China SaaS lawyers
China SaaS. It’s complicated.

With the launch of the US-China trade war, it should go without saying that China is tough on foreign internet companies doing business in China. Foreign SaaS (Software as a Service) companies are on the front lines of China’s internet and the legalities of their operating in China are complicated and generally unfavorable.

Our China lawyers who focus on China’s internet typically send out some variant of the following email to foreign SaaS companies  to give them an initial lay of the China SaaS land:

 

The basic position of the PRC government regarding foreign SaaS is as follows :

1. Provision of SaaS services to Chinese nationals through a server maintained outside of China is not legal.

2. Storage of personal information gained during the processing of SaaS services on servers located outside of China is generally not legal.

3. The PRC enforces these above two rules in the following two ways:

a. Conversion of RMB for payment for offshore server SaaS services is not permitted.

b. The URL allowing contact to the offshore server is subject to being blocked. Use of a VPN to access a blocked server is illegal.

Unlike France and some other European countries, China does not typically seek to enforce its laws through extraterritorial action. 3 a. and b. are generally the only methods of enforcement used. However, these methods are very effective.

Many companies operate in this illegal realm, knowing they will likely not be pursued by the Chinese government in their home country. As long as they (the company and anyone who China might associate with the company) stay out of China, this attitude is probably rational. However, it is not usually possible to build a real business this way. But this “offshore server” approach is usually considered to acceptable by companies without real long-term interest in China.

To operate legally in China, a PRC based server is required and the arrangement requires licensing to a Chinese owned entity. This is the approach Microsoft and Apple use for their China Cloud/SaaS products. Setting up Cloud/SaaS operations in China with this sort of licensing approach is complex, but it is necessary and for that reason it has become very common.

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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.