Dispute resolution where international lawyers may be weak in China

International law firms and lawyers are thriving in China for long. Foreign investors generally come into China hand in hand with a foreign law firm.

International law firms are appealing to foreign investors in China for various reasons: feeling more bonded with each other due to language skills and culture, having global connections and resources to serve…

Pitfall for buyers of Chinese trademarks

Here is the story:

A foreign investor wishes to buy a Chinese local brand in respect of certain products falling within Class A, and at the time of executing the trademark transfer agreement, the seller doesn’t disclose that he has a very similar trademark in Class B products which are similar products with those in Class A. After partial payment of the …

When does a share buyer become shareholder in a Chinese company when buying its shares?

To many, it may seem a simple and even stupid question. But it is not.

I   In the Case of Domestic Company

In a country with the tradition of statute laws, when a statute law fails to offer a clear answer to a certain legal issue, it can be a problem in practice.

With respect to the captioned question, China Company Law does not provide clearly for when a buyer of the …

China’s inflation slides to 5-year low

Low Inflation Rate

According to the National Bureau of Statistics, China’s inflation rate slides to 5-year lowest in September.

Meanwhile, the producer price index, a measure of inflation at the factory gate, fell 1.8 percent last month, after slipping 1.2 percent in August. In this month, the consumer price index increased only 1.6% year-on-year, which…

Obtain a security interest (guarantee) from a Chinese company

In business world, security is critical. For creditors like traditional banking lenders or industrial companies that are occasionally involved in lending, borrowing or other obligations, a security interest in the form of collateral, guarantee, standby letter of credit is always craved if ever available.

A security interest in this post refers to any  …

Registered capital, the greater, the better? Not really!

With China adopting the full authorized capitalization regime in its Company Law (click here for more about China reform on company’s registered capital), there has been a clear trend in the market that companies present a much bigger amount of the registered capital to the public (now through the corporate information registration and publishing…

Prohibited and limited sectors in China for foreigners

Prohibited and limited sectors in China for foreigners

The 12th Five-Year Chinese Plan covering the years 2011-2015 aims to further forge relationships with foreign companies.

Although its plan is promising for the development of China, foreigners keep in mind that many economic sectors are prohibited or restricted from entering. Regularly, the Chinese…

What impact for the Shanghai Free Trade Zone in China economy?

The State Council passed a comprehensive plan to set up a free trade experiment zone in Shanghai on August 26, 2013 [see our analysis of the New Rules for Commercial Factoring in Shanghai Free Trade Zone] . Few months later, how to evaluate the real impact of Shanghai pilot FTZ in China ?

The Shanghai FTZ is made up of three extant bonded areas – Yangshan, Waigaoqiao…

Who the hell has the right to represent a company in China?

This is a true story.  The question here may well boggle minds of fellow professionals in China.

I. Facts of the Case

A foreign investor has set up a wholly foreign owned enterprise (“WFOE“) in Shanghai, a limited liability company. The WFOE has a board of directors with three members, and one supervisor. One of the board member, a foreigner, was…

Commercial factoring business in China Free Trade Zone to take off

[You may wish to download a PDF version of this post, click New Rules for Commercial Factoring in Shanghai Free Trade Zone_140604.]

New and detailed rules regarding special treatments for certain industries in China (Shanghai) Pilot Free Trade Zone (the “Shanghai FTZ“) have erupted recently covering quite a number of sectors that may otherwise…

Derivative Action/lawsuit in China: protection of (small) shareholders

[You can also download the PDF version for review here Derivative Action_140516]

Derivative actions are regarded worldwide as an effective enhancement of corporate governance in terms of protecting shareholders from the misbehaving management of their invested company, and protecting small shareholder from being repressed by controlling shareholders.…

Case study on legal representative: a good lesson on corporate governance of companies in China

This is a true case that I am handling.

FACTS:

A European investor set up a wholly foreign-owned trading company in Shanghai, China as its foothold in China to sell its advanced products. The shareholder appointed three members on the board of directors who are all foreigners with no regular residence in China. One of the director was appointed to serve as the …

Appoint a Chinese lawyer as supervisor for your company in China

I am still working on behalf of a European corporate client to clean up the mess of its invested WFOE in Shanghai caused by the WFOE’s general manager and legal representative.

The WFOE has a board of directors and a supervisor as well. The management of the WFOE is left to a general manager who also serves as the legal representative of the WFOE. It seemed …

China’s reforms on companies’registered capital

As part of the China’s big promise of overall reforms, state cabinet announced “Plan on Reforming Registration System of Registered Capital (of Companies)” on February 14, 2014.

It is a significant move to inject vitality into Chinese ailing economy, as it lowers the threshold substantially for more ordinary people to embark on building…

JP Morgan probe:is it a worthy lesson to learn?

Bribery probe into JP Morgan hiring practice in China has drew extensive attention from both inside and outside of China. Web portals like Reuters (click here), Guardian (click here) have all run similar news on the topic.

Well, to a Chinese business man, what JP Morgan has done in its hiring practice is so normal, reasonable and even necessary. As a Chinese lawyer,…

Mind whom you are doing business with – transit trade with China

Frauds in international trade with China take many forms.

We talk about a very common trick that often leaves the buyer outside of China in a very hopeless situation in recovering losses arising out of the trick: transit trade or whatever name you call it. It involves a third party in a separate jurisdiction in the international trade conducted by actual seller…

Want to sue a Chinese company? But which court? Jurisdiction Issue

I have been receiving email inquiries from abroad asking for help to sue a Chinese company that failed to deliver goods in compliance with contract terms. Very often, the foreign buyers find that the goods do not comply with quality standards and sometimes, the goods are stone, sands or useless powders. Fraud is pervasive and rampant in international trade …

China (Shanghai) Pilot Free Trade Zone:how does it benefit foreign investors in China

The China pilot free trade zone in Shanghai has just been launched at end of September, and a slew of regulations tailored for the FTZ have also been unveiled. In particular, the much expected “negative list” listing those industries that are restricted or prohibited from foreign investment is also issued.

Overall, the experimental FTZ in Shanghai…

What is a legal person under Chinese laws

You may frequently encounter the phrase “legal person” when perusing legal articles about Chinese laws, in particular, corporate and business laws. However, you may inadvertently take the “legal person” in China as the same in your home country when it is actually not. which may lead to unmindful loss.

What is a legal person under

land use right as contribution in kind in incorporating Chinese companies

Land use right in China is regarded as a form of real estate. In practice, land use right can be used as contribution in kind in capitalizing a company in China. China Company Law says in its Article 27 that upon incorporating a company, an investor can use cash, intellectual property, land use right etc. that can be valuated and transferred as contribution in capitalizing…