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Changing Your China Factory? Be Careful.

Posted in Basics of China Business Law, Legal News

Just read an article, Toy supplier sues maker in reshoring fight about an American toy maker’s lawsuit against its Chinese supplier. The article describes the lawsuit as being based largely on allegations that the Chinese supplier ceased providing the American company credit and delayed deliveries, all in an attempt to make it impossible for the American… Continue Reading

China Law For Foreign Companies Doing Business In China. It’s Real.

Posted in Basics of China Business Law, Legal News

Pretty much since we started this blog, we have written posts that essentially set forth the following mantra: China has laws. China increasingly is enforcing those laws, against both domestic companies and foreign companies operating in China. Probably more against foreign companies operating in China than against domestic companies. You are entitled to complain about… Continue Reading

China Non-Competes. Oh, Oh, The Price You’ll Pay

Posted in Legal News

A Non-Compete Agreement is a contract where one party agrees not to compete with the other. These agreements reduce the likelihood of someone using information you provide them to compete against you. Non-compete agreements are fairly common between Western companies and their more important employees and it is common for those Western companies to want similar… Continue Reading

Identifying Your China Risk Factors

Posted in China Business, Legal News

China is in the midst of what appears to be a concerted government crackdown against foreign companies doing business in China. This has led many of our clients to ask themselves (and our China lawyers): “Are we at risk, and if so, how much risk?” Our quick answer is always “yes.  Hard to say.” The… Continue Reading

China Product Development Contracts: The Questions We Ask

Posted in Basics of China Business Law, Legal News

We often write on how foreign companies outsourcing their product manufacturing to China need an NNN Agreement (in Chinese), an OEM Agreement (in Chinese), and their trademarks registered in China. For most companies seeking to manufacture product in China, those three are enough. But for those foreign companies that do not have a finished product ready for manufacturing, a fourth… Continue Reading

China Compliance: The Mooncake Version

Posted in Basics of China Business Law, Legal News

The Mid-Autumn Festival is coming and mooncakes will soon be given to Chinese family, friends, and colleagues to demonstrate appreciation for these individuals’ generosity throughout the year. Most will exchange delicious mooncakes during the Mid-Autumn Festival with the purest of intentions. However, the holiday also provides an opportunity for individuals with less admirable intentions to… Continue Reading

China Employee Probation: Don’t Let It Slip Away

Posted in Basics of China Business Law, Legal News

In China, employment contracts for new employees often include a probation period  (试用期) designed to give the employer (mostly) and the employee time to test each other out. Generally speaking, the longer the initial employment term, the longer the probation period may be. However, the length of the probation period is not without limitation. Under… Continue Reading

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… Continue Reading

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… Continue Reading

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… Continue Reading

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… Continue Reading

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… Continue Reading

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… Continue Reading

China Contracts and the Unknown Counterparty

Posted in Basics of China Business Law, Legal News

Whenever one of our China lawyers drafts an agreement for a client doing business in China, one of the first things we ask is the identity of the Chinese counterparty. It’s a deceptively simple question. The typical Chinese manufacturer (for example) is composed of multiple entities, with complicated lines of ownership. One entity may run… Continue Reading

China’s SaaS Market: WFOEs Need Not Apply

Posted in Basics of China Business Law, Legal News

A major trend in the business software business is provision of software not through installation on a customer’s computer but rather through online access using the Internet. This approach is known as software as a service (SaaS). Though SaaS is a major trend in the U.S. and Europe, SaaS in China by a foreign company… Continue Reading

China’s Forty Hour Work Week Is Mandatory. Except When It’s Not. Part III.

Posted in Basics of China Business Law, Legal News

In parts one and two of this series, I wrote about the “flexible” working hours system as an exception to China’s standard working hours system. China’s labor law and relevant regulations also provide for a second exception: the “comprehensive” working hours system. The latter system applies to three categories of employees who work longer hours… Continue Reading