Doing Business in China – Dealing with Regulatory and Practical Issues in the Current Economic Climate Zhu Julie Lee ( 李竹 ...
About Foley & Lardner LLP  <ul><li>Foley & Lardner is an international law firm with 19 offices across the United States, ...
China’s $585 Billion Stimulus Package <ul><li>Fixed asset investment – infrastructure, transportation, energy and water co...
Opportunities to Foreign Investors <ul><li>Taking advantage of government spending and new policies, e.g., </li></ul><ul><...
Forms of Investment in China <ul><li>Traditional methods favored by foreign companies - Greenfield Investment and  M & A <...
Creative Forms of Investment in China <ul><li>Collaboration with Chinese companies </li></ul><ul><ul><li>Examples: </li></...
Creative Forms of Investment in China <ul><li>Collaboration with Chinese companies </li></ul><ul><ul><li>Advantages </li><...
Creative Forms of Investment in China <ul><li>Collaboration with local Chinese government </li></ul><ul><ul><li>Advantages...
Creative Forms of Investment in China <ul><li>Collaboration with local Chinese government – example:  </li></ul><ul><ul><l...
China’s Recent Regulatory Development <ul><li>Highlights of third amendment to Patent Law, effective Oct. 1, 2009 </li></u...
China’s Recent Regulatory Development <ul><li>Highlights of Labor Contract Law, effective Jan. 1, 2008 (regulations issued...
China’s Recent Regulatory Development <ul><li>Highlights of China’s Enterprise Income Tax Law, effective Jan. 1, 2008 </li...
China’s Recent Regulatory Development <ul><li>Highlights of Anti-Monopoly Law, effective August 1, 2008 </li></ul><ul><ul>...
China’s Recent Regulatory Development <ul><li>Highlights of Anti-Monopoly Law, effective August 1, 2008 </li></ul><ul><ul>...
<ul><li>Thank you </li></ul><ul><li>Zhu Julie Lee, Partner </li></ul><ul><li>Foley & Lardner LLP </li></ul><ul><li>Tel: (4...
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Zhu Julie Lee, Partner, Foley &amp; Lardner LLP (414) 297-5504 zlee@foley.com

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Ms. Lee\'s PowerPoint presentation from the 45th Annual Wisconsin International Trade Conference, May 12, 2009, Italian Community Center, Milwaukee, WI

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Zhu Julie Lee, Partner, Foley &amp; Lardner LLP (414) 297-5504 zlee@foley.com

  1. 1. Doing Business in China – Dealing with Regulatory and Practical Issues in the Current Economic Climate Zhu Julie Lee ( 李竹 ), Partner Foley & Lardner LLP Tel: (414) 297-5504 Email: [email_address] May 12, 2009
  2. 2. About Foley & Lardner LLP <ul><li>Foley & Lardner is an international law firm with 19 offices across the United States, and offices in Tokyo, Brussels and Shanghai </li></ul><ul><li>Over 1,000 attorneys worldwide provide comprehensive legal services to clients </li></ul><ul><li>Foley & Lardner is one of the oldest law firms in the United States with a history of 166 years </li></ul>
  3. 3. China’s $585 Billion Stimulus Package <ul><li>Fixed asset investment – infrastructure, transportation, energy and water conservation </li></ul><ul><li>Encouraging domestic consumption – tax reduction, subsidies and increased lending </li></ul><ul><li>Encouraging exports – increased export VAT refund rates, focusing on the labor-intensive, mechanical and electrical product sectors </li></ul>
  4. 4. Opportunities to Foreign Investors <ul><li>Taking advantage of government spending and new policies, e.g., </li></ul><ul><ul><li>Directly benefitting from government spending </li></ul></ul><ul><ul><li>Proper positioning to take advantage of the new market situation after the new infrastructure is in place </li></ul></ul><ul><ul><li>Reassessing global sourcing strategy </li></ul></ul><ul><li>Opportunity for creative collaboration with Chinese companies and local government </li></ul>
  5. 5. Forms of Investment in China <ul><li>Traditional methods favored by foreign companies - Greenfield Investment and M & A </li></ul><ul><ul><li>Advantages: control </li></ul></ul><ul><ul><li>Disadvantages: requiring significant initial capital outlay </li></ul></ul><ul><li>Creative forms of investment: collaboration with Chinese companies and government </li></ul>
  6. 6. Creative Forms of Investment in China <ul><li>Collaboration with Chinese companies </li></ul><ul><ul><li>Examples: </li></ul></ul><ul><ul><ul><li>Product development </li></ul></ul></ul><ul><ul><ul><li>Joint research </li></ul></ul></ul><ul><ul><ul><li>Joint marketing </li></ul></ul></ul><ul><ul><ul><li>Alliance agreement (suppliers, customers) </li></ul></ul></ul>
  7. 7. Creative Forms of Investment in China <ul><li>Collaboration with Chinese companies </li></ul><ul><ul><li>Advantages </li></ul></ul><ul><ul><ul><li>Does not require significant initial capital outlay </li></ul></ul></ul><ul><ul><ul><li>Flexibility to respond to uncertain business trends </li></ul></ul></ul><ul><ul><ul><li>Reduction of risk </li></ul></ul></ul><ul><ul><li>Disadvantages </li></ul></ul><ul><ul><ul><li>Success of the arrangement depends on the Chinese partner </li></ul></ul></ul>
  8. 8. Creative Forms of Investment in China <ul><li>Collaboration with local Chinese government </li></ul><ul><ul><li>Advantages – local government can establish local policies, approve local investment projects, allocate resources and control key industries </li></ul></ul><ul><ul><li>Disadvantages – a collaboration agreement with the government is generally vague and needs to be further defined by future actions of parties on a mutually beneficial basis </li></ul></ul>
  9. 9. Creative Forms of Investment in China <ul><li>Collaboration with local Chinese government – example: </li></ul><ul><ul><li>Rockwell Automation signed a strategic partnership agreement with Hebei Province in October, 2008, to cooperate on projects that help save energy, reduce emissions, protect the environment and achieve a sustainable economy. The initial focus of the cooperation will be on energy efficiency </li></ul></ul>
  10. 10. China’s Recent Regulatory Development <ul><li>Highlights of third amendment to Patent Law, effective Oct. 1, 2009 </li></ul><ul><ul><li>Damage cap for patent infringement increased </li></ul></ul><ul><ul><li>Patent co-owners' rights better defined </li></ul></ul><ul><ul><li>Administrative enforcement strengthened </li></ul></ul><ul><ul><li>Rules on inventions made in China liberalized </li></ul></ul>
  11. 11. China’s Recent Regulatory Development <ul><li>Highlights of Labor Contract Law, effective Jan. 1, 2008 (regulations issued Sept., 2008) </li></ul><ul><ul><li>Requiring written contracts </li></ul></ul><ul><ul><li>Non-compete: limited to senior personnel, two years in length, activities identical to those of the former employer, and payment post-employment </li></ul></ul><ul><ul><li>Severance payment: payable under a fixed-term contract unless the employee chooses not to renew </li></ul></ul>
  12. 12. China’s Recent Regulatory Development <ul><li>Highlights of China’s Enterprise Income Tax Law, effective Jan. 1, 2008 </li></ul><ul><ul><li>Elimination of previous tax incentives and creation of new tax incentives </li></ul></ul><ul><ul><li>Special rules for resident enterprises </li></ul></ul><ul><ul><li>Transfer pricing regulations </li></ul></ul><ul><ul><li>General anti-avoidance rules </li></ul></ul><ul><ul><li>Special rules on thinly capitalized entities </li></ul></ul>
  13. 13. China’s Recent Regulatory Development <ul><li>Highlights of Anti-Monopoly Law, effective August 1, 2008 </li></ul><ul><ul><li>Prohibition of anticompetitive agreements </li></ul></ul><ul><ul><ul><li>Examples of prohibitive horizontal agreements: fixing prices or output, or restrictions with respect to new technology </li></ul></ul></ul><ul><ul><ul><li>Examples of prohibitive vertical agreements: fixing prices or setting a minimum resale price </li></ul></ul></ul><ul><ul><ul><li>Exempt if an agreement has positive effects such as promoting efficiency or improving product standards </li></ul></ul></ul>
  14. 14. China’s Recent Regulatory Development <ul><li>Highlights of Anti-Monopoly Law, effective August 1, 2008 </li></ul><ul><ul><li>Prohibition on the abuse of a dominant market position </li></ul></ul><ul><ul><ul><li>Meaning of dominance: ability to control the price, quantity or other trading terms of goods </li></ul></ul></ul><ul><ul><ul><li>Example of abuse: price discrimination, exclusive dealings and tying </li></ul></ul></ul><ul><ul><li>Merger control </li></ul></ul>
  15. 15. <ul><li>Thank you </li></ul><ul><li>Zhu Julie Lee, Partner </li></ul><ul><li>Foley & Lardner LLP </li></ul><ul><li>Tel: (414) 297-5504 </li></ul><ul><li>Email: [email_address] </li></ul>
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