Legal & Regulatory
By Srinivas Raman
China recently abolished an archaic FDI law from 1995 regulating the establishment of representative offices (ROs) of foreign firms doing business in China.
The reform is part of a larger initiative to cut red tape in China and attract greater foreign direct investment (FDI) amid concerns from the foreign business community over the country’s business environment.
The repeal of the law streamlines the setup process for foreign investors establishing ROs in China, and marks another effort by the government to reform administrative processes.
By Srinivas Raman
The recent ruling by a Chinese court in a trademark infringement dispute concerning New Balance’s logo marks a watershed moment in China’s intellectual property rights (IPR) regime.
The court awarded a landmark decision in favor of New Balance (NB) against Chinese competitors deemed to have infringed the company’s IPR, reflecting China’s recent efforts to improve IPR protection.
While foreign firms doing business in China may breathe a sigh of relief at this decision, they must also recognize the implications of the decision against the backdrop of the Chinese trademark regime.
By Dezan Shira & Associates
Editor: Grace Tate
In China, companies seeking to engage in the online retail industry are required to first set up a company and a physical store. For investors not yet fully prepared for setting up a company in China, global sites launched by China’s local e-commerce platforms might be the best choice to sell to China’s lucrative market.
Tmall, China’s largest B2C platform owned by e-commerce conglomerate Alibaba Group Holdings Ltd., controls over 50 percent of China’s B2C market share. In 2013, Tmall launched Tmall Global: a cross-border, online platform that allows international brands and retailers to sell directly to Chinese consumers without having a physical presence in China.
By Thibaut Minot and Alexander Chipman Koty
When establishing a foreign-invested enterprise (FIE) in China, investors face a number of strategic considerations that can have long-term effects on their businesses – including determining the right amount of registered capital to commit to the company.
Registered capital is the initial cash investment dedicated by the shareholder(s) to an FIE, investment that is registered with China’s Administration for Industry and Commerce (AIC) and, once injected, instrumental to begin operations. This is not to be confused with the total investment prescribed to the company, also stipulated in the articles of association, which not only encompasses registered capital but also the possible foreign loan amount that can be lent to the FIE.
By Dezan Shira & Associates
Editor: Zolzaya Erdenebileg
Free trade zones (FTZs) are a specific type of special economic zone (SEZ) where goods can be imported, handled, manufactured, and exported without direct intervention from Customs. They play an important role in modernizing China’s business landscape and serve as areas where authorities can experiment with pro-business regulations.
Currently, there are 11 FTZs in China; seven planned FTZs were announced in August 2016. Each FTZ has an industry focus and matching incentives to attract investment. FTZs are of critical consideration for foreign firms, but this decision process is highly dependent on an investor’s business focus and growth prospectus.
The latest issue of China Briefing Magazine, titled “China’s Investment Landscape: Finding New Opportunities“, is out now and currently available to subscribers as a complimentary download in the Asia Briefing Publication Store.
In this issue:
- The New Investment Catalogue and Negative List
- Investing in Free Trade Zones
- The Business Reform Agenda
By Alexander Chipman Koty
A company in northwest China that has gained notoriety for its verbose name – ‘There Is a Group of Young People With Dreams, Who Believe They Can Make the Wonders of Life Under the Leadership of Uncle Niu Internet Technology Co. Ltd.’ – will have to change its name in the wake of new company naming regulations.
The Rules for the Prohibition and Restriction of Enterprise Names, released by China’s State Administration for Industry and Commerce (SAIC), ban businesses from registering company names authorities consider “weird”, overly long, politically sensitive, or mimicking existing brands. Businesses already registered with names authorities deem inappropriate may be compelled to alter them. The new rules came into effect on July 31, 2017.
By Vasundhara Rastogi
Americans are feeling less optimistic about doing business in China.
In its latest survey, the American Chamber of Commerce in China found that more than three-quarters of US-based companies expressed doubts about investing in China, while over 45 percent of those already in the country stated that their revenues were dropping.
China’s economic growth has slowed down since 2012. Its gross domestic product rose only 6.7 percent in 2016, registering its slowest pace of expansion in two decades.
Apart from sluggish growth, China’s challenging regulatory environment and fierce market competition makes doing business much harder for foreign companies in the country.
Yet, two global fast-food giants – McDonald’s and Starbucks – continue to expand their operations in China. In this article, we discuss how the two companies have pursued and expanded their operations, and why China is still seen as a valuable market.