China Law BlogChina Law BlogChina Law for Business. Legal aspects of doing business in China. Articles
An ABC To Losing Your China IP
2011-10-22 11:08:00 Fascinating article up on the Wall Street Journal, written by Geoff Nairn and entitled, "Patents are a Virtue," and subtitled, "China is a land of opportunity for business, but it is also a land of counterfeiting and intellectual property theft." The article is on counterfeiting in China and the various innovative ways companies act to prevent it. The article has a sidebar, entitled, "An ABC to Losing Your IP," that lists out three things companies often do to cause them to lose their intellectual property in China. The Journal attributes this list to our blog, but because it has been so modified for the article, I am not even sure from what post(s) they came. In any event, I love the list, so here goes: A: Failing to use employee invention agreements. These specify that any invention made using the company's time, material or facilities belongs to the company, not to the employee. B: Thinking that patents are the only IP that matters. Western companies underestimate the...
China FDI In Iceland. Soft Power Done Hardly Well At All.
2011-10-21 09:58:00 The following is a guest post from one of our readers in Iceland , Neil Holdsworth. Neil has been updating me via email regarding a Chinese investor who is seeking to purchase a massive amount of land in Iceland and the controversies that have been attendant to that. When he asked me why I don't write a post about it, I asked him the same question and the below is the result. As has been reported extensively elsewhere, China has taken an interest in Iceland as a potential location for a deep sea port on arctic shipping routes and as a future source of fresh water. Though China has not shown signs of embarking on an Africa-style resource grab in Iceland, it obviously has a long term strategic interest in the country. It is proposing to develop what will be by far the biggest embassy in Reykjavik, raising eyebrows among the country's 320,000 inhabitants. Despite Iceland's being part of the European Economic Area, investment opportunities for outsiders here are limited. Ho... More About: Power , Soft
Chinese Commercial Law Books In English. An Update.
2011-10-18 12:08:00 Nearly every week, I get an email from someone (usually a law student or an in-China company manager) asking what books they should be reading to better understand China's laws and legal systems. About six months ago, I did a post, entitled, Chinese Commercial Law Books in English , setting out four excellent such books. I do these posts so that when I get an email asking for good readings, I can quickly respond with just a link. When I wrote that post six months ago, I commented on how where there used to be very few English language books worth recommending, but now (then) there are four. Since writing that post, no fewer than three more excellent (though somewhat specialized) law books have come out and need to be added to my list. if you want help understanding China's legal system or aspects of it, I recommend the following books for the folllowing reasons: 1. The Legal System of the People's Republic of China in a Nutshell. Yes, this is part of West's Nutshell series... More About: Update
Registering Video Game Copyrights In China
2011-10-18 05:48:00 In both the United States and in China , one need not actually register one's copyright to have one. This oftentimes leads companies not to bother registering their copyrights. The problem with not registering your copyright in China is that it is nearly impossible to prevail in a copyright lawsuit unless and until your copyright has been registered. American companies too often think this is no big deal, figuring that if anyone infringes on their copyright, they will simply register it and then sue. However, the problem with this thinking is that securing the actual copyright registration in China typically takes from 12-18 months. If a Chinese company is violating your copyright and you cannot sue for another year, it becomes very difficult to stop the Chinese company from infringing. You can write a cease and desist letter, of course, but it will not be all that powerful because you will not be able to cite to any registered copyright and the infringing company will figure it has... More About: Video , Game , Video Game
How To Buy Product From China Without Losing Your Shirt
2011-10-15 16:03:00 Despite the media having proclaimed China dead for product outsourcing, I seem to be getting many new clients doing exactly that. Interestingly, many of these new clients have been outsourcing for years from China and they are contacting us now because they want to tighten up their relationships with existing supplier or because they are ready to move on to a new one. Having gone through my "buying product in China" spiel so often of late, I figured I might as well just put it into a blog post. I tell them that there are two things we as China lawyers can do to assist them: one, draft an OEM Agreement that will help protect them from problems with their Chinese supplier(s) and two, make sure they have properly registered their IP so as to protect them from everyone else. More About: Product , Shirt
Thoughtful China
2011-10-15 02:18:00 Those of you in the marketing, advertising, and media community should check out and tune into Thoughtful China , an online talk show put on by the Thoughtful Media Group. Shot in a studio in Shanghai and produced by Normandy Madden (formerly Managing Director of AdAge China), the show explores a different marketing- or media-related theme every week. Topics thus far have included data validity in China’s media industry, brand development strategies in digital environments, and “green” issues in China marketing. Through a combination of interviews, editorial segments, and roundtable panels, the show offers practical insight into a wide range of industries and consumer markets. Thoughtful China is especially valuable for foreign marketers and advertisers interested in learning more about niche demographics like affluent Chinese travelers, adventure sports enthusiasts, and “Tiger Moms.” The show emphasizes current events and cultural...
China And The WTO. Hopkins China Forum, Beijing, October 16, 2011
2011-10-13 03:08:00 CLB's own Steve Dickinson will be one half of a two person discussion this Sunday, October 16, at 3:00 p.m., on China and the WTO. The event is part of the Hopkins China Forum , which describes itself as "a quarterly speakers series that brings together counterparts from the United States and China in China's capital city to discuss current events." More specifically, the topic is "China and the WTO: A 10 Year Review With a Look to the Future." it will be a "conversation" between our own Steve Dickinson and Professor Tu Xinquan, the Deputy Director of the China Institute for WTO Studies (中国WTO研究院). Wei Lai, editor of the Global Times will be the moderator. It will take place at the Western Returned Scholars Association (WRSA) Building, 111 Nanheyan St., 欧美同学会会址，南河沿大街11 1号, Beijing . There is a RMB 30 entrance fee, but that includes a drink and a reception to follow. Both speakers will have 10 minutes to make opening remarks, followed by a...
Updated China Blogroll
2011-10-12 01:08:00 We just updated our blogroll (over there on the right) for the first time in a while. This update consists of the following changes:OUT: AsiaBizBlog China Economics Blog China Solved These are (were) excellent blogs, but two had not posted since May and one had not posted since mid-July. IN: China Accounting Blog China Finance DigiCha Seeing Red in China I am adding these four to the blogroll because...well...they are (not were) excellent blogs and they deserve to be here/there. If you want to learn more about our reasons for adding these four blogs, check out the following posts where we touted them: China Accounting Blogs. Because Accounting Matters -- China Accounting Blog and China Finance China's Internet Is Not Your Father's Internet and China's Digital Consumers -- DigiCha Noodle Blogs: Your Absence Swells My Eyes With Tears, So I Am Seeing "Red In China." -- Seeing Red in China. In the "old days" -- back when people actually read blogs on-site and not just through ... More About: Blogroll
China VIEs. The End Of A Flawed Strategy. An Update/Rebuttal.
2011-10-10 17:08:00 Yesterday, co-blogger Steve Dickinson wrote a post essentially excoriating VIEs. That post went live early this morning. A few hours before our post went live, Bill Bishop (who knows as much about China 's tech industry as any human being alive) wrote a post essentially saying that those who are trashing VIEs are engaging in scare tactics and that there is little cause for worry. Bishop makes his very powerful counter-argument on his Digi-Cha blog, in a post entitled, "Bloomberg Keeps VIE Fears Alive: China Companies Evading Rule With U.S. Listings Stump Regulators." Bishop contends that "so many powerful interests have financial stakes in VIEs that it would be career suicide or worse for a Chinese bureaucrat to destroy this structure on a wholesale basis." We do not disagree with this statement, but we do not think it deals with the two main issues. One, the government has come out with regulations making very clear that such structures are illegal. On top of that, and as ... More About: Strategy , Update
China Business After The Hu-Obama Summit. Same-O, Same-O.
2011-01-20 04:38:00 Though we do not ordinarily delve much into China -US politics, I have been following the recent Obama -Hu summit so closely I cannot resist. Here are my thoughts on the business aspects of that summit. Overall, things have seemed to go well. The United States did the pomp and circumstance thing in grand style, which gave China the symbolism it wanted. On the flip side, President Obama has made it appear as though he made real progress on various trade issues and, heck, even if he didn't, he spoke out firmly on the various "sensitive" China issues which ought to get him more votes at home. An English language 41 point joint statement was issued that included many clear commitments by China, but until we see the official translation of that statement in the China Daily, their clarity has to be in some doubt. It appears China is trying to make nice with U.S. business, though it is not clear to me why. The business community has for many years been one of China's bi... More About: Business , Summit
China Rare Earths Quotas -- The Facts And The Law
2011-01-19 18:28:00 By Steve Dickinson The purpose of this post is to provide a factual and legal background to China ’s export quota program for rare earths. The Facts Rare earths are one of 49 products for which China imposes export quotas. Other products for which China imposes export quotas include grains such as corn and wheat, hydrocarbons such as coal and crude oil and various metals such as tin and zinc. As explained below, this entire set of export quotas appears to violate WTO trade rules prohibiting export quotas as a general principle. Mexico has challenged the quotas on metals other than rare earths in the WTO. The dispute resolution panel is expected to render its decision on that challenge in April of this year. The U.S. has repeatedly threatened to challenge the rare earths quota system. If Mexico prevails on its metals claim, we can expect a challenge to the rare earths quotas to follow soon thereafter. It appears that the entire Chinese export quota system can be challenged ...
China Opening Up Health Care For WFOEs
2011-01-18 11:08:00 As regular readers of this blog know, my favorite five industries for foreign investment in China are education, healthcare, food, cleantech/greentech, and software. Health care just got even better. The Chinese government has made clear for some time that it seeks to improve healthcare in China and it recently took another step in that direction by announcing that foreign companies may now own private hospitals in China outright. In other words, foreign companies need no longer partner via joint ventures in their ownership of healthcare facilities in China; they can now own them on their own as Wholly Foreign Owned Entities (WFOEs or WOFEs). These foreign-owned private hospitals will be able to formulate their own pricing for services (so long as they do so pursuant to the government's medical pricing policies), be eligible to participate in China's medical insurance system and also be eligible for the same tax exemptions as Chinese private hospitals during the first thr... More About: Health Care , Care , Opening
What About Chinese Companies Taking Your IP?
2011-01-18 01:58:00 Last week, co-blogger Steve Dickinson and I spoke at the Foreign Correspondents Club in Beijing. From our perspective, the best part of our talk were the excellent questions posed to us by the reporters in attendance. There was one question I pretty much punted on and though I have thought much about it since, I still do not have a good answer. In fact, I have determined it is not a question for a lawyer, but rather for a business. Here's the question, as best as I remember it (I believe it came from a Wall Street Journal reporter): "What do you tell your clients about how Chinese companies are taking foreign company intellectual property and then using that intellectual property to market their own products outside China?" As I recall, my response was something along the following: "Good question.In the 'old days' we used to warn our clients about the risks of Chinese companies taking our clients' intellectual property and using that intellectual property t... More About: Companies
What To Do About Chinese Companies Taking Your IP?
2011-01-18 01:58:00 Last week, co-blogger Steve Dickinson and I spoke at the Foreign Correspondents Club in Beijing. From our perspective, the best part of our talk were the excellent questions posed to us by the reporters in attendance. There was one question I pretty much punted on and though I have thought much about it since, I still do not have a good answer. In fact, I have determined it is not a question for a lawyer, but rather for a business. Here's the question, as best as I remember it (I believe it came from a Wall Street Journal reporter): "What do you tell your clients about how Chinese companies are taking foreign company intellectual property and then using that intellectual property to market their own products outside China?" As I recall, my response was something along the following: "Good question.In the 'old days' we used to warn our clients about the risks of Chinese companies taking our clients' intellectual property and using that intellectual property t... More About: Companies
What Every SME Needs To Know About Chinese Law. AmCham Beijing, January 11,
2011-01-09 03:48:00 Co-blogger Steve Dickinson and I will be speaking on January 11 at the next AmCham Small Business Forum Event breakfast here: AmCham-China Conference Center The Office Park, Tower AB, 6th Floor No. 10 Jintongxi Road, Beijing , 100020, PRC Tel: (8610) 8519-0800 Our topic will be "What every SME needs to know about Chinese Law." You can pre-register by going online here or by registering at the event between 8:00 a.m. and 8:30 a.m. We will present from around 8:30 a.m. to 9:00 a.m. and then field questions until around 9:45 a.m. This event is free for AmCham members and "a light breakfast and coffee will be provided." The cost is $50 for AmCham member employees and $100 for non-members. We hope to see you there.
The Five Steps To Successfully Buying Product From China.
2011-01-07 08:48:00 Co-blogger Steve Dickinson and I had a wonderful dinner the other night with Renaud Anjoran. Renaud Anjoran is the founder of Sofeast, a quality assurance firm that assists small- and-medium importers with China quality control. Renaud has been based in Hong Kong and Shenzhen since 2006. He writes the Quality Inspection Tips blog, of which I have been a huge fan for a long time. See e.g., the following posts, where I extensively cite from one of Reanud's posts: Quality Control For Your China Product s China Product Quality. What It's Gonna Take. Avoiding Kickbacks In China. Just Say No. This Is Guanxi In China And You Ain't Got It. During our dinner, we spent a lot of time talking of how in buying product from China, "everything is tied together." In other words, a company that is buying product from China is "only as good as" its weakest link among supplier selection, payment terms and penalties, quality control, communication and contract. Therefore, to succ... More About: Buying
Minimum Capital Requirements. Good News For Small Companies Looking At Sha
2011-01-05 16:08:00 By: Steve Dickinson Shanghai has recently loosened its minimum capital requirements for WFOEs (Wholly Foreign Owned Enterprises), making location of service businesses in Shanghai far more attractive. Chinese company law mandates all one shareholder corporations have a minimum registered capital of at least RMB100,000. The WFOE formation regulations provide for no specific amount for registered capital. Instead, the rules provide that the amount of registered capital must be sufficient for the proposed operations of the WFOE. Most jurisdictions require the registered capital be equal to the first full year of expenses of the WFOE. As a practical matter, it is rare for a big city jurisdiction like Shanghai to require less than USD$150,000 in registered capital. What many investors do not realize is that the registered capital does not need to be contributed in a single lump sum. The rule is that 15% of the registered capital amount must be contributed within 90 days of WFOE formatio... More About: News , Companies , Good News , Small , Good
China Inflation And The Impact On Your Business
2011-01-04 15:18:00 By: Steve Dickinson There are two related economic issues that are of primary importance to ordinary Chinese people. The first is the inflation in prices of basic necessities such as housing and food. The second is the lack of wage growth in the manufacturing and service sectors. Today’s China Daily (January 4, 2011) featured five separate articles dealing with these issues. • The headline article of today’s China Daily reports that the PRC All China Federation of Trade Unions (ACFTU) is pushing for legislation that will establish the formal rules for mandatory collective wage bargaining in China. While China mandates that all businesses permit the formation of unions, there is no corresponding set of national laws or regulations concerning mandatory collective bargaining. However, a number of local governments have adopted local rules and “guidance” concerning mandatory wage agreements. The ACFTU assert that where collective bargaining has been us... More About: Business , Inflation
China Law Blog In Shanghai Today.
2011-01-02 00:24:00 Co-blogger Steve Dickinson and I will be in Shanghai today. If you are interested in meeting with us, please contact us by pressing the contact button above and sending an email. More About: China , Blog , Today
China's Courts. "Utterly Worthless" Is Probably An Overstate
2010-12-31 13:28:00 In the early years of this blog, when discussing China 's court system, I would make it a point to emphasize that I was limiting my comments to how the courts handle business law matters. I did this for two reasons. One, my sense is that the quality of court handling of business cases is very different from the quality of judging given to criminal matters. Two, I am not the least bit qualified to talk about how Chinese courts handle criminal matters as I never studied Chinese criminal procedure and my firm has never (and will never) represented a Chinese criminal defendant. Working in tandem with Chinese lawyers, we have represented a number of foreigners in criminal proceedings in China, but those cases do not qualify me to speak on China's criminal justice system as a whole. For these same reasons, I always beg off whenever journalists contact me for my legal analysis on this or that high profile criminal case in China. I thought of all this today while reading a post by St... More About: Courts
China Rules Skype Illegal. Tell Me Something New.
2010-12-31 09:48:00 I arrived in Shanghai the other day and my first meeting was with co-blogger, Steve Dickinson, who pronounced that Skype had been declared illegal. We both commented on how it is illegal, and then we started talking about inflation. Skype is illegal in China , of that there can be little doubt. The real question arising from this recent pronouncement is what will this actually mean for Skype in China. I am not a techie, but after talking with a number of people who are, I see the following as the possible repercussions: 1. Nothing. China will not change a thing regarding Skype. I actually see this as the most likely outcome. I predict China will not "shut down" Skype because those who most often use it are those whom the government wants to keep in their corner. Heck, it wouldn't surprise me a bit if those who most often use it are the sons and daughters of government officials who are off studying overseas. 2. China will "shut down" Skype, but most of those who use it in Chi... More About: Rules
China Business Dinner Etiquette.
2010-12-31 00:18:00 Nothing really new here, but the International Herald Tribune's Business Navigator section just came out with a concise explanation of the etiquette involved in Chinese business dinners. The article is entitled, "In China , Social Evenings Are Considered Part of the Business Routine," and, among other things, it notes the following: Business dinners are "a very important event." The article does not say this, but I will. If you want to do business with a Chinese company, it really pays to accept their dinner invitation and you should learn the basics of what is, essentially, a ritual. Business dinners on the mainland usually start at 6 or 6:30. The Chinese host sits at the head of the table facing the door. As the company's guest, you should sit "directly across from him if the table is rectangular. If it’s a round table you’ll be seated to his right.” "Paying attention to details...can improve your standing in business negotiations." “Giving fa... More About: Etiquette , Dinner
The Truth About US-China Trade.
2010-12-29 03:58:00 Just came across an excellent article in the Wall Street Journal that starkly highlights how global trade statistics may not always mean what they first appear to mean. The article was written by Andrew Batson and it uses the iPhone as an example of how even something viewed as of the United States can add to the United States' trade deficit with China . I don't ordinarily deal in big-picture economic issues (and I am really starting to resent all the non-economists out there who do so as though it is all really quite simple), but this article so nicely raises important issues that I feel compelled to recommend it. It's called "Not Really 'Made in China':The iPhone's Complex Supply Chain Highlights Problems With Trade Statistics" and I suggest you check it out and let us know what you think. And for those of you who have not yet voted for China Law Blog in the ABA Journal competition, please do so soon as voting closes at the end of this month. To vote, first go here to r... More About: Truth
The ABA Blawg 100. Vote China Law Blog!
2010-12-29 00:38:00 We are still fighting to win the American Bar Association Best Blog award in our category for the fourth straight year. We started our campaign very late this year, but if we can get anywhere close to the same number of votes we got last year, we will win it. We really need your support. If you value what you read here, PLEASE repay us with one minute of your time. Here are the steps you need to take: If you voted last year, you will likely need to recover your password. You do this simply by going to this page and inputting your email address. You will then receive an email with your password and your screen name. At that point, you should login to the ABA Journal website here and then once logged in, go here and then scroll down to China Law Blog (second from the top) and click the "Vote " symbol to the left of that. Thanks! If you didn't vote last year, you should go here to register. You do not have to be an ABA member (or a lawyer) to vote. When you pick...
Wanna Get Sued In China? Don't Pay Overtime.
2009-12-19 21:18:00 China's Labor Contract Law (which law applies to every employment relationship in China) is very clear: employers must pay their employees for overtime. Though there are some exceptions, these exceptions are not nearly as broad or as easy to obtain as is widely believed. Overtime payments are 150 percent for each overtime hour worked on a normal work day, 200 percent for each overtime hour worked on a day off, and 300 percent for each overtime hour worked on a statutory holiday. China considers forty hours per week as generally considered standard. Though high level management and other staff can be considered exempt from overtime pay, to be so, prior government approval is typically required. To make matters even more complicated, local regulations definitely can vary on what constitutes an exempt employee and what is required by way of approval. My firm has handled around a half a dozen cases where foreign companies came to us after having been sued for having failed to p... More About: China
China's New Food Safety Law. An Early Report.
2009-12-17 05:58:00 In June of this year, China enacted a new Food Safety Law. It is stating the obvious to say that China's food safety is of relevance to the entire world and China food safety is the rare case where both foreign and domestic interests are united in wanting to solve a major problem within the Chinese system. China's new food safety law takes the position that the food safety problem arises from inadequate central control and from a lack of clear standards and procedures. However, even if this were true, the measures adopted in the Law will not resolve these issues. The Law created a Beijing based coordinating council called the National Food Safety Commission to coordinate five national level ministries that have day-to-day control over different phases of the food production process. Since the Law does not set out the structure or authority of the new Commission there is no reason to expect this approach will improve central control of the food safety problem. It does li... More About: Report , Early
China WFOE vs. JV. Make Mine A WFOE. I Just Call It Like I See It.
2009-12-16 08:48:00 Just got this comment (comment # 63 on our post, "China : First Let's Clear Out The Long Time Foreigners", which poses some pretty important questions and also leaves hanging some very common misperceptions regarding doing business in China: So here's my question albeit already bounced around but no solid answer given.... JV or WFOE for a new foreign company launching in China? I am about to launch my company that I have been planning for 8 years and will do things by the book, no qualms about that, but I don't want to start the thing in a realm of probable employee threats, and local competitor company lordship privileges. Especially if it's capable of being taken away from me over 5 mao (50 cents) missing in a tax audit because someone has decided that my company will look better in the hands of my local competition. I have seen many situations of law bending to suit local businesspeople to their advantage, and in those situations the victims of such law bending have almos... More About: Mine , Make , Call
China As Distribution Center. Explained.
2009-12-15 16:08:00 One of the fascinating things about having a China law practice is the front row seat it provides into the evolving trade relationship China has with the rest of the world. One of the things I have seen happening in far greater numbers over the last year or so are US companies establishing their worldwide or Asian distribution centers in mainland China. I have seen this from companies that used to have their only distribution center in the United States and I have seen this from companies that have distribution centers all around the world: Chaina Magazine (the Magazine of the Global Supply Chain Council) just ran a very detailed article by Damon R. Paling, of PricewaterhouseCooper's Shanghai office, entitled, "Planning for Economic Recovery: Establishing a Regional Distribution Centre in China." The article "summarizes the experiences of a US luxury retailer as they evaluated options for establishing a Regional Distribution Centre (RDC) on Mainland China," and in doing so, makes... More About: Center
China Corporate Law -- The Basics of China's Company Law.
2009-12-14 13:28:00 On January 1, 2006, China implemented its New Company Law. At around that same time, China Law Blog's own Steve Dickinson wrote a scholarly article on the new law for the Pacific Rim Law & Policy Journal, entitled, 'Introduction to the New Company Law of the People's Republic of China." At around the same time, Steve wrote the China corporate law section for the international corporate deskbook, International Corporate Procedure We are reprising Steve's Pacific Rim article now as part of our new series, setting out the basics on China business law. This article was written in 2006, but we have noted where the statements that have become glaringly out of date. I. INTRODUCTION On October 27, 2005, the People's Republic of China adopted a new Company Law. This law became effective on January 1, 2006.' The New Company Law replaces the Old Company Law, which had been adopted in 1993. The New Company Law is a complete revision of the old law. Almost nothing of the old law survi...
How To Get A China Visa. Just The Real Basics.
More articles from this author:2009-12-14 06:28:00 This post is part of our new Basics of China Business Law series, where we discuss, usually in a bare bones sort of way, the basics of what it takes to do business in China legally. This post focuses on the different sorts of visas one can use to get into/stay in China. My law firm almost never involves itself in Chinese visa issues because it typically does not make sense for our clients to pay law firm rates for us to do so. Chinese visa matters are typically better handled internally or by a reputable visa assistance company. My law firm and I usually use a visa company to secure our visas to China because we find it easier to do so and because the company we use has been coming through for us for more than a decade (and not just with China, but with many other countries as well) and it definitely seems to have a very good relationship with the Chinese consulate in SFO. China visa information will always be at least somewhat dependent on the country in which you are seek... More About: Real , Visa 1, 2, 3, 4, 5, 6, 7 |
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