One of the things we as lawyers face in trying to register companies, trademarks, licensing agreements, etc., in China are what I call the “little rules.” Does a document need to be notarized? Does it need to be appostilled? Does it need to be consularized? And if so, how must that document be notarized, appostilled, or consularized? Must it show on every page that it was notarized, appostilled or consularized? Where on the page?
There is no one answer to any of these questions beyond saying that it varies. It can vary between locations and governmental bodies. It can vary between what was required yesterday and what will be required tomorrow. Heck, it can even vary between the Chinese bureaucrat who takes in your document at 9 am and another Chinese bureaucrat who takes in your document ten minutes later.
All this can be very frustrating. Even more so when the filing gets rejected for having failed to comply. When a Chinese agency rejects a document they usually just say something like “we cannot take this document.” Our job at that point is to find out why and to fix it as quickly as possible. Sound easy? It’s not.
Oftentimes, the Chinese government will demand something be in a certain form and the U.S. state or local authority will tell us that they cannot do it that way. We are then in a Catch-22 situation where we essentially have to negotiate between two governments to get a document accepted by China. Where we most often see this — believe it or not — is on something as “small-time” as whether a document must have a government seal on every page. Sometimes the Chinese government requires this and sometimes they do not. So our standard procedure is to seek it every time from U.S. governmental bodies. But oftentimes, they will refuse, insisting that is unnecessary and they just don’t do that. Much of the time, they are right and everything is fine, but sometimes the Chinese governmental body rejects the document, at which point we have to go back to the U.S. governmental body and explain what just happened and pretty much just beg them to do what the Chinese governmental body is mandating. These sorts of problems are most common when registering companies in China simply because that tends to be the most locally dependent and involve so many documents.
UPDATE: Someone I know who used to set up foreign companies in China sent me the following, obviously wanting to remain anonymous. I have taken her email and revised it a bit to protect anonymity and here it is. I am running it because I think it nicely conveys what dealing with the Chinese bureaucracy (any bureaucracy, really) can be like:
Agreed, Dan, it is locally dependent. Talking about entity registration, we would first go for “Shanghai? Where EXACTLY in Shanghai?”- List of requirements for documents can vary greatly sometimes just within the same city.
But it also a problem of agency, whether it is too small or less experienced. With so many districts and cities in China, it would be impossible for us to follow all the updates or changes in the bureaucrats’ and so it would be impossible to warn clients in advance.
As we can’t change the system, we just had to constantly adjust to it (with constant complaining, of course). For instance, I would participate in weekly meetings of our company’s project department on all the on document requirements they faced while applying to different district authorities. And with our life search for logic in China, we even sometimes dared to analyze what had caused such changes. Some would be reasonably caused by new notifications on some regulations (rarely). In other cases we would fail to find any logic (that’s when even my most experienced colleague who used to work in government, would go for “这是老师个人的问题”).
As our assistants would go meet with the authorities practically every day, they would know most of the bureaucrats and they would sometimes discuss what they would need to do to secure approvals. Whenever an agency would get someone new, we would immediately feel it, as some projects would start to enjoy unspent creativity in “little rules” making as new bureaucrats so often go for “No, we can’t accept it” so as not to “lose face” by saying “I’m not sure. Let me check it for you.”
All of this was definitely very frustrating and sometimes made it impossible for us to stick to our policy of making our clients sign the papers only once. We had a private joke response to our clients who would ask us to tell them how much longer it will take to register their company: “If it isn’t raining in the Ministry of Commerce, it will take ….”
I found the above to be completely accurate and I note that our response to how long it will take for the local authorities to get back to us regarding a WFOE registration is usually something like “two to four weeks, except when it isn’t.”