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China¡¯s new Anti-Monopoly Law: Protectionism?

Much has been said about China¡¯s new Anti-Monopoly Law. Sceptics have particularly zeroed in on the pre-merger/acquisition review which must take place for companies which meet certain thresholds (which are yet to be determined). The law provides that one such factor to be considered in the review process is "development of the national economy". People¡¯s Daily, some months ago, printed the following story (excerpted below) relating to foreign M&As of Chinese companies:

China will introduce more than 20 supporting regulations on foreign mergers and acquisitions (M&A) of domestic firms before August, a senior Chinese legislator said on Saturday.

The regulations will come out in a series before the Antitrust Law goes into effect on Aug. 1, 2008, Cheng Siwei, vice chairman of the Standing Committee of the National People's Congress, told a forum in Beijing.

The regulations will help ensure that foreign M&A deals promote China's economic growth without threatening its economic security, Cheng stated.

Under the Antitrust Law, China would scrutinize foreign M&A proposals if they posed a potential threat to national security, he noted.

To evaluate foreign M&A deals, the first factor should be whether the domestic firms were fairly priced. The second was whether the deal would lead to company asset growth, Cheng added.

November 25, 2007

While it is understandable and expected that anti-monopoly/competition laws further development of the national economy, it is yet to be seen how such wording will be implemented, and impact on foreign M&A deals in China.


China Law 0 Comment January 31, 2008, 5:02 pm

Migrant workers in Xinjiang and their lawyers

Sida Liu of the University of Chicago recently posed an interesting theory as to why the number of lawyers per capita in Xinjiang is so high (10.4 per 100,000):

[A]utonomous regions with large groups of ethnic minorities (and potential threat of instability) often have a stronger legal profession than adjacent provinces. For example, lawyers in Ningxia are doing much better than lawyers in Gansu ¨C some of their office buildings are even better than many law firms in Beijing! The reason is not purely economic ¨C autonomous regions usually get larger amounts of state subsidies from the central government for their development than other provinces. Of course this is a measure for social stability, but it benefits the legal profession as well as other service sectors. I suspect that the relatively large amount of lawyers in Xinjiang follows the same logic.

Looks like their strategy is working out for the Han in the area: a team of lawyers led by Zhang Huihua recently secured 6 million yuan in 17 days for the workers of in the region of Xinjiang. The method they used? Rather than having workers appeal individually, the team met with legal aid offices as well as government-run companies to obtain workers¡¯ rights. Zhang claimed his mission was "a double insurance for success, by incorporating legal muscle with government help."


China Culture 0 Comment January 30, 2008, 6:00 pm

ACEF wants more people in court

From China Daily:

Less than 1 percent of the more than 100,000 disputes over environmental violations reported last year reached the courts, figures from an environmental group showed Tuesday.

The numbers show the mounting challenges faced by the masses in fighting pollution and other environmental violations, the All-China Environmental Federation (ACEF), the only nongovernmental organization active nationwide, said Tuesday.


Lu said the ACEF is planning to establish a nonprofit law firm this year to help bring polluters to court. It will work with the All-China Lawyers Association to get support from lawyers nationwide and provide legal services to victims of such violators, Lu said.

With all the environmental violations here, China seems like an ideal place for an aspiring environmental lawyer from overseas in search of a job to get some substantial and highly marketable experience.

More information about ACEF from their website.

China Law 0 Comment January 21, 2008, 3:45 pm

Injury and Death Compensation in China

Junbo Hao, a Lehman, Lee & Xu litigator currently representing the plaintiffs in the Baotou Air Crash recently talked to Sina.com.cn about the value of human lives in China. As our readers know, a common complaint of trade protectionists and other activists is that China's rules and corporations are currently too lax about the value of human lives in China, so it's interesting to see media attention being brought to it in mainstream Chinese channels, particularly in an article that is very overtly in favor of raising death compensation standards in China. A translation of the full article after the jump...

full article>>

China News 0 Comment January 16, 2008, 1:52 pm

Status Update on the Labor Law

There are new guidelines out on calculating compensation according to the new labor law.

Now that the new year and the new law is with us, here are some thoughts about the new law...

Although the Chinese government claims that the new labor contract laws provide for a more harmonious working envirnment which appeals to employers and employees alike, many companies remain threatened by the new measures. Because of the new rights allotted to the individual employee, as well as the strengthening of trade unions, the position of the worker seems far stronger than before. Many enterprises demonstrated ouvertly if not direct opposition, then at least fearful apprehension of the new laws' consequences. For example, Huawei Technologies encouraged long-term workers to resign only to be re-hired in order to avoid protecting them from dismissal without cause. This displays not only an unwillingness to embrace the projected work environment, but also indicates underlying issues between existing employer-employee contracts.

If measures such as these are being taken nationwide, perhaps it is time that working conditions become more "stabilized." Despite these various fears that these laws will greatly hurt companies, however, many cite provisions included in the legislation that protect employers as well, such as reformed income taxes. Others claim that future lack of enforcement will prevent any drastic change anyway. However, little can be definitively said about the effects of this law, even if compared to similar actions taken in other countries.

If labor laws can improve the conditions of workers without badly curbing employers, many affirm the work environment will appeal more to foreign investors. On the whole, it seems as though the new laws are if nothing else an attempt to correct a less-than desireable work environment. Employers, at the very least, will have an opportunity to re-organize their management and possibly boost efficiency. However, as in the case of Huawei, this can be severely hampered by an unwillingness of companies to accept the laws.


China Law 0 Comment January 15, 2008, 5:07 pm

AmCham Legal Committee meeting tonight

An invitation from our longtime friend James Zimmerman for the AmCham Legal Committee Meeting tonight --

To members of the Legal Community:

You are invited to attend an informal AmCham Legal Committee meeting on Tuesday, January 15, 2008, 8:30-9:30am, at the Beijing offices of Squire Sanders.

The speakers at the meeting will be Richard Naimark, Senior Vice President of the American Arbitration Association and Jun Bautista, the director of the International Center for Dispute Resolution in Singapore.
Richard and Jun will talk about trends in international arbitration/mediation and the work of the AAA/ICDR. See attached biographies.

Squire Sanders & Dempsey L.L.P.
Suite 2501, 25th Floor, North Tower
Beijing Kerry Centre, 1 Guanghua Road, Chaoyang District
Beijing 100020, China
Telephone: 86-10-8529 6998 (Main)
Facsimile: 86-10-8529 8088

All are encouraged and welcome to attend. No cost.

As old China hands, we're glad to see the legal community organizing to help one another as more and more foreign lawyers flock to China.


China News 0 Comment January 15, 2008, 2:14 pm

The IRS is Coming to China

From "Tax Notes Today"

The IRS is planning to open an office and place an attache in the U.S. Embassy in Beijing before the end of fiscal 2008, according to Barry Shott, IRS deputy commissioner (international) of the Large and Midsize Business Division. Shott told Tax Analysts January 10 that the IRS is working with the State Department and hopes to have the office running by the end of fiscal 2008, but that it may not open until early fiscal 2009 because of several complicating factors, including the Beijing Olympics.


The office will focus on the Asia-Pacific region and serve countries such as Australia, New Zealand, Pakistan, India, Sri Lanka, Japan, and the Republic of Korea, in addition to working with China. Shott said the office "will be the face of the IRS in the Far East" and that the IRS is creating the new post in response to the growing importance of the Asia-Pacific markets.

For all the Americans living in China and the Asia-Pacific region, the Year of the Mouse, 2008, might as well be the Year of the Taxman. All the more reason to be a good citizen and pay your taxes even while abroad!

Lehman, Lee & Xu hope to work closely with this officer. We are proud to be the #1 Tax and Trusts Firm in China. For more information about complying with China's Company Law and Corporate Income Tax Law, please get in touch with us.

China News 1 Comment January 14, 2008, 3:37 pm

Bejing People's High Court Rulings on Music Search Engines

Looks like the RIAA has been busy here in China:
Record companies lose lawsuit against Chinese Baidu
Yahoo loses music download case in ruling
. Both cases had been decided in the intermediate-level courts and affirmed by the Beijing People's High Court. I'd love to see the reasoning as to why the outcomes were different, seeing as both search engines defended themselves using apparently the same logic -- "that, as a search engine, it only provided links in its music search results and should not be held responsible for the content of third-party web sites."


China Law 0 Comment January 8, 2008, 9:41 am

Implementation Rules of the Enterprise Income Tax Law of the People¡¯s Republic of China

Don't miss attorney Gregory Sy's article on the Implementation Rules of the Enterprise Income Tax Law, published on January 1, 2008. The article is a brief guide to understanding the Rules, which were adopted at the 197th Session of Executive Meeting of the State Council. To read a translation the Rules courtesy of our translation department, please click here.

To read the text of the Enterprise Income Tax Law itself, please follow this link.

Don't miss these invaluable resources on China law and China IP law! If you haven't signed up for Lehman, Lee & Xu's weekly newsletters, be sure to do so here.


China Law 0 Comment January 7, 2008, 10:39 am

The first case of an adverse reaction to a recalled Merck & Co. vaccine in China

Junbo Hao, a member of our litigation team, spoke to Sina.com in December about the first case in China of an adverse reaction to Merck & Co.¡¯s recently-recalled Haemophilus influenzae type B vaccine, PEDVAXHIB.

Here¡¯s a summary of the article, which is written in Chinese:

On December 19, Mr. Hao received a phone call from one Mr. Zhou in Qingdao, whose two year old child had a severe rash on his face from a recent injection of the PEDVAXHIB vaccine. Upon hearing of the recall, Mr. Zhou examined the packaging of the vaccine and found that his child¡¯s vaccine indeed belonged to the recalled batch.

PEDVAXHIB is a Haemophilus influenzae type B vaccine, which is produced in the United States by Merck & Co. Due to Merck¡¯s discovery that some of the production equipment may have been contaminated, the company recalled 11 batches of the vaccine last week.


China Law 0 Comment January 7, 2008, 10:27 am

A Special Note from Our Patent/Trademark Team

Article 11 of the Patent Law of the People¡¯s Republic of China states that:

¡°After the grant of the patent right for an invention or utility model, unless otherwise prescribed in this Law, no entity or individual is entitled to, without permission of the patentee, exploit the patent, that is, to make, use, promise the sale of, sell or import the patented product, or use the patented process and use, promise the sale of, sell or import the product directly obtained from the patented process, for production or business purposes.

After the grant of the patent right for a design, no entity or individual is entitled to, without permission of the patentee, exploit the patent, that is, to make, sell or import the product incorporating its or his patented design, for production or business purposes.¡±

Many patents are held by individual inventors or by small- and medium-sized businesses, for whom legal fees often make it difficult or impossible to defend their rights against infringement. Even large enterprises may run into difficulties when faced with infringement overseas or by multinational companies.

Our firm, Lehman, Lee & Xu, together with a number of major law firms in the United States, the United Kingdom and the European Union, are now pleased to be able to offer patent enforcement litigation services on a contingency basis to patentees whose rights are being infringed.

Initially, there is a small fee for us to appraise the validity and scope of your patent rights, and to determine whether and to what extent your rights are being infringed. If after this stage we determine that your patent rights are materially infringed, we will then take prompt action to vindicate your rights. Other than the initial evaluation, you will not be required to pay any attorney¡¯s fees unless the enforcement action is successful, in which case our attorney¡¯s fees will be deducted from any compensation which the court grants. If the litigation is unsuccessful, on the other hand, you need not pay any attorney¡¯s fees.

If the prospect of enormous legal bills is preventing you from defending your patent rights, please don¡¯t hesitate to contact us. We look forward to working with you to achieve a win-win result.


China Law 0 Comment January 4, 2008, 11:40 am

Our Condolences to Pakistan


On December 29, 2007, representatives of Lehman, Lee & Xu visited our neighbors, the Embassy of Pakistan in China, to express our firm's condolences over the assassination of Ms. Benazir Bhutto.


Lehman, Lee & Xu's entry in the Embassy's condolence book.

Commenting on Ms. Bhutto's untimely death, Mr. Lehman said:

I had the pleasure of taking Ms. Bhutto around Beijing many years ago when she was in Beijing for the 4th World Women's conference. She was very statuesque, was only six years my senior, told me she was educated by Christian Missionaries, then at Oxford and Harvard. I knew her briefly but I did recognize then, as now, that she was a real icon for her people and was the first woman leader of a Muslim nation, a long time friend of China.


Lehman, Lee & Xu extends its deepest condolences and sympathy to our friends in Pakistan.


Lehman Affairs 0 Comment January 2, 2008, 9:28 am