At least once a month, I get an email from an English teacher in China wanting to start a language consulting business or school in China. I have a form response that summarizes what it will likely take and likely cost for them to do so legally. Virtually none of them had any idea of the difficulties and costs in starting such businesses.

My law firm represents a good number of existing international schools in China and we are right now working on at least double the number of legal issues as usual for them. Today I saw a Shanghaiist post on “issues” being faced by Shanghai Rego International School. The post entitled, “Shanghai Rego International School now facing forced relocation,” details how the school is being forced to move as its facility is being taken over for a public school:

However an official surnamed Hua with the district’s Education Bureau said there were no safety issues but said the school probably will have to relocate because the bureau has decided not to lease land and facilities to it anymore.

Hua said the bureau signed a 10-year contract with the school in 2003 for its renting of the facilities, which will expire in January 2013. He said the facilities were built at that time to be a public school, but the area was not sufficiently populated to need such a school. The bureau instead leased the facility to the international school.

“But now a growing number of local residents living in the area are having trouble finding a school for their children, so we have decided that the facilities will be taken back when the contract ends and will be used as a public school,” said Hua.

He said the decision was made and announced with no possible alternatives, and the Shanghai Education Commission is now talking with the school over relocation issues.

Because we are right now in the midst of so much work for international schools in China, I hesitate to discuss even broadly the sorts of issues these schools face. But suffice it to say that international schools in China are more subject to the whim of governmental authorities than most foreign businesses and I am starting to think that the whims are shifting. I am hearing all sorts of explanations for this shift, ranging from the value of land to a concerted desire to make it tougher on foreigners staying in China.

What are you seeing out there with respect to the international schools in your area? Are Shanghai Rego’s issues a one-off or just one more sign of a broader trend?

  • Dan,
    Where is the problem here?
    They signed a 10 year lease, and the lease is up. Were it year 3 (of a ten year lease) then that would be a different story, but as it stands the government just gave them a 18 month warning. 17.5 months more than the average landlord in Shanghai
    Also, it should be noted that Minhang is one of Shanghai’s fastest districts with more than 2.5 million residents now (was 500,000 5 years ago), and there is nothing whimsical about the government in that district.
    Mayor Sun (now a vice mayor of Shanghai) is known to be one of the most progressive mayors in Shanghai, is himself a lawyer, and was once a law professor at GW.

  • MHB

    Dan, you are normally on the money with your examples and evidence, but this case smacks of opportunism – not suspicious in itself, and in this case quite laudable. Is there anything to suggest coherent action?
    International schools will typically be in residential areas, whereas I don’t imagine (nor do I know…) that other foreign businesses will be. Could this be relevant?
    You wrote about this recently, and it could well apply here – if a government official disappoints or crosses a local, it will come back around to bite him in the proverbial. If a government official disappoints a bunch of foreigners, well, hopefully he never need hear about it again!

  • Bob Walsh

    Yeah, it looks like the article cited should have been titled “Rego School Lease Ends, District Declines to Renew”, rather than make this sound like forced relocation. If Rego was on the ball, they might have entered into negotiations to renew quite some time ago, rather than let this be an unpleasant surprise.

  • Nathan Pope

    There is some majoryly incomplete information with regard to Rego’s lease. In 2003 they signed a lease for 189 Dongzha Road, which is the lease that ends in 2013….
    BUT… They built a new campus (almost twice the size of 189 Dongzha Road), just a five minute walk away at 159 Diannan Road… The new campus houses the primary school and the old campus houses the secondary school.
    The new campus at 159 Dianan Road has very few students, and the campus could easily house both primary and secondary schools… So I don’t think there is a story here… Rego will move the secondary school to the primary school campus, again the two campuses are literally a five minute walk apart. In a car it takes one minute.

  • Alec

    Hi Nathan, funny to see you here. I hope everything is well in San Fran. I’ve been following this Rego case – it intrigues me, and it sounds like you might an angle regarding what this kerfuffle is really all about.
    Why did the government refuse to give work visas for so many months? I heard than on Friday teachers were finally given their residence and work permits, but it was a major struggle that took something like 6-months of tourist visas. Is this a personal problem between the school management and the Shanghai Education Bureau? Something else?
    I heard that the land used by the school is not actually zoned for education (I-schools are forced to set up shop only in very certain locations, also) but for industrial use. Is this true? Is that the root of the problem – the land is more valuable as something else? If so I wonder if Shanghai’s falling land value (and the grinding to a halt of new developments) might actually save the school.
    Do you see the school surviving in the near-long term? Rego has a good reputation, and is particularly popular among the non English-French-German speaking expats in Shanghai, and some of those folk must have some serious clout with their consulates and businesses.

  • Shangaister

    Yup this article has overdone the drama. The lease was coming to an end. Nothing bad about this at all. The 18 month notice is a pretty good courtesy in fact. “Chinese landlord behaves nicely” shocker.

  • xinlao

    Without a law background but with an ear to the ground and an eye on the papers I also think it is a sign of things to come. Recent article about forcing foreign children into Chinese schools “international division” comes to mind.
    Rego is only the first. These problems started with the owners, continued with the gvmnt and end with the current prinicipal; and gives the current owners 18 months to “save” money.