China Legal Like it’s 1999

China lawyers and attorneys

BREAKING NEWS: The China of today is different from the China of  1999. Okay, so you knew that, right? Are you sure? Just like you know your 22-year-old kid is now an adult but in your mind you still think of him/her/they as 14 or 15 years old? Have you really caught up with today’s China or do you at some level still view it as it was one or two decades ago? I ask these questions after reading a China Skinny article, entitled, Why is it Popular? Dolce & Gabbana’s Fail Uncovers Restored Chinese Pride? This article talks about a “recent Dolce & Gabbana ad campaign” that was not taken well by China’s netizens:

China’s netizens took to social media, condemning D&G for its apparent espousal of backward and racist associations with China. The overwhelming sentiment was that the China photographed perpetuated Western viewpoints of an underdeveloped, dirty and inferior land. The people wanted to know: why was their country still represented by tuk-tuk drivers and pudgy, awkward tourists? The photos had gone global, posted on D&G’s western media like Instagram and Facebook, and the people were mad.

The article goes on to explain why China’s citizens were justified in their views regarding the ads, by citing the following:

A short drive from the scene of the Beijing photos could take you to the site of a $2.1b A.I. research park to host 400 businesses and churn out $7.6b in annual output by 2023. The chair of the US Defense Innovation Advisory Board recently spoke plainly on the subject of the rise in China’s A.I. capabilities; “By 2020, they will have caught up. By 2025, they will be better than us. By 2030, they will dominate the industries of A.I.”

Or you could pop down to the Beihang University and its School of Astronautics and discuss China’s plans to have nuclear-powered space shuttles by 2040 which will “colonize the solar system.” These feats are just a drop in the ocean of advances which have driven China’s rise on the world stage and a fiercely proud population that no longer sees a reason to back down.

Good points.

The legal front is no different. Hardly a week goes by without one of my law firm’s China lawyers having to explain to someone how much China has changed, usually involving one (sometimes more) of the following, along with my own typical quick response.

1. “I’ve heard that it’s fine to operate in China without having a China business [typically a WFOE or a Joint Venture] because they will never catch you or if they do you can usually get off just by paying the person $500.” My Response: Twenty years ago, maybe. Now, if you get caught doing business in China without a WFOE or a JV you and your company (and even those who work for you in China) will be in big trouble. See Doing Business in China with Deportation or Worse Hanging Over Your Head. And note that going into China via Hong Kong hasn’t really worked in most situations for a decade. See A Hong Kong Company Is NOT a Mainland China Company and a Hong Kong Trademark is NOT a Mainland China Trademark. And paying bribes has always been a really bad idea for a whole host of reasons. See China Bribery. Not Smart and Not Necessary.

2. “What’s the point in having a contract when China is just the wild wild West anyway.” I’m tired of explaining aways this one because it hasn’t been true for at least twenty years and it shows an inherent misunderstanding regarding contracts and even regarding less developed legal systems. My Response: Read this: Will My Contract Be Enforceable in China, and Will It Help Ensure the Chinese Side Performs Properly?

3. “There’s no way to protect your IP from China anyway.” Our China attorneys tend to get this one after we tell a potential client not to hire us to try to stop a Chinese company from using the potential client’s IP because their failure to protect that IP precludes their having any decent claims. My Response. There are all kinds of things you can and should do to increase your odds of having your IP protected in and from China. See 12 Action Items for China Trademarks.

4. “I’ve heard that nobody properly lists their imports for China customs because if they did they’d never be able to make a profit.” My Response: I’ve heard that people at foreign companies are getting arrested and charged criminally more every year for customs fraud and some of them are going to jail and many are paying large fines. See China Customs Violations and How to Avoid Jail Time. We hear the same sort of things regarding paying China taxes.

The reality — of course — is that China today is far different from China yesterday and there may never have been a country in history that has come so far so fast in terms of its legal system, law enforcement, and capabilities of carrying out its laws. And anyone who believes otherwise is just not keeping up.

What are you seeing out there?

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