China Business

China’s Good Old Days

China lawyer Vietnam

A China lawyer friend of mine and one of our most loyal readers since day one (January 4, 2006, but who’s counting) emailed me the other day reminiscing about the good old days of China blogging.

In his email he linked back to our first post, INTRODUCTION TO OUR BLOG, in which we introduced ourselves to the world with the following (stay with me here because this post does indeed have a point).

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 or the China lawyer.

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.

The strengths of our China attorneys who will be writing for this blog are in forming companies in China (WFOEs and Joint Ventures and Representative Offices, mostly), in drafting international contracts with Chinese companies (in English and in Chinese), in intellectual property protection, in technology licensing agreements, in media and entertainment, and in litigation. We welcome your comments, suggestions, and ideas on any area of law relating to doing 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.

And now for the point.

We were so excited back then. So optimistic. Speaking just for myself now, I can say that I saw the opportunities for China business as nearly unlimited. By this point my law firm was already representing many companies outside the United States (I was already contemplating where we would eventually open offices — even back then Spain and Mexico were at the top of my list) and I believed (correctly as it turned out) that our global reach would expand as China’s expanded.

And comment you did. We would sometimes get literally hundreds of comments on one post and there were so many great discussions within them. Blogging has changed since then and though there has yet to be a year when our readership has not grown, few of you are seeing this on our own blog page, and commenting on here (and every other blog) has plummeted.

Far worse though is the way so many view China has plummeted as well.

Way back when we wrote our blog introduction we not only believed the opportunities for China business were unlimited, I (naively as it turned out) believed the opportunities for China and for China-US and China-Western friendship would grow along a steep and nearly straight line. Sad to say I was wrong on this and that has been borne out by the typical conversations I have with clients and potential clients these days, which so often go along one of the following three lines:

1. You want to have your product manufactured in China? Why? Will you be sending them to the United States? If so, have you considered the cost of the tariffs as they exist right now and as they will likely exist in 1-6 months (we see 25% tariffs coming nearly across the board). We can help you figure out where to have your products manufactured and for your sort of product it makes sense to weigh the costs and the benefits of having them made in Vietnam, Malaysia, Taiwan, Thailand, Mexico, Indonesia, India, or Pakistan or maybe even Eastern Europe. Last month — for the first time ever — we did as many deals and drafted as many contracts with Asian countries outside China as we did for China. And literally not a day goes by without at least one of our international lawyers or getting a call from an existing client seeking our help in leaving China. See the following for more on these things:

2. You want to go into China? Are you sure? You want to do a China Joint Venture? Are you sure? These are usually very difficult and expensive and you should at least consider other options, such as licensing your technology and/or your brand name to China or using a distributer or a reseller there. See China Licensing Agreements – Look Before You Leap and China Distribution Contracts: The Questions We Ask.

3. Speaking of licensing technology, are you aware the US government (and some other governments as well) have become wary of Chinese investment and is cracking down on it and has instituted new requirements for it and will be instituting more soon? It will make sense for us to figure out which of these apply to what you are doing before we move forward with much else.

The champagne days regarding China are over and proof of that is whenever we say something that even hints at this either on this blog or on our China Law Blog Facebook Page, we get all sorts of desperate hate mail/comments. The expectations we (and so many others) had for China are not going to come true and we have adjusted accordingly. And contrary to those who have written to chastise us for our glee over this, this does not make us happy at all. In fact we and I find all this quite sad.

Yet this is the New Normal and we are not going to act otherwise to make anyone — especially not our harshest critics — feel better.

What are you seeing out there?

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