China real estate scandals:the lesson you should learn when investing in real estate projects

No one will dispute the fact that real estate industry is one of the most dirty and corrupt industries in China. Any worse one? A slew of scandals in real estate sector exposed recently in media has cemented the above statement.

1.  An official from local Minhang District government of Shanghai Municipality was discovered to be engaged in illegal business…

Subrogation right in China Contract Law, a case study

I am advising a client on his real estate dispute with his seller which is very interesting as it led me to think about two important issues under china contract law.

Here are the facts: my client entered into a real estate sale and purchase contract back in 2009 under which he agreed to pay for an apartment which at the time of signing the contract was not allowed to…

China real estate investment:buy cultural and historical houses

I ran across a piece of news on www.Ifeng.com telling a story of a couple from Singapore purchasing a historical house in Shaoxing City, Zhejiang Province, China, that is adjacent to the “Baicao Garden” depicted in the literature by the famous historic writer, Lu Xun.

The house was built a century ago by a noble family whose line of descendants runs…

Work ethic among Chinese employees: water that is too clear has few fish

Water that is too clear has few fish, and one that is too critical has few friends. This is a Chinese idiom from old history. This reflects well an aspect of Chinese culture and philosophy with respect to interpersonal dealing among Chinese people. It preaches the idea that one shall be tolerant with other people's mistakes and errors in order to be able to get along…

Corporate image, something foreign investors should uphold still in Chinese market

There are too many corporate scandals in Chinese markets, simply too many for any normal market in the world. You can label the Chinese market as the most corrupt and tainted one.

As a old Chinese proverb goes, he who touches pitch will be defiled. We see many international businesses degrading themselves after coming into China.

The latest example is KFC. The…

Should the couple both sign the contract for sale and purchase of the property?

In China, properties, personal or real, acquired during marriage are statutorily prescribed to be community property of the couple even though only the name of one spouse is registered as owner on the relevant title deeds or ownership certificates. Being community property in the case of real property such as apartment, houses, condo, office and other commercial…

Can a foreign investor invest in Chinese real estate leasing business?

Not long time ago, I got an inquiry regarding legality of a foreign invested company contemplating leasing part of its business premises/factory in Shanghai.

The company is a foreign invested enterprise engaged in manufacturing business. As a result of China’s economic contraction, part of its factory is now left idle. They want to lease the part of…

Can a Chinese employer lay off employees on the ground of business suspension?

There has been a slew of news on the internet telling layoff stories in big companies. The other day, it is AMD, the chip manufacturer, that was to slash 15% of its manpower throughout the globe. Today, the leading Chinese wind power company, SinoVel, sent dozens of its employees back home for “long vacation”, sparking anger among its staff. These…

close/wind up your China business? liquidate it properly

Amid global financial crisis, China is not a safe harbor. Many foreign invested companies in China are hit seriously and some of them are definitely considering winding up their business or are compelled to do so.

Here are some basic ideas about closing a Chinese company.

I.  Dissolution, Liquidation and Deregistration

In the course of winding up your China…

Inquiries about foreign-invested travel agencies in China

With Chinese people getting rich (to some extent this can be true) and starting emerging as tourists all over the world, China’s travel industry has been appealing to international investors.

We have been inquired frequently by foreign travel agencies about setting up their business presence in China. Very often, these foreign investors want to set…

An agent needs express authorization to appoint a sub-agent in China

This is a just a reminder to foreigners who may issue a power of attorney to their Chinese agents in dealing with affairs in China.

In the course of advising a few American three individual clients on their inheritance of a Chinese real property, I realized that it is worth a brief post on the blog.

Among the three inheritors, one of them has authorized the other two…

An irrevocable power of attorney? What does it mean under Chinese laws?

A power of attorney, POA, is used widely in any jurisdiction in many circumstances where one individual entrust another individual to speak and act in his name or on his behalf and protect their best interests.

As I represent foreign clients in most cases, clients often raise the issue of revocability of power of attorney they are going to grant to me. Recently,…

property price in Wenzhou dropped 40%

News on ifeng.com had it that property prices in Wenzhou have seen a 40% drop off its peak prices in the year of 2010.

Wenzhou is a special place in China’s economic landscape boasting its big population of enterpreneurs in the city. The local affluence and fortunes have found easy expression in the local property prices that may easily dwarf or belittle…

Sell China property, but not just about sale

I am representing two clients in selling their properties in Shanghai, China. It seemed that people are losing confidence in China property market, a sign that the growth of Chinese economy in a whole is slowing down to a lackluster rate.

Foreigners may be more worried about their holding of properties in China as they are often alarmed by western media about …

dependent personal service or independent personal service?

There is a question in my mind for long, or I should rather say it is more of a contradiction or confusion rather than a question.

For expats working in Shanghai as chief or general representatives in representative offices, in the case of employment disputes with the rep office, their relationship with the rep office is not regarded as the normal labor relationship…

A good case for reference regarding moving money out of China

Many of us know that there is underground banking in Chinese grey financial market, allowing money flowing across Chinese border without undergoing the cumbersome and lengthy procedures and formalities laid down by China State Administration of Foreign Exchange.

The case offers a quite clear picture of how one of the these underground banking systems works.  …

real estate mortgage/hypothecation/guarantee in China

Recently, a foreign trading company importing a production line from a manufacturer in Shanghai inquired about what should be considered when accepting a contract performance guarantee in the form of real property hypothecation provided by the Chinese exporter which offered to collateralize its buildings and underlying land to guarantee the production…

Chinese Labor Contract Law, it is not for you, dude!

One of my corporate clients recently asked about how to terminate the employment of one of its senior officers. The client is a WFOE invested by an American company. The poor employee is one who has served the WFOE for more than ten years taking up the regional sale manager position and receiving a hefty monthly salary of more than RMB 50,000. Due to the dipping Chinese…

Another meaningful victory against Shanghai local government in respect of inheritance of garden villa on allocated land

A few months ago, I was approached by one of the offspring of Sun Yat Sen, the founder of the Republic of China, for his trouble in inheriting a garden villa located in Xuhui district in Shanghai China. The trouble is that he and other heirs to the estate garden villa are required by local land administration to pay a big sum of land grant fee for the land underlying …

move money and property out of China

Moving money, assets and property out of China is quite a sensitive matter in China, though such moves take place every day across the Chinese borders. It is a known secret that a bulk of the money so moved is illegal proceeds generated by corrupt officials and their cronies. While we see a great deal of illegal transfer across the border, for ordinary people, moving…