Perspectives on Chinese Business and LawJust finished reading (most of) the book, Perspectives on Chinese Business and Law and I very much liked it.

This book lists four professors as its writers: one from Poland, one from Belgium, and two from China. More specifically, its authors are Dr Łukasz Gołota, Assistant Professor at the Institute of International Relations, Warsaw University (where I was a guest professor earlier this month!), Dr Jiaxiang Hu, Professor of Law at Shanghai Jiao Tong University, Dr Kim Van Der Borght, Professor of International Economic Law & Diplomacy at the Vrije Universiteit in Brussels, and Saisai Wang, Lecturer of Law at the Law School of the Shandong University of Finance and Economics. It also includes a number of additional authors who wrote or co-wrote a chapter.

I start out mentioning the authors because in some respects this is an academic book, but I nonetheless found it extremely helpful on practical Chinese legal issues that impact foreign companies doing business in China. The book consists of the following twelve chapters:

  1. Evolution of the Chinese Economic Model and Its International Implications
  2. Domestic Political and Economic System of China
  3. EU-China Economic and Trade Relations
  4. The Idea of “Law” in China: An Overview
  5. An Introduction to the Civil Procedure System
  6. Foreign Related Commercial Arbitration in China
  7. Contract Law
  8. Chinese Company Law
  9. Chinese Foreign Direct Investment Law
  10. Establishment of Overseas Branches of Chinese Companies in the EU
  11. Regulation of Financial Services in China
  12. Chinese Intellectual Property Rights

All of the chapters are well written and useful, but I found chapters 5-9 and 11-12 particularly helpful for foreign companies looking to do business in China. In fact, a number of these chapters were the clearest English language writing I’ve seen on their topics. Its Amazon blurb quite accurately describes what you can expect:

Perspectives on Chinese Business and Law contributes to the debate and understanding on China by offering insights and perspectives from both Chinese and European scholars on themes related to business and economic affairs. The current foreign trade and business-related legal framework of China are expressed along with certain historical and political analysis on China’s development.  This book offers different perspectives on China’s business and law. It aims to offer an introduction into both theoretical and practical aspects of China’s law on foreign related business affairs. This comprises economic and political background information, including China’s economic evolution and China-EU trade relations, in addition to more detailed information on selected subject areas important to foreign related business affairs in China, namely: commercial arbitration law; contract law; company law; IPR protection; financial law; foreign direct investment law; and also the establishment of overseas branches of Chinese companies in the EU.

I highly recommend this book to lawyers who represent companies that do business in or with China, to academics seeking a better understanding of Chinese law, and to anyone else seeking a high level understanding of Chinese law.

 

China IP lawyers

All you need do to assume Mark Cohen knows whereof he speaks on China IP and UC-China trade relations is read his bio. All you need do to know Mark Cohen knows whereof he speaks on China IP and US-China trade relations is to hear him speak (which I have done many times).

I mention this because I just finished reading a blog post Mark wrote today, entitled Trade and Peace on Earth: Part 1, and folks, this is as good as you will get in terms of analyzing what is going on between China and the US today, most particularly, what China is doing that might or might not assuage the United States.

I strongly recommend you read it.

International law

You know how when you buy a new car you all of a sudden see a ton of those cars on the road? I feel like I’m experiencing something similar with Michael Pillsbury. Starting about a week ago, a number of my firm’s lawyers (from both our international trade and international law groups) started mentioning “the importance” of Michael Pillsbury in determining how President Trump will negotiate with China and what terms he will accept from China in return for a trade deal.

Then all of a sudden I start seeing Michael Pillsbury everywhere, with the media pronouncing that he has President Trump’s ear on China and so what he thinks will be key. In The China hawk who captured Trump’s ‘very, very large brain, Politico highlighted Pillsbury’s crucial role and the New York Times did the same in A China Hawk Gains Prominence as Trump Confronts Xi on Trade.  Many articles on the G20 meeting highlight Pillsbury’s influence on the U.S.’s path with China.

Who then is Michael Pillsbury and what is his position on China? Pillsbury has a long and foreign policy record, with a long history of dealing with China. He played a large role in the United States’ initiating military and intelligence ties with China in the early 1980s. But it’s his 2016 book, The Hundred-Year Marathon: China’s Secret Strategy to Replace America as the Global Superpower, that catapulted him to the attention of China Hawks (whose ranks have soared in the last few years). In that book (which I just ordered but have not yet read), Pillsbury posits the following:

For more than forty years, the United States has played an indispensable role helping the Chinese government build a booming economy, develop its scientific and military capabilities, and take its place on the world stage, in the belief that China’s rise will bring us cooperation, diplomacy, and free trade. But what if the “China Dream” is to replace us, just as America replaced the British Empire, without firing a shot?

Based on interviews with Chinese defectors and newly declassified, previously undisclosed national security documents, The Hundred-Year Marathon reveals China’s secret strategy to supplant the United States as the world’s dominant power, and to do so by 2049, the one-hundredth anniversary of the founding of the People’s Republic. Michael Pillsbury, a fluent Mandarin speaker who has served in senior national security positions in the U.S. government since the days of Richard Nixon and Henry Kissinger, draws on his decades of contact with the “hawks” in China’s military and intelligence agencies and translates their documents, speeches, and books to show how the teachings of traditional Chinese statecraft underpin their actions. He offers an inside look at how the Chinese really view America and its leaders – as barbarians who will be the architects of their own demise.

Pillsbury also explains how the U.S. government has helped – sometimes unwittingly and sometimes deliberately – to make this “China Dream” come true, and he calls for the United States to implement a new, more competitive strategy toward China as it really is, and not as we might wish it to be. The Hundred-Year Marathon is a wake-up call as we face the greatest national security challenge of the twenty-first century.

Is Pillsbury right? If so, what does this mean for US-China trade negotiations and for the future of US-China relations? Or maybe the better question isn’t so much whether Pillsbury is right or wrong, but whether his views are now the views of the US government. And if that is the case, how will those views influence US-China foreign and trade policy (to the extent those two things have not become one and the same) going forward?

 

Best books on China businessOver the years we’ve often been asked by both our readers and our clients what books they should read “to better understand China.” And over the years we have reviewed a ton of books on China. Yet I for one am never quite sure how to answer the question so I do the lawyer thing and flip the question on the questioner by asking them what they want to get out of the book. Their answers tend to vary. Greatly.

Some want a “how to” on doing business on China. Some want a book that will help them avoid legal pitfalls. Some want a book that 2ill simply give them a better feel for China as a whole. So clearly there is no one right answer.

Well maybe there is. We looked at all the China books bought by readers of this blog through Amazon and eight of them seemed to dominate sales as compared to the rest. These eight books tend to share two things in common: they are all short and they all lean towards the practical/relevant. These are not for the most part deep-think books or books that will take you weeks to read. They are instead crisply written briefs with a specific purpose or goal. Most importantly, they are the books our own readers are choosing to read.

So without further ado, our readers’ eight most popular books chosen strictly on the numbers and in no particular order, along with my one sentence review of each.

 

 

China employment lawyer

China employment law is technical and local and nearly all foreign companies get it wrong. See China Employment Law: Local and Not So Simple. It is one of the most consistent and expensive problem areas for foreign companies doing business in China and it has become a massive growth area for our law firm. More than ever, China wants harmony. And don’t forget, China is a communist country. Combine these two and you have a country that badly wants to keep its workers happy, especially as compared to your run of the mill foreign company that competes with Chinese businesses.

If you have employees in China or you are thinking of having employees in China you should have at least a basic knowledge of what you must or should be doing as an employer in China. This book, for the low low price of less than $20 in paper form, gives that to you. It is also sold as a Kindle version for $9.99, but you really should spend the extra $10 to be able to have it in physical form in your office so that you and others can consult it easily whenever necessary. You can get this book at Amazon or at Barnes & Noble.

Disclaimer: This book is written by our lead China employment lawyer, Grace Yang and we get a cut of every sale.

Our typical attorney-client interaction on China employment laws usually goes something like this:

  1. Foreign employer company contacts one of the China lawyers at my firm after having terminated an employee and after that employee has either sued or threatened to sue, oftentimes over a technical legal violation by the foreign employer.
  2. One of our China employment lawyers looks at the case and determines the termination did not comply with China (or perhaps local) laws and the employee will almost certainly prevail in his or her claim. See China Employee Terminations: Don’t Get Lazy.
  3. We explain the above to the foreign company employer and we learn the company is violating China’s employment laws in various ways with all of its employees.
  4. The foreign company employer wants its violations excised.
  5. We then conduct an employer audit to determine what other employment problems need fixing. See China Employment Compliance and Audits: THE New Big Thing.
  6. The employer audit invariably generates a laundry list of employment problems that need fixing.
  7. We fix the employment law problems, one by one.

Nearly all foreign company employers have employment problems in China because Chinese employment laws are so complicated and so localized, because China is so tough on foreign employers, and because pretty much every employee in all of China fully understands the leverage they hold over the foreign employers.

The typical small to mid-sized foreign company goes into China with maybe one or two foreign employees and one or two Chinese employees, none of whom know anything about Chinese employment laws (on the local, regional or national level) and all of whom are focused on getting the business off the ground more than on complying with the letter of the multiple sets of China employment laws. On top of this, at this time, they are usually a tight-knit group of founding employees who view themselves as much as founders as they do employees and who all get along with each other and view their futures with the company as bright. But as the company grows, nobody realizes how important it is to grow out the company’s employment compliance as the company expands and even if they did, nobody in-house knows how to do it. And why spend money trying to complying with obscure employment laws when there has never been a problem with those laws?

But then a problem arises and a China employment attorney at my firm gets called — usually by someone high up in the U.S. or in Europe or in Australia. This person is often the head of HR, the CFO or the CEO, or the GC and they are trying to find out what is going on with HR in China and they are getting only vague or nonsensical answers from their people in China and they are starting to worry. They see the potential for big problems down the road and they want to nip those in the bud now.

Foreign companies with employees in China need to get on top of their China employment situations and stay there. China Employer audits are the way to go in most situations, but in the meantime and as a supplement, someone at your company needs to understand China employment law basics. Someone at your company needs to know enough to be able to spot your company’s China employment law issues before they escalate.

The China Employment Law Guide is the book for that and you really really really should buy it and put it on your shelf. And when I say put it on your shelf, I mean you should buy the softcover version (not the Kindle version) so you can literally put it on your shelf. You actually should get a couple copies and give them to anyone in your company who manages your China employees or plays any role in their hiring or their firing or their vacation time or…. This book is meant to be used for background and for reference and as a decision-making guide.

Just a little bit about Grace Yang, its author. Grace grew up in Beijing and excelled at and graduated from China’s best law school there — Beijing University. She then came to the United States and graduated from the University of Washington Law School where she again excelled. Grace is our firm’s lead China employment and labor lawyer and she is the lawyer at our firm to whom everyone else goes for China employment and labor law questions. Grace is a licensed U.S. lawyer (licensed in Washington and New York) and she splits her time between Seattle and Beijing.

Anyway, did I tell you that you should buy the book? Of course I did and you should. What though will you learn from this book? Among other things, you will learn the following:

  • The basics of China’s employment law rules
  • How to draft an employment agreement that works for your China locale
  • How to draft China employer rules and regulations (aka employee handbooks)
  • The other agreements you should consider for your China employees
  • Frequently contested issues, such as overtime, vacation days, commission payments, and leaves of absence
  • Employee terminations
  • HR audits
  • Most importantly, how to keep your company out of trouble
  • AND MUCH MORE!

So just click here and buy the book.

 

 

You did do that right?

China business basics

Every so often, one of our China lawyers will get an email from a blog reader asking for a recommendation of THE book to read to “better understand China” or “to get a better handle on China.” These requests often come 2-3 weeks before the person is heading off to China for the first time and they oftentimes mention wanting something that will give them a quick overview.

Amazingly enough, there are a plenty of really good, really short books that qualify, including the following three:

  1. Modern China: A Very Short Introduction,  By Rana Mitter. 168 pages. 2016. Oxford Univeristy Press. Mitter is a Professor of the History and Politics of Modern China and Director of the University China Centre at the University of Oxford, authored this book and it is an excellent short history on China. It does a great job of conveying an overall sense of China in an amazingly short time.
  2. The One Hour China Book (2017 Edition): Two Peking University Professors Explain All of China Business in Six Short Stories.  By Jeffrey Towson and Jonathan Woetzel. 152 pages. 2014. This book truly does take about an hour and in that time you will gain a pretty respectable sense of what is going on business-wise in China.
  3. China in the 21st Century: What Everyone Needs to Know. 192 pages. Jeffrey N. Wasserstrom and Maura Cunningham. Wasserstrom is a Professor of History at the University of California, Irvine and the Editor of the Journal of Asian Studies. Cunningham is the Diigital Media Manager of the Association for Asian Studies. This book is meant to be basic and it is, but it is a good a first book as can be found and it is not in any way simplistic.

Any (and all) of these three books would make for excellent reading on an airplane flight for those heading to China for the first time. The One Hour China Book is best if you are going to China for business, but it would be good to supplement that book with one or both of the other two. If you are going to China as a tourist or to teach English or to study, I recommend reading both Modern China and China in the 21st Century.

Any others?

Doing Business in Myanmar Burma

Robert Walsh, sometime Seattle resident and long-time friend of our law firm (we worked on a number of China deals together and we — Dan and Steve — met up with him on our last trip to Myanmar), has spent the last four years in Myanmar, where he operates a vibrant business consultancy. Robert is fluent in Chinese and Korean and, amazingly enough, Burmese (multiple dialects), having learned Burmese while working in the U.S. Embassy in Yangon many years ago.

Robert has been sending us email updates from Myanmar for some time and we post some of them on here. Back in 2014, it was Myanmar: Open For Business? and in 2013, it was Myanmar Foreign Investment. Difficult And Expensive, But Opportunities Are There. In our 2013 post I mentioned that my law firm had “been involved in a few Myanmar matters, but truth be told, Myanmar is a difficult place in which to do business and many of the companies going there are bigger companies mostly looking to get in now and make money later. In the last year.” Since that time, our Myanmar work has actually shrunk as interest in Myanmar by SMEs has greatly waned and their non-China Asia focus these days seems to be more on Thailand and Vietnam. Early last year, in A Report from Myanmar from an old China Hand I talked about how much had changed, due in large measure to the relaxation of sanctions.

Today’s post is on how optimism is waning as things just keep getting worse.

1. The electricity situation here is going to get worse before it gets better.

a. Foreign oil & gas companies are pulling out of their offshore blocks en masse. They had a requirement to drill or walk away, and they are walking away. Low gas prices drive part of it, but also the royalties schemes with the Burmese government are the other part. Prevailing wisdom is that they will return later when the blocks go up for bid again, and offer a lot less and drive a harder bargain with the Burmese government.

b. Several of the schemes for producing more electricity have hinged on gas coming in from offshore. The 2 gas turbine plants running are getting their gas for free from the government, from the Yadanar fields that have been in production since the 90’s.  But production is dropping in quantity and quality and Thai TPP has first call on it. 

c. The government has given a green light for companies to do LNG, but the only credible one is led by Total. We have already been approached by one group of unqualified Burmese rent seekers who have had a gas turbine project on the back burner for more than 4 years, who now say that they want to add a LNG gasification plant.  They are offering nothing more than a 60-acre parcel that they don’t seem to own yet, but want 20% equity in the thing.

d. Coal is what the IFC and world bank are pushing the government, but there is a lot of grassroots-level pushback. A lot of communities have suffered pollution from coal-burning cement plants, and there is concern for waterways as well. Still, a so-called “clean coal” plant would be 5-7 years in the making, and would also require importing all the coal, as there is no source of suitable coal in the entire country.  

e. All of this, and electricity demand is growing 15-20% year-on-year.  The government still subsidizes costs of electricity and consumers pay very little of the costs of delivery. Last year the costs of subsidies were north of $900 million, with $358 million of that for Rangoon Division alone.  The government will not grant a power purchase agreement (PPA) to any foreign or domestic provider that covers CAPEX and running costs, let alone allow for a decent return, so private power providers are staying away. Raising rates for the consumer to the point where costs of delivery are covered is regarded as political suicide.

f. With the above in mind, consensus is that it may be as late as 2025 before we see something positive in the electricity sector.


2. Politics in general. 

a. The consensus is that Burma’s political reforms plateaued more than a year ago and are in fact in a gentle backslide. Readers will note that National League for Democracy head Daw Aung San Suu Kyi (ASSK) has been stripped of a few honors, and is in fact held in some mild disdain by many outside the country. 

b. In her defense, the military still holds control of the key ministries of defense, home affairs, and borders.nationalities. I can tell you from long and painful experience that out in the provinces it’s still 1965, as all of the authorities at the state, district, township, all the way to the village level are still appointed by the military-led home affairs ministry. 

c. On the other hand, ASSK has been decidedly unwilling to weigh in on the racial strife in Rakhine state, and her attitude towards the various ethnic armed groups is pretty much “it’s my way or the highway”. As a result of her unwillingness to play a part the groups that have any combat power at all have taken to the field again. None want to sign the national ceasefire agreement until they get what they want. The only signatories to the agreement are groups that have not fired a shot in anger for decades. Still, some trouble has recently been brewing with signatories the Karen National Union, who are pissed at Burmese Army encroachment into territory that was agreed to be off-limits.



3. Everybody and his brother wants to build and operate special economic zones and industrial parks.

Here, there, and everywhere.  Even the Korean government Ministry of Land & Housing is doing a 600-acre park(KMIC/ Korean Myanmar Industrial Center) about 100 miles north of Rangoon, jointly with a Korean private company.

a. We cannot understand the drive for these parks, especially in areas where the roads and other infrastructure, -to say nothing of electrical power availability- are in general lacking.

b. A key thing, one I focus on whenever I talk to developers of these things is: “Which companies have already weighed in as tenants?”.  The answer is invariably “nobody yet”. 

c. A lot of the developers are either ignoring or worse yet, -ignorant- of certain facts about Burmese workers.  They are not highly mobile, like the hundreds of millions of Chinese who gravitate to Shenzhen and other Chinese megacities for work. My best guess is that 4/5th of these parks are sited in areas where labor is going to be a problem.

d. For the garment manufacturing sector, the lack of US GSP for textiles and garments has really slowed things up. Last week the government passed a daily minimum wage of MMK 4800 (USD $3.63), and the factory owners bitched a blue streak. 

4. When Trump tore up the TPP.
Many describe this action as “pressing pause on American plans for Asia”. Well, the Chinese have not pressed pause, but rather accelerated plans. Not too long after Trump’s inauguration ASSK spent time in Beijing getting initiated into resumption of Burma’s status as a Chinese client state.  

a. The Chinese are now everywhere in Burma, pursuing developments that are all rather land-intensive.  In addition to the Kyaukhpyu SEZ up on the NW coast, they are going after another 4-5 developments each over 5000 acres.  What they all have in common is a lack of focus on fundamentals.

b. For its part the Burmese government is overwhelmingly receptive to all of this, as the Chinese are looking at other big-ticket infrastructure things that no other donor government is looking at doing.

c. As an aside, the current Burmese government still does not issue sovereign debt. A lot of the ADB and other sovereign wealth fund loans have gone to private concerns like Yoma/FMI.

d. And of course the Chinese are in no way, shape, or form inclined to carp on Burma’s human rights situation.
e. I was on a 4-month project in Magway division last summer, and a cast o’1000’s of Sinopec people were all over Burma’s onshore oil patch doing seismic work. In another year parts of the division are likely to become a forest of drilling rigs.

5. FDI is flat, and declining.
But the Burmese do not seem to understand how to incentivize investment, because they are so bound to the cronies; they simply will not allow investment conditions that might conceivably afford a foreign company an advantage over locals. 

a. The only exception to the rule I can see is telecoms, with Ooredoo and Telenor getting licenses in early 2014. But those two companies were flummoxed to see the Japanese KDDI/Sumitomo step in and work with the legacy government MPT to revitalize what should have been a failing competitor. And more recently the Vietnamese Army VietTel paired with the Burmese Army UMEHL to form a 4th contender, MYTel/MecTel.  

b. Some sectors like mining still require foreign companies to take on local partners, most of whom offer little in the way of value. Still, in the border areas controlled by favored (and not-so-favored) ethnic armed groups, there’s not shortage of dirty smash & grab mining operations. Most are for gold, some for tin, others for antimony.

c. Oddly enough, the areas where completely level free market playing fields exist are the areas under government-granted autonomy to the various ethnic armed groups, e.g. DKBA, KNU, and the UWSA areas (as noted above).

d. As of a few weeks ago the US was waaaaaay down the DICA-published list of investment source countries. If you can get its website to kickstart itself, the Directorate of Investment and Company Administration is here.

e. Entertaining to read was the 2017 State IG report on AmEmbassy Rangoon. According to the IG report:

-There are now around 127 American direct hires assigned to the embassy, and an additional 388 or so as local hires/local nationals. I have no idea what they do all day. None whatsoever. Our prospects and prestige here have pretty much sunk that low; it’s possible that nobody in the Hitler’s Bunker-modeled embassy building knows this.

-The embassy has at least 71 leases for housing for which it pays at least $10.7 million a year. Just this number makes the embassy the single biggest American economic player in Burma. If all that is spent on office space for USAID and its contractors is figured in, we could be talking north of $100 million/year just for expatriate quality-of-life maintenance. Staggering. Naturally USAID’s contractors bill back all of that overhead, which is likely deducted from whatever was allocated for Burma aid. That would explain why I don’t see much evidence of USAID doing anything in the areas of Burma I work and know best.

-Puzzling is that the IG points out that 5 people in the embassy produce 5 different translated local media reports per day. I guess foreign service officers no longer read newspapers in the local language at the start of their work day. (The report does note that language training prior to assignment only enables our diplomats to engage in greetings and informal chit-chat) Go here for the whole thing.

6. We do indeed have an American Chamber of Commerce chapter here, but most members are local companies.
The chamber does not do a hell of a lot. The New Zealand and French chambers are very active and do a much better job of engagement. Still, American involvement in Burma’s economy is waaaaaaaay down the list, as reflected in the Myanmar Investment Committee’s monthly stats. China (of course), Korea, and Japan are the big hitters. In terms of American economic activity, Coca-Cola is the most visible.
a. We do have a Hard Rock Cafe now, started by a couple of Crony Princelings, but as they can’t seem to properly manage it, and are usually out of a lot of menu items, the place is not popular.
b. Other US brands here are Ford (RMA Group Thailand) and Chevy (AA Medical Group). Neither brand is exactly punching above its weight against used Toyota products and the Korean offerings. Nearly 2 million cars have gone on local roads since the last letter. The government is now wisely stipulating that cars coming in be less than 2 years old and be left-hand drive (the majority are Japanese used cars less than 7 years old, and right-hand drive).
-I bought the very first off the local assembly line Suzuki Super Carry Kei truck. The Japanese cleverly used the way-back machine to incorporate 1960’s design and technology which is dirt-simple and appropriate for Burmese countryside conditions. Electronic nothing, points and condenser, carburetor. $5700 delivered, with Rangoon city plates, vice triple that for a used truck from Japan.
 Burma Law Firm
c. Out in the sticks where I work, US farm machinery manufacturers have once again screwed the pooch by not sending in an “A Team”; they’d rather find a local dealer and half-assed support it. Kubota owns the market now, having figured out a way to offer financing to whole villages for a package of everything needed to plant and harvest rice. Older Burmese farmers have nostalgia for Ford and John Deere tractors, and every once in a while I run across the bones of one of these in out-of-the-way places.
-I had a major jade mining company looking for new heavy trucks; could not get any US maker on the plane to come for a meeting. That $57 million all-cash deal went to Komatsu. The buyer had been vetted for all sorts of US Treasury stuff, so that could not have been the problem.
d. As with China, we have KFC and Pizza Hut, franchised from YUM! by local moneybags Serge Pun’s FMI/Yoma. Both are popular but face stiff competition from Lotteria and other established local and foreign brands. FMI/Yoma spent awhile sorting out the supply chain, as YUM! actually has standards for what goes in their food.

7. Americans are leaving.
A few weeks ago we had American lawyer Eric Rose announce that he was throwing in the towel. He had been one of Burma’s biggest boosters, and carried a lot of water when it came to sanctions lifting. He will be missed.

As always, if any you should find yourself in Burma, I’d be more than happy to help.

China Lawyers
China Law Blog is getting “social.”

When we first started this blog we would fairly often get hundreds of comments on one post. With the changes in how so many of you actually see our posts and the importance of social media, those days are over. Or at least they have diversified.

As part of that diversification, we have ramped up what we do on social media as well. we started a China Law Blog Group on Linkedin to create a spam-free forum for China networking, information, and discussion. That group is always growing at it is now has more than 11,500 members and the number and quality of our discussions keep rising as well.

We have had some great discussions, as evidenced both by the numbers (we’ve had discussions with 50-100 comments) and on their substance. Our discussions range from the practical (“why is it so difficult to do business in China” or ”what do I need to do to get my Chinese counterparty to follow my contract) to the ethereal (“when will we know China is taking innovation seriously”).

The group has a large contingent of members who live and work and do business in China and a large contingent of members who do business with China from the United States, Australia, Canada, Europe, Africa, the Middle East and other countries in Asia. Some of our members are China lawyers, but the overwhelming majority are not. We have senior personnel (both China attorneys and executives) from large and small companies and a whole host of junior personnel as well. We have professors and we have students. These mixes help elevate, enliven, and enlighten the discussions.

What I think truly separates us from most (all?) of the other China groups on Linked, however, is how we block anything and everything that even smacks of spam. We have become so proficient at not allowing spam to see the light of day that hardly anyone even tries to sneak anything past us anymore.

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 in our group, the better the discussions. Click here and join us!

Our China Law Blog Facebook page also just keeps on growing and it now has more than 19,000 likes/followers. We use that page  to go a “bit wild” because there is no massive government there to restrain us. That page deals with China law, sure, but it also deals with politics, tourism, food and fashion, business, culture, language, and just about anything else China-related. Our goal with that page is to educate and entertain. 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 occasionally post there as well, especially to promote our own firm’s China and international events. Click here for that.

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.