Last week the White House announced the United States Strategy on Countering Corruption, which believe it or not represents the country’s first comprehensive blueprint for reducing “the ability of corrupt actors to use the U.S. and international financial systems to hide assets and launder the proceeds of corrupt acts.”
How to handle China factory disputes is a question our international manufacturing lawyers have been getting a lot of lately. Many China factories are in deep trouble due to declining sales stemming from the US-China Cold War, from its energy issues, and from its declining economy. I say this not just because of the economic statistics everyone sees, but also on the steady stream of emails our international manufacturing lawyers are getting from foreign companies reporting the usual range of problems whenever China's factories are suffering. See China's Slowdown and You.
With supply chain issues constantly changing, our International Manufacturing Contracts must change as well. Even small changes in how we draft our manufacturing contracts dictate changes in the questions we ask our clients when gathering the information for drafting a contract that suits their goals and needs.
How to Handle Your Manufacturing Contracts When Manufacturing in Multiple Countries. You generally have three options for contracting when dealing with a parent company in one country with subsidiary factory companies in multiple other countries. No option is perfect but you as the product buyer still must choose. Our goal as lawyers is to give you the information and advice you need so that your choice is made with a full understanding of the consequences and trade offs, as opposed to being based on an illusion of safety and enforceability.
Listen HERE or stream on Spotify, Apple Podcasts, Amazon Music, Stitcher, or Soundcloud! At Harris Bricken, we keep close tabs on what is happening around the world, and we know that our friends and clients do, as well. We are happy to provide this podcast series: Global Law and Business, hosted by international attorneys Fred Rocafort and Jonathan Bench, where we look at the world
Due diligence is an investigation of a business or person prior to entering a contract. It often involves a comprehensive appraisal to establish assets and liabilities or to evaluate commercial potential. Though due diligence is important anywhere, it is doubly important when dealing with companies in countries where things are often not what they seem and where the legal system is less than ideal.
With so many companies moving their manufacturing from China, mold protection when manufacturing overseas has become a critically important issue, largely for two reasons. First, we are seeing many companies losing their molds and/or their tooling in their exodus from China. These are the companies that failed to protect their molds/tooling when they first went into China. On the flip side, with so many companies establishing new manufacturing relationships outside China, it becomes critical they understand the need and the methods for protecting their molds/tooling. Product buyers and product designers need to know how to protect their molds and their mold designs. The simplest way is via enforceable written contracts that provide protection. At the most basic level, however, the key is to be able to recognize when a factory is intending to hold your molds “hostage” and to do a cost-benefit analysis of whether it makes sense to proceed or walk away.
There is now an opportunity to request DOC AD/CVD Administrative Reviews for products with AD/CVD orders with a December anniversary month. We have posted about many antidumping (AD) and countervailing duty (CVD) petitions that trigger investigations conducted by the U.S. Department of Commerce (DOC) and U.S. International Trade Commission (ITC) on imports of certain products. Most of these cases result in AD/CVD orders being issued after the DOC and the ITC complete their investigations and make final determinations on whether a domestic industry is injured by subject imports (ITC) and to what extent those imports are dumped or subsidized (DOC).
Go ahead and describe China as one giant casino. And go ahead and call its legal system rigged. All this is fair. But do not let any of this be be an excuse for you not doing whatever you can to increase your own company's odds when doing business with China. Because if you do not do what it takes to protect yourself, I can guarantee you will have bad results.
How to control your China operations while avoiding China government control is critical and companies looking to do business in China need to decide what the China market means to them and what they are willing to risk. Companies looking to do business in China should decide what the China market means to them and what they are willing to risk. There is no way to entirely avoid China regulatory risk, but depending on your product or service and your company’s and owner’s risk appetites, there is always a way forward. The question of how to control your China operations is just one of many questions to ask.
