Foreign Investment in China

stretched understanding of shareholder’s pre-emptive right to purchase equity interests under China Company Law


It is a landmark court decision in China corporate law practice in the judicial system, having far-reaching impact for anyone that holds equity interests in China limited liability companies.

The decision was made not long ago by a Shanghai People’s First Intermediary Court in the high profile dispute between Fosun and Soho in regard of the equity interest…

non-competition clause in outsourcing deals


An American client recently complained that his Chinese OEM manufacturer in Shanghai is selling the products designed by him which is supposed not to happen pursuant to his understanding.

It is a small transaction where the American client asked the Chinese manufacturer to manufacture a new-model product designed by him. After the Chinese manufacturer …

Classification of Employees Conducts in China’s Workplaces


Enactment of the Labor Contract Law of the People’s Republic of China (hereinafter “Labor Contract Law”) has very much changed the landscape of employer and employee relationships in Chinese workplaces. One of the most strongly felt pains is the inability for employers to dismiss unwanted employees as the Labor Contract Law has substantially restricted…

Why do you need a HK offshore structure when you invest in China?


Chinese official statistics on foreign investment in China have indicated that Hong Kong has been the biggest source of inbound foreign investment in the mainland China.

But why is it Hong Kong?

In addition to the common advantages of having an offshore structure (an SPV or a pass-through entity), namely, easier transfer of equity interests in the Chinese …

risk of loss of freedom for serving as legal representative of a company in China


I have written a quite comprehensive post explaining the concept of legal representative of a Chinese company (click here for details).

Just recently, a new instance of foreigners being banned from leaving China prompted me to remind expat employees in China of the risk of loss of freedom for serving as legal representative of a company in China.

It is a simple…

China poised to end the exemption of individual income tax on dividends received by foreign individual investors


From early nineteen nineties, China has kept the favourable tax treatment for foreign individual investors pursuant to which dividends received by such individual foreign investors is exempted from paying China’s individual income tax, a strong incentive to encourage foreigner to invest in China.

On February 3, China cabinet announced its plan…

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…

18 ways to learn like the Chinese


This is an interesting article titled “18 ways to learn like the Chinese”, from online colleges web. Click here to read the whole article.

It is intriguing because for Chinese parents like me we have been looking out for western style education to insulate our children from being suffocated in terms of their creativity and social value. Chinese…

the creditor’s pitfall in dealing with VIE entities


VIE entities in China have been pervasive in many industries in  China, in particular, the telecom industry, advertising and some other asset-heavy industries like steel and mining. Below is a typical chart illustrating the VIE structure widely used in China.

Variable Interest Entity in China

In the chart, the VIE, generally a domestic entity holding necessary governmental license, is…