Dan (Harris) is the man when it comes to blogging on China, and everyone reads the China Law Blog (don’t they?). There are many good quotes to draw on, but this one captured something of the moment, and rings very true from a consultant’s perspective.
In the post “My China Business Has Just Fallen Off A F–king Cliff And You Want To Tell Me What I Should Do Next Time!? “, Dan writes about “three potential clients whose situations were so bad that I had to suggest they not hire us at all”:
“…these companies had apparently been engaging in risky behavior for many years, without having suffered any real consequences. It seems the old stockbrokers adage that “genius is a rising market” also holds true for China business.
We lawyers are trained to think about and prepare for the worst case scenario. The economic downturn is causing worst case scenarios to happen constantly and those scenarios are exposing those who apparently believed such scenarios could never occur. In other words, we lawyers are being proven to have been right all along. I told you so.”
There are a lot of bad situations out there, and this is no time for hope and seasonal best wishes…That great relationship may never have been tested in the good times. But when the time comes for hard decisions, will your supplier or client still be able to do the right thing by you? We are already seeing payment risks rise, and we are hearing people say things like “but we have had a great relationship with them for years”, and getting really worried as they realize that cash payment, simple purchase-order agreements, and a bit of karaoke will not fix what now looks like a painful re-negotiation at best, or a terminal bad debt at worst.
For those peering comfortably into the economic abyss, as reported on the evening news, now is the time to update payment, contract and dispute resolution clauses – and to renew the due diligence (if any!) on which original risk assessments were made.
Otherwise, when the proverbial happens, there might be a need for the services of an excellent lawyer…who will have to bite his lip to keep from saying “I told you so” all over again…