How to protect foreign investors in Sino-foreign equity joint ventures?

Over time, foreign investors have come more and more inclined to “go alone”, i.e. setting up a WOFE (wholly foreign owned enterprise), when making green field investment in China. The reason behind is that Chinese partners may proved to be unreliable and may and can mess up things altogether. Look at the battle between Wahaha and Donone. Wherever…

Shall I sell my share in a FIE before I fully pay up the registered capital

Due to various reasons, a foreign investor wants to quit his investment by selling his share of equity interests in the foreign invested enterprise/company even before he pays up its subscription to the registered capital of the company.

1. Can the unpaid share be transferred?

Yes, you can transfer the share that has not been paid up.

In China, a shareholder …

Chinese tourism market

A Japanese travel agency recently got approval from the Chinese authorities to set up a totally foreign-funded company in China, the first of its kind so far. What does it mean? Is it a challenge or chance for local companies to compete with increasing power?

China boasts a large population and vast geographical areas. They are natural catalysts for the development…

foreign exchange issue in regard of foreign invested partnership enterprises

Since China cabinet issued the Administrative Measures on Foreign Entities or Individuals Establishing Partnership Enterprises in China (the “Measures”), it has stirred up waves of interests among foreign investors. We have translated the Measures into English language and listed the advantages of this new investment vehicle (you can …

what if your spouse buys a house for his or her lover/mistress?

A foreign woman recently approached me for advice on her situation: she came to Shanghai with his husband who was an executive of internatinal company. She recently found out her husband is having an affair with a Chinese girl. What is more, she also discovered that her husband had spent a big sum of money on purchasing a luxury apartment the title of which is registered…

China to impose criminal liability on employers refusing to pay salaries and drunken drivers

China parliament, the Standing Committee of the National People's Congress, has in Feburary of 2011 enacted a very important amendment to the current China Criminal Law, the eighth Amendment.

The Eighth Amendment included fifty articles, a substantial revamp of the Law. Among those revisions, two have caught a lot of attention and sparked waves in the public.…

Practical tips about setting up a foreign invested travel agency in Shanghai China

Since China relaxed its rules about setting up foreign-invested travel agency by enacting the Regulation on Travel Agency (the “Regulation”) in February of 2009, there have been a flurry of interests aroused thereby and we have been approached frequently by potential foreign clients inquiring about how to set up their own travel agency in China.…

Setting up a foreign invested travel agency in China

To meet its undertakings upon the entry into the WTO, China has promulgated the Regulation on Travel Agency (“Regulations”), effective as from May 1, 2009, which also incorporates rules for setting up foreign invested travel agencies (“FITA”). Previous regulations issued by Ministry of Tourism (“MOT”) and Ministry…

Trial Measures for the Investment in and Establishment of Sino-Foreign Equity Joint Venture Enterprises and Sino-foreign Cooperative Joint Venture Enterprises by Domestic Natural Persons in Pudong New Area

Trial Measures for the Investment in and Establishment of Sino-Foreign Equity Joint Venture Enterprises and Sino-foreign Cooperative Joint Venture Enterprises by Domestic Natural Persons in Pudong New Area

Promulgating Institution: Shanghai Administration of Industry and Commerce; Shanghai Pudong New Area People's Government
Document Number: …

You may now set up a joint venture entity with a PRC citizen in Pudong, Shanghai

For many years, when a foreign natural person or entity wants to set up a joint venture in China, he can only find a Chinese entity as partner instead of a Chinese natural person. It is not clear why China has maintained this rule for so many years while in practice there are easy ways of circumventing this restriction.

However, with the adoption of PRC Foreign Invested…

Employment with a representative office in China

Frequently I was inquired by people working in a representative office (hereinafter "Rep Office") of a foreign Company about labor & employment issues. Recently I have also represented a foreigner, a representative in a Rep Office of a foreign architecture firm, in a labor dispute. I feel it necessary to clarify some of the rules regarding employment …

China to expand work injury coverage to its workers

China state council is considering revising the current Work Injury Insurance Regulation, according to news.

The major focus is on whether injury happening on the way to office or home should be regarded as work injury. Currently, it is provided in the regulation that injury caused by road accident involving motor vehicle (on the way to office or home) shall…

New rules for setting up representative office in China

On November 19, 2010, China Cabinet, the State Council, promulgated a new piece of regulation, entitled “Regulation on the Administration of Registration of Representative Offices of Foreign Enterprises”, overhauling and replacing the old rules that have been in operation as from March 15, 1983.

There are a number of notable changes in these…

Tort liabilities relating to employment-take domestic workers as illustration

In Shanghai, there are basically two ways of hiring an Ayi from market. (1) you find the Ayi by yourself or through a friend and you pay her directly and thus establish an employment relationship with the Ayi; (2) you hire the housekeeping/babysitting service from a company or firm in the market and the company sends their staff to your house but you pay the company…

China enacting the Law on Choice of Laws to Foreign-related Civil Relations

China has promulgated a very important law governing foreign-related legal matters, entitled "Law of the People's Republic of China on Choice of Law to Foreign-related Civil Relations", set to be effective as from April 1, 2011.

This new law is organized into eight chapters:

Chapter 1  General provisions;

Chapter 2  Civil subjects;

Chatper 3  Marriage…

Time limit on capital contribution to foreign investment enterprises (companies)

In China, a company (in this article we take the limited liability company, the LLC, for illustration), either domestic or foreign-invested, has to have its own registered capital in order to be recognized as a legal entity at law. As to the timing of capital injection, Chinese laws have treated domestic firms and foreign invested firms differently. To set …

The Political Divisions in China

An investment in China is often subject to regulation of more than one level of the governments. However, it is very often confusing to a foreigner to understand the political divisions through reading some scattered information in that regard. I will try to make my introduction accurate and comprehensive to help you understand this issue.

Bear in mind before…

The basic steps for setting up a foreign invested enterprise in China

1. the Catalogue of Industries for Guiding Foreign Investment in China

China has put in place for long a Catalogue of Industries for Guiding Foreign Investment in China (the “Catalogue”) which may from time to time be amended to reflect economic changes in reality. In this Catalogue, industries are basically classified into four types: encouraged,…

Shifts in real estate taxation affecting your investment

Recently this year saw a string of shifts in tax policies that affect businesses in China, in particular, foreign invested enterprises.

â…  City and Township Land Use Tax

At the end of the year of 2006, the state cabinet revised the Interim Regulation of the People’s Republic of China on the City and Township Land Use Tax and the revised version came…