Doing Business in China: a JD Supra Legal Reader

For your convenience, recent legal advisories on a broad range of corporate issues related to doing business in and with China:

China’s Anti-Monopoly Law Makes it Easier to Sue in Cases of Anti-Competitive Conduct (McDermott Will & Emery)

“Recently, the Supreme People’s Court of China issued final rules to build a working framework for civil anti-monopoly cases brought under the country’s Anti-Monopoly Law. The rules will take effect on 1 June 2012. China’s Supreme People’s Court (SPC) finalized and issued the ‘Relevant Issues Concerning the Application of Law in the Trial of Civil Monopoly Dispute Cases’ on 8 May 2012… The rules seek to build a working judicial framework for civil anti-monopoly disputes.” Read the update>>

MOFCOM’s “Fusion” Approach to Chinese Merger Control (Sheppard Mullin Richter & Hampton LLP)

“We often hear about how China’s merger review ‘diverges’ from other jurisdictions, most recently in reaction to conditional approvals of the Seagate/Samsung and Western Digital/Hitachi mergers. But China’s MOFCOM is merely doing its homework. Similar to ‘fusion’ cuisine, MOFCOM practices ‘fusion’ merger control as it blends two aspects: its mandate under the Anti-Monopoly Law, and the antitrust theories of other jurisdictions.” Read the update>>

China 20/20 Legal and Regulatory Developments (Orrick, Herrington & Sutcliffe LLP)

“On March 18, 2012, the State-owned Assets Supervision and Administration Commission (‘SASAC’) issued the Interim Measures for the Supervision and Administration of Overseas Investment by Central Enterprises, which will take effect on May 1, 2012. The measures govern the investment activities of Chinese state-owned enterprises and their subsidiaries in foreign countries, Hong Kong, Macao or Taiwan.” Read the update>>

Snapshot of China Real Estate Market 2012 (Morrison & Foerster LLP)

“For China’s real estate sector, the last 18 months has been a relatively quiet period on the legislative front. It has nonetheless witnessed continued efforts by the PRC authorities to control the property market… A key theme since the end of 2010 has been efforts to cool the residential market. The price of housing in China’s cities has come down from the lofty heights achieved in 2011, but the Chinese government continues to remain concerned about the lack of affordable urban housing.” Read the update>>

New IPO Guidelines (Sheppard Mullin Richter & Hampton LLP)

“The China Securities Regulatory Commission (‘CSRC’), China’s securities regulator, recently unveiled new guidelines (‘Guidelines’) for China’s initial public offering system. The guidelines were issued pursuant to feedback that was gathered from the public earlier in April. The Guidelines present increased efforts by the CSRC to administer China’s securities market and to help restore investor confidence in what remains an uncertain economic climate.” Read the update>>

China’s New Foreign Exchange Control Rule on Overseas Equity Incentive Plans (Pillsbury Winthrop Shaw Pittman LLP)

“New requirements for foreign exchange registration of equity incentive plans are now in effect. Overseas-listed companies that grant equity awards to employees of their Chinese affiliates should review their registration status and periodic filing schedules to make sure they are in compliance, especially in view of the new, shorter deadline for filing quarterly reports and the need to file amendments.” Read the update>>

Local Authorities Implement Social Insurance for Foreigners in China (Bryan Cave)

“On September 6, 2011, the Ministry of Human Resources and Social Security promulgated the Interim Measures for Contribution of Social Insurance by Foreigners Employed within China (‘Interim Measures’), which came into effect on October 15, 2011. The Interim Measures stipulates that all foreigners legally employed within the territory of China must participate in China’s social insurance system in accordance with the Social Insurance Law.” Read the update>>

China Joins the International Fight Against Corruption (Thomas Fox)
“China has recently joined most of the western world in passing anti-corruption legislation. As reported by the FCPA Professor, ‘the legislature of the People’s Republic of China (PRC), the National People’s Congress, passed a slate of 49 amendments to the Criminal Law, one of which is a provision that criminalizes paying bribes to non-PRC government officials and to officials of international public organizations (“the Amendment”).’ This Amendment represents the first instance in which PRC law has prohibited PRC nationals and PRC companies from paying bribes to non-PRC government officials and to officials of international public organizations.” Read the update>>

FCPA Compliance in China: An Oxymoron? (Michael Volkov)

“If your company does business in China, you need to conduct an anti-corruption audit. No ifs, ands or buts — and I am not one who would easily make this recommendation. But the picture in China is growing worse by the day… Companies that operate in China are reporting more and more FCPA compliance concerns. Last year, at least one-third of all FCPA settlements involved violations in China.” Read the update>>

Revised Measures Require More Disclosure and Confidentiality in China Franchising (Bryan Cave)
“On February 23, 2012, the Ministry of Commerce of the People’s Republic of China promulgated the revised Measures for the Administration of Information Disclosure of Commercial Franchises (‘Revised Measures’)… The Revised Measures expand the scope of information franchisors must disclose to potential franchisees, increase the confidentiality obligations of franchisees, and add criminal liability as a punishment for franchisors that violate the Revised Measures.” Read the update>>

China Life Sciences Newsletter (Morrison & Foerster LLP)
“The first article in this issue includes a thought-provoking interview with John Oyler, the CEO and founder of BeiGene, a fast-growing China-based biotech firm focused on oncology drug discovery to meet the needs of cancer patients in China and the greater Asia-Pacific region. Among other things, Mr. Oyler shares his outlook on the evolution of various segments of the industry, fundraising and cross-border partnering, the impact of PRC health care regulation and reform, and China-based research teams.” Read the update>>

An RMB 150-Million Litigation in China for the Abuse of a Dominant Market Position (McDermott Will & Emery)

“Recently, the High People’s Court of Guangdong held a public hearing for a high-profile lawsuit involving two software giants and alleged abuse of a dominant market position. This is the first anti-monopoly case accepted by the court, and the claimed amount is RMB 150 million (approximately US$23.8 million). With few judicial precedents in China, this case will be watched closely, and its outcome is expected to have far-reaching implications.” Read the update>>

Citigroup Is First Global Bank Permitted to Issue Credit Cards in China (Davis Wright Tremaine LLP)

“On 6 February 2012, Citigroup announced that it had received official approval from the China Banking Regulatory Commission to launch a proprietary credit card business in China. The business will cover both retail and commercial cards, and is likely to be launched later this year. On 19 March, Citigroup sold its stake in Shanghai Pudong Development Bank, which had been Citigroup’s co-branded credit card partner, for 4.2 billion yuan (approximately $665 million).” Read the update>>

Shale Gas: What Is New in China? (Dechert LLP)

“The National Development and Reform Commission, China’s Ministry of Finance, the Ministry of Land and Resources, and the National Agency of Energy on March 13, 2012 jointly published the first five-year plan for development of shale gas in China for 2011–2015. Production targets are ambitious and emphasize the need for foreign cooperation, particularly in technology, to allow the growth of this economic sector.” Read the update>>

Is it Time for Enterprises to Re-evaluate their Labour Dispatch Models in China? (McDermott Will & Emery)

“Since the Labour Contract Law became effective in 2008, the use of the labour dispatch model in China has increased—to the point of “abuse” according to some voices. However, new regulations are expected to come into effect soon. Companies using the model would be well-advised to review the functions their Dispatch Employees perform, so that their organisations may successfully adapt to the changes.” Read the update>>

Chinese Audit Firms: Change is Coming. When and Why this may Occur (Barry Epstein)

“U.S. Big 4 accounting networks operating in China must ‘localize’ their operations so that they are led by Chinese citizens and dominated by accountants holding China’s accountancy qualifications by December 31, 2017… Although some are speculating that this is being done to shield Chinese auditors, which have been recently targeted for much criticism, from closer scrutiny, China’s rapid pace of economic development, with its heavy emphasis on international trade relationships, likely presages further emphasis on greater professionalization.” Read the update>>

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