Doing Business in China: Latest Need-to-Know from JD Supra

For your convenience, here’s a roundup of recent legal commentary and analysis on a broad range of issues facing companies doing business in and with China, on data privacy and protection, merger control regulations, employment law, intellectual property, corruption, and more:

Chinese Ministry of Industry and Information Technology Issues Draft Provisions Governing Protection of Personal Information (Morrison & Foerster LLP):

“… the Standing Committee of the National People’s Congress issued a Decision on Reinforcing the Protection of Network Information on December 28, 2012. To implement this Decision, the Ministry of Industry and Information Technology published a draft version of the Provisions for Protection of Personal Information of Telecommunications and Internet Users (电信和互联网用户个人信息保护规定(征求意见稿)) and the Provisions for Registration of Authentic Identity Information of Telephone Subscribers (《电话用户真实身份信息登记规定(征求意见稿)》) on its official website on April 10, 2013 for public comment.” Read on>>

“Actually, Someone Knows You are a Dog”– the Chinese Regulation Efforts on Private Data Protection (Sheppard Mullin Richter & Hampton LLP):

“In order to safeguard the legitimate rights and interests of Chinese citizens concerning private data protection, the Ministry of Industry and Information Technology of China announced the Provisions on the Protection of Personal Information of Telecommunication and Internet Users (Draft for Comments) (‘PPI Rules’) and the Provisions on the Registration of True Identity Information of Telephone Users (Draft for Comments) (‘RTII Rules”) and sought for public comments… The PPI Rules and RTII Rules are a breakthrough with respect to legislation of personal information protection. Although these two rules are not officially a personal information protection law, they are a good beginning and call for a complete set of rules.” Read on>>

Internet Regulation and Data Privacy in China (Pillsbury Winthrop Shaw Pittman LLP):

“PRC regulation of the Internet is not applied extraterritorially. As a practical matter, however, all Internet traffic in China is monitored by and subject to interruption by the PRC authorities. Compliance officers therefore need to be aware of PRC sensitivities with regard to Internet operations even if PRC law does not technically apply to their companies. The principal means by which the PRC regulates the Internet is through its jurisdiction over value-added telecommunications service providers whose operations or servers are located in the PRC.” Read on>>

Privacy Changes Coming to China (Morrison & Foerster LLP):

“There is continued focus in China on privacy and data security issues. China still has no omnibus law, but it has promulgated some sector-specific regulations. The latest of these regulations governs protection of consumer data by credit reporting agencies. More significantly, China has issued new voluntary guidelines on management of computerized information of individuals.” Read on>>

Protecting Personal Data in China (Pillsbury Winthrop Shaw Pittman LLP):

“Personal data protection legislation has been a widely discussed topic in recent years in China, mainly because employees of institutions that amass personal data of users and clients in the course of their business (such as internet companies, hospitals, phone companies, banks and insurance companies) are selling the personal/client data for profit or disclose the data to third parties inappropriately. In extreme cases, databases of personal information can even be downloaded online freely. Despite cries for a comprehensive national personal data protection law, no such law is in place yet. However, the past six months have witnessed a series of administrative regulations and standards, which are aimed at tightening control over involuntary dissemination of personal data.” Read on>>

“At long last, Glencore has overcome the final regulatory hurdle and secured the approval of China’s Ministry of Commerce (MOFCOM) to acquire the 66 percent of Xstrata that it does not already own. But not before agreeing to part with one of the prized assets in Xstrata’s portfolio, the Las Bambas copper project in Peru.” Read on>>

China’s Merger Control Rules Changing: MOFCOM Publishes New Draft Regulations on Remedies and Simple Cases (McDermott Will & Emery):

“China’s Ministry of Commerce (MOFCOM) recently published for public comment two new regulations regarding merger control. One is a draft regulation on acceptable conditions that could remedy objections to a concentration (merger, acquisition or joint venture), the other a draft regulation on the standards applicable to cases that are regarded as ‘simple’ merger cases and so eligible for a fast-track procedure… Given the delays and uncertainties arising in many merger control cases over the last few years, these initiatives are welcome.” Read on>>

MOFCOM Requests Public Comments on Draft Provisions Related to Remedies Imposed in Conditional Approvals (Sheppard Mullin Richter & Hampton LLP):

“On March 27, 2013, the Ministry of Commerce (‘MOFCOM’) requested public comments by April 26, 2013 on draft provisions concerning the evaluation, negotiation, implementation, monitoring, reconsideration of the remedies used in the conditional approvals issued as a result of the pre-merger review process as well as related sanctions… The current draft provisions reflect MOFCOM’s effort to provide more guidance and transparency to the process related to conditional approvals. These provisions are important not only for parties to the transaction but also for third parties who may be affected by the transaction or may be interested as being part of the remedy.” Read on>>

What Your Company Should Know About Protecting Against Trademark Infringements in China’s Fashion Apparel Industry (K&L Gates LLP):

“It is no secret that trademark infringements are rampant in the People’s Republic of China. As the popular phrase goes, “傍名牌,搭便车,” which translates to “feigning as brand name companies and free riding on their coattails,” these cases have steadily increased over the years. In fact, in 2012 alone, PRC courts have heard 19,815 trademark civil cases and 1,123 trademark administrative and unfair competition cases. With the rising number of disputes, PRC courts have taken an active stance to resolve disputes and protect companies from improper trademark infringements and unfair competition.” Read on>>

Market Entry: People’s Republic of China (Pillsbury Winthrop Shaw Pittman LLP):

“China is the world’s second largest economy, with an annual growth rate of more than 8 percent and a rapidly growing middle class. Foreign investment into China routinely exceeds US$100 billion a year. Businesses from all over the world must have a China strategy to remain competitive and succeed in the global marketplace. This Market Entry brief will cover some essential issues and questions confronting companies as they develop or expand their China strategies.” Read on>>

Spring 2013 Eye on China Newsletter (Foley & Lardner LLP):

“Until recently, the primary risk that China’s culture of business corruption posed to multinationals was that they might run afoul of the FCPA or the UK Bribery Act. However, if one believes the current Chinese government’s stated prioritization of combating corruption, multinationals might now do well to focus on local Chinese anti-bribery enforcement as well.” Read on>>

China Life Sciences Health Industry Client Briefing – March 2013 (Reed Smith):

“China Food and Drug Administration (‘CFDA,’ previously known as ‘SFDA’) issued a draft Notice on Soliciting Public Comments on the Special Approval Procedures for Innovative Medical Devices for Trial Implementation (‘Draft Special Procedures’). The Draft Special Procedures provide for a separate approval process aimed at encouraging the development of qualified, innovative products.” Read on>>

Phasing Out China’s One-Child Policy? (Fisher & Phillips LLP):

“In March, China’s leadership announced that the Ministry of Health and the National Population and Family Planning Commission will merge. This has been widely seen as a downgrade in authority for the latter commission, which oversees the implementation of China’s one-child policy. In fact, this governmental action has raised questions about whether China’s one-child policy itself will be eventually phased out.” Read on>>

Distribution in China – Legal Issues (McDermott Will & Emery):

“Foreign companies looking to sell their goods to Chinese businesses and the increasingly affluent Chinese consumer do so either directly or indirectly. The direct method requires a company to establish a presence in China and undertake the import or manufacture and subsequent distribution of its goods. The indirect method involves either selling the goods to a Chinese buyer that resells the goods in China, or appointing a commercial agent in China that introduces prospective buyers to the foreign company.” Read on>>

Work and Resident Permit Applications of Foreign Employees in China (Sheppard Mullin Richter & Hampton LLP):

“The most important issue for foreigners working in China is to apply for work and resident permits with Chinese authorities. Compare with the procedures and documents required for foreigners who work for a foreign enterprise’s representative office in China, those for the foreigners working for foreign invested enterprises are more complicated and time consuming. Let’s take the latter as an example to provide some general and useful information on the work and resident permit applications for foreigners working in China.” Read on>>

New Rules for China’s RQFII Regime (Dechert LLP):

“At the January Asian Financial Forum in Hong Kong, the Chairman of the China Securities Regulatory Commission (‘CSRC’), Mr. Guo Shu Qing, stated that Mainland China could increase the level of investment quotas for both the Renminbi Qualified Foreign Institutional Investor (‘RQFII’) and Qualified Foreign Institutional Investor regimes by ten times. True to form, the CSRC soon after raised its initial aggregate investment quota of RMB20 billion for RQFII schemes to a total allocated quota of RMB270 billion. More recently, on 6 March 2013, the CSRC announced the further liberalization of the RQFII regulations to support further expansion of Mainland China’s capital markets.” Read on>>

Amway’s Lessons in China: How to Weather the Compliance Storm (Thomas Fox):

“Amway entered the Chinese market in 1995 but found that it was locked out of the market in 1998, when the Chinese government outlawed the direct sales model for Western companies. The Chinese government made this change because it believed that some direct sales models were simply scam artists, taking advantage of the Chinese peoples’ desire for all things Western. This would have appeared to sound the death knell for Amway in China as the company had never built or operated out of fixed retail outlets. The story of how Amway overcame this change in Chinese law and eventually prospered financially has some interesting insights for the compliance practitioners.” Read on>>

China FDA Publishes Draft Measures to Accelerate Medical Device Approvals (Ropes & Gray LLP):

“The China Food and Drug Administration (previously known as the State Food and Drug Administration) (the ‘CFDA’) has published drafts of two tentative measures, Fast Track Approval Process of Innovative Medical Devices and Circular on Simplification of Dossier Required for Medical Device License Renewal and Amendment, for public comments through March 31, 2013. Both measures reflect the CFDA’s intention to expedite the approval process for certain medical device products.” Read on>>

China Releases New Essential Drug List (Ropes & Gray LLP):

“China’s Ministry of Health released the new essential drug list (the ‘2012 EDL’) on March 15, 2013, effective as of May 1, 2013. Essential drugs are those which meet basic health care demands in suitable dosage forms with reasonable prices and a guaranteed supply. Essential drugs shall be made available at all grass roots health care services providers and will be fully reimbursed by the Basic Medical Insurance. By rolling out the 2012 EDL, the government aims to meet the basic clinical needs, reinforce the collective tendering and procurement process for essential drugs, and contain health care costs.” Read on>>

China Real Estate Update (Morrison & Foerster LLP):

“China property prices have continued to trend upward despite the government’s previous efforts to cool the real estate market. Such efforts include, among others, limiting the number of residential properties that a household may purchase and raising the down payment requirement. On February 26, 2013, the General Office of the State Council promulgated the Circular of the General Office of the State Council on Continuing Regulation of the Real Estate Market (in Chinese, 国务院办公厅关于继续做好房地产市场调控工作的通知).” Read on>>

Supreme People Court’s Interpretation on Employment Law Issues (Sheppard Mullin Richter & Hampton LLP):

“Employers need be aware of a recent interpretation issued by the PRC Supreme Court which clarifies a number of employment issues related to service year, non-competition, amendment to employment contract and employment relationship of foreign individual. The PRC Supreme People’s Court issued the Interpretation on Several Issues concerning the Application of Laws in Labor Dispute Case (IV) on January 18, 2013 which became effective on February 1, 2013.” Read on>>

China Clarifies Fast Track Approval Eligibility for Novel Biologics (Ropes & Gray LLP):

“The Chinese State Food and Drug Administration (‘SFDA’) created a fast track review and approval process for novel drugs in its Drug Registration Rules issued in 2007. The fast track approval process is available for (1) active ingredients and their finished formulations derived from plants, animals or minerals, which have never received any market authorization in the world or newly discovered crude drugs or their finished formulations; (2) chemically active pharmaceutical ingredients and their finished formulations or biologics which have not received any market authorization in the world; (3) new drugs which are used to treat AIDS, malignant tumors, or rare diseases and have obvious clinical advantages; or (4) new drugs used to treat diseases for which no effective treatment is available.” Read on>>

Find additional updates on China at JD Supra Law News>>