China Law Blog

Just read this excellent article by the former/current publisher of the once hugely popular ex-pat magazines, "That's Shanghai," "That's Beijing" and "That's Guangzhou."  The article details Mark Kitto's problems with the Chinese government and the government's takeover of Kitto's Chinese media empire.  Much of what is written here is peculiar to the media business in China, which is of particular interest to the government (for obvious reasons), probably more than any other business sector.  But much of what Kitto describes here is not confined to the media business and the article is quite instructive.  Sure, stories like this in China are rare and getting rarer, particularly in the more sophisticated business cities, but the large role of the government and the loose use of laws are a fact of life in China. 

Suffice it to say there are times where you want your business in China to be as close to the government as possible and there are times you want it to be as far away from the government as possible. 

Just today, I was explaining to a client that it is a misconception to view China as a lawless country as the opposite is actually more accurate.  The problem is not a lack of laws, it is a selective enforcement of them.  China has too many laws, which is exactly how the government wants it.  With so many laws, it is relatively easy for the government to find one that you have violated and seek to close you down or deport you.  Of course, for various reasons, the government almost never does this, but it is discomforting to know that they can. 

The Bottom Line: You must do whatever you can to follow the laws in China.  Do not listen to your Chinese "partner" who tells you he or she has such good contacts with the government that you need not follow the law.  The contacts may not be as good as he or she thinks or, perhaps he or she is making it up so as to be able to eventually use your law violation against you.  Or, maybe the contact leaves the government and a new, more law abiding civil servant takes over.  The least risky thing you can do is to operate on the up and up.