Global brands are losing share in China while Chinese brands expand outward at the same speed. The two-way movement raises both the number and the fragility of commercial relationships: distribution, licensing and joint-venture contracts lose their founding assumptions within a few quarters.
The picture that has unfolded in the China market in recent years is no longer a business news footnote. Global brands are losing market share in China under fierce competition from domestic rivals, while Chinese brands are expanding abroad at the same pace. This two-way movement is increasing both the number and the fragility of commercial relationships.
As Competition Intensifies, Contractual Relationships Grow More Fragile
In a market under this much price pressure, distribution, licensing, and joint venture agreements are finding that the assumptions in place at signing can lose their validity within a few quarters. A brand may find a partnership it sees as advantageous today has to be renegotiated tomorrow in the face of a rival's pricing or positioning move. This turns the contractual relationship into a process that must be continuously managed, rather than a one-off agreement.
Institutions Are Already Preparing for This Intensity
The Hong Kong International Arbitration Centre's 2025 figures confirm this trend: the institution received 10 percent more filings than the previous year, and the total amount in dispute exceeded USD 16 billion. China itself is preparing for this as well; the new Arbitration Law that took effect in early 2026 specifically encourages resolving intellectual property disputes through arbitration. Under the Belt and Road Initiative, the government is also openly promoting mediation to resolve disputes in cross-border projects without damaging the underlying commercial relationship.
The Real Question: What Happens When These Relationships Break Down
In competition this intense, the winner is not simply the party offering the strongest product or the lowest price, but the one able to keep its commercial relationship standing under unexpected pressure. Arbitration retains its place as a final avenue for seeking one's rights; but in relationships involving long-term interests such as access to the China market or global brand positioning, managing a dispute through an ongoing negotiation is far more fitting than through a single, one-off decision.
For this reason, mediation and structured negotiation steps built into distribution, licensing, and joint venture agreements from the outset can move parties toward a resolution in this competitive environment both faster and while preserving the relationship. As the intensity of competition in the China market becomes a structural feature of doing business, such mechanisms need to be designed as a founding element of the contract, not an add-on to it.
Sources
1. HKIAC, 2025 Case Statistics (hkiac.org).
2. Morrison Foerster, HKIAC’s 2025 Statistics Highlight Record Caseload and Reinforce Hong Kong’s Advantages as an Arbitral Seat.
3. Mayer Brown, What do China’s New Arbitration Reforms Mean for Your IP Strategy? (2026).