Keep trouble away with comprehensive contracts and negotiations

Foreign companies with independent vendors on their premises should ensure all contracts, including termination clauses, are comprehensive and seek vendor feedback before making significant decisions that will affect business.

Earlier this week, the vendors at the Carrefour Foshan store threatened to sue the company if they weren't compensated fairly for a sudden closing on January 1. It is not clear from media reports whether the French supermarket chain had provided advanced notice of the shut down.

According to Simon Fang, a senior partner at Win & King Partners, Chinese contract law allows the vendors two rights if their contracts are vague: prompt notice within a reasonable time frame and reasonable compensation.