International Arbitration

I think that would depend on what law governs the contract. If Chinese law governs, you'd probably have to arbitrate in China; if US law governs, you'll want to arbitrate in your company's home state (if you're incorporated outside of the state where you have your principal place of business, you'll have to choose between the two states as you write the contract, and that choice will depend on the law of each state much more than on the convenience of the parties).

Arbitration provides you with a speedy and relatively inexpensive solution to problems that could otherwise take years to litigate, but it is NOT a requirement to a contract. Arbitration clauses cause both parties to give up the right to a jury trial, give up the right to appeal, and give up other important rights.

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This question is far more complicated than you probably realize.

There are various questions you must ask and answer in determining where to arbitrate on a Chinese contract. Here are some of them?

1. What law will be applied?
2. What language do you want for the arbitration?
3. Where will you want the judgment enforced. Be warned that China generally only enforces awards from recognized arbitral bodies.
4. Fairness of the arbitral body?
5. Cost/location of the arbitral body?
6. Can all parties get visas to go to the arbitration?
7. Oftentimes you will want to be able to secure injunctive relief (perhaps to get your Chinese manufacturer to stop manufacturing fakes of your product). If this is the case, you must be sure to carve out a provision allowing you to go to court for that.

These are just some of the more basic issues.

There are International Arbitration associations that may be helpful. You may want to pick a neutral country and city where neither company does business (so no perceived home court advantage), that is relatively equally difficult in terms of travel time for each party to reach, and a city that does a substantial amount of international trade (to increase the pool of available, experienced arbitrators). An attorney that handles international arbitrations would be extremely helpful to give you legal advice on these points.