China Law Blog

By Charles Moure

I attended AmCham Shanghai's June 8, 2007, China Trends Conference at the Pudong Shangri-La Hotel.  I was quite impressed by both AmCham and the conference itself.  The large conference room was nearly full.  Brenda Foster, President of AmCham Shanghai, gave the opening remarks and she noted AmCham Shanghai is one of the fastest growing AmChams in Asia. 

Steven Ganster of Technomic Asia gave the first speech.  My firm has worked on a number of matters with Technomic Asia (mostly with Kent Kedl, who is based in Shanghai) and we hold them in very high regard.  Steven gave an excellent speech on how when Chinese and Western companies compete for the same customers, Western companies usually lose.  Chinese companies simply have too many advantages in their relationships, their labor costs arising from their willingness to take a harder line with labor, and their ability to pay lower taxes.  Western companies typically have the advantage in access to finance and in more sophisticated management techniques. 

John Leary, Managing Partner of White & Case's Shanghai office spoke next.  My firm has worked with White & Case on a number of matters in Russia and we have always found them to be absolutely superb lawyers and Mr. Leary certainly did nothing to dispel that view.  His talk was entitled, "Recent Changes and Trends in PRC Law" and yet he managed to keep it light and interesting.  He started off with a good lawyer joke (note to self, use it the next time I speak).  He said he had asked his wife how to keep his presentation short, while still covering so much material.  His wife advised he should keep in mind he would not be able to bill anyone his normal hourly rate while presenting. 

John did a great job briefly highlighting recent trends in China's labor, intellectual property, tax, mergers & acquisitions, real estate, and dispute resolution laws. 

John anticipates China's draft labor law will become law this summer. John talked about how non-compete clauses in employment contracts are getting enforced in China and employers should consider these to prevent employees from taking intellectual property.  He also talked about how employees in China must have written contracts and on how it is difficult to fire them.  Most companies get around this by entering into short term contracts with their employees (maybe for a year or so) and then not renewing the contract if things do not work out.

John then talked about how China is considering changing its requirement that patents arising from research and development done in China must first be filed in China.  John also briefly discussed the Beijing "Silk Market" case where a landlord was found liable for having allowed counterfeit product to be sold in its buildings.   

John talked about how though foreign companies in China have a lower tax rate than Chinese domestic companies, tax compliance by Chinese companies is reputedly less.  John left open the question as to whether the new unified tax law will cause the Chinese government to take tax enforcement against domestic companies more seriously.

In discussing dispute resolution, John promoted using an offshore arbitration clause, preferably Hong Kong.  I asked John about his firm's success rate in getting foreign arbitration awards enforced in the Chinese courts and he said they have had a good success rate in converting those awards into Chinese judgments.  I found this interesting because co-bloggers Dan and Steve are always fighting over whether to include a Chinese arbitration clause (Steve's usual position) or a Hong Kong, Vancouver, or Singapore one (Dan's usual position).   

Unfortunately, I had to leave the conference early to participate in a bankruptcy conference at the Allen John law firm so this was all I got to hear.   

I shall return.