What you should not miss at the new PRC company law – Mark Schaub

 

Mark Schaub

China will implement a new PRC company law and veteran lawyer Mark Schaub expects most people will doze off before they make it to the end of that law. In his China Chit-Chat website, he summarizes the main changes and insists you should pay attention. He covers important issues like: “The new PRC Company Law sets a 5-year deadline to make promised capital contributions. Crucially this requirement will apply retrospectively. Ouch!” And who is the boss in a company, and how to fire a director.

Mark Schaub:

Being an external director of a WFOE was always quite a lark. You would go to board meetings (often in Hainan), were treated with great respect and as someone external to daily operations you did not really know why you were there, so you did not need to concentrate. Sometimes you would daydream about what superpowers it would be good to have.

Sadly, these halcyon days of daydreaming about being a superhero are consigned to the past as the PRC Company law ramps up (again) personal liability for directors. The threat of personal bankruptcy somewhat outweighs the pleasure of an occasional Gin and Tonic at a board meeting where all you need to do is nod and ask the occasional question to show you are awake even if such questions showed you to be not very well informed.

Much more at the China Chit-chat.

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

Are you looking for more experts in dealing with your China risks? Do check out this list.

A plea for solid labor relations – Zhang Lijia

Zhang Lijia

Former rocket factory worker and author Zhang Lijia discusses labor relations in China in an opinion piece at the South China Morning Post after a video about a dismissal of a worker caused an online uproar. “The government’s commitment to protect its workers is on the line here,” she argues.

Zhang Lijia:

This month, a short video attracted a huge amount of attention on China’s social media. In the clip, a female executive was seen sacking a male employee. When he protested that she had violated the country’s labour law, she spoke rudely to him, admitting: “I’ve violated the law – so what?” He could go ahead and sue her, she said, but he would never get anywhere because she “knew people” in labour arbitration.

The video has caused a public outcry and widespread condemnation. There is heated debate over how she could blatantly disregard the law, whether China’s labour laws were working well enough and how China can better protect worker rights.

Having once been a factory worker for 10 years, I maintain a keen interest in labour relations; I also feel for my fellow workers.

China enacted comprehensive labour legislation only in 2008, with the Labour Contract Law, the Labour Dispute Mediation and Arbitration Law, and the Employment Promotion Law – all important legal milestones aimed at addressing workers’ grievances and protecting their rights. In particular, the Labour Contract Law states that companies must provide each employee with a written contract and stipulates guidelines on termination: there should be a 30-day notice or an extra month’s salary in lieu.

After outraged netizens started digging around for the identity of the woman and the company, the Beijing-based chip design company issued a statement on January 8, apologising for causing the furore. It said its executive had been reprimanded and suspended from work. It also said the sacked worker was let go about five months into his six-month probation because of a lack of competence, and that the termination was lawful.

Labour disputes in China are a relatively new phenomenon and it is not uncommon for companies to fire workers just before the end of their probation. As economic and social inequalities increased with China’s opening up, so have labour tensions…

Given the circumstances, the authorities must try harder to protect workers’ rights to fulfil their duty of care. They should thoroughly investigate the latest allegation of unfair dismissal and severely punish those who violate labour laws.

They should also introduce more legal aid, work to simplify the arbitration procedure, and ensure all verdicts are obeyed and wronged employees are properly compensated.

The government’s commitment to protect its workers is on the line here. China is a socialist country, built as a state for and of the workers. A failure to protect workers undercuts the Communist Party’s credibility, especially if the poor enforcement of labour laws is allowed to continue and cases start to mount.

More at the South China Morning Post.

Zhang Lijia is a speaker at the China Speakers Bureau. Do you need her at your 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.

Plea

How the 1995 employment law changed China – Mark Schaub

 

Mark Schaub

China veteran Mark Schaub discusses how China changed since it introduced the 1995 Employment Law and how it impacted the way foreign businesses could work. Before 1995 few people had a written labor contract, but since the introduction of the law much changed for workers and lawyers, he explains.

Mark Schaub is a speaker at the China Speakers Bureau. Do you need him at your meeting? 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.

Self-driving cars: legal issues on data collection - Mark Schaub

Mark Schaub

Autonomous driving cars cause a range of issues, for example on collecting data to make them possible. Lawyer Mark Schaub looks at the legal issues when foreign companies have to send data to their headquarters outside China, for the China Law Insight.

Mark Schaub:

During the data collection, the sensors of the test vehicle generally will capture the images and information of other vehicles, pedestrians, cyclists as well as traffic signs, traffic lights, road edges, traffic lanes, other infrastructure and landscape. 

Accordingly harvesting and analyzing data are key for many carmakers, auto suppliers and high tech companies. Moreover, international companies active in China will often intend to transfer all or part of such information collected in China to their headquarters or affiliates overseas for further processing, e.g., labelling, validation and function development, etc. 

However, both driving a car on China’s public roads to collect data through sensors equipped on vehicles (“Data Collection”) and transferring such data abroad (“Data Transfer Abroad”) may give rise to legal risks under PRC law... 

In China, surveying and mapping activities are strictly regulated due to issues of national security, concerns over demarcation of borders and state secrets. 

Surveying and mapping is defined broadly under PRC Surveying and Mapping Law. According to Article 2 of the PRC Surveying and Mapping Law, surveying and mapping refers to the surveying, collection and presentation of the shapes, sizes, spatial position and attributes etc. of the key elements of natural geography or man-made facilities on the surface, as well as the activities in processing and providing of the obtained data, information and results. 

The PRC Surveying and Mapping Law requires that surveying and mapping in China be carried out exclusively by entities holding a license issued by the relevant governmental authority. 

For the Data Collection, if only radar and cameras are used then the likelihood (in our opinion) that such activities will fall within the scope of surveying and mapping under PRC law may not be high. However, use of positioning units and/or LiDAR will likely lead to such data collection falling within the scope of surveying and mapping. The risk level will increase if the Data Collection is conducted by a foreign entity or a foreign invested enterprise (FIE).

Much more at the China Law Insight.

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

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The new foreign investment law: an improvement - Mark Schaub

Mark Schaub

China's new foreign investment law will go in to practice on January 1, 2020, replacing three older laws. China veteran and lawyer Mark Schaub looks at the law in details, and sees improvements, he writes at the China Law Insight.

Mark Schaub:

It has been more than two months since China’s new Foreign Investment Law (FIL) was passed at the second session of the 13th National People’s Congress (NPC) of China on 15 March 2019. Some thought the FIL was an indication that the US-China trade talks would soon be wrapped up. This is unlikely. Despite this the FIL has shown China reiterating a willingness to deepen reform and open up its economy.    

The FIL, to be effective on 1 January 2020, is largely welcomed globally. It shows the Chinese government’s addressing concerns voiced by international companies such as forced technology transfers; level playing field for foreign invested companies; protection of intellectual property rights and access to public procurement projects.    

In respect of improving the protection of IP rights China has emphasized – as much for its internal development as to placate overseas rights holders – on improving the rights of IP holders as well as the enforcement of such rights. Problems still exist but the situation is far better than it was even 5 years ago. China’s government also moved to remove requirements that forced technology transfers (i.e. time limits; continued use after expiration; ownership of improvements; etc.).

Much more at the China Law Insight.

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

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Sex discrimination ends up in court - Zhang Lijia

Blatant discrimination on the job market is one of the major challenges for women in China. But they are gearing up to sue companies and institutions in court, if their adds search for ´male only´, notes author Zhang Lijia in ChinaFile.

Zhang Lijia:

+Lijia Zhang 

But Huang was determined. “I wanted to go ahead (with the court case) even though I didn’t have the money for a lawyer,” says Huang, who gets by with piecemeal jobs and still hasn’t found full time employment. A friend introduced her to Cao Ju who offered not only useful advice and encouragement but also some funds to cover her legal costs. “There’s no better way to spend the money,” says Cao Ju. “Squeezing money out of the court case was not my intention. Fighting against sex discrimination is.” Cao also organized an online petition to rally support for Huang. So far, more than 400 women from all over the country have signed it. 

Again with friends’ help, Huang found Nanjing-based lawyer Xu Ying who was willing to take on her case. “To me, the case is blatant sex discrimination,” says Xu. “Even the recruiter’s excuses rest on gender stereotypes: women are not suited to travel or they’re too weak to carry a suitcase. The only thing that matters here should be the applicant’s ability, not the person’s sex.” 

The Law of the People’s Republic of China on Promotion of Employment, adopted in 2007, includes explicit language forbidding gender discrimination in hiring and noting that, “When an employing unit recruits female workers, it shall not have such provisions as restrict female workers from getting married or bearing a child included in the labor contract.” The law also states that a job-seeker has the right to sue the employer in cases of gender discrimination. Why then have there been so few of such cases in China? 

“Generally speaking, people in China are not very aware of their legal rights,” explains lawyer Xu. “There’s no tradition of suing an employer. And of course, going to court is expensive, time consuming, and the whole legal system doesn’t seem to be geared to cope with such cases.” 

Indeed, it took well over a year for a Beijing court just to accept Cao’s case. It refused the case at first, citing a lack of precedent. Huang fared a little better. After back and forth negotiations with a Hangzhou court, the hearing took place on September 10, with the accused absent. The verdict is due in December. 

A man from the Oriental Cooking School’s HR department, who refused to disclose his identity, said there was no need to appear for the hearing as the court will make a correct judgment according to facts. “Everything the plaintiff said was a lie. Sex discrimination? If so, why are there so many women teachers working at our school?” 

Given the difficulties of filing a lawsuit, some have sought other methods to tackle gender discrimination. On December 26, 2013, eight female students from different cities in China wrote to their local governments to report job listings they suspected were discriminatory. Altogether, they found 41 such cases. 80% of jobs advertised were white-collar jobs that were not physically demanding, offered mostly by privately-owned enterprises. The women received hardly any response from the authorities. But young women from across the country continued the reports and they have gradually drawn more responses from the authorities. 

The reports and lawsuits take place at a time when China is witnessing an increase in women’s rights activism. 

In November 2013, ten university students, wearing giant paper pants over their winter coats, staged a demonstration in front of a local government building in Wuhan to protest invasive gynecological exams imposed on women applying for civil servant jobs. Earlier that year, 20 women across the country shaved their heads, silently voicing their anger against discrimination in admissions standards at universities. Some universitiesset higher standards for entrance examination scores for female students. In Beijing, three women dressed up in blood-stained wedding gowns to protest domestic violence; in Guangzhou, women queued in front of a toilet to protest against the lack of public toilets for women.

More in ChinaFile. Zhang Lijia is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers´ request form. Are you looking for more female speakers at the China Speakers Bureau? Do check our recently updated list.  

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• The improving position of women - Zhang Lijia
• China unveils steps to improve judiciary
• How to deal with China´s aging population - Zhang Lijia
• Watch out world: China is coming

China's home-grown green laws - Charles McElwee

Charles McElwee

China's environmental laws use elements from green laws in Europe, the US and Japan, but the result is uniquely Chinese, writes environmental lawyer Charles McElwee in ChinaDialogue.

While China’s environmental law regime comprises a set of national laws and regulations similar to many western models, it is important to understand that the Chinese tend to define the fundamental aspects of their environmental legislation in terms of a set of systems or principles, not individual national laws.

As Dr Yin Fucai of the Anhui province Environmental Protection Bureau has put it: "[i]n China, every environmental man knows eight environmental regulations and policies.” Or seven or ten depending on which “environmental man” you are talking to, but the perspective revealed by this statement is the same. Most observers seem to ascribe to the notion that there are “three principles” (such as “polluter pays”) and at least seven generally accepted “management rules” (for instance the “Three Simultaneous” system – which requires that a facility and its mandated pollution control measures are designed, constructed, and placed into operation at the same) at the core of China’s environmental regulatory scheme.

These principles and regimes were formulated primarily during the three national environmental-protection conferences in 1973, 1983 and 1989 andset forth in the statements summarising the conference discussions. All of them were incorporated into the 1989 version of the Environmental Protection Law, and other laws and regulations adopted subsequently.

More in China Dialogue

 Charles McElwee is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.

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Being a monopoly is fine if you are state-owned

The leading financial magazine Caijing summerizes twenty years to legislative work on the anti-trust laws.

However, questions remain about implementing and enforcing the voluminous law, which includes 57 articles and eight chapters. In addition, some sensitive issues raised during decades of discussion were dropped or glossed over with vague language.
For example, the issue of administrative monopolies -- which are common in local governments and influence national sectors including telecommunications, electric power and education – is covered in the fifth chapter but not covered by the initial definition of a monopoly in the first chapter, said legal professor Dr. Wang Baoshu of Tsinghua University.

Yahoo! lied in Shi Tao's case

Shi Tao

Rconversation points at new material found by the Dui Hua foundation that proves Yahoo! legal counsel has been lying in a congressional hearing when he said that his company did not know why the judicial authorities in Beijing wanted to go after the journalist Shi Tao.
Shi was - with the help of Yahoo! - convicted to ten years of jail for giving state secrets to foreigners.
The Dui Hua foundation has translated the original document. Rconversations links to it all.

Update: The Dui Huai foundation comes with additional prove in other cases Yahoo knew why the police was after journalists and internet users.

Only six face jail in Shanxi kiln scandal

Only six lower-ranked official will face criminal prosecuting, Shanxi government officials announced on Monday, writes Howard French in the International Herald Tribune. Not surprisingly, angry citizens are not pleased.

The announcement ... unleashed a torrent of strongly critical commentary on the Internet, with thousands of people in news discussion groups and on blogs denouncing what were widely perceived as light punishments, and questioning the failure to pursue criminal charges or allegations of corruption.
A serious political incident was first turned into a serious criminal case, and then slowly transformed into a matter of ordinary malfeasance," wrote one online commentator. "Once all of these rustlings are over, the same things are bound to happen again."

Update: Was obvious wrong here. One has been sentenced to death and 28 to jail, says the BBC.

How far can you go in blaming your employer

The case of a disgruntled foreign lawyer at a Chinese law firm is now definitely getting out of hand. Danwei reports they saw (and got screen shots) at Google ads of what appears to be a fake ad of the Zhong Lun Law Firm that in fact leads to the weblog of the lawyer.
I first decided to follow this case. An employee using a weblog to get even with an employer is an interesting case, regardless who is right or wrong. Obvious, Jeff Brauer was angry and it is always nice to have a peek in those private affairs.
The original post has now been deleted, after Jeff got a visit from his former boss and managing partner he perceived as threatening. But at least the managing partner promised him he would get the money he was entitled to and Jeff would delete the blog. He then did delete some entries but went on to disclose some practises at his former law firm that would suggest bribing judges. When you are in it for a compensation, not the best way to please your former employer.
Other, now deleted, posts had already raised my doubts on his ability to make sound judgments on what is really happening in China (here one in the Google-catch).
Obvious Jeff sees China as a country where law has no value and he has now decided to ignore the law himself. That might again illustrate some rather poor judgment skills that would become a major problem in seeking new employment.

Update: Well, the case seems to be settled, out of court and out of the blogs.

Working for a Chinese law firm

You thought that only migrant workers had problems in getting paid by their Chinese bosses. Well, according to this US lawyer Jeff the same happened to him when he worked for a Chinese law firm, the Zhong Lun law firm in Beijing. Unlike most migrant workers, this lawyer stared a weblog to document his complaints. That has now been discovered by one of the partners in his law firm and she is now rather angry:

I have seen your blog. You are the biggest liar I have ever seen in my life. You are seriously sick and need to see a doctor. By the way, I am not threatening you. I am going to sue you - that is exactly what I am going to do, and I will sue you for a huge amount of damages.

I'm going to watch this for a while.

The so-called IPR-losses

"I'm not sure you would agree," writes Shaun Rein in an email where he announces his latest contribution to Business Week, this time a strategy to beat piracy.
Well, Shaun for sure takes off at wrong leg by simply copying the figures the US companies claim they have been losing on piracy in China.

Some of the numbers are startling. The Business Software Alliance estimates that in 2005, 86% of all software used in China was pirated, accounting for a $3.9 billion sales loss.

That is an old trick: the BSA does as if there would be a market for legitimate software in China for US prices. That is not the case, but you do get nice big figures in that way.
Also, the assumption that Chinese consumers want rather genuine products in stead of the fakes as soon as they can afford it sounds rather outlandish:

One positive sign is that Chinese are in many ways no different from other consumers. Millions are entering the ranks of the middle class, and they want to look the part of the urban aristocrat. If they cannot afford genuine items they turn to touts on the street hawking fake Louis Vuitton, Tiffany (TIF), Montblanc (CFR.VX), olex, and Polo (RL) items. But as Chinese consumers become increasingly sophisticated, the situation is changing. Now consumers can value the difference between a real Giorgio Armani tie and a fake one.

I have no proof this is wrong, apart from the observations of the purchasing pattern. Now the Xiangyang market has been closed, they walk the extra mile to get their fakes. When asked by a researcher they would of course always deny they would buy fakes.
Probably there are some more items I would not agree on, but have to prepare to leave to Beijing right now. Will read the article further when the combination of time and wifi's allows.
(I like the way how he throws with name: that will make the search engines very excited.)

Who owns your brandname?

An interesting twist in the struggle between Danone and Wahaha, fortunately closely followed by AllRoadsleadtoChina. After some legal setbacks, Wahaha has played an interesting card. Wahaha's Zong's says that the Wahaha brandname was never transferred to Danone, so they cannot complain about him using it.

If this Is proven true, and the arbitrator’s find for wahaha… Well, needless to say we have a whole different ballgame… And danone is going to wish they paid zong the premium he was asking for.

The story is becoming more fascinating by the day. My bet is on Wahaha: not only are they in the best position to win this power struggle, they might have some strong legal arguments too.

Yahoo and free speech

I'm quite sure that it is about time that Yahoo and China Yahoo (or is it still Yahoo China?) hould talk to each other again, since I'm convinced that Jack Ma, who runs their China operations might have some misgivings about Yahoo's latest moves.
In short, when Yahoo China was not yet sold to Jack it helped the Chinese authorities to jail journalist Shi Tao for ten years. Then it sold most of its China operation to Jack Ma and tried to ignore accusations that they helped in jail a Chinese journalist.
Now, obvious that is no longer possible now Shi and others are suing Yahoo in the US. This is their latest:

"Yahoo is dismayed that citizens in China have been imprisoned for expressing their political views on the Internet," the company said in the statement faxed to The Associated Press, which asked Yahoo to comment on Shi's lawsuit.

Well, we were dismayed already quite some time before Yahoo was asked to defend itself in a US court. It just does not fit. I'm again dismayed and wonder how sincere Yahoo is now.

Update: I was already wondering why Yahoo wanted to cause trouble by themselves. But their shareholders are meeting on Tuesday and that could cause drama, say some.

SFCC discusses the labor contract law

prof. Liu Cheng

The Shanghai Foreign Correspondents Club organizes next week Wednesday a panel on China's draft labor contract law with professor Liu Cheng. Liu Cheng was one of the key debaters in the past few years on how the labor law should look like. He has been very outspoken in criticizing the American Chamber of Commerce for trying to water down the draft law.

He is joint by Ma Jianjun, a labor expert of the Jun He law firm in Shanghai.

From the fact that nobody from the American Chamber of Commerce in Shanghai is there, I assume that they have refused to participate, since I'm quite sure they have been invited. That might make the debate a bit one-sided, but you cannot force accused institutions to defend themselves.

The meeting starts at Wednesday May 30 at 7PM at the Foreign Culture Club at Jululu 889. Timely reservation is advised because of the limited seating here.

Shanghai agency caught in the stock market

A prominent Shanghai government departments has been using its capital to invest in three listed company, against explicit bans to do so, the Financial Times writes. The Shanghai Municipal Housing Maintenance Fund Management has been one of the top-10 shareholder in a variety of companies at the Shenzhen stock market. The agency is in charge of maintaining public spaces and get a levy of two percent on each purchase of apartments.

Fraser Howie, an expert on the Chinese stock market, said it was probable that other government units – including state-owned companies, local government, the police and the army – had been investing surplus funds in the stock market and their holdings could be as high as $125bn.

It reflects the worries by Hu Shuli, chief-editor of the financial magazine Caijing, who blamed the government for not doing enough to stop illegal activities at the stock markets.

Raving reviews for Schaub's book

Mark Schaub

"Again a raving review," yelled my friend, author and lawyer Mark Schaub on the phone earlier this evening. "In the Far Eastern Economic Review by Gordon Chang." Unfortunately, this formerly great magazine is not online, so you have to believe me that I have seen a scanned copy of this combination of dead wood and ink. Since the book makes at least twice fun about Mr. Chang's book, the Upcoming Collapse of China, Mark was pretty relieved most of the review was indeed raving.
Gordon Chang clearly was a bit annoyed ("One day I will have to get even."), but then, it is very hard not to make fun about a book that tells us in 2001 China will collapse within five years, when we are living in 2007 and a collapse looks futher away than ever.
Anyway, I noted many more positive reviews and since Mark Schaub sees because of lack of online activity his own website sinks away in the search engines, I have to show him the power of linking.
Eurobiz of the European Chamber asked Mark himself to write a review. That shows bad judgment on the part of the editors.
Cosmos books calls the book "lively and entertaining", but I seriously doubt whether they have read the book. Also The Beijing Review calls the book "lively and entertaining," so at least it is a spin the media liked. And the Law Librarians Blog call the book, surprisingly, "lively and entertaining".
There is still room for improvement: not too many reviews are online.
Of course I should mention here that Mark Schaub is one of the distinguished speakers in our upcoming China Speakers Bureau. I can assure you from personal observations that his speeches are even more lively entertaining than his book. Do drop me a line, if you have an interest.

Hong Kong wants to criminalize free speech

Peter Yu

At least, that would be the catchy headline I would give to the much more balanced approach by Rebecca MacKinnon when she analyses the debate on digital copyrights in Hong Kong going on now. She links to the position paper Peter Yu wrote and a recent opinion piece, taken away from behind the SCMP firewall.

"Should we turn into criminals the future pillars of our society? Should we slow development of internet services to protect creators of digital content? Should we sacrifice privacy, free speech and a free press in the name of copyright protection?"
Then he answers: "While the copyright holders' concerns are understandable, some of the medicine prescribed in the paper is, unfortunately, worse than the diseases it claims exist."

China Labor Forum 2007

A smaller PRC law firm Trans Asia Lawyers is preparing a major two-day conference on the upcoming labor law in China, their website announces.

Scheduled for the 2nd quarter of 2007 at the Beijing China World Hotel, this 2-day event is intended to facilitate a frank exchange of opinions among senior MOLSS, ACFTU and local officials, representatives of China's leading employers, foreign embassy officials and prominent academics. Simultaneous English translation will be available throughout the event.
The forum will be the first time that senior PRC officials and legislators will appear on the same platform to discuss the new law. It will therefore provide a unique opportunity for attendees to hear authoritative interpretation of the law and to share their own thoughts directly with those individuals.

Essential information like dates and possible entrance fees are not yet given.