In China, company stamps (chops) are essential for any business contract – much more than in the EU. They are a symbol of the legal rights of the company. Therefore, there are strict rules for their usage and storage. Chinese company stamps have standardised elements which are clearly identifiable (with very rare exceptions):
- Circular or oval shape
- Red ink
- Red star in the middle
- Company name written in Chinese characters
- Occasionally, bilingual chops in Chinese and English might be used; a 13-digit number might also appear, indicating the chop’s registration number with the authorities.
Company stamps in any other shapes, sizes, colours or languages have no legal value in China. One may argue that other chops – especially those in English – are used to facilitate the foreign partner’s understanding of the stamp; in practice, these are often a strong indicator that the company does not want to disclose its legal information and thus may have something to hide. In all the cases of scams encountered by the EU SME Centre, the company chops used by the Chinese company were clearly of different shapes, sizes, colours or languages!
The EU SME Centre receives, on a weekly basis, emails from EU SMEs that have been scammed when purchasing goods from China. In the majority of cases, such scams could have been avoided with the above steps. The EU SME Centre can assist in conducting free-of-charge, informal background checks on potential partners. For major transactions and complex deals, it is always recommended to seek professional legal advice from law firms established in mainland China.
