China Law Blog

A Chinese court in Heilongjang province recently awarded nineteen AIDS patients more than $1 million in compensation against those responsible for spreading the virus through contaminated blood (h/t to China Confidential).  According to Voice of America, Li Dan, who runs the China Orchid Project to help AIDS orphans, said, "One can now use legal channels to protect rights. This is an improvement."

This further evidences the evolution of China's legal system.  In my original post of this series, China Law Evolving -- Businesses Take Note," I talked about a case whose ruling "would almost certainly have been different ten years ago (even five years ago), even in Shanghai or Beijing."  The same is true of this AIDS case.  China -- and with it, its courts -- is slowly moving from a policy of economic growth at any cost, to one where the "little guy" can get some protection.  This particular case involves patient rights, but there have been other cases involving employee rights, environmental rights, and securities fraud.  As I noted in the initial post, this evolution has and will continue to affect businesses in China:

What this means for businesses (particularly foreign businesses) in China is the following:

1.  Worker's rights will increase.  Note the recent events at Wal-Mart and with FoxConn/Apple. 

2.  China's product liability and other tort laws will get tougher.  Can anyone translate Ralph Nadar into Chinese? 

3.  China's environmental laws will get tougher.

4.  Damages in court cases will increase. 

5.  The types of claims will expand.  New causes of action will be accepted. I did a post the other day about a decision finding no compensation for a damaged sex life due to the injury of a spouse.  Will anyone bet against such claims being accepted in China within ten years?

In my second post on this same topic, I talked about having "seen too many countries evolve more towards the American model of wide-open litigation not to believe China is also heading in that same direction" and counseled "foreign businesses in China "to keep one eye on the law as it is and another on the law as it may be shortly." 

In my experience, most foreign businesses (at least the mostly American and European ones my firm represents) do realize Chinese laws are always evolving and they understand that it sometimes makes economic sense to try to stay ahead of the legal curve.  There may be no point in designing a product to comply with this year's Chinese safety standards if next year's standards will make your product obsolete.  Do you hire new workers in light of China's proposed labor laws that will make termination much more difficult? On top of all this, foreign businesses in China are held to higher standards than their domestic counterparts. 

You do not need to be a lawyer to succeed in business in China, but you do need to keep your eye on the laws relating to your business, more so than you do at home.