There is no specific regulation applicable to distribution contracts in China.
Distribution agreements are governed by the Contract Law (1999) which is a hybrid with elements of socialist, Roman, German systems, and international conventions. Important principles, to be kept in mind when drafting distribution agreements with a Chinese partner, are equality (“pingdeng” – art. 3) free will (“ziyuan” – art. 4) equity (“gongping” – art. 5) and good faith (“chengshixinyong”- art. 6).
For this reason, even if a distribution contract is validly entered into verbally or even de facto, it is important to draft a clear, balanced and complete contract, as this document will be the main source of discipline of the parties’ obligations.
When it comes to the individual sales contracts, remember that China is a member to the UN Convention on the International Sale of Goods (CISG), while it is not 100% clear whether Hong Kong and Macao should be considered contracting states after the sovereignty transfer to China: it is advisable, thus, when contracting with companies based in such territories, to provide expressly for the application of CISG (“opt in”).
Both in case of distribution and sales contracts, it is advisable to negotiate and execute a bilingual agreement (English-Chinese): although the contract is valid even only in a foreign language, providing a Chinese version avoids misunderstandings on the content and is also important should the contract needed to be used or enforced in China, as Chinese is the only official language admitted in courts and before public bodies.
Finally, one should know that it is a good practice not only to sign the contract but also to stamp it with the company chop: this is a unique piece of wood, crafted when the company is incorporated, held by the person who has the power to represent the company: thus, the stamping of a contract is an important indication that the signer is an authorized representative of the company