Foreign Investment in China

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  …

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…

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


This is a true case that I am handling.


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 …

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 …

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…

What If the Chinese Partner Defaults on Joint Venture Contract or Share Transfer Contract?


This is anything but a new topic. There are many essays and articles discoursing on this. However, there is still a great deal of confusion esp in terms of legal doctrines that can be used to support current practice.

Herer are the typical situations where this question often arises: (1) a foreign investor has signed a joint venture contract with the Chinese party…

Check out who you are trading with in China


Coincidentally enough, I am approached by two clients respectively from UK and US for advice on their situations where they are deceived by two fraudulent Chinese suppliers both selling second-hand machinery to the overseas market. Fancy enough that both of the two clients bought machinery for Iraq market.

They both were defrauded because they don’t…