INTERNATIONAL/CHINA PRACTICE
China's rapidly growing economy offers uniquely attractive trade and investment opportunities, but not without challenges to even the most experienced global competitor. Rapidly evolving legal, regulatory, governmental and cultural barriers confront those desiring to establish or expand their business in China. Since 1992, Attorney Russell Chin has traveled throughout China on behalf of many clients, as attorney, advisor and official representative of many American and foreign entities. The following is a sampling of his direct, in-country legal and advisory experience.
· Representation of a Fortune 500 consumer products company requiring:
o Brand Licensing
o Employee Agreements
o Establishment of Foreign Office
o Asset Transfers
o Repatriation
o Import/Export
o Negotiation and Contract Drafting
o Privatization
· Representation of Fortune 500 technology corporation requiring:
o Consolidation of multiple manufacturing facilities
o Divestiture of assets, rights and business lines
o Origination of WFOE
o Contractual commitments of US$250,000,000
o Management of class action labor litigation defense with seven-figure exposure
· Representation of Fortune 100 consumer electronics corporation requiring:
o Green field entity formation of WFOE
o Licensing and Distribution Agreements
· Representation of Fortune 500 multinational advertising and public relations agency requiring:
o Development of potential foreign partner relationships
o Establishment of CJV with major SOE
o Establishment of offices in multiple PRC cities
· Representation of quasi-public governmental authority requiring:
o negotiation and resolution of contractual dispute with foreign employee requiring application of China’s National Labor Law and American employment law
· Representation of a substantial number of major multinational corporations involving:
o Sale of assets between NYSE-listed company and NASDAQ-listed company
o Establishment of JV between one of the world’s largest consumer companies and China’s largest peer company
o Merger of major industrial company and Asia-based foreign competitor
o Licensing of worldwide dominant brand to major Asian corporation
o Pooling of interest (US$240,000,000) and acquisition of foreign assets through establishment of off-shore enterprises
o Incorporation of off-shore entities for Fortune 500 electronics company and acquisition of China-based multi-plant extruded plastics enterprise
o Advising South American automobile parts manufacturer in its Singapore and Malaysian operations
o Incorporation, labor and licensing matters for US and European subsidiaries of Hong Kong wireless telecom
o Enforcement proceedings and coordination of trademark protection in China
o Negotiation and resolution of chemical acquisition and shipping contract dispute between US and Chinese companies
o Negotiation and contract formation between Shanghai electronics manufacturer and American purchaser
o Establishment of WFOE for large software systems integration company specializing in software toolsets
· Trade Mission participant accompanying United States President William J. Clinton and First Lady Hillary Rodham Clinton in China
· Trade Mission Delegate accompanying United States Senator John F. Kerry in China
· Trade Mission Delegate accompanying Massachusetts Governor Paul A. Cellucci in China
· Foreign Trade and Investment Special Advisor to PRC Jiangsu Provincial Government
· Established and supervised representative law offices in Beijing and Hong Kong from 1993 to 1996
· Former Chairman and Responsible Partner for major US law firm’s Asia/Pacific Rim Practice Group
· Negotiated multiple strategic alliance agreements with several major PRC government entities and local law firms
WHAT IS YOUR CHINA STRATEGY?
The China market is something many multinationals find well worth pursuing as annual growth over the past fifteen years has been reported at a steady 7-9%. Since becoming a member of WTO in 2001, China has played an increasingly critical role in the global economy. Operating in China might be compared to doing business in the United States where distinct regional differences exist and a multi-tiered government structure has long baffled newcomers. However, unlike the U.S., China's laws, policies and regulatory environment continue to undergo rapid evolution in response to a market economy operating under a Communist political system.
Some of the following questions reflect factual situations confronted by foreign company clients in China. You may wish to consider these in the development of your China strategy.
1. Why are you going to China, what do you expect to achieve by being there and when do you expect a positive return on investment?
2. Might other countries be more suitable for your purposes?
3. What is the best way to nest your China efforts into the existing corporate matrix?
4. If you are trying to sell in China, have you considered tailoring your product and plant locations to lower inventory, reduce costs and maximize sales?
5. Have you considered coastal and in-land regions where SEZs may provide favorable tax treatment?
6. Do you truly understand the capabilities of your JV partner and are your goals in harmony?
7. Have you considered all of the ramifications of buying out an underperforming JV partner or privatizing a struggling SOE?
8. Are you convinced that your cross-border national and local sales and marketing strategies are achievable?
9. Are you certain that local management is in compliance with China's National Labor Law or are you prepared for a potential litigation that could destroy global marketing efforts and all of the company's good will?
10. Is your critical intellectual property completely outside China and, if not, are you sure it is secure?
11. Have all of the local offices truly bought into the corporate China strategy?
12. Does the China office have significant P&L responsibility for its overseas operations?
13. Do your senior managers in China have direct ties and effective communication with the company’s global leaders?
14. Which company personnel should negotiate with the Chinese government and why?
15. If your client asks what you have done to prevent intentional factory production overruns and the piracy sales of its branded goods by your employees, what will you say?
16. Is your China budget based on credible data sources?
17. Is it true that Chinese officials could unilaterally undermine a profitable company despite sound business fundamentals?
18. What if you want to re-invest profits but your JV partner turns out to be an ailing, cash-strapped SOE and disagrees?
19. What will it take to convince your board of directors that the company’s China initiative is sound when many Chinese laws and policies are unwritten?
20. How will you minimize the political, social, environmental, health, operational, and financial risks inherent in a significant China play?
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