China employment law guide
Want to know more about China’s employment laws? Buy the book.

One of the most important things you should know about China employment law is that employees have many rights that they cannot contract away. For an example of this, see China Employers: Pay Your Employees on Time to Avoid Lawsuits and Penalties. China employee working hours is another good example of this.

As I have written previously, most China employees can only work under China’s “standard working hours system,” and in most places in China, that means a 40-hour work week — 8 hours a day and 5 days a week. Many foreign employers dislike this system because it means any work done outside standard working hours is overtime and must be paid accordingly. China’s laws recognize this standard system is not practical for certain positions and for certain industries and it allows for two major exceptions, with one being the flexible working hours system. This system is somewhat similar to the salaried employee system in the United States in that it allows employees to work flexible hours without overtime.

China’s flexible hours system sounds good to foreign company employers, but they so often mess it up that it sometimes seems most would be better off were it not to exist at all. To get one or more of your employees in under the flexible working hours system, you must secure prior government approval and this can be a painful and frustrating process, even for those of us who do it all the time. The requirements for getting an employee under the flexible hours system (like pretty much everything else employee related in China) are localized and can change without notice. The local government decision on whether to grant a flexible hours exception rests with local employment officers and they have plenty of discretion and their interpretations of the law can vary. Making things worse, an approval is usually valid for only one year so you need to renew it every year, and the renewal process can be just as arduous as the initial application. Once any of our China employment lawyers gets an approval, we are always certain to send that same lawyer back for any subsequent approvals, figuring that we are not going to mess with what works.

Because of these difficulties, we are starting to see China employers come up with “creative” ways to get around this problem. For example, instead of seeking government approval before they designate the employees to work flexible hours or securing approvals for renewals when the validity periods are expiring, they enter into a “well-written” Chinese-language agreement with the employee that specifically states the employee will work flexible hours and any overtime pay will be dealt with accordingly. Bad idea. The validity of these sorts of agreements has been tested by China’s courts, and the employers have lost nearly every time. In a recent case in Fujian Province, an employer argued that the local law requiring prior government approval for a flexible hours system is not mandatory and because the employer and his employees had agreed to such a system of their own free will, their agreement did not violate any mandatory laws and should be respected. No surprise to anyone who knows China’s employment laws, but the court did not side with the employer and it instead ordered it to pay all overtime, plus penalties.

There are actually a few very limited circumstances under which employers do not need prior government approval before they can make an employee work flexible hours, but those exceptions vary by locale and they can change without notice as well. On top of this, we are aware of situations where the law says government approval is not required for certain positions but the local labor authorities nonetheless still mandate prior approval. Your outcome will ultimately come down to your locale, but our advice to clients is never to institute a flexible hours program without first getting sign off from the relevant authorities. Failing to do so can lead to lawsuits and penalties.

Even if you do everything right in securing relevant government approval, you also must then follow all the requirements of a flexible hours system and these too can be complicated and local. For example, in a case in Tianjin, an employer that obtained government approval to have an employee work under the flexible working hours system lost a lawsuit to an employee who worked 8 hours a day, 6 days a week for years without overtime. The court ruled that even though the employer had secured government approval for the employee to work flexible hours, because the employer made the employee report her attendance and work overtime as though she were still on a standard hours system, the laws on standard working hours must apply and the employer must pay this employee overtime pay for all past overtime work.

When it comes to China employment laws, you really need to get clear on what can be contracted away, and what cannot.

Towards that end, it is with great pride that I announce the recent publication of my book on China’s employment law, entitled, The China Employment Law Guide: What You Need to Know to Protect Your Company. The Kindle edition is already out and the softcover version will soon follow. I wrote this book intending it to be a quick and easy off the shelf reference for companies with employees in China. Please check it out and let me know what you think.

 

 

 

China negotiationsWay back in 2012, my good friend Andrew Hupert wrote a great book on negotiating with Chinese companies: The Fragile Bridge. And for the last five years, whenever anyone asks me what book they should read to learn more about how to negotiate with Chinese companies I always recommend The Fragile Bridge. Earlier this week, someone to whom I made this recommendation emailed me with the following:

Thanks for recommending The Fragile Bridge to me. Took me quite a while to get started with it but once I did, I couldn’t put it down. Hupert clearly knows how to handle Chinese companies and I appreciated how how he does not drone on for an extra 100 pages, as so many other others who write about China feel compelled to do. Any particular reason why you never recommended it on your blog?

Whoops. no particular reason other than oversight.

Here’s the thing, and somewhat in my defense: I hate writing book reviews. My father was an English professor and so I learned at an early age that good book reviews must consist of more than “loved it, buy it and you will too.” And yet writing much beyond that is a ton of work. Maybe worst of all, it requires reading a book slowly and taking notes, which contrasts with my style, which is to read books as quickly as possible with no note taking whatsoever.

When I tell people how tough I find writing book reviews, they always wonder why it would be any tougher than just writing a blog post. Most of my blog posts come fast to me because they mostly consist of my putting in writing what I tell clients as part of my work, or what I hear other China lawyers in my firm tell clients as part of their work. Or else it’s just me pulling from my own emails to clients or, better yet and easier still, my pulling emails from the other China attorneys in my firm to clients.

But writing a book review is real work for which there is no bill at the end. That’s what I call tough.

But I do agree that I should have reviewed Fragile Bridge a long time ago, so here goes.

Great book. Loved it. Uber-practical. If you will be negotiating with a Chinese company, you must buy it. Now!

But wait, there’s more. Amazon describes the book as follows, and I swear to you that its description is 100% spot on, and here it is;

Written by an American for Westerners negotiating in China, “The Fragile Bridge” dispenses with politically correct euphemisms and ivory tower pseudo-psychology. The Chinese want your technology, intellectual property and product designs. You want their markets, resources and labor. Knowing which 1,500 year-old philosopher uttered what esoteric phrase won’t help you safeguard your assets or keep your JV operating, but learning from the lessons of dozens of successful Westerners who have survived the China challenge just might. Andrew Hupert’s even-handed analysis uncovers the sources of conflict in Western-Sino negotiation and anticipates the trajectory that business disputes travel. “The Fragile Bridge” offers readers practical, insightful advice for avoiding, containing and managing China business conflicts of all shapes and sizes. Case studies and examples illustrate each observation. The book ends with a list of highly practical best practices that are appropriate for newcomers and “Old China Hands” alike.

How can you not want to read a book described as per the above? I particularly love the line about how “the Chinese want your technology, intellectual property and product designs,” because I’ve been known to start one of my China speeches with something like the following:

Big companies in China want to steal your IP. Small companies in China want to steal your IP. Government-owned companies want to steal it. Privately held companies want to steal it. And even that company that is run by someone who invited you to his daughter’s wedding—that company also wants to steal your IP. This is not a reason not to do business with Chinese companies, but it is a reason for you to be sure to do business the right way with those companies.

I gotta love an author who thinks like me.

Anyway, just buy the book.

 

China LawyersWe created a China Law Blog Group on LinkedIn to provide a spam-free forum for China networking, information and discussion. We are nearing 11,500 members and the number and — most importantly — the quality of our discussions continues to increase as well.

We have had some great discussions, as evidenced by their numbers (discussions occasionally get more than one hundred comments) and their substance. Our discussions range from the practical (“how do I open a China bank account” or ”what do I need to do to comply with China’s new work visa policies for foreigners” or “what are you hearing about China’s crackdown on xyz?”) to the ethereal (“when will China surpass the West in innovation?”)

The group’s diversity is its greatest strength. We have a large contingent of members who live and work in China and many who operate businesses there. Our LinkedIn Group also has many members who do business with China from the United States, Australia, Canada, Europe, Africa, the Middle East and from other countries within Asia. Many of our group members are China lawyers (both inside and outside China and both in-house and with private law firms) but the overwhelming majority are not. We have senior personnel from large and small companies and a whole host of junior personnel as well, again, both within China and outside China. We have professors and we have students of all levels. This mix helps inform, elevate and enlighten the discussions.

Perhaps of most importance is how we block anything and everything that resembles spam. We have become so proficient at this that virtually nobody even tries any more to inject spam into any of our discussions. Many of our members have commented on how much they appreciate our vigorous no-spam policy. I assure you that will never change or even moderate.

If you want to learn more about doing business in China or with China, if you want to discuss China law or business, or if you want to network with others doing China law or business, I urge you to check out our China Law Blog Group on LinkedIn and join up. The more people who do join our China Law Blog LinkedIn group, the better our discussions. Don’t be shy; click here and join us!

And if you are a Facebook person, we can accommodate you there as well and I urge you to check out our rapidly growing China Law Blog Facebook page. Our focus there is on anything and everything that is China relevant. Our goals with our Facebook page are to entertain and to educate and to highlight issues that for various reasons we cannot discuss elsewhere; our Facebook page most certainly does not shy away from controversy. It also most emphatically covers more than just China law and China business. We post on China politics and diplomacy, China culture and history, China travel and tourism, China food and fashion. We post on pretty much anything we find interesting that day. And we give a lot of rope to the comments and that means we sometimes (like just this morning) get complaints about them from our readers. But we are of the view that you are big kids and recognize that it is not our role to protect you from what others might say. We are rapidly approaching 17,000 “likes” of that page (and growing at approximately 1,000 a month) so so we must be doing something right. Anyway, please check out our Facebook page too, by clicking here.

And last and least, after a three year hiatus, I went back on Twitter and I even every so often post on there as well. Click here for that.

China lawyer China attorneyAmerican and occasionally European law students and recent law school graduates are always contacting our China lawyers to ask what they must do to become international lawyers focused on China law. My advice to them is usually a somewhat rambling dissertation on the need to build a solid legal foundation while constantly working on improving your Chinese language skills. I then talk about how almost every lawyer I know just fell into/morphed into their practice area after many years as a lawyer. I always get the sense this is exactly what these law students/young lawyers do not want to hear.

They want specifics and I am giving lectures on following one’s heart, foundations, basics, training, morphing, and luck. They want to become a China attorney tomorrow and I tell them how if they follow an unclear and difficult and convoluted path they might become one some day.

Here then are some specifics, some of which are my own ramblings and some of which were purloined and appropriated from others.

Career Paths 

Many international firms in mainland China seek attorneys with American or British law degrees and high level Chinese language skills, but for various reasons, it is difficult to enter the China legal market without previous experience in the United States or the UK.

It is important to note that Westerners generally cannot become licensed China lawyers; they can only become Foreign Representative Attorneys.  and there is a law requiring Foreign Representative Attorneys have at least two years’ experience in another jurisdiction before they can work in China. Many lawyers get around this by splitting their time between another jurisdiction (including Hong Kong) and China. If you spend 6 months + 1 day in the other jurisdiction and the rest of the year in China, that will count as a year in another jurisdiction. If you do that for two years, you are eligible to work in China as a Foreign Representative Attorney. You still cannot “practice” law in China, but you can work there.

Generally, the best way to do this is to spend your first few years practicing law at a major US London law firm and then go to China to practice for a couple more years. This way you bring an American or British legal education and the requisite high level law firm experience. Even if your Chinese is excellent, your added value to a law firm in China is your American/British legal background. If you go to China immediately after graduation you cut into what you can offer. It is important to note thought that the real key to increasing your value as a foreign lawyer doing China law is to be able to read and write in Chinese. Being able to order a beer or discuss the weather in Chinese is great as a tourist, but nearly meaningless as a new lawyer whose chief job is usually to research and analyze written laws and contracts.

On the other hand, there is something to be said for going to China right after law school. Ten years ago if you went immediately to China you would arguably be ending your legal career before it began. I know a ton of fine lawyers who went to Japan or to Korea or to China and spent decades in those countries and by doing so became virtually unemployable as lawyers in the United States. Globalization is changing this rapidly, but it is still a little risky and I frankly do not know the current situation well enough to advise anyone. I have heard though that if you don’t want to be a partner at a major law firm, going to China first is probably fine. However, if you are looking for an American legal career, It is probably still best to stay in the States for at least a couple of years after graduating law school.

Law Schools

Speaking of law school, one of the more common emails our China lawyers get comes from law students and potential law students, asking us what they should start doing now to prepare themselves for a career practicing China law. My advice on that is also probably a bit too Zen-like for their tastes, but here goes. Get into the best law school you can, not in China. Take as many corporate and intellectual property and private international law courses as you can. Get the best grades as you can. Travel as much as you can. Hone your Chinese language skills as much as you can. Hone whatever other foreign language skills you have as much as you can.

Lately, I have been getting many emails from people who are already working in China in non-lawyer jobs, asking about getting a law degree from an English language law school program tied in with a Chinese law school. My response to them is to ask what that degree will allow them to do once they complete it, because it is my understanding that it will NOT allow you to practice law in either China or the United States. If anyone believes I have this wrong or if anyone is aware of a country that does permit a graduate with one of these degrees to practice law, please let me know via a comment below. See also China “International” Law Schools???!!!!

           Requisite Traits

Practicing law tends to require certain traits. Practicing law in China or even with China also requires certain traits. Far too many people get into law when it is not suited for them and they end up unhappy. You should passionately want to become a lawyer or not bother. You should passionately want to become a China lawyer or not bother.

The book, China CEO: Voices of Experience from 20 International Business Leaders, lists the traits CEOs seek in their expat managers for China and these traits are pretty much the same traits needed to be a good international lawyer or a good China lawyer.  Here is the list, with my comments in italics:

  1. Technical and Corporate Expertise: Select people with a rock-solid professional background and an excellent knowledge of the company.In the legal arena, this means smart people who understand complex legal issues, no matter what the country.  
  2. International Expertise: A posting in China becomes vastly more manageable after an assignment either in an Asian location or another developing market, or both. The key here is that the person who has spent time in another country tends to be better equipped to deal with other countries, including those countries to which he or she has never been. I have seen this time and again with both lawyers and clients. We have many clients who when their business dried up in one country moved nearly effortlessly to another country. We also see domestic companies that simply cannot make the leap to go international at all, even when they should. What you learn in one country (but obviously not everything) will help you in another country.
  3. Multicultural Mindset:When selecting an executive for an overseas posting, look for someone with an adventurous spirit, a sense of humor, and an open mind. This also applies to lawyers.  n an article I wrote a long long time ago on doing business in emerging market countries, I wrote on how doing business in an emerging market means taking nothing for granted:

I have a mantra for my own legal work in these countries that translates well to the business world: ‘Assume nothing, but assume that you are assuming things without even realizing you are doing so.’”

Things will be different. Very different. Things you take for granted in your home country might not exist in the emerging market country. Things you take for granted in your home country might be the exact opposite in the emerging market country. Things you think will be totally different in the emerging market country may be exactly the same. Things you thought you knew about emerging market countries based on what you know from another emerging market country may be completely different in a neighboring country, or even in another region within the same country.

The principle, one more time: Keep an open mind, and assume nothing.

  1. Commitment to Learn: Learn from those around you. Listen to your employees, JV partners, clients, and customers. This is equally true for international lawyers. 
  2. Humility: Be humble and avoid using an authoritarian style. Influencing and coaching is the way to get the best out of your Chinese employees. Of course. This is also the way to get the best out of the lawyers in other countries with whom you will be working.
  3. Strength: Be unyielding in defending core corporate values and culture. In the legal context, this means doing things by the law, even if you see others around you not doing so. This also means always telling your clients the truth.
  4. Patience: Be patient; use a step-by-step approach in China, not a Big Bang approach. I will borrow again from my emerging markets article:

Exercise Extreme Patience.  This principle stems from the maxim that everything takes twice as long as you think it will. If it takes twice as long in the West, triple that in emerging market countries. You’ll go in both as a businessperson and a teacher — and in both roles, the learning curve of your partner will almost certainly take way more time to deal with than you think.

For example, many emerging market countries have a history where “bad business” meant “thinking long-term.” A year or two after the fall of Soviet communism, I was involved in a matter where an investor put $250,000 into a Russian joint venture. The business very quickly was making good money and all indicators pointed towards steadily increasing profitability. But, quite quickly, the Russian company stole the $250,000. Was it so irrational for him to think so short term in a country where the government and tax systems had such a history of unpredictability?

  1. Guanxi-BuildingBuild your guanxi not only internally (with subordinates, peers and superiors) but also externally with clients, suppliers and government officials). A strong guanxi network is a fundamental element of your success in China. As a lawyer, both you and your practice will benefit by your doing more than just staying in your office poring over law books. Get to know your clients, your fellow lawyers, good people in the industries in which you are working, and treat them with respect. This is basic good business for anyone. An international lawyer friend of mine (with a great international law blog) recently sent me a very popular and highly regarded book, The Go-Giver, Expanded Edition: A Little Story About a Powerful Business Idea, that expands on this in all (not just China) contexts. I highly recommend this book to anyone contemplating a career in law or in business. Lawyers who succeed widely generally work well with others. 
  2. Speed: Be flexible and quick. Stay well informed; the business environment in China is in a constant and rapid flux, probably much more so than in other markets. This is true of international law as well, and if one is going to practice in this area, one must enjoy and thrive on constant change and even constant uncertainty. You need to be prepared to work tirelessly just to keep up.

 

Are you Sure?

A few years ago, a law student emailed me a link to a Quora question and answer session on what it takes for someone to succeed in working for a company in China as a foreigner. The law student specifically referred to answers given by David Wolf and asked whether those things apply to China lawyers as well. They most certainly do.

The specific question on Quora was “What are the key skills needed to succeed working for a company in China as a foreigner?” David Wolf’s excellent answer shows as number one because the highest number (including a number of prominent China bloggers) voted it number one. Wolf’s answer was that “as someone who has hired on behalf of large and small companies here in China, I can tell you the kind of young foreigner who gets hired has most or all of the following: (my comments are in italics)

  1. Chinese language skills: Language is the key to culture, and if you don’t understand the culture here, you aren’t going to add much value, and you’ll be gone within 2-3 years. Sure, a lot of people speak English, and it is easy to operate in an English bubble in larger companies. But the better your Chinese and the better your appreciation for the culture, the better you’ll fit in. For lawyers, being able to read and write a language are more important than being able to speak it and law students need to realize this. Being able to order a beer in Chinese is great, but being able to read and analyze Section 308 of such and such code and being able to read a ten-page contract in Chinese in the same amount of time it would take you to read it in English is what law firms need.
  2. Communications skills: industry specific knowledge and skills can be learned. You need to come in with the clear ability to express yourself in both written and spoken form. Absolutely. Want to piss off a client?  Send them a long email giving them six options without making any recommendation. Want to make a client happy?  Send them an email clearly explaining and ranking their best three options.
  3. An ability to roll with the punches: operating in a cross-cultural environment is trying at the best of times, and at the worst of times would test the patience of a saint. If you are high-strung or expect things to work the way they’re supposed to all the time, don’t even get on the plane to come here. This is particularly true at smaller law firms and companies and this is a crucial element in my law firm’s hiring at all levels. One of our lawyers began with us as a legal assistant and we hired her for that position because she had great marks as a cocktail waitress at a Vegas casino. We figured if she could keep her cool while dealing with a bunch of drunk losers, she could keep her cool in a fast-paced office. We once hired a receptionist who had been the interface between a private school and the students’ parents because we figured if she could deal with parents who are wildly concerned with their kids, she could deal with clients who are wildly concerned about their legal matter. I love asking potential hires about their travels and I do so because I want to know if they like going to the same ski resort every year or prefer going to remote villages in Guatemala (which was true of another of our legal assistants). The person who treks to Guatemala in his or her spare time has learned to roll with the punches.
  4. A very clear idea of what you offer that is hard to find or is unobtainable from among your Chinese peers, and the ability to express that well. If you can’t tell me in 50 words or less what you have that I need but I can’t get from a fresh Tsinghua University graduate, you are wasting your time and mine. If a potential hire cannot pitch me on his or her skill-set, it is unlikely they will be able to instill confidence in our clients.
  5. Passion for the business that is so real that others can feel it walking into the room. If you interview with me and I think you have not spent hours poring over our website or that you are talking to me just because you want a job (as opposed to this job), you have no chance. I stretch this even further by wanting to see passion in other things as well. I want someone who shows passion for something and I do not care what it is. Passion translates. The last kind of person I want to hire (for a million reasons) is the person who just doesn’t seem to care about anything.
  6. Integrity: Like few other places on the planet, China will test your character and your ethics. If you do not know when or how to stick to your principles when the chips are down, you’re part of the problem. This is in many respects everything. The lawyer-client relationship is based on trust and it cannot work without it. 
  7. Excellent project management skills: This is something in fairly short supply among people coming out of school in China, and it is expected from expats. This is very important, but in law there is generally a high correlation between high grades and the ability to develop these skills.
  8. Creativity: I don’t mean Pixar-style creativity, but the ability to come up with new ideas, to not only think outside of the box but burn the box altogether. Far more important for the law than most law students realize, and more important in an international context than a domestic one.
  9. Last and by no means least, a demonstrated commitment to China: Most hiring decisions for China and Asia positions — even for multinational companies — are made on the ground here in the region. If anything, this is more the case now than it was a decade ago, as most firms have so expanded their operations in the region that the Asia HR function is managed separately. See number 5 above.

Go forth and prosper.

China Foreign PolicyForeign Policy Magazine just came out with an exceptionally clear-headed, exceptionally valuable article on the derivations/influences of China’s foreign policy, entitled (in part and when you see the full title you will probably understand why I shortened it) How China’s History Shapes its Policies Today.

I posted it on our China Law Blog Facebook page with the following lead-in:

Great article by some truly great people. Read it. Study it. This is the sort of article that could become seminal for understanding China foreign policy. Then read it again.

Not much more to say about it other than that if you have any interest at all in China foreign policy, in China’s place in the world, or even in China at all you need (yes need, not should) go read it. Now. Oh, okay, I cannot resist: Those who cannot remember the past are condemned to repeat it.

Your thoughts?

China IP LawyersOur China lawyers do the legal work on all sorts of transactions with China, ranging from relatively simply manufacturing contracts to purchase widgets to relatively complicated joint venture deals to technology licensing deals to mergers and acquisitions (involving both the purchasing of a Chinese company by a Western company to the purchasing of a Western company by a Chinese company). Nearly all of these deals have one thing in common: intellectual property. And on many (most?) of these deals, our lawyers will be far more skeptical of the intentions of the Chinese side than will our clients. We are perpetually concerned that the overriding goal of the Chinese side is to walk away with our client’s intellectual property without fairly compensating our client for that. That leads us to today’s question, which is one we are constantly asked in some form resembling the following: Do you really think XYZ Chinese company wants to steal our IP? To which the answer is pretty much invariably yes.

You can give all sorts of politically correct or politically incorrect answers as to why this is so, but it generally is. The answer I give is that Western companies want to steal your IP also, but because IP laws in the West are more developed and more likely to be enforced, their cost-benefit analysis is going to be different and so it will far less often make sense for them to try to steal your IP than it will for a Chinese company.

I was reminded of this ultra-common question today upon reading Mark Cohen’s always good China IPR Blog and his most recent post, entitled, Stealing IP from the Steel Sector. Mark’s post is about another article, Make the Foreign Serve China: How Foreign Science and Technology Helped China Dominate Global Metallurgical Industries, by Michael Komesaroff. Komesaroff nicely sums up China’s general thinking on IP with the following:

Chinese companies will infringe the proprietary technology of national champions as readily as they do to foreign competitors and the absence of an enforced intellectual property law accelerates diffusion of any new technology….with an endless supply of smart engineers and scientists, why pay for technology, something that you cannot touch, see, taste, or smell.

A reporter called me yesterday to check in on the “hot topic’ issues my firm’s China attorneys have been seeing lately. I told her of how my firm was getting a ton of matters involving Chinese companies claiming to want to invest in or buy out US technology companies, but in many instances, just using that claim as an excuse to “kick the tires” to see if there might be some way they can walk off our client’s technology for little to nothing. Just a more recent version of what Komesaroff describes in his article. For more on how Chinese companies have updated (but only slightly) their tactics of making off with Western IP and, more importantly, how to prevent that from happening to you, I urge you to check out the following.

Oh, and be careful out there.

China lawyersHardly a day goes by without someone asking one of the China lawyers at my firm for an English language source on Chinese law on one thing or another. Truth is there is a dearth of helpful articles and books on Chinese law, in large part because Chinese law changes so often and varies so much from city to city, both in actuality and in how it is enforced. On top of that, because our attorneys do virtually all of their legal research in Chinese (it is never good to read anything but the actual law as opposed to a translation) we are not even great people to ask.

But there is some help out there and I was reminded of this yesterday by a reader who sent me an email rightly touting this bibliography on Chinese law crafted by Knut Benjamin Pissler and Benjamin Julius Groth, both at the Max Planck Institute for Comparative and International Private Law. The bibliography is entitled, Bibliography of Academic Writings in the Field of Chinese Law in Western Languages in 2015, and though it has a decidedly academic tilt, it still makes for a good starting point for anyone looking to dive deeper into Chinese law.

The Abstract for this China law bibliography describes it as follows:

The bibliography aims to give readers an overview on articles in academic journals, contributions to edited volumes, monographs and textbooks published in English or German in the field of Chinese law published in 2015. Writings in other western languages could only partly be considered. Regarding relevant German-language literature, the issues 1 to 12 of the journal “Karlsruher Juristische Bibliographie” (KJB) of the year 2015 were screened for articles relating to Chinese Law. Simultaneously the classification scheme of the KJB was used as a model in this bibliography. Inside this classification scheme the titles of the contributions are listed in alphabetic order of the authors. Abbreviations are not utilized in order to facilitate the use of this bibliography by international readers. Concerning English-language literature we mainly focused on periodicals and books available at the library of the Max-Planck-Institute for Comparative and International Private Law (MPI) in Hamburg. The catalogue of the library of the MPI is available via the homepage of the institute (OPAC). Besides we scrutinized fee-charging databases like Westlaw, LexisNexis, Juris and Beck-Online for relevant articles.

Number of Pages in PDF File: 19

Keywords: Bibliography, Chinese law, 2015

JEL Classification: K00

I urge you give it a look-see.

 

China Lawyers

Commercial real estate company Jones Lang Lasalle (JLL) has come out with a ranking of cities worldwide by “momentum.” JLL researchers use 42 factors to evaluate world cities on the move and their rankings do at least somewhat jibe with the sense I have regarding the cities I know. Their ranking of the top 30 cities is as follows:

1 Bangalore
2 Ho Chi Minh City
3 Silicon Valley
4 Shanghai
5 Hyderabad
6 London
7 Austin
8 Hanoi
9 Boston
10 Nairobi
11 Dubai
12 Melbourne
13 Pune
14 New York
15 Beijing
16 Sydney
17 Paris
18 Chennai
19 Manila
20 Seattle
21 San Francisco
22 Shenzhen
23 Delhi
24 Raleigh-Durham
25 Mumbai
26 Hangzhou
27 Los Angeles
28 Dublin
29 Nanjing
30 Stockholm

So as you can see, Shanghai comes out on top among China cities at #4, Beijing clocks in at #15, Shenzhen at #22 and Nanjing at 29. I was a bit surprised not to see Shenzhen at the top of the China list, because without a doubt, our China lawyers have been seeing a greater increase of work from there than from any other city in China. See Shenzhen, China, 24/7, and the Internet of Things. But who are we to quibble.

What most struck me (but did not surprise me one bit) is how well Vietnam’s two largest cities did in this ranking, with both Ho Chi Minh and Hanoi in the top ten. Beyond China and Vietnam, India and the United States do best in the rankings overall, with India contributing two cities in the top ten (Bangalore at #1 and Hyderabad at #5) and four more cities ranked between 10 and 30. The United States has three cities in the top ten and an additional eight cities ranked between 10 and 30.

What are your thoughts regarding the above ranking?

Chinese CultureI just finished reading and heartily enjoying the book, Etiquette Guide to China: Know the rules that make th difference, by Boye Lafayette De Mente and Patrick Wallace. I read most of it on a flight back from Barcelona, Spain, my law firm’s European headquarters, and a city in which I have spent a fair amount of time and in a country where I have spent considerable time. Yet even on this only two day trip, I learned tons about both Catalonan/Barcelona personal and business culture.

In Barcelona, I gave a speech to an overwhelmingly European (mostly Catalan with some attendees from elsewhere in Spain) on how to protect your IP from China without any notes and on at least 3-4 occasions I realized that my descriptions of how foreign companies typically act in China was overly based mostly on how American companies act in China and only later did it become clear to me that some of what had said was less true of Catalan (and Spanish) companies. In other words, I would have benefitted from having known more about Catalan culture.

Though the book obviously calls itself an etiquette guide, I view it as more a cultural guide and becuase so much of it dealt with China business culture, I found it very helpful. This is a great book (indeed, an almost necessary book) for anyone new or relatively new to doing business in China. It also makes for an excellent refresher for China veterans.

Let me start by saying that I am not terribly good with etiquette anywhere. It’s not that I don’t think etiquette matters; it’s just that I’ve always believed that being respectful and polite and not condescending and not snarky go a long way. Etiquette, whatever that means, is, to me, more like icing on the cake.

Does this hold true for China? I think it does. I was in Shenzhen last month and while there I actually had a discussion with a China lawyer regarding the importance of etiquette in China versus the importance of etiquette in Korea. We both then had great fun in telling (and in listening) to our various business etiquette faux pas stories involving doing business in Korea and then we concurred that etiquette matters a lot less for doing business in China than it does in Korea. So even though both of us have had many more business  dealings with China in our careers, neither of us had any great China faux pas stories to tell.

Below is my favorite Korean faux pas story, which just seems to get better every year.

Many many years ago, I was representing a very large Korean company in a settlement negotiation with a very large American company. On the first day, the talks were tough, but going fairly well and at lunch time, the lead in-house lawyer for the Korean company invited the American side to join us for lunch. The Americans declined. We went to lunch (the Korean company representatives and me) and then negotiated the rest of the afternoon.

The next day, we made tremendous progress and a full settlement was completely in the bag when the lead in-house lawyer for the Korean company again invited the American side to join us for lunch. Again, however, the American side stressed the need to work through lunch.

So again, I went to lunch with my Korean client, but this lunch was very different from the previous day. My usually very light-hearted and sober client had a number of drinks during lunch and made clear early on that he was not in a joking mood. After lunch, we returned to negotiate and one of the more junior lawyers on the American side made some completely innocuous suggestion. I do not remember the suggestion, but for effect when I tell this story, I say that he suggested the agreement be signed in blue, not black — it really was nearly that inconsequential.

In response to the young lawyer’s comment, the lead in-house lawyer for the Korean company slammed his notebook shut and proclaimed that we were “done here” and instructed all of us to walk out. The Americans looked at me for an explanation and I had none.

Only a few weeks later did my client tell me what had transpired.

On the first day, he had invited the American company to lunch and they had turned him down in front of “his people.” The next day, the American company should have invited all of us to lunch but they didn’t. So in an incredibly magnanimous act, the lead in-house lawyer for the Korean company had invited them. Again though they declined, which made him lose tremendous face in front of “his people.”

in the end, we did eventually settle, but it took another month and a lot of lawyer time and a highly choreographed trip to Korea by the CEO of the big American company and all because of a declined invitation for lunch.

Something like this is a lot less likely to happen in China. Despite the importance of face, business practicalities tend to win out in China and had this same thing happened in China, I doubt it would have slowed down the settlement talks at all.

Though not knowing China’s etiquette rules are unlikely to destroy your business chances, it can hardly be disputed that knowing those rules can aid it. Knowing the etiquette rules on how to conduct business will  help you in doing business in China. And if you want to know the rules, you should buy and read Etiquette in China.

The parts and chapter titles of the book will tell you better about its content than I could so here you go:

Part I. The Middle Kingdom

  • The Origins of Chinese Etiquette
  • The New China
  • Cultural Influences on Chinese Etiquette

Part II. Minding Your Manners in China

  • Personal Etiquette in China
  • Chinese Meal and Celebrations

Part III. Doing Business in China

  • Foreigners and the Chinese Way of Doing Business
  • Cultural Influences in Chinese Business

Part IV. Negotiating In China

  • The Chinese Way of Negotiating
  • Preparing to Negotiate in China
  • What to Expect While Negotiating
  • Business Entertainment
  • When You Are Host in Your Own Country (this was my favorite chapter

Read the book, and no matter what your level of China cultural knowledge, I assure you that you will walk away with a better understanding of China after having done so.

Negotiating with Chinese companiesIn this series of posts I have been looking at themes explored by Lucian Pye in his work Chinese Commercial Negotiating Style. Pye concludes that the way most Sino-Foreign negotiations are conducted helps the Chinese side apply its preferred strategies and tactics. My first post looked at how Chinese companies tend to control the preliminaries during what I call the “courtship” phase. The second post considered what Pye says about the Chinese tendency to prefer agreements on generalities. In my third post I examined Pye on  specific Chinese negotiating tactics. In this final post I summarize Pye’s tips for negotiating with Chinese companies.

Take general principles seriously. According to Pye, the Chinese usually prefer to begin with agreement about general principles before moving to concrete items, while foreigners like to begin with specifics and avoid generalities. Agreement on generalities allows the Chinese to make headway by drawing subsequent negotiations back to the “spirit” of the agreement. If you follow the Chinese route it is imperative you decide ahead of time the precise general principles you are prepared to accept.

Avoid the indebtedness trap. Chinese negotiators often seek to put foreigners in a position where they will feel obligated or indebted. Pye says that foreign negotiators need to be aware of the obligations they may be accruing. They should be skeptical in the face of the “effusion of personal friendship” often used to elicit an acknowledgement of the indebtedness. See How NOT To Choose Your China Business Partner. And Why I Take Cabs.

Prevent exaggerated expectations. Exuberant Western sales techniques are often read to mean the foreigner is prepared to do more than they intend. Once the Chinese assume a relationship has been established they will genuinely count on generosity and flexibility from their partners. If the Chinese decline an offer of generosity in one instance, they may consider themselves entitled to ask for the same kind of generosity in future. Chinese “face-saving” can involve turning down initial offers but there is no loss of face in asking for help later.

Handle the shaming. When disappointed, Pye says, Chinese negotiators tend not to search for appropriate counter moves but attempt to shame the foreign party with moralistic appeals and denunciation. They believe that if the other party can be shamed into doing the “right” thing they will be grateful and not resentful. You can often satisfy the shaming tactic with symbolic responses.

Master the record. A Chinese negotiator will normally be completely knowledgeable about the deal history and will test the other side’s memory to advantage. What was previously discussed or settled may be contradicted in an attempt to take advantage of new negotiators or changed circumstances. There is a belief that foreigners are careless and deserve to be penalized if they make mistakes. Pye’s tip is that you keep an exact record of your negotiation history.

Control the damage. It will inevitably be necessary, at times, to adopt positions the Chinese may find offensive or that may violate their beliefs about how people with mutual interests should behave. Pye’s tip is to concentrate on limiting the damage and not engage in mutual recriminations, which will only convince the Chinese side that the foreign side is insecure. According to Pye, the Chinese have a strong need to publicize what they perceive as mistreatment. Avoid an aggressive defense at all cost. Better to pass something off as an unavoidable misunderstanding about which the Chinese side has the right to be upset.

Pye’s report was commissioned by the US Air Force in the early 1980s. As I said at the start of this series, though some of his political and economic observations are somewhat dated, I was nonetheless struck by his report’s enduring relevance and I now recommend it to anyone interested in doing business with China.