The Great Shanghai Expat Exodus – Mark Schaub

 

Mark Schaub

China veteran and lawyer Mark Schaub dives into the issue of the upcoming exodus of ex-pats from Shanghai, triggered off by the stringent COVID-19 lockdowns. More foreigners than ever will be leaving, while fewer are coming to replace them unless their companies reinvent themselves. But to a large degree, this is a long overdue cleanup in a dynamically changing climate, he argues in his second weekly column China chit-chat.

Mark Schaub:

 COVID is deadly to the vulnerable – this applies to businesses as well as people. In the West some businesses were hit hard but bounced back quickly. In the West COVID sped up the demise of old-fashioned retail, chain restaurants past their prime and often small businesses.  At lot of these businesses had already lost their way and COVID just sped up the inevitable. For a long time, I have wondered whether foreign invested enterprises in China needed a shakeup. Many have been shielded by being in a growth market (but now being squeezed by competitors), having a profitable niche (but these niches are now also becoming battlegrounds), headquarters knowing China is too important to ignore but also a tough market on which they are not willing/able to spend their time on but also unwilling to fully empower the local management.

For many Western businesses the question going forward will be is can you continue to succeed in a dynamic market like China if management on the ground cannot take decisions dynamically? Can you survive against more agile competitors? Does it make sense to still be in the Chinese market.

More in the China chit-chat.

Mark Schaub is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.

Are you looking for more experts in managing your China risk? Do check out this list.

Can China’s tech firms still list in the US? – Mark Schaub

 

Mark Schaub

China’s tech firms have faced US listing limitations on both US and China regulations. China lawyer Mark Schaub look at the new issues tech firm face on data, privacy, VIE’s, and other regulations for listing in the US at the vlog of his law firm KWM.

Mark Schaub is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.

Are you looking for more strategic experts at the China Speakers Bureau? Do check out this list.

Sourcing, supply chain challenges and the new 5-year plan – Mark Schaub

 

Mark Schaub (right top) discusses supply chains in China

Lawyer and China veteran Mark Schaub looks at how foreign firms have been sourcing in China over the past 20 years, and how supply chain challenges developed, at the latest webinar of his law firm KWM. “The real market is now the domestic market,” he says.

Mark Schaub is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.

Are you looking for more strategic experts at the China Speakers Bureau? Do check out this list.

How China deals with smart cars – Mark Schaub

 

Mark Schaub

China has issued a wide range of new rules on cybersecurity, data exchange, and consumer protection that will define the development of smart cars, says China-lawyer Mark Schaub in an extensive analysis of the recent regulations, at Lexocology.

Mark Schaub:

China has established its main legal regime in regulating cybersecurity, data security and personal information protection with the promulgation of Cybersecurity Law, the Data Security Law and PIPL. Smart cars will be collecting, processing and transferring data at levels previously undreamt of. However, such activities will prove to be a great challenge to the Chinese regulators. Following the effectiveness of the Data Security Law, the PIPL and the Management Provisions, we expect to see enforcement against some major players to make it clear that China will enforce data security and personal information protection. Companies that will be affected should consider the following: (1) Consider data security issues in the process of designing, producing, selling, operating, maintaining and managing cars, and reduce the amount of data collected and stored in car to the greatest possible extent.(2) While using big data for commercial operations, safeguard the users’ right to know and implement technical safeguards to desensitize and anonymize data, as well as preventing misuse or unauthorized third-party access.(3) Multinational companies or Chinese companies with R&D centers outside China should consider implementing localized storage as soon as possible by establishing data centers within China and enhancing local R&D capabilities in China.(4) Finally, companies would be well advised to conduct a systematic review and assessment of the current state of their data handling. Business operations that clearly do not comply with the requirements of the Management Provisions should be adjusted in a timely manner.

More at Lexocology.

Mark Schaub is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.

Are you looking for more articles by Mark Schaub on different subjects? Do check out this list.

China’s road to the Personal Information Protection Law (PIPL)– Mark Schaub

 

Mark Schaub (top right)

China passed in August 2021 its Personal Information Protection Law (PIPL), comparable to Europe’s GDPR. China lawyer Mark Schaub has at his webinar a look back at the road to PIPL. The PIPL will be in force on November 1, 2021.

Mark Schaub is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.

Are you looking for more experts on China’s digital transformation at the China Speakers Bureau? Do check out this list.

What is happening in China’s education industry – Mark Schaub

 

Mark Schaub (left)

China’s authorities have been cracking down on education, tutoring, and foreign teachers, scaring foreign firms and teachers. China lawyer Mark Schaub summarizes an earlier webinar under Chatham rules. No reason to panic, he says at his vlog. “It makes completely sense what the government is currently doing. If there is a demand, there will be a way to carry on.”

Mark Schaub is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.

Are you looking for more strategic experts at the China Speakers Bureau? Do check out this list.

How can NGOs survive in China? – Mark Schaub

 

Mark Schaub

In recent years NGOs have been seeing tougher regulatory oversight, including visits from the police forces, urging them to comply with China’s regulations for NGOs. China lawyer Mark Schaub dives into the recent law for NGOs and concludes that survival in China is possible, he writes for the China Law Insight.

Mark Schaub:

Foreign NGOs have become a more established part of the China economic and social landscape.

By some counts there are some 7,000 foreign NGOs operating in China[8] in some form or another – official or under the radar. However, most commentators believe there are some 500 to 700 foreign NGOs registered officially as Representative Offices in China and many more engaging in temporary activities.

Many of these registered foreign NGOs are trade promotion bodies or guild like organizations. These tend to be far less controversial organizations than NGOs dedicated to political or social issues. In our experience, the Chinese authorities have been even handed in dealing with these entities provided the Overseas NGOs have agreed to bring their operations in line with the legal requirements.

More in the China Law Insight.

Mark Schaub is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.

Are you looking for more political experts at the China Speakers Bureau? Do check out this list.

Why Shanghai is (mostly) better for your China investment – Mark Schaub

 

Mark Schaub

China lawyer Mark Schaub tells why in most cases foreign companies are better off in Shanghai, compared to other cities in the mainland, in a wide-ranging discussion on myths many have on China, in his vlog.

Mark Schaub is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.

Are you looking for more strategic experts at the China Speakers Bureau? Do check out this list.

What are VIE’s – Mark Schaub

 

Mark Schaub

China’s government is trying to control its tech sector and VIE’s (Variable Interest Entities) are high on their agenda. But outside the China business, very few people know what VIE’s are and China lawyer Mark Schaub reposted his vlog on what VIE’s actually are, even though they are a key feature in China’s tech sector.

Mark Schaub is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.

Are you looking for more experts helping to deal with the fallout of the trade war? Do check out this list.

How negotiations in China changed in the past 25 years – Mark Schaub

 

Mark Schaub

China-lawyer Mark Schaub looks back at how negotiations in China have changed compared to 25 years ago. Now, deals are made much easier, and lawyers no longer attend negotiations on basic deals. Business partners can solve often their problems without a large delegation of lawyers on both sides, he tells on his vlog.

Mark Schaub is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.

Are you looking for more strategic experts at the China Speakers Bureau? Do check out this list.

Data security rules for the automotive industry – Mark Schaub

 

Mark Schaub

China’s legislators have set another step in regulating data security, this time for the automotive industry, by publishing a draft for comments. China-lawyer Mark Schaub gives an overview of the plans for the China Law Insight. “Companies would be well advised to conduct a systematic review and assessment of the current state of their data handling,” he concludes.

Mark Schaub:

China has continuously strengthened legislation and regulation on cybersecurity, data security and protection of personal information protection.

Automated driving and smart cars will be a major challenge to the Chinese regulators. Smart cars will be collecting, processing and transferring data at previously undreamt of levels. The authorities will need to balance the convenience of automated technology against cybersecurity and privacy concerns. China is accelerating its pace of promulgating laws, regulations, policies and standards to nurture the intelligent vehicle industry but at the same time have in place regulations to ensure such technologies are safe.

The Draft strengthens the protection of personal information and secures data in China’s automotive industry.

However, we believe that some provisions of the Draft require clarification and there is also room for improvement as to how the Draft fits in with other laws. Big data is an important basis for the rapid development of self-driving cars and China’s automotive industry but a balance must be struck between technological innovation and data security. [2]

The Draft will affect almost all players engaged in the automotive industry. Companies that will be affected should keep a close eye on the legislative process of the Draft and start making preparations now to minimize disruption to their operations. In particular:

• Consider data security issues in the process of designing, producing, selling, operating, maintaining and managing cars, and reduce the amount of data collected and stored in car to the greatest possible extent.

• While using big data for commercial operations, safeguard the users’ right to know and implement technical safeguards to desensitize and anonymise data, as well as preventing misuse or unauthorized third-party access.

• Multinational companies or Chinese companies with R&D centres outside China should consider implementing localized storage as soon as possible by establishing data centres within China and enhancing local R&D capabilities in China.

• Finally, companies would be well advised to conduct a systematic review and assessment of the current state of their data handling. Business operations that clearly do not comply with the requirements of the Draft should be adjusted in a timely manner. The companies should also consider formulating internal mechanisms and systems that comply with the Draft as soon as possible. Although the Draft has not come into force it is a clear indication of the Chinese authorities’ intent and clear direction as to where the policy is going.

More at the China Law Insight.

Mark Schaub is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.

Are you looking for more strategic experts at the China Speakers Bureau? Do check out this list.

Privacy app users high on legal agenda – Mark Schaub

 

Mark Schaub

China is gettings its digital agenda for its legislation in order, especially the protection of users’ privacy, writes China-lawyer Mark Schaub on the China Law Insight.  He looks at the call for comments on the Interim Provisions on the Administration of Personal Information Protection of Mobile Internet Apps.

Mark Schaub:

The mobile phone is likely to be the greatest point of vulnerability for Chinese consumers. Apps collect (often surreptitiously) massive amounts of data with the Chinese consumer having little inkling as to the purpose or extent to which their data is being processed and shared.

The Provisions signal a very welcome recognition that privacy on devices is important to safeguard privacy rights in real life. The Provisions recognize that standardization of measures and regulations are important so that there is a unified approach by the authorities.

The Provisions set common sense safeguards for personal information and, more importantly, also set out real life means by which to take action against errant Apps.

Although, the Provisions are being circulated for public comment it is unlikely that this will lead to any provisions being watered down. More likely, in the near future, the implementation of the Provisions, accompanied by the introduction of the Personal Information Protection Law, will provide a multi-layered legal system with sufficient teeth to protect personal information in China.

More in the China Law Insight.

Mark Schaub is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.

Are you looking for more strategic experts at the China Speakers Bureau? Do check out this list.

Beauty brands line up for China market, but still face legal challenges – Mark Schaub

 

Mark Schaub

China has been removing legal challenges for foreign brands to enter its lucrative domestic market, like compulsory animal tests. But China lawyer Mark Schaub warns there are still barriers in place and might stop fast market entry, he tells in Vogue. He lists two major ones.

Vogue:

One challenge is obtaining the certification of the manufacturing quality management system (QMS) for each manufacturer used for a product for the China market. The QMS is released by the country where the manufacturer is based, but it’s still not clear which jurisdictions the China National Medical Product Administration (NMPA) will recognise. Mark Schaub, international partner at King & Wood Mallesons, believes that France, Japan, South Korea and Spain will be the most likely countries at first. Other jurisdictions, especially those that are experiencing political friction with China, may face a longer wait. “It’s very unlikely that Australia will be recognised in the short-term,” he says…

Another hurdle is the appointment of a so-called Domestic Responsible Agent, necessary for all brands seeking registration with the NMPA. The agent is liable for safety issues related to imported products. The new provisions create tougher potential liabilities for the agent, including fines, employment bans and criminal liability. That makes it harder for brands to find a third party willing to take on the responsibility, says Schaub. “If there is a recall, the domestic responsible agent may be the first in the firing line, given that the company is protected by being overseas,” he notes.

More in Vogue.

Mark Schaub is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.

Are you looking for more strategic experts at the China Speakers Bureau? Do check out this list.

How China starts facilitating sales of autonomously driving cars – Mark Schaub

 

Mark Schaub

Selling cars in China has been notoriously difficult because of stringent regulations. Mass production of autonomous cars will only be possible when the government paves the legal way for those cars, and just that is happening, writes China lawyer Mark Schaub at the China Law Insight.

Mark Schaub:

China has accelerated its promulgation of laws, regulations, policies and standards related to autonomous cars in 2021. The Draft Admission Guide coupled with the Draft Regulations of Shenzhen Special Economic Zone on the Administration of Intelligent and Connected Vehicles for public comments and the Draft Proposed Amendments of the Road Traffic Safety Law issued by the Ministry of Public Security of China indicate that law makers are seeking real life solutions to the soon to be reality of autonomous cars.

The Draft Admission Guide sets out a commercial case for autonomous cars as it sets admission conditions for autonomous cars and their manufacturers. These requirements understandably centre on the core issues of safety and security. Further, and underscoring safety concerns, at present the authorities are only considering mass production of Level 3 and Level 4 autonomous cars in China. Level 5 autonomous cars are expected to be some way down the track.

More details at the China Law Insight.

Mark Schaub is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.

Are you looking for more strategic experts at the China Speakers Bureau? Do check out this list.

How China moves on legislation on autonomous driving cars – Mark Schaub

 

Mark Schaub

China is moving fast on setting up legislation on the development of autonomous driving cars in China, in tandem with the fast technological and commercial developments, writes China-lawyer Mark Schaub in the China Law Insight. These detailed regulations will have a significant and positive impact on the industry, he adds.

The China Law Insight

The Ministry of Public Security Draft Proposal and the Shenzhen Draft for Public Comments mark the first step in China’s legalisation specifically for autonomous cars. These regulations will have a significant and positive impact on the development of autonomous cars in China.

Their provisions on liability will directly impact the development of technologies and business models for autonomous cars in China as well as requiring changes in how contractual arrangements between automated driving system developers and carmakers are made.

Despite the positive elements it should be noted that much is left to be clarified and there are already issues in respect of how to ensure consistency between laws. The classification of autonomous cars in the Shenzhen Draft Regulations seems to differ from that outlined in the MPS Proposed Amendments.

The term “autonomous cars equipped with drivers” in the Shenzhen Draft Regulations and the term “autonomous cars equipped with automated driving functions and manual operation modes” in the MPS Proposed Amendments seem to both primarily refer to conditionally automated vehicles (i.e., level 3). However, the two terms are expressed differently and the responsible party for traffic violations and liability also differ. While the MPS Draft Amendments identifies the responsible party to be the driver or the automated driving system developer, the Shenzhen Draft Regulations defines the responsible party to be the driver, manufacturer or distributor. The question of how to maintain consistency on liability for traffic violations or accidents of autonomous cars in the legislations may be an important consideration in the subsequent revision of these pieces of draft legislation.

Although the relevant provisions of the MPS Proposed Amendments and the Shenzhen Draft Regulations are still in draft form (and therefore the final official versions are likely to undergo significant amendment), the two drafts will undoubtedly directly drive China’s legislation in the field of autonomous cars and therefore have a profound impact on the commercialization of autonomous cars in China.

More at the China Law Insight.

Mark Schaub is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.

Are you looking for more strategic experts at the China Speakers Bureau? Do check out this list.

Cosmetics can become free of animal-tests, at least a little – Mark Schaub

 

Mark Schaub

Cosmetics sold in China require up to May 1, 2021, animal tests to prove they are safe for consumers. Since their users required cruel-free cosmetics, foreign manufacturers had a hard time selling cosmetics to Chinese consumers. But times are changing, although only a little, says China-lawyer Mark Schaub in the China Law Insight in a review of upcoming legal change.

Mark Schaub:

It is good news for animals. From May 1, 2021 international cosmetics companies can apply to sell ordinary cruelty-free cosmetics in mainland China through general import and general trade.

In a best case scenario this will open up the opportunity for distribution through physical stores or distributors (which despite the hype about online remains crucial in China). These cruelty-free brands will be able to be sold in physical stores in China after being registered/filed to NMPA and imported via general trade according to the Provisions.

Online sales will also change. At present cruelty free brands are effectively excluded from the mass online market (i.e. can only sell T-Mall Global rather than T-Mall). In our experience, consumer facing companies will sell far more on T-Mall than on T-Mall Global. Indeed international brands can establish their own shopping websites in China to sell products directly.

Another change may be in respect of the outsourcing of production to China. In recent years a number of international cosmetics brands transferred part of their manufacturing process to China in order to manufacture under a limited animal testing exemption which could be applied for in respect of domestically manufactured ordinary cosmetics. This change in regulation may make such practice less attractive.

Although Chinese cosmetics brands are becoming increasingly popular but the heritage of cosmetics can play an important role in the consumer’s relationship to a product. However, we anticipate that the roll out may be time-consuming and much will depend on the land of origin and the status of its negotiations with the Chinese authorities.

International cosmetics companies will embrace the ability to export cosmetics to China without animal testing. However, it is important to note that this loosening is coupled with increasingly strict regulations, introduction of a trusted manufacturer concept, improved health and safety standards and also an expanded role and potential liability for the domestic representative. Importing cruelty free will now be possible but it will be coupled with greater obligations and paperwork.

In addition, it should be noted that a crucial issue is that the recognition of the QMS is on a bilateral basis between China and the relevant manufacturing country. This may mean that brands may need to outsource manufacturing to countries that are recognized. This may be an issue for countries that are politically out of favor with China. Time will tell but it is likely that for international cosmetics companies will find that they will not need to test on animals for most products whether exported to China or domestically manufactured.

More in the China Law Insight.

Mark Schaub is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.

Are you looking for more experts on managing your China risk at the China Speakers Bureau? Do check out this list.