Tom Orlik has a great article out in a recent edition of The Economist Intelligence Unit’s Business China [$10 to purchase]. The article, entitled, “Legal Obligations,” nicely summarizes China’s key recent law changes that will affect foreign businesses in China going forward. It, very rightly concludes that “fears for the worst may be overblown.”
The article focuses on five major legal changes:
1. China’s moving over to equal tax treatment of foreign and domestic companies. Orlik notes that “high technology and research-focused companies will continue to benefit from incentives, as will firms investing in China’s priority sectors, such as environmental conservation, or in the country’s most impoverished provinces.” and that “a grandfathering scheme further softens the blow by phasing in changes over a five-year period.”
2. China’s New Labor Law. As regular readers know, this is my “favorite.” Orlik thinks foreign companies will “undoubtedly” be the “main target” of this new law because they “are blessed with deep pockets.” He then quotes me as saying that the new law may actually give legitimate foreign companies a competitive edge:

Dan Harris, a partner at Seattle based international law firm Harris Bricken notes that for firms already operating above board in China, the costs of compliance will be limited. Some companies might even benefit as their less scrupulous competitors scramble to get in line.

For more on China’s new Labor Contract Law, check out the following:
— “China’s New Labor Law — It’s A Huge Deal. Huge I Tell You.
— “Power to the People
— “China’s New Labor Contract Law “(podcast interview with Steve Dickinson over at the China Business Network.)
— “China’s New Labor Law Gives SOME Employers The Jitters
3. China’s Anti-Monopoly Law. Due to become effective on August 1st, “authorities could very well use the Anti-Monopoly law to push back any foreign investor who might get in the way of their goal.” But it also has “welcome elements” in that it “brings together the patchwork consumer protection and competition laws that already exist into a single, more coherent package” and it may “pave the way for greater competition in energy, natural resources, telecoms, and other sectors currently dominated by government owned companies.”
For more on this new law, check out, “Meet China’s New M&A Policies. Same As The Old Policies.
4. New Foreign Direct Investment (FDI) Catalogue. Divides foreign investment into “encouraged,” “restricted” and “prohibited” sectors. “Local governments can approve foreign investment in the encouraged category without recourse to Beijing. For investments in the restricted or prohibited category the permission of Beijing is both required and routinely denied.” The new catalogue substantially restricts foreign investment in real estate and continues curbs on “foreign investment in publishing, media, and market and social research,” now expanded “to cover Internet publishing.” Also restricts “Investment in manufacturing solely for export, heavily polluting or energy-intensive industry.” It does, however, open various service sectors “wider to foreign investment, including logistics and outsourcing.
For more on China’s FDI policies, check out, “China FDI: Quality Not Quantity.
5. New Property Law. “Gives equal protection to public and private property” and affirms “that China’s long march towards a modern market economy continues. For more on China’s New Property Law, check out our four part series explaining the new law: Part I, Introduction, is here. Part II, General Principles, is here. Part III, Rules Of Real Property Ownership, is here. Part IV, Real Property Use Rights, is here.
I see the New Labor Contract Law as likely to have the most impact, simply because it applies to every business in China, be it foreign or domestic, large or small. It already constitutes a full employment act for lawyers.
Update: The article is now online (free) in Commonwealth Magazine,

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Dan Harris

I am a founder of Harris Bricken, an international law firm with lawyers in Los Angeles, Portland, San Francisco, Seattle, China and Spain.

I mostly represent companies doing business in emerging market countries. It has taken me many years to build my network and it takes constant communication and travel to maintain it. My work has been as varied as securing the release of two improperly held helicopters in Papua New Guinea, setting up a legal framework to move slag from Canada to Poland’s interior, overseeing hundreds of litigation and arbitration matters in Korea, helping someone avoid terrorism charges in Japan, and seizing fish product in China to collect on a debt.

I was named as one of only three Washington State Amazing Lawyers in International Law, I am AV rated by Martindale-Hubbell Law Directory (its highest rating), I am rated 10.0 by AVVO.com (its highest rating), and I am a SuperLawyer.

I am a frequent writer and public speaker on doing business in Asia and I constantly travel between the United States and Asia. I most commonly speak on China law issues and I am the lead writer of the award winning China Law Blog (www.chinalawblog.com). Forbes Magazine, Fortune Magazine, the Wall Street Journal, Investors Business Daily, Business Week, The National Law Journal, The Washington Post, The ABA Journal, The Economist, Newsweek, NPR, The New York Times and Inside Counsel have all interviewed me regarding various aspects of my international law practice.

I am licensed in Washington, Illinois, and Alaska.

In tandem with the international law team at my firm, I focus on setting up/registering companies overseas (via WFOEs, Rep Offices or Joint Ventures), drafting international contracts (NDAs, OEM Agreements, licensing, distribution, etc.), protecting IP (trademarks, trade secrets, copyrights and patents), and overseeing M&A transactions.