And we couldn’t be more pleased.

The ABA Journal is the magazine of the American Bar Association.  The American Bar Association is by far the leading/most prestigious bar association in North America.

And yet, there we are, just named to the ABA Journal’s Blawg Hall of Fame, and in there with a star-studded roster of 20 other legal blogs that have been and still are at the top of the blogging game. And thanks to our blog title starting with a “C” for China, rather than a “Z” for Zimbabwe, we are at number two on the list.

In all seriousness, this is quite an honor and one we do not take lightly.

We started this blog nearly eight years ago, on January 5, 2006, with an introductory post explaining what we would be seeking to achieve.  We were young(er) then and a helluva (sorry for that word) more idealistic then:

Why are we doing this?

What exactly will we be doing?

There are more than 4 million blogs. Many of these are about China, including some very good ones. Some of our favorites include Talk Talk China and Simon World for general China information, The China Stock Blog for Chinese stock market information, China Tech Stories for information regarding China’s technology sector, and Journey Around China for travel information.  [3-6-2012 Update: None of these blogs still exist so we removed the links]

There is even a superb Chinese law blog, The Chinese Law Prof Blog, but it has a distinctly academic bent and we will not.

We will be discussing the practical aspects of Chinese law and how it impacts business there. We will be telling you about what works and what does not and what you as a businessperson can do to use the law to your advantage. Our aim is to assist businesses already in China or planning to go into China, not to break new ground in legal theory or policy. We want to start a conversation with, for and about the person who wants to know “what is what” in China and the practical aspects of starting and growing a business in or involved with China.

We are not writing for those who want to know more about Section (A)viii of a particular piece of Chinese legislation or the history of that act or the policy reasons behind it. Our site is not focused on the legal scholar.

We want to initiate a discussion regarding the changing laws in China. We will constantly be challenging the various misconceptions the West has about law in China, including that the law in China does not really matter or that guanxi can supplant it.

We will provide information to those who conduct business with or in China as to how they can use the law as both a shield and as a sword. We will give you our insights to achieve practical solutions, while doing our best to entertain.

We know lawyers are not popular, and though we are ourselves really quite likable, we recognize the need to avoid those things that incite lawyer hatred. In other words, we will strive to avoid legal jargon and namby-pamby language that attempts to camouflage our views or to avoid controversy.

We want this blog to be a place for conversation and even controversy. We expect many of you will disagree with us much of the time and we do not care. We will always strive to avoid boring you or being unwilling to take a stand. We are not going to be afraid of being wrong — in fact, we want you to tell us when and how we are wrong. If you want “lawyer language” or long strings of caveats, you are going to have to pay exorbitant legal fees to get that elsewhere.

Though our focus will be on the interaction of law and business in China, we most certainly will be personalizing this page with our own experiences. We will tell you more than just that the law is this and this is what needs to be done to comply. We will discuss how the laws as written may say one thing, but our experience dictates something else. We will tell you when you need to do more than just follow the law to succeed and we will set out exactly what that something else is. We will estimate the chances for success if one does one thing as opposed to another. You will hear what we have done to succeed for ourselves and for our clients in China and you will hear about where we failed. We will regale you with stories about the Chinese lawyers with whom we work, the foreign and Chinese businesspeople with whom we deal, and even the places we go. There will be times where our lawyer ethical rules will make us unable to name names, but we will always work to tell the full story.

In addition to our discussions regarding what we are seeing on the ground in China, we will post articles and postings from elsewhere, to which we will, when appropriate, add our own comments. We will also post events, like seminars, conferences and trade shows, that we believe will advance our readers’ grasp of China law and business.

It has become a blog cliché to implore readers for their input, but it is so important we must join the crowd on this. We do not purport to know everything about Chinese law. That is impossible.  China is anything but monolithic and the differences in the legal situations between the various regions are no less pronounced than the cultural differences.

Our strengths are in forming companies in China, in drafting international contracts with Chinese companies (in English and in Chinese), in intellectual property protection, and in litigation. We welcome your comments, suggestions, and ideas on any area of law relating to conducting business in China.

In plain language, we ask that you write us early and often. We will review your comments before we post them, but that does NOT mean you should not criticize us or disagree with us. Our review will be to filter out “comment spam” and comments that are without substance and/or are personally abusive. We want to encourage a high level of discussion but we will not ban or delete your comments just because you come after us — at least not the first few times.

So why are we doing this? The short answer to this initial question is that we are doing this to — in our own small way — advance the dialogue regarding Chinese law and business.

Since that time, our goals have, if anything, become more circumspect and more pedestrian.  At this point, we merely seek to be interesting and to — still in our small way — help Western companies doing business in China.

According to Blog Rank, we have the best overall statistics (mostly a combination of various readership and citing criteria) of any law blog and according to Avvo, we are the fourth (really the third though since the allegedly most read one is Avvo itself, not just its blog) most read law blog.In the 2881 days since our inception, we have written 3,199 posts (counting this one), which is a hair over one a day.  We have received 26,599 comments, which equals approximately 8.5 comments per post.

We have categorized our posts as follows:

  • China Business   1381
  • Legal News 1,133
  • Recommended Reading 608
  • Events 183
  • China Travel 93
  • Basics of China Business Law   90
  • Good People 80
  • China Film Industry 39
1,243 of our posts have ended by asking “what do you think?”  Our first post to ask that was in May, 2006.  257 of our posts ended by asking “what are you seeing out there?”

The following are our top five posts in terms of readers comments

Though our readership has increased every single year since our inception, the number of comments we receive has, unfortunately, declined.  We attribute this mostly to the greatly increased use of RSS readers.

But our numbers really tell only a small fraction of the story.  We (and by we here, I am talking about myself, Dan Harris, and my co-blogger Steve Dickinson) remain in awe at the friends and business relations our doing this blog has brought us.  And we are sincerely and eternally grateful for that.

But if I had to mention the one thing that saddens me most, it would be the number of great China blogs (many written by my friends) that are no longer extant.  I would be lying if I were to claim that our own blogging has not suffered from their absence.

So where do we go from here?  Where should we go from here?  Honestly, at this point, our plan is simply to keep doing what we have always done as it seems to still be working.  Just as we promised in our very first post, we will keep seeking to “give you our insights to achieve practical solutions, while doing our best to entertain.”

What do you think?  What are you seeing out there?

We still really really want to know.

The Compliance in China blog has a really interesting and informative post, entitled An Incriminating Board Decision of D&B in Violation of Chinese Privacy Law.  The post is on a recent China criminal case against Dun & Bradstreet China subsidiary (presumably a WFOE) Shanghai Roadway D&B Marketing Services and key personnel with that company.  The post is interesting because it highlights how risky it can be to operate illegally in China and because it nicely sets out what it takes to criminally prosecute corporate officials in China.

Most importantly, it teaches some key lessons about doing business in China.

As a bit of a sidelight, I also have to admit that I like the post because a few years ago when a US company came to us with plans to run a “D&B type credit reporting agency in China” my law firm was adamant about how we doing so would violate China’s laws and that we would have no part in it.  To our client’s credit (pun intended) it decided against doing business in China.

The Compliance in China blog relayed the following regarding the Shanghai Roadway D&B Marketing Case :

  • Shanghai’s prosecutor charged Shanghai Roadway D&B Marketing Services Co., Ltd. with illegally obtaining private information on Chinese citizens.  The Chinese press reported that the private information included personal data (income, job titles and addresses) of 150 million Chinese citizens.
  • The Shanghai Zhabei District Court found Roadway guilty of illegally purchasing personal information of Chinese citizens and it fined Roadway around USD $160,500.
  • Because this crime was allegedly committed by an entity and not an individual, Chinese law imposes responsibility for the entity’s crime on “the  responsible persons who are directly in charge” and on “the other persons who are directly responsible”.
  • Because intent is an element of the crime of illegally obtaining private information of Chinese citizens, the prosecutor could not obtain convictions against individual Roadway employees without proving that they committed the crime intentionally.
  • Four Roadway employees allegedly involved with the buying of information were convicted and they were sentenced to up to two years in jail.

Here’s the kicker:  Two of the four eventually convicted Roadway employees heard about a Beijing criminal case involving the purchasing of private information and they mentioned that case to the two other Roadway employees and they also consulted with Roadway’s lawyer about whether those purchases were legal or not.  The lawyer did not tell them “yes or no” regarding legality.  He instead proposed that Roadway change the title of their purchase contracts from “Contract for Purchasing Information and Data” to “Contract on the Advice and Consultation for Commercial Data,” as though that would in some way help. In light of the lawyer’s advice, Roadway continued purchasing the private data and that decision became “perfect incriminating evidence to prove that Roadway and the other four accused individuals intentionally committed the crime of breaching privacy.”

There are countless takeaways from this, including the following:

  1. First is that calling your table a chair not only does not make it a chair, it also will make anyone who sees the document in which you called the table a chair very suspicious that you were trying to hide the fact that you had a table.  We always tell our clients that if what they are doing is legal, they should have no trouble being upfront about it and if they do have trouble being upfront about it, then they really need to decide whether they really should be doing it.
  2. Second is that you want a lawyer who is going to tell you what the law is and not just what he or she thinks you want to hear.
  3. Third is that operating illegally in China is a very bad idea.  Like jail time bad.


I am always getting emails asking for the English language version of this or that Chinese law.  My usual response is to say that I do not know where to find English language versions of Chinese laws because we do all of our research in Chinese.

But today I was reminded of an excellent Chinese legal research guide that “resides” right here in my back yard.  The guide is put out by the University of Washington’s Gallagher Law Library, and it is really quite comprehensive and up to date — it was last updated about a month ago.

If you wish to conduct legal research in English on China law, I am not aware of a better place to start than the University of Washington’s China Legal Research Guide.

What do you think?

Yesterday, at lunch, a couple of lawyers and I were discussing choice of law provisions.  I know that makes us geeks, but what can I say?  The discussion started when I talked of how I had been receiving an increasing number of “draft contracts” that called for applying “China and US law” to any dispute.  I told of how I had recently taken it upon myself to ask the client what that meant and of how no client could tell me.  Frankly, these provisions make no sense at all.  What does it even mean to apply two country’s laws at the same time?  What if there is a conflict between the two laws?  Is the court supposed to just pick one or try to merge them into one?  The bottom line is that putting this sort of choice of law provision in your China contract will only increase ambiguity and with it your costs.

We then talked of how we are seeing another recent trend, which is to provide that if the American company sues the Chinese company, it can sue in a US Court with US law applying, but if the Chinese company sues the American company, it can sue in a Chinese Court with Chinese law applying.  These provisions sometimes make sense, but if the Chinese company does not have assets in the United States, there usually is no point in suing there.  See Suing Chinese Companies In US Courts. The Pros And The Cons.  The other issue with this sort of choice of law provision is that it makes drafting the contract more complicated and expensive because the lawyer doing the drafting most figure out the laws of two countries (not just one) and then draft accordingly.

We then discussed our pet peeve: the contract that calls for disputes to be resolved in a Chinese Court but then calls for application of US law, or vice-versa.  The subset of this is arbitration in China in Chinese, under US Law or the opposite.  These sort of choice of law provision generate uncertainty and added costs.  Is a Chinese Court really going to enforce US law?  What US law?  US Federal law or the law of the US State with the most contacts or the law of the US State from where the US company has its head office or the law of the US State where it is incorporated?  And how will the Chinese Court familiarize itself with US Law?  And if it were to apply it, what would it even look like?  We have heard of Chinese Courts literally throwing cases out because they provide for application of US Law.

We recommend dancing with the one that brung ya.  By that we mean that if your dispute is going to be resolved in a Chinese Court or before a China-based arbitral body, it will almost always make sense for you to go with Chinese law in your contract.  And the converse is true if your disputes will be in a US Court or before a US arbitral body.

Any questions?

The number of American law students who speak Chinese is increasing.  The number of American law students who can read Chinese is increasing as well, though that number is considerably less than those who can speak it.  The number of American law students who can read Chinese legal documents with anything approaching their ability to read those documents in English is exceedingly small.

So how does someone make the leap from being able to read general interest publications in Chinese to being able to read legal documents in Chinese?  I am constantly being asked this question and my answer is usually that they should try to take a legal Chinese course at their law school if it has one or otherwise, just learn Chinese legal terminology on the job.  They invariably then ask me if I can recommend a book to them and I would invariably say no.

Until now. Until China Law Reader.  China Law Reader is written by Lawrence Foster, a Professor of Law at the University of Hawaii, Tiffany Yajima a licensed lawyer who was formerly with AmCham in Shanghai, and Yan Lin, a Professor of Law at Jiaotong University in Shanghai. In its introduction, China Law Reader describes its purpose and its ideal reader as follows:

The primary purpose of the CLR is to introduce you to the language of Chinese law.  The ideal user is someone who has completed at least two years of Chinese language study and is now ready to read actual law-related Chinese language texts in order to learn the specialized language of Chinese law.

I completely agree.  If you already are able to read Chinese fairly well and you are going to be working with legal text, get the book.  Now.




A few weeks ago, the China Law internet and listserve (yes, we lawyer-nerds still have a China Law listserve) was abuzz with an article on In-N-Out-Burger’s China trademark troubles. Surprisingly, the article was written by a just graduated law student.  I contacted that recent law school grad to request that he do a shortened version for our blog and he graciously agreed. The law grad is Bradley Sova and his vitals are as follows:

Bradley Sova graduated magna cum laude from Truman State University with a degree in Political Science and Chinese Studies. After completing additional language study at Tsinghua University, he earned his law degree from the William S. Richardson School of Law. In law school, Bradley completed extensive coursework on Chinese and international law, served on the board of the Asian-Pacific Law & Policy Journal, completed a semester at Tsinghua University School of Law, and worked for multiple Chinese law firms and international organizations. Bradley is currently preparing for the California bar exam and he hopes to work in China-related commercial law or international arbitration. His full paper on the issues discussed below can be found here and I urge you-all to read it.

Here’s Bradley’s blog post:

In late 2011, burger advertisements from an unnamed source sprang up in Shanghai promoting Double-Double, Animal Style, and Protein Style burgers, all of which are well-known staples of the West coast fast food legend, In-N-Out Burger. The ads, however, were not from In-N-Out, but were posted by a new company called CaliBurger, which had registered these names as trademarks in China and in several other Asian and Eastern European countries. CaliBurger’s restaurant design and business model also closely imitated the American chain.

Although In-N-Out was able to use CaliBurger’s corporate registration in California as a toehold to bring a Lanham Act claim in the United States, this toehold does not appear have given In-N-Out too much leverage. The two parties ultimately reached a confidential settlement, with CaliBurger slightly altering its burger names and décor and In-N-Out presumably paying CaliBurger a decent settlement to retrieve the trademarks out from under its Chinese doppelgänger. CaliBurger continues to operate in Shanghai and Guangzhou and recently signed franchise agreements for locations in Hong Kong and the Philippines. For its part, In-N-Out has been more vigilant in Asia, conducting multiple promotional activities throughout the region since its dust up with CaliBurger.

Trademark squatting is common in China, and American fast food brands have been fertile ground for Chinese copycats, as those who have seen places like Starbox Coffee or Pizza Huh can confirm. As such, it is easy to write this dispute off as yet another squatting squabble where an American company was forced to buy its American trademark names back in China. There are, however, several elements that should cause American brand owners to consider registering trademarks in China, even if they never plan to go there.

Like many companies facing Chinese copiers, In-N-Out had no presence in China nor any immediate plans to enter the Chinese market. Indeed, despite the pleas of many homesick Californians, In-N-Out has never ventured to the East Coast. Yet, In-N-Out ruthlessly pursued CaliBurger and was ultimately willing to pay to secure the Chinese burger trademarks. Its reasons for doing so reveal why Chinese trademark registration in China is important, even for businesses that may never end up doing business in China.

In-N-Out has limited its growth to protect its supply chains, customer loyalty, and, most importantly, its brand reputation. This is why In-N-Out has never left the American west despite over forty years of success and a cult-like following. CaliBurger, on the other hand, had no such quibbles about rapid expansion. Although expectations have since cooled, CaliBurger’s initial plans called for hundreds of locations in China and franchises in almost a dozen other countries. More than the trademarks themselves, the threat to its brand and paradigm that roused In-N-Out to confront CaliBurger. Like any zealous brand owner, In-N-Out could not allow confusion in China and elsewhere to tarnish its meticulously built identity.

Companies without plans in China should also understand the threat that judicious use of Chinese law can pose, especially in the hands of a savvy entity such as CaliBurger. The perception that Chinese IP law cannot be used effectively is wrong and In-N-Out’s dispute with CaliBurger shows that the exact opposite is true: with proper knowledge, China’s IP system can be used very effectively — against foreign brand owners.

In-N-Out never registered its company or burger names in China or extended its protection into China. Although the company is well known in America, a Chinese court would not possibly find that the burger names of an American regional chain meet China’s high standards of being well-known to the relevant Chinese public and thus deserving of trademark protection without registration. Additionally, even though CaliBurger’s American origins might indicate bad faith registration, Chinese law makes proving such conduct very difficult. Finally, China’s first-to-register system gave CaliBurger strong rights once it received its China trademarks. CaliBurger no doubt knew all this. It did not seek to skirt China’s IP law. It actively used the law as a shield, and In-N-Out was left with little choice but to sue in America and ultimately buy out the trademarks.

These facts by themselves are not unique; Chinese trademark squatters exploit the system everyday. What makes CaliBurger unique and what should frighten American brand owners, is that CaliBurger was a sophisticated, American entity capable of raising millions of dollars in capital to carry out its plans to simultaneously execute trademark applications and challenges in several nations. Additionally, its founders had the legal knowledge necessary to fulfill its plans in China. All four of CaliBurger’s founders had law degrees from California law schools and two had IP legal experience. This sort of threat is a far cry from the small-scale squatter or shoddy pirating scheme many envision when considering Chinese IP theft.

Though CaliBurger and In-N-Out’s dispute is just one incident, such activities are ongoing and increasing in frequency and sophistication. With such a threat, even those companies with no plans for doing business in China should at least consider trademark registration there.

What do you think?


Just received an email from a friend stating/asking the following (note that I have changed some elements of the email to strip it of any even potentially identifying information):

I am heading off again to work for a few years at our China Rep Office.  My new employment contract with the head office says that [foreign country] law will apply.  Will it?  And what if there is a conflict between [the foreign country] law and China’s laws, which will control?

We get this question far too frequently and we have seen way too many employment contracts written as though U.S. law (it was actually not a U.S. company in the above instance) applies all around the world. The reality is that if you are working for a Chinese company in China (be it a Rep Office, a WFOE, a JV, or whatever), Chinese law is going to apply to your employment relationship.  I know of no country that would allow otherwise.  I mean, imagine if a United States subsidiary of a Pakistani company were to claim in a U.S. court that it should not be required to pay overtime because their contract with the employee calls for Pakistani law and Pakistani law does not provide for that, or that it can discriminate against women because there is no such law prohibiting that in Pakistan?  Even if the employee at issue were a Pakistani citizen, there is absolutely no way in the world a U.S. court would go along with any of those arguments.  In fact, the argument is so bizarre I am not even aware of anyone ever having made it.

Any employer-employee relationship between a Chinese company and an employee working in China is going to be governed by China law, no matter what the contract says.  So in China there would be no conflict of laws because Chinese law would simply apply. This is why we also advocate for drafting China employment contracts and employee manuals with Chinese as the official language.  Chinese courts and Chinese administrative bodies are the only rightful jurisdiction for China labor law disputes stemming from employment in China (yes, this is true for expats too) and so it only makes sense to have these documents in the language they are sure to understand.

Here is a more interesting/complicated related question: what would happen if a U.S. company had a contract with a U.S. citizen and that contract provided that the U.S. citizen would go work at the U.S. company’s WFOE for a few years and that contract called for application of U.S. law.  Now as I have said above, no Chinese court would apply anything but Chinese law to this relationship, but what would happen if the U.S. citizen were to flip around and sue the U.S. company in a U.S. court for failing to abide by some particular U.S. law?  I do not know the answer to this question (any U.S. employment lawyers out there), but I can tell you that if it were to benefit my client, I would argue that Chinese law applies and I think I would prevail on that.  But, I can also tell you that if it were to benefit my client, I would argue that U.S. law applies.

Anyone know how a U.S. court would rule?

We constantly receive emails from readers seeking our advice on the books they should be reading to better understand China’s laws and legal systems.  I respond to those emails by linking over to the most recent post listing out such books.  Realizing, however, that our last list has gotten a bit long in the tooth, I figured I would run it again, updated this time with a couple new books well worth a read.  What pleases me is how the list of worthwhile books continues to grow and to diversify in terms of subject matter.

if you want help understanding China’s legal system or aspects of it, I recommend the following Chinese Business Law books for the folllowing reasons:

1.  The Legal System of the People’s Republic of China in a Nutshell. Yes, this is part of West’s Nutshell series, but before you law students and lawyers start keeling over in laughter, let me explain. I am always telling law students that they should read “the nutshell” of their course before they go to their first class in any given subject. I suggest they read the nutshell book from cover to cover as though they are reading a novel. In other words, they should not stress too much over the points they do not understand and they should not worry about retaining anything.

I advocate reading nutshell books because they are a superb and fast and relatively painless way to get a big picture view of a topic. Getting the big picture view first then allows you to put the pieces you learn later into their proper place.

The China nutshell (I read a previous edition a long long time ago) does a great job of giving its readers a feel for Chinese law and a quick read of it will help you immeasurably in thinking like a Chinese lawyer. Will it tell you what you need to do to get from point A to point E in forming a China WFOE? No, but that should not be why you read it. You should read it because it is a very good first introduction to Chinese law.

The China law nutshell is written by Daniel C.K. Chow, a law professor at Ohio State University who is eminently capable of publishing more weighty works on Chinese law as well.

2.   Chinese Commercial Law: A Practical Guide. This book was written by Maarten Roos, a Holland trained lawyer who practices in Shanghai. I find this book very useful as a good first source on Chinese legal issues. It does a good job touching on the major legal issues foreign investors typically face in China. Its Amazon page accurately describes it as follows:

He clearly describes the opportunities and pitfalls exposed as a foreign investor engages with such elements of business in China as the following:

  • negotiating a detailed written contract;
  • performing a legal and commercial due diligence on a prospective partner;
  • resolving disputes through negotiation, arbitration or litigation;
  • establishing and enforcing trademarks, patents and other intellectual property rights;
  • investing in China;
  • considering the joint venture structure;
  • expanding through a merger or acquisition;
  • restructuring or liquidating an operation;
  • designing and implementing effective corporate governance;
  • retaining, managing and terminating employees;
  • arranging funds into and out of China;
  • ensuring both tax efficiency and tax compliance; and
  • avoiding criminal liabilities in the course of doing business.

I agree and I think this book makes for a great nuts and bolts introduction to the various topics it covers and it also serves as a great initial legal reference as well.

3. China Law Deskbook, A Legal Guide for Foreign-invested Enterprises. This book is by James Zimmerman, a very respected China lawyer. This is THE book on the practical aspects of China law.

Its website describes much of what it covers:

[T]he new Tort Law, Property Rights Law, Anti-Monopoly Law, Labor Contract Law, Enterprise Income Tax Law, Enterprise Bankruptcy Law, revised Foreign Investment Catalogue, and various other new and amended laws, regulations, and governmental policies that impact foreign investment and trade with China. [It] is over 1100 pages long and over 3000 footnotes of references and citations. Overall, the Deskbook is organized in 24 chapters covering key topic areas such as court system and litigation, contract law, financial regulation, taxation, tender and government procurement, consumer protection, customs and trade, labor and employment, M&A, liquidation and bankruptcy, securities, property rights and land use, environmental, and dispute resolution.

If you buy this book, do not buy Maarten Roos’s book, and vice-versa. They are both excellent books and they are both geared towards the person who needs real-life help in figuring out China business law issues. The difference between the two of them is that Zimmerman’s book is much longer, much more comprehensive, and much more expensive. In my view, Zimmerman’s book is geared more towards lawyers (though it would be fine for non-lawyers as well), as opposed to businesspeople, and Roos’s book is the opposite.

4.  Understanding Labor and Employment Law in China. I gave a very favorable review of this book when it first came out and my appreciation for it has only grown. This is what i said then:

I am three-quarters of the way through the book, Understanding Labor and Employment Law in China, by Ronald C. Brown. Brown is a Professor of Law and the Chair of the Pacific-Asian Legal Studies Committee at University of Hawaii Law School and can confidently state that it is a great book.

But it is not for those seeking merely a light dusting on Chinese labor and employment law. Not at all.

It is 332 page exposition on the current state of China’s labor laws. It was just published so it is quite current. Its appendix consists of translations of the key Chinese laws relating to labor and employment.

Who should read this book?

  • Academics interested in China labor laws? Check.
  • Private practice lawyers seeking a deeper understanding of China’s labor laws? Check.
  • In-house lawyers wanting to better understand China’s labor laws? Check.
  • HR personnel with businesses operating in China? Probably check.
  • Lawyers who actually practice labor law in China? Maybe check.
  • The general businessperson doing business in China? Maybe check.

Let me explain my maybes.

Any lawyer actually doing employment law in China must be able to speak and read Mandarin fluently and so that lawyer probably does not have much need for a book like this, written in English. If you are going to be writing employee manuals and employment contracts in China or giving advice regarding China’s labor laws, you absolutely must know how to read and write Mandarin. You have to know how to read it because so many of the employment laws are local, rather than national, and because there is no substitute for reading a law in its original language. You have to know how to write in Mandarin because your employee manuals and your employment contracts pretty much have to be in Chinese if you have any Chinese employees.

This book is probably too intense, too thorough, too long, too deep, and too complicated for the typical businessperson seeking a general background on Chinese employment law and I do not think it was ever intended for that purpose.

If you are looking for an English language book that really details China’s labor and employment laws, this is the book.

I am now of the view that HR personnel should buy this book, so long as they realize that it is just a first step towards deciding what to do in each individual instance. I have come to this view after having recommended it to a number of HR people with whom my firm works and seeing how they use the book. I have come to believe this book is a great resource for HR people because they are using it to help determine whether they might have a legal issue in doing such things as firing someone who is pregnant, reducing vacation time, asking someone to work a weekend out of town, etc., rather than using it for the definitive answer to their very specific situation.

5. Patent Litigation in China, by Douglas Clark. This is a really good book if you want to know what is going on in the China patent world and it is great book if you want to know what to do in that world if you believe someone is infringing on your patent or if someone believes you are infringing on theirs. It is also an excellent book to read just for getting a sense of how China’s courts operate (which as I am always saying, is likely to be quite a bit better than most believe it is, particularly in the context of business litigation involving foreign companies).

This book is very much aimed at the legal practicioner, not the businessperson, but if you are a businessperson embroiled in a China patent dispute, I recommend this book for you as well.

The book’s own blurb accurately describes it as follows:

Patent Litigation in China, by Douglas Clark, provides U.S. and other non-Chinese practitioners with an overview of the patent litigation system in China. Strategic commentary is provided to enable those contemplating or involved in patent litigation in China to better comprehend the risks and challenges they face, as well as to ensure better decision-making by those responsible for bringing or defending patent actions. The book covers the tests for patentability grounds for invalidating patents before focusing on evidence gathering, litigation strategy and procedure, as well as considering defenses and remedies. The key differences between the Chinese, U.S. and other more mature patent systems are highlighted throughout the book.

6. Environmental Law in China: Mitigating Risk And Ensuring Compliance, by Charles McElwee. The book’s publisher, Oxford University Press, accurately describes this book as having achieved the following:

  • Lays out a detailed explanation and analysis of Chinese environmental law
  • Provides the most complete [English language] guide to date for businesses, particularly foreign-operated, to comply with both national and local Chinese environmental regulations
  • Discusses the possible legal ramifications, both civil and criminal, of companies’ failure to comply with Chinese law
  • Describes generally the relation between international environmental treaties and Chinese national law
  • Includes an overview of Chinese culture and its unique influence on the nature of the Chinese legal system

As I read this book, I kept thinking how China’s environmental laws are not all that dissimilar from those in the United States. China greatly differs from the United States, however, in that there is little history to discuss by way of enforcement, either in the real world or in the courts. This means that too much of the book is on laws as opposed to practice. Charles essentially had no choice because in many instances there is no practice about which to write. Nonetheless, if you represent or work for a company facing environymental law issues in China, this is the book for you.

7. Anti-Monopoly Law and Practice in China, by H. Stephen Harris, Jr.Peter J. WangYizhe ZhangMark A. Cohen, and Sebastian J. Evrard. This is truly a great book. It is clearly written, comprehensive and highly relevant and that is a rare beast among law books.

It does an exceptional job covering China’s anti-monopoly laws and it does an exceptional job putting them in their context. To quote some of those who received an advance copy:

This is an extraordinary treatise on the Chinese Anti-Monopoly Law, and should be on the desk or nearby shelf of every antitrust practitioner, academic and policymaker whose work or interest involves modern-day China, the relationship of the state to the market, and its transition to a socialist market economy. The book is an invaluable resource. It is clear, straightforward, and comprehensive in its presentation of the fundamental details, its identification of the ambiguities, and its overview and perspective.”  Eleanor Fox

Anti-Monopoly Law and Practice in China is an insightful and comprehensive account of an increasingly important area of Chinese law. The authors provide detailed coverage of a number of important issues that are central not only to the development of China’s Anti-Monopoly Law, but also are at the heart of China’s rise as an economic power. It will be helpful reading for practitioners, scholars, and policy-makers.”   Benjamin L. Liebman

“Chinese Anti-Monopoly Law (AML) is now one of the most important antitrust regimes in the world, and this book provides the first comprehensive analysis of the AML. It describes not only the substantive and procedural provisions of the law, but also compares the AML with other antitrust regimes, and describes relevant cases since its implementation. This book will be useful to any corporation doing business in China as well as anyone interested in China’s economic and legal systems.”   Xiaoye Wang

I wholeheartedly agree with all three and encourage those with an interest in China antitrust law to pick up this book.

8.  Corporate Income Tax Law and Practice in the People’s Republic of China, by Fuli Cao. Though I have to admit that I just skimmed this book, it nonetheless makes this list for a number of reasons.  First, it was published by the Oxford Press, which consistently puts out only fine books on Chinese law.  Second, the parts I read were clearly written and very helpful. Third, another lawyer in my firm read much of it and he raved about it.  He now uses it as the only English language adjunct to the Chinese texts he had been using previously.

9. “Doing Business in China: Problems, Cases and Materials,” by Daniel C.K. Chow and Anna M. Han, is actually a casebook, but it definitely does double-duty as a reference book and we so use it in my law firm.  Ms. Han told me that she wrote it with the intention of it being used as a desk reference for lawyers who “occasionally deal with an issue that may come up involving Chinese law and want some background.”  It definitely is an excellent book for that.

Any other suggested must-reads or must-haves?

A member of our China Law Blog Group on Linkedin left the following comment (modified slightly) regarding Chinese company names, prompting this post:

Recently I happened to meet with a Chinese lawyer in Qingdao who told me about how the Province [Shangdong] registers the Chinese name of a company. The companies are registered only with Chinese names. Let’s say for a contract with an Indian or a US company they do use just the English name. He says it is compulsory to have the contract in English and in Chinese also. Otherwise the Chinese company simply can deny its English name to avoid participating in the arbitration. Is this true? How we can make a contract foolproof without making a Chinese contract?

Great questions.

Let me start out by saying that we are of the view that in most cases it makes sense to have your contract with a Chinese company be in Chinese.  We explain why we take this position in China OEM Agreements. Why Ours Are In Chinese. Flat Out:

Because international contracts are so often between parties from different countries, they commonly are written in two or more languages. Nearly all of the contracts we draft for our Western clients doing business in China are in English and Chinese (though about ten percent of the time, we also translate them into German, Spanish, Korean, or French as well). This duality of language can, if not handled properly, pose big problems.

When we do a contract in both English and Chinese, we always call for the contract to specify ONE official language to control if there is a dispute. We do not advise drafting a contract that is silent on the official language, nor do we advise drafting contracts that call for both English and Chinese to apply. Having two official languages pretty much doubles the chances for ambiguity and pretty much doubles the attorney time (and fees) that will be incurred in fighting over the meaning of the two contracts. It is expensive enough litigating on one contract; there is no benefit litigating on two.

So the question for us comes down to whether English or Chinese should be the official language of the contract and the answer to that question requires we first decide where we would most like to see disputes resolved. If we go for arbitration in English (and if the Chinese manufacturer actually agrees to this, which is quite rare), then we almost certainly will want English as the official language. But if we decide the Chinese courts will be the best place to resolve conflicts, then we want Chinese to be the official language.

But, having said this, it is not true (as many seem to believe) that English language contracts will be deemed invalid by Chinese courts or arbitral bodies.

But what about company names?  The only official company name is the Chinese language version and this is true as well for WFOEs in China and Joint Ventures as well.  If you are going to form a China WFOE, you must come up with a Chinese name for your WFOE and that Chinese name will become your one and only official name.

But must one put the Chinese name on any contract with a Chinese company?  No, this is not required, but it is certainly smart to do so. I have actually never heard of a Chinese company claiming it is not them who signed a particular contract using the English language version of their name, but it absolutely does not surprise me to hear that happens.  Our firm has always used the Chinese language version of a Chinese company’s name, even on the English language version of our contracts and we do so for clarity. We also typically put in the address of the company as well and sometimes its license number as well.

I can certainly imagine a Chinese company seeking to get out of a contract by claiming that it never signed one because the contract at issue does not contain its Chinese language name. But at the same time, I also think that someone facing such a claim ought to — in most instances — be able to prevail against it by marshaling evidence to show that it was indeed the Chinese company that signed the contract. This will be particularly easy if the Chinese company has a well-known and often used English language name or if the English language name is a direct translation of a unique Chinese language name.

I actually think the bigger issue regarding contracts with Chinese companies is whether the contract is sealed or not.  In How To Write A Chinese Contract That Works, we wrote on how Chinese companies were notorious for trying to get out of contracts they had not sealed/chopped:

For written contracts in China to be effective, one of the following must be true:

  1. The company’s legal representative signed it. Chinese law provides that a company’s legal representative has apparent authority to bind the company. This means that even if that representative lacks the actual authority to bind the company (maybe because the board of directors or the shareholders never gave the representative the authority to contract with you), the legal representative’s signature will bind the company. There is, however an exception to this and that is when you know that the legal representative lacks the authority to bind the company.
  2. The contract is appropriately sealed.  An appropriate seal (oftentimes called a chop) is applied to the contract. It does not matter who applies the seal, so long as it is the right seal. This means it must be sealed either with a contract seal that sets forth the name of the company or, as is more commonly done, with the Company Seal. Each Chinese company has only one company seal (no copies).

Chinese companies are notorious for trying to get out of contracts by claiming they never actually signed them or that they were signed without the proper authority and so if your contract is big enough and important enough, you should consider doing all of the following to minimize even further the likelihood of the Chinese company seeking to get out of your contract:

  1. A signature from the company’s legal representative. Of course, you must first confirm from the company’s business license who exactly is the company’s legal representative.
  2. A resolution from the company’s board explicitly approving the contract and authorizing the legal representative to sign it.
  3. The affixation to the contract of the company seal or the company’s contract seal.

In that same post, we set out the basics of what it takes to write a good Chinese contract:

If you want to greatly increase your chances of being able to enforce your contract with your Chinese counter-party, you should do the following (you should do a lot more than this, both within and outside your contract, but I am limiting this post to just those things directly related to being able to enforce the contract and its terms)

  1. Have a written contract (see this, this and this);
  2. Have that written contract be in Chinese;
  3. Have that written contract set out clearly how disputes are to be resolved and, even more importantly, pick the right forum for those disputes;
  4. Have that written contract set out in excruciating detail what the Chinese company must do to be in compliance with the contract;
  5. Set out the liquidated damages the Chinese company must pay if it fails to comply with the contract;
  6. Make sure the Chinese company signs AND seals your contract.

It is impossible to make any contract foolproof in that there will always be risks in any deal, but doing the above will increase your odds.

What do you think?



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Yet another story of an American businessperson being held in China for his company’s unpaid debt. Hate to say we told you so, but we told you so. And more than once (note this is Part 3!)

This latest debt-hostage story was brought to my attention by Jeremiah Jenne of (a terrific new China blog, but one that really ought to allow comments) and Jottings from the Granite Studio fame (a terrific old China blog that does allow comments).  Jeremiah asked me about it via Facebook by sending the following:

Sure to be more to this story than just ‘bad China.’ Rep sounds clueless at best, downright dumb at worst. US company boss also seems quite shady, firing the poor schmuck but still unable to remove him as ‘legal representative.’

Need help making sense of this. Sending bat signal to Dan Harris.

Not sure there really is all that much unusual to the story as it reads like a typical debt-hostage story, with the following standard elements:

  • For whatever reason, American company owes China company money (or even just China company claims American company owes it money).
  • For whatever reason, company doesn’t pay China company.
  • For whatever reason, important American guy (I’ve heard of this happening at least a dozen times and my firm has been actively involved in these at least twice and every single time it’s been a guy) goes to China to try to resolve the debt either by trying to convince China company to accept less than the full amount owed.
  • For obvious reasons, important American guy gets his passport taken and is blocked from leaving China until the matter is resolved.
  • For whatever reason, important American guy thinks that whining to the U.S. Embassy and the press is going to help him.

Anyway, here is this latest story, courtesy of the Washington Post, and titled, “Missouri businessman in limbo in China in dispute over debt, unsure when he’ll get back to US”:

The Chinese government forced Steve Fleischli of Labadie, Mo., to surrender his passport in a dispute over his company’s unpaid debt to Chinese firms. Complicating matters is that he has lost his job since going to China on business in January.

Many of the details of the case, including exactly why Fleischli was fired from his job, are unclear. But his story offers insight into the perils of a western businessman doing business in China, especially when commercial disputes are involved.

The State Department declined comment on his case, but its website says there is little it can do to intervene on behalf of Americans in situations like Fleischli’s, which can take years to resolve.

Let’s break down this intro a bit.  First off, it says the “Chinese government” forced this American to surrender his passport. What is meant by “Chinese government”?  Local police or President Hu Jintao?  I’m betting it’s local.

Second, it says that “Many of the details of the case….are unclear.”  Yup.  No surprise. Reading between the lines, this probably (note I said probably because I do not know and I am just guessing here) means that the company does owe the debt, the American hostage is responsible for the debt under Chinese law, and the company that fired the American was less than happy with him.

More of the story:

“I think he’s more frightened about the comment that sometimes these things go on for years, rather than about his personal safety,” Fleischli’s attorney, Mitch Margo, said.

Fleischli, 37, began his career at Washington, Mo.-based NorthPole Ltd. 11 years ago and rose to CEO. The company is a leading maker of outdoor gear including tents, foldable camping chairs. Warburg Pincus, a global equity firm, is NorthPole’s majority owner.

Times got tough for NorthPole in recent years as prices for materials increased and retail orders slowed. The company owed money to suppliers in China. Margo said Fleischli even loaned NorthPole $200,000 of his own money last year. The company declined to discuss details of the loan, but it was an issue in Fleischli’s firing.

Let’s look at the above.  The American guy is “more frightened about the comment that sometimes these things go on for years, rather than about his personal safety.” That makes sense.  In my law firm’s experience, these things only end by an agreement by the Chinese company to accept a certain payment and then that payment being made. Maybe these things can end some other way, but I am not aware of that ever having occurred. The Chinese company typically wants its money, not to physically harm anyone.  I do hope Mitch Margo is working with other lawyers experienced in negotiating with Chinese companies.  “The company owed money to suppliers in China.” Presumably, the American company owes money to the Chinese company that saw to the taking of Mr. Fleischli’s passport. Why does a company fire someone for loaning the company money? This does not make much sense and there has to be more to it than this.

Fleischli, who has a 3-year-old daughter and wife back home in Missouri, decided to fly to China to address concerns of suppliers in person. He left in January in anticipation of a meeting with suppliers at a factory in Xiamen, China, in March. The meeting was a disaster as angry suppliers rioted. After more than a day, police were able to help Fleischli get out of the factory.

In How Not To Get Kidnapped In China, we set out three rules to follow if you or your company are alleged to owe money to a Chinese company:

So what are the lessons from all this?

  1. If you are in a debt dispute with a Chinese company, think about not going to China at all.
  2. If you must go to China, think about using a bodyguard or two and think very carefully about where you stay and where you go. Most importantly, be very careful with whom you meet.
  3. Consider preemptively suing the alleged creditor somewhere so that you can very plausibly claim that you have been seized not because you owe a debt, but out of retaliation for having sued someone. If you are going to sue, carry proof of your lawsuit with you at all times while you are in China.

We really should have added a fourth rule, which rule we discussed in “Shanghai Thugs Forcibly Remove Shanghai Residents. Why This Matters For YOUR Business”:

Though China is relatively safe, one should absolutely not write off the possibility of violence in one’s business dealings in China. My law firm has been called in at least a half dozen times where violence was either threatened or occurred. We tell our clients that if they owe money to a Chinese company or are involved in any sort of dispute with anyone in China (partner, employee, etc.), they should avoid meeting to discuss the dispute/problem anywhere other than in a neutral, very public place in the day time. A high end hotel lobby in Shanghai or Beijing is a good choice.

In other words, if you really think it necessary for you to go to China to try to resolve your company’s debt issues, at least seek to have the meeting in a hotel lobby in Beijing or in Shanghai, rather than in Xiamen in the conference room of the company to whom the debt is allegedly owed.

The article goes on to say that Fleischli is being held because he was/is NorthPole’s “legal representative in China” and that a court in Xiamen actually ordered Fleischli to be held.  I am pretty certain that in every case like this on which my law firm has worked, there was no court order.  Instead, the company and the police had merely acted together to block any exit by our client.

In “Bo Xilai’s Lessons For Your China Business,” we wrote of how arguing that the hostage does not personally owe the debt is usually not the fastest/best way to resolve these sorts of situations:

I say this because we have been involved in at least two cases where this was the case. U.S. company owes money to Chinese company. U.S. company ceases to do business and so its key figures assume the issue is resolved in that the company has no assets to pay any debt.  They then get on a plane to a foreign country (one was a China case, the other was a Russia case) and they both get seized and “held hostage” until we negotiate out their release. They wanted us to argue that they personally did not owe the debt; their companies did. Our response was to tell them “that would be an excellent argument if we had the luxury of filing court briefs and waiting months for a judge’s decision, but our goal here is to get you released as quickly as possible.”

We deal with this issue in its nascent stages all the time when we work with our clients to shut down their Chinese entities (which for some reason has been happening like crazy of late). We always instruct our clients never to reveal that they will be shutting down their China operations while anyone from the home office is in China. We also tell them that if they or their company ever wish to return to China, they should pay off all their debts and usually the best way to do that is to announce from outside of China the plan to gradually shut down the China office and then, using that as leverage, negotiate down all of the debts. We always stress that once a reduced debt is agreed upon, there should be a written agreement on that and there should be proof of payment on that agreement as well.

All of this is necessary if you want to formally close your China entity, which is, in turn, necessary, if you want to be able to return.

Fleischli appears to be in an even worse situation in that a court has already found him personally liable for the debt as NorthPole’s legal representative in China.  Fleischli pleads ignorance: “I had no clue,” Fleischli told the Post-Dispatch. “I’m an American guy over here in China. I can’t read Chinese. I had no idea what a legal rep even was.” To which we can only say that ignorance of the law is no excuse in China just as in the United States.

Now here’s where the story gets weird.

Then in May, Warburg Pincus fired Fleischli for “gross misconduct.” The company declined to comment further on the firing, but Margo said it meant Fleischli also lost access to the company’s lawyers in China.

It’s not clear to Margo or Fleischli why the firing didn’t absolve Fleischli of his duties as NorthPole’s legal representative. Fleischli has sued NorthPole and Warburg Pincus seeking severance and damages and asking to be removed from that role. Margo believes that would help him get out of China.

But Warburg Pincus says it can’t remove Fleischli from that role.

“Warburg Pincus has had no involvement with any travel restrictions Mr. Fleischli may have in China. The firm does not control Mr. Fleischli’s status as legal representative of NorthPole in China, and does not control any travel restrictions that local authorities in China have placed on him,” the company said in a statement.

Fleischli was fired in May. Why didn’t anyone pay the company debt before that?  Presumably it is because the company lacked the funds to do so. Why didn’t Warburg Pincus pay the debt then? Presumably because even though it has power to fire the company CEO it is not on the hook for company debt. I guess that can make sense.  But what about removing Fleischli from his role as NorthPole’s legal representative?  I do not see why NorthPole and Fleischli cannot agree to make that happen, unless, of course, Chinese law forbids changing legal representatives in a situation where the company has debt.  But I also do not see how Fleischli’s removal as legal representative will help him at all with his present situation.  I truly hope Fleischli has good legal counsel in Xiamen where he is being held.

The story concludes by pointing out how the U.S. State Department’s website makes clear that when it comes to commercial disputes, the Chinese “may prohibit you from leaving China until the matter is resolved under Chinese law. There are cases of U.S. citizens being prevented from leaving China for months and even years while their civil cases are pending.” And how the U.S. Embassy and consulates general “have no law enforcement authority in China and cannot recommend a specific course of action, give legal advice, or lobby the Chinese government regarding a private citizen’s commercial dispute.”  All true.

For more on hostage situations in China, check out the following:

And just to scare you a little bit more, I have a friend who works for a high end China risk consultancy and he tells me that they started seeing a massive increase in these cases this year.

What are you seeing out there?