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China Joint Ventures That Work

Posted in Basics of China Business Law, China Business, Legal News

China joint ventures are notorious for their high failure rate. An old Chinese saying that is often applied to joint ventures is “same bed, different dreams.” This Chinese saying (同床异梦) actually far predates joint ventures — it applies to any sort of partnership without a meeting of the minds.

Far too often, American companies and Chinese companies rush into joint ventures without ever discussing their respective dreams.

Many years ago, a client about to fly to China to meet with a potential Chinese joint venture partner asked for our help in formulating questions to ask of the Chinese company to help determine whether to enter into the joint venture deal. We provided a list of issues to raise at that meeting, and have provided a similar list (honed a bit more each time) to subsequent clients facing the same situation. The goal of raising these issues is to determine whether the two companies share the same dreams, and whether the Chinese company is JV worthy. Currently, this list includes the following questions:

  • Why are you seeking to form a joint venture with us and what will be the goals of the joint venture?
  • What will you do for, and with, the joint venture?
  • What exactly do you plan for your company to be doing to advance the business of the joint venture and what exactly do you expect our company will be doing to advance the business of the joint venture?
  • Who will make business decisions for the joint venture, and what will mechanisms will we use for reaching a decision?
  • What will each of us be contributing to the joint venture? For instance: property, technology, intellectual property, money, know-how, and employees. If the joint venture loses money, who will be responsible for putting more money in?
  • How will we resolve disputes? China lawyers like to include provisions saying that we will work out any issues among ourselves and if that fails, we will arbitrate. The tougher question is: how will we deal with day to day disputes in a way so that the joint venture does not collapse?
  • Can either of us use confidential JV information for our own business? Can our own businesses compete with the JV? Can our own businesses do business with the JV?
  • How and when will the joint venture end? What if one of us wants to buy the other out?

Posing these questions puts the dreams to the test.

For more on China joint ventures, check out Joint Venture Jeopardy and Avoiding Mistakes in China Joint Ventures

China Employment Offer Letters: Be Careful.

Posted in Basics of China Business Law, Legal News

In China, an offer letter (录用通知书) is a written document delivered by an employer to an employee stating the employer’s intent to enter into a labor relationship with the employee. An offer letter typically proposes the employee’s work title, work location, wages, and the term of the employment arrangement.

Despite the relatively common use of employment offer letters in China (especially by state-owned enterprises) no Chinese law specifically addresses them. For that reason and for the reasons set forth below, employers should be careful in using them.

To begin with, despite what many believe, offer letters are not an official labor contract and they do not satisfy the requirement that labor contracts be in writing. Under Chinese law, an offer letter is regarded as an employer’s unilateral act expressing its willingness to enter into an employment relationship with a potential employee. An offer letter is deemed to be an “offer” (要约) and it is governed by China’s Contract Law, not by China’s Labor Contract Law. A labor contract is a legal document evidencing the existence of a labor relationship between the employer and the employee but an offer letter has no such effect. So even when the employee returns a signed offer letter, the employer must nonetheless execute a formal labor contract with the employee within one month after the employee begins working for the employer to be in compliance with Chinese law.

Under China’s Labor Contract Law, an employer can be required to pay its employees twice the employees’ monthly salary if it fails to execute a written labor contract within one month of the commencement of the employment relationship. Further, if the employer goes  more than a year without having a written labor contract with an employee, the employee lacking the written labor contract will be deemed to have entered into an open-term labor contract with its employer, which essentially means there is no definitive end date to the labor relationship.

Nearly all of the offer letters our China lawyers have reviewed made statements violating PRC labor laws. This alone generally makes it a bad idea to refer to the offer letter in any eventual labor contract. But on top of this, nearly all of the offer letters we see also usually also contain terms that conflict with the labor contracts and/or other employment agreements such as the employer’s rules and regulations.

When an offer letter makes sense for our clients, we usually recommend that they insert  a provision in the formal labor contract (in Chinese, of course) explicitly providing that  the labor contract supersedes the offer letter.

In conclusion, if you are going to use an offer letter, you should, at minimum make sure of the following:

  • It does not violate any PRC laws.
  • You have a written labor contract with the employee to whom you sent the offer letter.
  • Your written labor contract clearly provides (in Chinese) that it supersedes the offer letter.

China Joint Ventures: A Warning

Posted in Basics of China Business Law, Legal News
The most common ways that companies start doing business in China (legally) is by forming a WFOE (A Wholly Foreign Owned Entity) or by partnering with an existing Chinese business through some form of joint venture. Media reports to the contrary, China remains  quite open to foreign investment and in the past several years WFOEs have become the most common vehicle for foreign investment, partly because of investor skittishness as stories about problems with Chinese equity joint venture partners have made the rounds.

Yet many foreign investors still wish to enter the Chinese market through equity joint ventures, and the particular risks involved with this type of arrangement require careful planning. One way to reduce your risk is by conducting due diligence on your potential Chinese joint venture partner before you tie the knot.

Another way is by making sure that you will control the joint venture. Since most foreign investors wish to maintain control over their Chinese joint venture entity, this issue is usually paramount.

Yet our China lawyers have far too often seen foreign investors make a mistake that effectively leaves them without control—a mistake so fundamental that it accounts for most of the failed equity joint ventures in China. The mistake is assuming that Chinese joint ventures are managed according to a Western model, under which the board of directors has controlling power over the company.

Most foreign investors strive to obtain a 51% ownership interest in the equity joint venture, assuming this gives them the right to elect the entire board and thereby control the company. After winning the struggle for percentage ownership of the joint venture, foreign investors will frequently allow the Chinese side to appoint the equity joint venture’s two key management positions, the Legal Representative and the General Manager. But these “concessions” are all part of the Chinese side’s plan, and effectively render board control meaningless.

Control over a Chinese joint venture actually comes from the following:

  • The power to appoint and remove the China joint venture’s Legal Representative.
  • The power to appoint and remove the General Manager of the China joint venture company. The joint venture agreement must make clear that the General Manager is an employee of the joint venture company employed entirely at the discretion of the Legal Representative (whom you have the power to appoint and remove). Note that this agreement will be enforced under Chinese law and its official version should therefore be in Chinese.
  • Control over the company seal, or “chop.” The joint venture partner that controls the joint venture’s registered company seal has the power to make binding contracts on behalf of the joint venture company and to deal with the joint venture company’s banks and other key service providers. The annals of history are filled with foreign companies getting shut out of their China joint ventures after losing control of the seal.

The Chinese side to a joint venture will typically refuse to give the foreign party the above three measures of control.  It will argue that it should control the joint venture for reasons of both efficiency and expertise. In many cases, it also will claim that it cannot bring its political connections, or guanxi, into play unless its own people fill the Legal Representative and General Manager slots. This argument is usually just a smoke screen for the Chinese side trying to secure the true levers of joint venture control. For more on the difficulties of China joint ventures, check out How We Really Feel About China Joint Ventures. We Love Them AND We Hate Them.

Using a Chinese lawyer or a “China consultancy” increases your risks. Chinese lawyers are not bound by the same duties of loyalty as American lawyers and it is not unheard of for them to work on behalf of your Chinese counterpart to get the joint venture deal done. This may be because the Chinese lawyer is getting paid by the Chinese company or it may simply be because the Chinese lawyer knows he or she will make more money if the joint venture deal concludes. We are aware of consultancies that have represented American and European companies on joint ventures while getting a percentage of the deal from the Chinese side if it goes through.

If you want control over your China joint venture, you should follow the rules set forth above. Otherwise you might find yourself in a venture with no legal right to guide it.

You have been warned.

China Compliance: Don’t Rely On Your China Staff, Part IV

Posted in Basics of China Business Law, China Business, Legal News

In Part 1 of this series, I discussed how Chinese staff of foreign companies operating in China typically view China compliance very differently than the foreign company itself. In Part 2, I talked about how the views of Chinese staff can negatively impact the foreign company’s China compliance efforts. In Part 3, I discussed one aspect of what often happens with the local Chinese staff when the foreign company starts to enact real changes in its operations.

Today, I focus in on how Chinese staff will seek to undermine those who it sees as behind the foreign company’s seeking to  implement an anti-corruption and compliance program, and what you as the foreign company must do in the face of this.

In Part 3, we described how employees firs react to a compliance program:

Typically when a foreign company begins establishing strong anti-corruption and compliance polices for its China operations, it will encounter strong resistance from some or all of its Chinese staff. There are multiple reasons for this and the one usually given by staff is the fear that acting within the law will hurt company competitiveness. But there is also usually another reason for resistance — this one unstated — and that is the fear by staff that their kickback gravy train will be ending or, even worse, that their previous kickbacks will be revealed and they will be fired.

It is not uncommon for Chinese employees to view their job as a platform for more than just a salary; it is also a platform for leveraging additional income through kickbacks. This view is even more prevalent among employees of foreign companies, which are viewed as easy marks.

When a foreign company initiates or toughens its China compliance and anti-corruption programs, the local employees cut off from their (usually substantial) additional income stream, commonly get quite angry about this. Usually, they start out by trying to convince the foreign company that it is making a big mistake and that its actions will prevent it from being competitive in China. They also will oftentimes accuse the foreign law firm for not having “any clue about how business is done in China” and demand that it be fired. My firm’s China lawyers have many times faced this.

You absolutely must be prepared for at least some members of your China staff to viciously go after those who seek to bring the China operation in line. You can expect to experience some or all of the following:

  1. The staff involved in kickbacks asserting that someone else insisted that they take the kickbacks.
  2. The angry staff insisting that the entire compliance clean-up operation is being done to take out certain people in the company.
  3. The angry staff insisting that some of those involved in the clean-up operation be fired. In particular, be prepared for attempts to be made to frame those people supporting the clean-up.

All of the above are much more likely to happen against a foreign employee than against a domestic employee. We have seen local staff provide “evidence” of improper expense reports against foreigners, make allegations of sexual harassment against the foreigner(s), and come up with “new discoveries” that the foreigner is no longer eligible for a work visa, just to name a few examples.

As shocking as the above may be to you, what we find even more shocking is how often the foreign company takes the bait either because they truly believe the misinformation they are being fed or simply because they lose the stomach to continue moving forward with the cleanup.

When our China lawyers take on a China compliance/anti-corruption program, they warn our clients about the above (and about a number of other things as well) and stress that if they are not going to follow the program through to completion, it is a mistake even to start. Stopping midway with a compliance program will inflict the pain but fail to provide the benefits. Compliance programs are critical for China, but only if done to completion.

China Compliance: Don’t Rely on Your China Staff, Part III

Posted in Legal News

In Part 1 of this series, I discussed how Chinese staff of foreign companies operating in China typically view China compliance very differently than the foreign company itself. In Part 2, I talked about how the views of Chinese staff can negatively impact the foreign company’s China compliance efforts.

In this post, I am going to discuss one aspect of what often happens with the local Chinese staff when the foreign company starts to enact real changes in its operations.

Typically when a foreign company begins establishing strong anti-corruption and compliance polices for its China operations, it will encounter strong resistance from some or all of its Chinese staff. There are multiple reasons for this and the one usually given by staff is the fear that acting within the law will hurt company competitiveness. But there is also usually another reason for resistance — this one unstated — and that is the fear by staff that their kickback gravy train will be ending or, even worse, that their previous kickbacks will be revealed and they will be fired.

It is not uncommon for Chinese employees to view their job as a platform for more than just a salary; it is also a platform for leveraging additional income through kickbacks. This view is even more prevalent among employees of foreign companies, which are viewed as easy marks.

When a foreign company initiates or toughens its China compliance and anti-corruption programs, the local employees cut off from their (usually substantial) additional income stream, commonly get quite angry about this. Usually, they start out by trying to convince the foreign company that it is making a big mistake and that its actions will prevent it from being competitive in China. They also will oftentimes accuse the foreign law firm for not having “any clue about how business is done in China” and demand that it be fired. My firm’s China lawyers have many times faced this.

It is when the above fails to work that things get really tricky. The disgruntled employee oftentimes starts listing the illegal activities the foreign company has engaged in and then says, “You can’t fire me, because if you do I will report you for ten years of non-compliance.” Half the time, it is this very employee who (deliberately) set you up so as not to comply and then always assured you that you were in full compliance or that your non-compliance would never matter. Much of the time, your non-compliance actually benefitted this employee, like for example if you paid salary off the grid.

How do you handle this situation? The pat answer is by preventing it from happening in the first place. If you have a strong compliance program in place from day one and if you comply with the laws, these threats should have no impact. But that’s the pat answer. The real answer is that it depends. It depends on what your violations are and whether they can be remedied and at what cost and it also depends on what your employee really wants. Almost always the employee wants a top-tier severance package and oftentimes just giving him or her that will be enough to keep them quiet, especially since their going to the government may put them at risk as well.

China Trademarks: Like a Box of Chocolates

Posted in China Business, Legal News

Those of us who deal with China trademarks on a regular basis are used to a certain level of weirdness. To be fair, most decisions from the Chinese Trademark Office (CTMO) are logical, apply the appropriate laws and regulations, and occur within the general expected timeframe. But a nontrivial number are simply bizarre, and come with neither warning nor explanation. A trademark might be rejected for a ludicrous supposed conflict, like having the word “the” in common with a previously registered trademark. A trademark might be registered when it should be rejected for being identical to a previously registered trademark. A trademark might sit in limbo for two or three years before it receives an official decision. You never know what you’re going to get. Just like a box of chocolates, if that box was a few weeks past the sell-by date. But even if you get two or three horrendous decisions in a row, you can usually convince yourself it’s bad luck rather than a trend. For this reason, it has taken people a while to realize that something monumentally weird is going on: the CTMO has stopped issuing decisions.

As it turns out, this is an open secret. Or rather, it’s not a secret at all, it’s just not being publicized. In conjunction with the new Trademark Law going into effect on May 1, the CTMO has been switching over to a new computer system. During the transition period, the trademark examiners have (in theory) been working as usual: reviewing applications and rejecting trademarks and approving trademarks and all of the other wonderful things they do. Except they have been doing all of this offline, and until the new computer system is operational, no one outside the CTMO knows exactly what the examiners have been up to or how many hundreds of thousands of decisions await dissemination. Had the transition to the new computer system taken a couple weeks, which was doubtlessly the plan, no one would have been the wiser. But like almost every major IT project in the history of IT projects, the transition is way behind schedule – nearly four months and counting.

The most recent update I heard was that the new computer system would be online by the end of this month at the earliest. Not exactly the boldest of pronouncements. The people at the CTMO cannot be happy with this situation; they busted their tails to get caught up before the new law went into effect and now, just a few months later, are more behind than ever. But the Chinese trademark agents (who handle the vast majority of trademark applications, and are required by law to handle all applications filed by non-Chinese entities) must be even unhappier. They’re the ones that have to pass along the results to their clients.

All of this is particularly ironic given the new Trademark Law’s inclusion of strict deadlines for trademark decisions, which was unabashedly publicized by news reports and law firms alike. But unless you’re Alanis Morissette, irony doesn’t pay the bills.

UPDATE (8-25): The CTMO has just started to issue a few rejections and approvals, but the massive backlog remains.


China Compliance: Don’t Rely on Your China Staff, Part II

Posted in Basics of China Business Law, Legal News

In yesterday’s post, we briefly talked about the rash of legal problems lately besetting foreign companies doing business in China and of how foreign companies must avoid the temptation to assume that their Chinese staff have all China legal issues covered.

This post addresses the resistance foreign companies (and their lawyers) often face from Chinese staff when the foreign company seeks to comply with Chinese law. This resistance typically stems from Chinese staff who believe that “Chinese laws are stupid and unrealistic and routinely ignored.” They are of the view that if “we follow all of these laws we will not be able to compete with all of the Chinese companies that do not.”

Here’s the really scary thing: your Chinese staff is often correct and we could cite example after example as to why. How can you compete when your WFOE pays employees for a 40 hour work week yet your Chinese competitors are paying the same for 70 hours of work from their employees? How can your WFOE get the big contract without discretely giving a white envelope (usually in a briefcase) to the decision-maker just like all of your competitors do?

I do not purport to have the answers to these somewhat intractable questions so instead I will quote from what one of our lawyers told a client the other day. This client was told of concerns that we had about the people with whom it was doing business and instructed to retain us to make sure that none of these people were on any sanctions or prohibited entity watch-lists. The client responded by saying that no matter what we might find about the people and the companies, he didn’t see how his company would not go forward with the sale. “It’s three and a half million in sales,” he said. To which our China lawyer in charge of that matter responded by saying, “right, but I really think you need to weigh that against a potential three and a half years in jail. For you. Oh, and you might end up having to spend that time in both a China jail and a U.S. jail because you can be prosecuted by both countries and I’m not sure whether the U.S. will give you any credit for time served over in China.” He retained us to do the search, and fortunately, everyone checked out.

If you are serious about bringing your China business into compliance it will not be pain free or inexpensive. But hey, it beats the alternatives.

China Compliance: Don’t Rely On Your China Staff

Posted in Basics of China Business Law, Legal News

You’ve heard the message. If you want to keep operating in China and stay out of legal trouble, the time is now to get your China house in order. And this is quite possible.

But, can you rely on the advice of your China staff to establish corporate and regulatory compliance procedures, as well as anti-corruption policies? The answer is a weak (or is a strong?) maybe. The problem is that far too often your local China staff  views compliance and legal issues far differently than you or a government audit would.

In Dead and alive: metaphors for (dis)obeying the law U.Penn’s language log explains a common Chinese phrase used during reporting on the recent OSI food scandal, and by doing so helps highlights the problem:

规矩是死的,人是活的。… “It conveys a fairly typical Chinese attitude towards any rules/laws/regulations: they are made to break, bend and be compromised. View it [sic] positively, this indicates a way of problem solving. [emphasis added]”

You want your Chinese staff to solve problems, but you must be wary of how they do so, because breaking, bending or compromising rules/laws/regulations does not work for foreign companies doing business in China. Foreign companies with a history of local-style problem solving are low hanging fruit for Chinese government bureaus looking to demonstrate they have the will to enforce their own laws and that they care about the citizenry they are to serve.

Our China lawyers are always getting contacted to help foreign companies after they have gone through the following:

1. Foreign company sees need, and has some will to become compliant with Chinese laws and regulations and to establish a “no bribery policy” and it so instructs its employees.

2. Upon being so instructed, its Chinese employees think that “if we follow all these stupid rules we cannot accomplish anything”

3. The Chinese employees insist that they understand the company’s new “get clean” directive but little to nothing changes. Nonetheless, the foreign company relies on its local Chinese employees, believing that everything is just fine.

4. A government bureau shows up for an audit.

5. The foreign company learns that everything is not fine and that claiming that it was only doing what its Chinese employees insisted was legal and right provides it no relief. In fact, it oftentimes learns that claiming to have done only what some Chinese government bureau itself told them it to do also provides no relief.

6. Now, in the crosshairs, the foreign company realizes they require assistance beyond what their Chinese staff can give. At this point, they call our China lawyers.

Our job at that point is to try to reduce the sanction because it is usually too late to avoid all consequences. Without question, it is easier to get legal before the government knocks at your door. And relying on your local China staff to get legal rarely is going to work. For more on this is the case, check out Your Chinese-American VP Don’t Know Diddley ‘Bout China Law And I Have Friggin Had It.

An important first step to preventing a compliance/corruption problem is establishing a strong anti-corruption policy that zealously works to prevent your company and your entire staff from violating the China’s anti-corruption laws and those of your home country. At minimum, this means you have provided an Anti-Corruption Compliance Manual, written in both Chinese and in English, to all of your staff, and that you regularly conduct staff training to ensure the necessary shift in company culture takes place. This also means that you have objective third parties audit your company for compliance and then you take actions necessitated by that audit report.

And that leads to our next post focusing on compliance, which will discuss further why you need to get compliant now.

China Part-Time Employee Rules

Posted in Basics of China Business Law, Legal News

In China, the rules for part-time workers are not nearly as developed as the rules for full-time employees. In fact, it was only a few years did China begin legally recognizing part-time employees. The 1994 Labor Law applied only  to full-time employees and did not even mention part-time employees. In 2008, the revised PRC Labor Contract Law for the first time recognized part-time employees on a statutory level.

Unlike full-time employees, part time employees do not require a written contract. This does not, however, mean that the hiring and retention of a part-time worker is any less complicated than for a full-time employee and for the reasons set forth below, our China lawyers advise our clients to execute written contracts with both their full-time and their part-time employees. One reason to have a written contract with your part-time employees is to ensure that your employee understands the terms of employment and his or her work responsibilities and obligations. A contract makes clear that your employee (be she full or part time) agrees to obey all company rules and regulations. It can be particularly important to get something in writing regarding your company rules for protecting your confidential information, trade secrets and intellectual property.

A written contract also can serve as proof that your part-time employee is indeed a part-time employee. Towards that end, the contract should have a provision clearly stating the part-time nature of the position. At minimum, we typically like to put the following into the labor contracts we draft between our clients and their part-time employees

  • The working hours
  • The term/duration of the employment agreement
  • A description of the work the part-time employee will be performing
  • The part-time employee’s wages
  • Applicable labor protections and labor conditions

Note that you are not allowed to set a probation period for a part-time employee.

Under China’s Labor Contract Law, a part-time employee can work no more than four hours a day and no more than 24 hours in a week. If the part-time employee works more than these hours, you are at risk of “converting” him or her to a full-time employee, with all the legal obligations that go along with that status.

Chinese law requires that you pay your part-time employee wages at least every 15 days. This is different from the rules for full-time employees who are usually paid monthly. As with full-time employees, the salary you pay to your part-time employees must meet the local minimum wage requirement.

Chinese law allows either the employer or the part-time employee to terminate the labor contract at any time, without prior notice. As a general rule, the employer is not required to pay any economic compensation to the employee.

Employers are also normally required to pay only work-related injury insurance for their part-time employee but because every locale in China seems to have different rules on this, we always check first with the relevant authorities to figure out our client’s benefit obligations for part-time employees.

How To Get Legal In China. Now.

Posted in Basics of China Business Law, Legal News

During the past year, the number of calls from American (sometimes European) SMEs pushed out of China for having operated there without a legal entity (such as a WFOE) have doubled? What is causing this increase of foreign companies getting shut down in China?It’s the economy, stupid.

As China’s economy tightens, various local governments increase their crackdowns on foreign companies operating illegally. Period. But what also happens is that these foreign companies terminate their relationships with their Chinese personnell and then those ex-personnel report the company for operating illegally.

Generally, there is not much our China lawyers can do for a company that has been pushed out of China, but there is a lot we can do for those companies seeking to go legal. And fortunately, the calls and the emails from those companies have increased as well, no doubt due to what they have heard is happening to their compatriots.

The first thing we as lawyers need to do to help these companies get legal (and fast) in China is to figure out how they are currently operating in China (illegally) and then figure out the best way to get them operating legally.

An email from one of our China lawyers to such a client passed my desk the other day and I thought it would be helpful to reprise it here, with changes made so as to completely camouflage the company to whom it was written:

 

Please provide more details about your business model, including the following:

I understand that your core business is selling _____ products. How do you sell these products? (On the Internet? In a store?)

To whom do you sell your products? (Direct to the consumer? To a store? Via a distributor?)

Where do you sell your products? (The US only? North America? Europe? Asia? China?)

Do you have goods manufactured solely for your own company, or do you sometimes have goods manufactured on behalf of a third party?

What percentage of your products come from China?

Please provide more details about what you are doing in China, including the following:

  • I understand that you currently purchase from approximately _____ factories in China and import approximately ____ thousand containers per year. Are your purchases spread fairly even across those factories, or do you order a large percentage from a few of them? 
  • Are the factories scattered across China, or are they concentrated in one or a few areas?
  • Do you have factories make customized goods for you, or do you order “off the shelf” goods that the factories already make?
  • Do your products bear your brand/trademark, or the brand/trademark of any third parties?
  • For how long have you been working with these factories? How did you come to choose them?
  • How do you purchase your products from China? Do you purchase them directly or via a middleman/sourcing agent? Do you use contracts? Purchase orders? Are you committed to purchasing minimum quantities of anything?
  • Do you have any plans to add new factories or drop existing factories?
  • Do you have any other plans to change your operations in China during the next 1-3 years?

Please provide more details about your “employees” in China, including the following:

  • I understand that you currently engage ____ people in China to ______. On what basis have you engaged them?
  • For how long have they worked for you?
  • How did you hire them in the first place?
  • Have they signed a contract? A confidentiality agreement? Anything?
  • How do you communicate with them? 
  • How much do you pay them?
  • How often are they paid?
  • In what currency?
  • In what manner (check, wire transfer, cash, etc.)?
  • What arrangements, if any, have you made for payments into these “employees’” social insurance accounts?
  • What are their responsibilities?
  • To whom do they report to?
  • Where in China do they work?
  • Do they have an office? If so, where is it?
  • Have you ever engaged other people in China besides these ______ current people? If so, how did those engagements end?

Please provide more details about your future hiring plans in China, including the following:

  • I understand that you are thinking about engaging ____ additional people in China. When do you anticipate bringing them on?
  • How much will you pay them?
  • What will their responsibilities be?
  • To whom will they report?
  • In what city will they work?

What are your main concerns regarding your operations in China?

  • Compliance with Chinese laws, including labor laws?
  • Developing a market for your products within China?
  • Ensuring product quality and compliance with relevant laws in the markets where you sell?
  • Protecting your IP?
  • Something else?

Once we get answers to the above, along with answers to various follow-up questions, we are ready to start presenting various options, along with their plusses and minuses and their costs.