Foreign NGO laws and regulations

With all the changes that are taking place in China and due to the sheer number of requests that we have had for copies of the new laws and regulations relating to Foreign NGO’s, we have decided to make them available here for our readers.

Law of the People’s Republic of China on the Administration of Domestic Activities of Overseas Non-Governmental Organizations can be downloaded here.

Handbook for Foreign Non-governmental Organizations’ Registration of Representative Offices and Filing of Temporary Activities can be downloaded here.

Published by Christopher Fung on November 30th, 2016 tagged Uncategorized | Comment now »

EDWARD LEHMAN APPEARS ON CCTV’S DIALOGUE 28.11.2016

Beijing, China, 28th November 2016, Edward Lehman appeared on CCTV’s Dialogue, hosted by Yang Rui, to discuss the recent Chinese State Council’s Guidelines on Greater Protection for Property Rights. A copy of the guidelines can be found at http://news.xinhuanet.com/politics/2016-11/27/c_1119999035.htm.

The full episode can be viewed at http://english.cntv.cn/2016/11/29/VIDE5knU5yS1kiMuTHyBNkWN161129.shtml.

The Guidelines represent the first time that the State Council has issued guidelines on the protection of property rights (http://www.shanghaidaily.com/nation/Better-protection-of-property-rights/shdaily.shtml). The State Council and the Chinese Communist party stated:

“The country will provide equal, comprehensive and law-based protection to all kinds of property rights and encourage the participation of the public in the process…”

The Guidelines explicitly recognises that there are some inherent flaws in the current system of property ownership and that remedies are required to solve “Eight Property Problems” (http://www.xinhuanet.com/jrgz/20161127a/index.htm).

The Guidelines are targeted at property in all its forms, including Intellectual Property, which is sometimes a point of contention between China and its foreign trading partners, and was recently made an issue by US President-Elect Donald Trump (http://www.cnbc.com/2016/09/12/trump-america-has-leverage-over-china-because-it-owns-so-much-us-debt.html).

During the show, Edward Lehman stated:

“What happened on Sunday might be the most significant thing that has come across. It sends a signal. It doesn’t mean that the apparatus is in place yet to handle this signal, but it says to the judiciary, it says to the people… it creates a certain amount of awareness that property rights will be put on the same level as Government rights.”

LEHMAN, LEE & XU hopes that the Government will find the best path forward for the nation: One that balances property rights with those of the State. We hope this because as a Chinese law firm, we would like to see China prosper.

Edward Lehman holds the distinction of being China’s longest serving Managing Director for any law firm (Chinese or foreign) over the years, Edward Lehman has received recognition from his peers for his long term work in China. Edward Lehman is a Legal Commentator for China Central Television and a 25+ year resident of mainland China.

LEHMAN, LEE & XU is a licensed People’s Republic of China law firm, and the only Chinese law firm with a dedicated Visa and Mobility practice. The Firm was founded in Shanghai in 1992 as one of the first private law firms in China.

While the business and regulatory environment for companies with Asian operations is constantly changing, LEHMAN, LEE & XU advises clients on cross-border projects all across China, Hong Kong, Macau, the Cayman Islands and Taiwan. We also operate in the developing markets of Mongolia and East Timor.

Our full-service legal team helps multinational companies manage their business in line with their global business objectives. If you have any question please feel free to contact us. We are always happy to discuss matters on a preliminary no-cost, no-commitment basis.

Published by Christopher Fung on November 29th, 2016 tagged Uncategorized | Comment now »

The Foreign NGO Law

The new law comes into force in just over a month on 1st January 2017.

As some of you may be aware a new law relating to Foreign NGO’s comes into force in just over a month.

We thought it would be helpful to you, if we provided a registration flowchart (below).

Unfortunately, because of the uncertainty with regards to the new law, we have had to start advising some of our clients to considering liquidation and the laying-off of their staff. Their alternatives could involve deportation or imprisonment.

These are uncertain times indeed. However, if you need assistance planning for the new law, we are more than happy to discuss matters with you. Please feel free to contact us on +86 10 8532 1919 if you need any assistance.

Published by Christopher Fung on November 29th, 2016 tagged Uncategorized | Comment now »

Be Careful with Internet Ads in China

Selling to China’s internet savvy e-commerce consumer is all the rage with foreign companies from USA and Europe. These clients often ask our China lawyers to advise them on their China internet advertisement. Many online advertisers seek to take advantage of the medium by utilizing intrusive ads such as pop-ups, automatically opening windows, and pages that refuse to close. If a client come to us with such a proposal, the best we can do is to tell them China doesn’t allow ads like that.

It may surprise some to find that China’s Advertisement Law includes provisions regarding internet ads which specifically provide that such ads shall not affect the “normal” use of the internet.

While the law does allow “pup-ups” it requires a conspicuous “X” so the internet surfer may easily close the ad. Also, generally, internet ads must be able to be closed with one click.

Like many countries, China’s advertisement law is designed to protect consumers. This not only means protection from false claims in advertisement, but protection from disruptive ads online. If you have questions about your internet ad content, or wish to avoid future problems with Chinese regulators. Contact your China lawyers.

Published by Myra Kong on November 28th, 2016 tagged Uncategorized | Comment now »

CHILD LABOR IN CHINA.

The problem persists.

China has made great efforts to fight against child labor and to provide a legal basis forbidding companies and entities to use it. Despite the legislative requirements, law enforcement cannot supervise the entire country as China is big and its economy has developed with regional imbalances.

Hidden in low-skill service sectors and small workshops and businesses; including textile, toy, and shoe manufacturing enterprises, the practice of child labor is a persistent problem within our country. Those places have no licenses and change their locations frequently. Kids are promised high salaries, but they get beaten and extorted instead.

Poverty is the problem.

Child labor is merely the symptom of a greater disease named poverty. The government tries to prevent abuses and to protect human rights, and also to establish the legal basis for fair labor contracts and their enforcement.

But a simple ban on child labor doesn’t end the problem. It needs to be supported by social welfare measures, improvements in employment legislation and society at large.

Above all, education is the main cure.

A problem which goes beyond childhood.

A factor that contributes to poverty is the situation of migrant workers. Hundreds of millions of them leave the countryside every year to find work in the city and often have to leave their children behind. Many of them now also leave their rural homes straight after school and engage in strenuous labor.

Working at an early ages interferes with their ability to attend regular school, and that is mentally, physically, socially or morally dangerous and harmful. Within only a few years, many of these kids start suffering from conditions that usually affect people over 60-70 years old. This way, they are most likely to end up being poor in the future.

Compared to India.

Current measures can still be improved. However, the evolution in China is very optimistic if compared with its neighbor, India. That is because China has a culture of education, which has long been praised and valued as the flagship of social ascension, of improving one’s life and social status.

In the mid-20th century, both countries had a similar problem: too few of their children were attending primary school. The Chinese state has been a lot more efficient was in the implementation of a policy promoting universal primary education.

Of course India did have a similar goal, but the Chinese policy was a lot more effective and straightforward. This shows the impact a strong political will coupled with well-defined goals can have, as opposed to governments who often delay the implementation of serious reforms due to popularism (trying to please everyone, including the richer classes in the case of India). Engaging in profound reforms requires a tremendous amount of commitment, work and willpower to change a society.

Education, the solution.

As stated above, a proper education is the solution to poverty. The government has to make it accessible to everyone, not only in an active way, but also in easing the work of social organizations.

About 15 years ago, China achieved its goal of universal primary education and thus managed to wipe out most of child labor occurring in the country, or at least up to a certain age. It seems clear that schooling is the most effective antidote.

More Laws vs. More Freedom.

However, governments still disagree on the best legal course forward to address child labor. Some suggest the need for laws that place a blanket ban on any work by children less than 18 years old. Others like Bolivia legalize child labor from age 10 in order to guarantee legal protection and fair wages for children, who have been working regardless of laws against it.

It was widespread for children to work under the age of 14 in Bolivia, despite the fact that it was illegal. Accordingly, rather than attempt to enforce existing laws, the government it seems has tried to regulate matters in a way that conforms more to their local social standards and conditions.

The new criteria expands the former Code for Children and Adolescents, which previously held no exceptions to the 14-year-old minimum, recognizing that children must work out of necessity in light of Bolivia’s dire circumstances.

Under its provisions, 10 year olds are able to work if they are self-employed and if they simultaneously attend school. Similarly, the legislation sets 12 as the minimum age that a child is allowed to work under contract, if they possess parental authorization and continue their education.

Other provisions include stringent requirements for employers to ensure the physical and mental health of employed children, a harsher punishment for violence against under aged children (up to a 30 year jail sentence for child homicide), voluntary consent from the child and parents, and the mandatory permission from a public ombudsman. Additionally, working hours are limited to 6 per day for 14 to 17 years old, and this regulation forbids employing them for the most harmful jobs such as mining.

Some scholars suggest that more laws will do more harm than good. According to them, if laws ban all lawful work that enables the poor to survive, informal economy, illicit operations and underground businesses will thrive. These will increase abuse of the children. In poor countries with very high incidence rates of child labor, the alternatives for children who currently work are worse: grinding subsistence farming, militia or prostitution. Child labor sometimes is not a choice; it is a necessity, the only option for survival. It is currently the least undesirable of a set of very bad choices.

So when cases come up, we can’t just send them back to their miserable lives. In a recent case in Jiangsu Province, the kids have been accommodated into vocational schools until the case is settled, they will be paid wages owed to them and then be sent back home to poverty. Both slavery and poverty are miserable kinds of lives.

Does child labor still exist in developing countries?

Accurate present day child labor information is difficult to obtain because of disagreements between data sources as to what constitutes child labor in each country.  In addition, and contrary to popular beliefs, most child laborers are employed by their parents rather than in manufacturing or formal economy, what makes it more difficult to answer this question.

However, it’s obvious that in contrast to child labor in the developing world, the money earned by working teenagers is in most cases spend not on the welfare of the family as a whole, but on the teenagers own personal life.

Potential positives of children working.

Bolivia is the only nation in the world that tolerates legal employment at such young ages. However, it seemed to be a socially acceptable fact of life there before the passing of the new regulations.

Besides the obvious unfortunate reasons for child labor in this country, in Andean culture work is seen as an important agent of socialization for children as it is an integral part of their inclusion into the wider community, and it enables them to learn traditional societal values. Children work in order to contribute to the cohesiveness of family units and while the whole community works together to protect children.

The term child labor can be misleading when it confuses harmful work with employment that may be beneficial to children. In most families in the world, domestic work extends to productive activities, especially herding and various types of agriculture, and to a variety of small family businesses. Where trading is a significant feature of social life, children can start trading in small items at an early age, often in the company of family members or of peers.

While full-time work hinders schooling, empirical evidence is varied on the relationship between part-time work and school. Sometimes even part-time work may hinder school attendance or performance. On the other hand, many poor children work for resources to attend school. Also, good relations with a supervisor at work can provide relief from tensions that children feel at school and home.

In the modern world, school education has become so central to society that schoolwork has become the dominant work for most children, often replacing participation in productive work and the development of useful skills.

Conclusion.

Studies of economic and social data suggest that early 20th-century child labor in Europe and the United States ended in large part as a result of the economic development of the formal regulated economy, technological development and general prosperity. Child labor laws came later, but a cheap labor force was not itself the basis for economic growth. On the contrary, education, equal opportunities and free trade were the basis for achieving economic development and helped to eliminate child labor.

Shortsighted measures are not enough. Governments should focus on economic engagement and putting emphasis on opening quality schools and allowing private initiatives.

Published by Ines on November 28th, 2016 tagged Uncategorized | Comment now »

Continuing our legal education with friends from abroad

On 22nd November 2016, Lehman, Lee & Xu attended an event to mark the Stanford Law School, China Guiding Cases Project, turning six.

In attendance were several notable speakers, including the Honourable Judge Guo Feng of the Supreme People’s Court, Wang Ziqiang of the National Copyright Administration of China, Dr Yu Jianlong of the China Chamber of International Commerce and others.

Topics covered, included:

Information is the product lawyer’s offer. Without continuing education the information that a lawyer has will become less useful with time. That is why we continually invest in the education of the lawyers at our firm.

We would like to thank Mrs Mei Gechlik of Stanford Law School for organising a wonderful event. We will certainly be attending the next one.

Published by Christopher Fung on November 25th, 2016 tagged Uncategorized | Comment now »

China Business Transactions: Trust, but Verify

This past week a client has come into our Shanghai office seeking to initiate legal action against one of their buyers. The client, an auto parts manufacturing company, had sealed a new supply agreement with a buyer at the beginning of this year, and has supplied products to this customer each month since then. The client identified the buyer as a regular client and gave this buyer a 30 day grace period for payment after the date of delivery of goods.

For first several months, the buyer made payments on time, however since this middle of August the buyer stopped making payments. As the customer indicated they were experiencing problems with cash flow, our client extended the grace period on payment as a sign of trust, and continued to provide products to the buyer for another 2 months. The buyer never made any further payments to our client, and the client finally decided to take legal action.

During an evidence collection visit to the client’s offices, our China lawyers were surprised to find 35 unpaid purchase orders, with only 17 documents confirming delivery of product. Normally, there should be a delivery receipt with a signature from the buyer for each product delivery. However it seems that some items were delivered by courier service and the receipt was not maintained in good order. The client’s Finance Manager mentioned referred to the standard VAT invoices for each delivery with the expectation that the VAT invoices would service as evidence to certify the delivery.

Unfortunately, VAT invoices cannot serve of evidence of the delivery, as these are only a finance settlement document, thought these VAT invoices can to some extent demonstrate the existence of the Buyer-Seller Relationship. If we were to submit a claim using only VAT invoices and related tax data, and the buyer may still refuses to admit such claim. For good order the lawsuit must include evidence of delivery of the products.

Without the direct evidence for the delivery, is extraordinarily difficult to prove to a court that products were actually transported and delivered, we would have to prepare a pile of circumstantial evidence to support the contention and there would be no guarantee that the court would accept such evidence in the end.

The lesson here is to not overlook simple paper work. Delivery receipts are vital evidence in the event of a lawsuit which cannot be easily replaced. Even where you feel the business to business relationship is strong, “trust but verify”.

Published by Bonnie Zhang on November 24th, 2016 tagged Uncategorized | Comment now »

Things You Need To Know About The China Advertising Law

A client of the firm was investigated by the local Administration of Industry and Commerce in connection with allegations that the packaging of the Client’s products violated the China’s Advertising Law, which came into effect on Sep. 1st, 2015. On the client’s packages, they used the word “The Best”, which is a BIG NO NO under China’s Advertising Law. DON’T DO IT.

In China’s Advertising Law, there is no clear definition of “Advertising”. For most people, advertising generally refers to TV commercials, ads published on newspapers, magazines, sports events or internet, or posters and promotion materials. Most people would not pay much attention to product packaging, because most of the contents on the packages are mandatory content, such as manufacturer, date of manufacture, date of expiry, components etc. Only a small portion of the package will contain advertisements, which will many time take the form of a slogan for that company or product. Think of the “Nothing is Impossible” slogan for Nike which is printed on their packages or shopping bags. In China this sentence on the packaging is subject to the Advertising Law. In practice, any word on the packages with the effect of promoting the producer or the product is subject to the Advertising Law.

When designing the packaging for your products to be sold in China, in addition to ensuring yur labels comply with mandatory rules for products in your respective industry, take some time to consider the implications of your slogan or other materials under China’s advertising law. Want to know more about China advertising law? Contact your China lawyer today!

Published by Tina Dong on November 23rd, 2016 tagged Uncategorized | Comment now »

Exercising Shareholder’s Rights in China

It is very common that a shareholder of a company has no formal management positions in the company. Legally speaking, a shareholder has a right to keep up to date with the operation and management of the company by attending the meetings of the Board of Directors. However, many companies do not hold a formal board meeting regularly as required by law. Under such circumstances, shareholders not holding management positions with the company may have problems in obtaining accurate operational and management details of the company.

For many a shareholder in this which finds themselves shutout in a dispute, the first inclination is to litigate. While a shareholder may enforce rights via litigation this is of course a costly option. But before filing a lawsuit to the court, a shareholder should take the following steps:

First, you need to know that what kind of information you are entitled to obtain as a shareholder. Generally speaking, a shareholder to a company is entitled to consult and make a copy of the company’s Articles of Association, Minutes of Meetings of the Board and of Shareholders, Resolutions of Meetings of the Board of Directors, Resolutions of Meetings of the board of supervisors and financial reports, and also entitled to consult the accounting books of the company.

Second, before filing a case directly at a court with jurisdiction, a shareholder will need to make a formal request to obtain the operation and management information to the company in writing. You are also required to explain the purposes for obtaining such information. And the company is obligated to give you an answer in writing within 15 days after receiving your written request. If the company refuses your request, then you are entitled to file a lawsuit. Note that if you file a case without making a written request in advance, the court will not accept your case.

After making your written request and receiving the refusal or receiving no response within 15 days, a Shareholder is entitled to file the case at the district court where the company is registered.

After obtaining a favorable result at court, the shareholder may appoint a China Lawyer or accountant to review the company records on behalf of the shareholder. Lehman, Lee & Xu has much experience acting on behalf of foreign shareholders to enforce such rights against their own WFOE’s, in addition to having the professional legal and accounting staff in house to conduct a thorough forensic review of the company’s operations and accounts after access is gained.

Published by Myra Kong on November 22nd, 2016 tagged Uncategorized | Comment now »

Lawsuits in China: You may have a case, but who is the Defendant?

When a dispute arises which you are unable to overcome by friendly negotiation, you may want to go through litigation to resolve the issue. When you stand in front of the case filing chamber of a court to file a lawsuit against an entity or an individual, the most important thing you need to have may not be a statement of your claims but the certified identification of the defendant. Claims are allowed to be amended during later proceedings, but if you do not have the correct and accurate name, domicile and other contact information of the one you are suing, the court would not accept to hear your case at all.

China Civil Procedure Law prescribes that one of the conditions to institute an action must be the existence of a specific defendant, which usually in practice means the plaintiff should at least hold a copy of the business registration record of an entity defendant or have the ID card or Hukou registration information of an individual defendant. This will allow the court to successfully send out your complaint, evidence, court summons and other legal documents to the defendant. However, often during interactions with those you interact with in the course of business, you may not have access to their identification documents. You will have to find these documents on your own.

The Administration of Industry and Commerce is the competent authority for supervising the registration information of the business entities, and the Ministry of Civil Affairs reserves the right to preserve the registration records of social organizations, and the local Public Security Bureau is the right organ to manage individuals’ ID card and Hukou registrations. However, as identity information is private, each of these bodies will only allow the person him/herself or the entity itself to check its own registration information. You, as a plaintiff, without any valid judgment or verdict, may not be able to get anything out of these official systems during the case filing period. This would trap you in a tight spot and increase your difficulties in filing the case.

In this situation, you will need to engage a China lawyer, as the lawyers in China are afforded with the legitimate power to check the identification information for their clients. Laws and regulations confer the rights on China Lawyers to check relevant identity information of a defendant by submitting the lawyers qualifications, and a letter of statement to the competent authorities. This will be the most efficient way to help you get the information you need to file a China lawsuit.

Published by Crys Zheng on November 21st, 2016 tagged Uncategorized | Comment now »