become evidence. Maintain a professional tone in every communication, particularly with the US buyer, the buyer's lawyer, or any US agency.
Trying to negotiate without legal counsel after a US lawsuit has been filed. Once a case is filed, what you say to the other side is subject to specific rules, and unrepresented communications can hurt you.
Assuming that an arbitration clause or forum selection clause in your contract will be honored automatically. These clauses usually are honored, but enforcement requires active steps in the US court.
Sharing data or documents informally in response to US requests without considering Chinese law restrictions on cross-border data transfer.
Waiting too long to involve US counsel. Many situations that are manageable in week one become much harder by month three.
Frequently Asked Questions
Do I have to respond to a US lawsuit if my company is in China?
Yes, in the sense that ignoring the lawsuit almost always makes things worse. A US court can enter a default judgment against your company if you do not respond. That judgment can be enforced against any US assets you have or expect to have, and it can affect your future US business. If you believe the US court has no authority over you, that argument should usually be raised in the US court. In limited situations there can be strategic reasons not to appear, but that is a decision to make deliberately with counsel after weighing the consequences, not a default that happens because the notice sat unanswered.
What if my contract says disputes go to Chinese courts or CIETAC arbitration?
Those clauses are often (but not always) enforceable in US courts. If your contract has a forum selection clause or arbitration clause, the US court may stop or dismiss the US lawsuit and send the dispute to the agreed forum. But this does not happen automatically. You need to ask the US court to enforce the clause, which means retaining US counsel and filing the appropriate motion. The strength of these clauses also depends on how clearly they were written and how the contract was formed.
Can I sue my US buyer in China?
You can file a lawsuit in a Chinese court, but enforcing a Chinese judgment against US assets is difficult. US courts will sometimes recognize and enforce Chinese judgments, but the standards vary by state and the process is uncertain. If the US buyer has US assets you want to reach, arbitration or US litigation is usually more practical. If the US buyer has assets in China that you can reach through Chinese proceedings, Chinese litigation may be the right choice.
What happens if my US buyer files for bankruptcy and still owes me money?
In most cases you become an unsecured creditor in the bankruptcy. You need to file a proof of claim by the deadline the bankruptcy court sets, and unsecured creditors typically recover a fraction of what they are owed, if anything. There are exceptions: goods you delivered in the period just before the filing may be entitled to priority treatment, which can mean meaningfully better recovery on those deliveries. Payments you received in the 90 days before the bankruptcy filing can sometimes be reclaimed by the bankruptcy trustee under "preference" rules. This is a situation where prompt US counsel is particularly important, because the deadlines are firm and the rules are technical.
Why is CBP holding my shipment when my US buyer is the importer of record?
The detention is procedurally directed at the importer, but the goods are stuck regardless. As the supplier, you often have the documentation Customs needs to release the goods, particularly in UFLPA, country of origin, or evasion investigations. Whether you respond, and how completely, often determines how quickly the situation resolves. Coordinating with the US buyer and with US counsel familiar with Customs practice tends to produce better outcomes than letting the buyer handle it alone.
About Chang Law Group
Every dispute has its own facts. If your company is facing one of the situations described in this article, or if you anticipate one, contact Chang Law Group. We work with Chinese and Taiwanese suppliers, manufacturers, and their US-based representatives on cross-border commercial disputes, US litigation, customs matters, and the practical decisions that come up when commercial relationships break down. Attorney Jeff Chang is admitted to practice before the US Court of International Trade, the US District Court for the District of Massachusetts, and Massachusetts state courts. He speaks Mandarin and has nearly two decades of experience working with Chinese and Taiwanese businesses and their US partners.
Contact:
Phone: (617) 307-1238
Email: info@jchanglaw.com
WeChat: ChangLawGroupLLC
Chang Law Group LLC: One Marina Park Drive, Suite 1410, Boston, MA 02210
Disclaimer: This article provides general information about US commercial disputes, US litigation, and US customs matters and is not legal advice. It does not create an attorney-client relationship. Laws and procedures change frequently and apply differently to different facts. If you have questions about your specific situation, contact Chang Law Group to discuss how we can help.