Arbitration VS. Litigation
In practice, generally, arbitration instead of litigation is chosen as the dispute resolution in the commercial agreement, especially, in the international business agreement. Some people may be wondering why we choose arbitration instead of litigation, which is handled in the court, and seems more trustworthy. Let’s start with this.
Arbitration, compared with litigation is more professional regarding to the resolution of commercial disputes. Unlike some judges, arbitrators mostly have practice experience in the area which the disputes arise. They themselves are professionals in such area. This happens in many countries, especially in China.
There is a legal term “autonomy of will” which means, arbitration is more flexible since it is based on the bilateral agreement. As you may have known, the place of arbitration, the language, procedures, choice of law, and arbitrators of the arbitration could be decided by the both parties based on their agreement.
Many people may think that the judgment made by a court is more enforceable than an arbitration award. In fact, it is true to some extent and in some circumstances, as some arbitration award may be withdraw, however, in general cases, the arbitration award could be enforced directly by a competent court upon application, just as the court judgment. Moreover, as regarding to the disputes of an international business agreement, if the parties belong to different countries, the arbitration award will have an advantage of enforcement compared with the court judgment. Since the award made by a widely recognized international arbitration institution could be enforced in most countries, while, generally, a court judgment can’t be directly enforced in another country. It depends on the agreements of the both countries.
Effective Arbitration Agreement
In fact, not all the disputes could be solved by arbitration. Generally, disputes involve personal relations and administrative disputes may not be solved by commercial arbitration. Therefore, if both parties agreed to solve such disputes via arbitration, it may not be effective.
5. Agreement on Arbitration
Unlike litigation, application for arbitration will not be accepted without the mutual consent of the both parties of a dispute. There should be an agreement shows that both parties agreed to settle their dispute by arbitration, whether verbal or in written.
6. Arbitration Institution
Both parties shall not agree on settle their dispute by arbitration, but also agree on settled by which arbitration institution. If you just set forth in your contract that each party could file a lawsuit to the competent court or arbitration institution, it means that you have not reached an agreement on arbitration. The arbitration institution shall be specific in your contract.
Our Lehman, Lee & Xu has a long time experience in the commercial disputes resolution, especially in arbitration. So please don’t hesitate to contact us if you want to know anything more about solving disputes by arbitration in China.
Published by Myra Kong on February 20th, 2017 tagged Uncategorized | Comment now »
The Articles of Association (AoA) is a major document setting forth a company’s internal rules, and serves as the basis for effective operation of the company. However, in practice many investors and operators in China merely regard it as a document needed during the process of company registration, and pay little attention to clearly articulate important matters in it, which may result in serious legal risks.
Common risks in the AoA:
a. Legal risks relating to evaluation of capital contribution
Non-currency Contributions, for instance equity rights, creditor’s rights or trademark rights must be evaluated before contribution as part of the companies registered capital. If there is no clear agreement as to appointment of the evaluation authority in the Articles of Association, shareholders may encounter conflicts as to which evaluator is appointed, particularly in the case of Joint Ventures.
b. Legal risks as to division of power between board of shareholders and directors
One of the important functions of the AoA is to attribute the power of shareholders and the Board of Directors. However many companies simply state that such rule shall be determined in accordance with the Company Law. What this approach is legally acceptable, the law is quite general and may not be best suited to clarify concerns in relation to your company’s unique situation.
c. Legal risks on special resolutions
The company law does not state all conditions under which companies may need special resolutions. If a company does not stipulate in the AoA under what conditions special resolutions are needed, there is a change of confusion or liability in the event a special resolution is required.
A standard AoA designed to minimize risks shall meet the following conditions:
- Stating clear and exercisable norms regarding management of the company;
- Explicitly regulating the rights and duties of shareholders, directors and supervisors;
- Having clear operational rules for dealing with unusual conditions;
- No content which violates mandatory rules of law.
As the AoA plays an important legal role in the operations of a China company, the document needs to be drafted to best suite the unique characteristics and actual operations of the company. To guard against risks that might occur because of inadequate drafting, contact your China lawyer to ensure the AOA is completed effectively and professionally.
Published by Joy Xu on February 16th, 2017 tagged Uncategorized | Comment now »
A couple weeks ago, we introduced you to the basics of operating a China Trading company. As it happens, the firm now has a new client who has all required import & export rights, and wants to import milk powder for infants. To do so, an Import/Export license is not enough. As this is a highly regulated area, additional procedures are required.
According to Chinese regulations, infant formula milk powder is considered a dairy food. As these kinds of foods are critical for people’s health, there are additional requirements which must be met during importation. Official requirements on importing dairy food in China include three examinations and registrations which must be completed before importing any dairy food into China.
The first one should be checking the qualifications and production conditions of the overseas manufacturer producing infant formula milk powder or any other type of dairy products, including Sterilized milk, Fermented dairy products, Milk powder, Cream, Condensed milk, Cheese, and Whey powder. The foreign manufacturers must be registered with Chinese authorities, which will verify the authenticity and accuracy of the incorporation documentation of the foreign manufacturer as submitted in the application documents, but will also confirm the actual on-site conditions of the manufacturing facilities if necessary.
After the foreign manufacturer has passed the examination, the imported goods must be duly inspected. Imported dairy products shall be inspected upon entry into China to confirm compliance with all national standards. Once the imported dairy products are qualified after inspection and quarantine, the goods may be sold within China.
In addition to reviewing the qualification of foreign manufacturer and the quality of the imported goods, Chinese authorities also pay great attention to supervision of the qualifications and the operation of the Chinese importing companies. Dairy product importers are required to have their own qualified technicians and management to address food safety issues and must follow rules and regulations for ensuring food safety. Diary importers must complete a special registration as such prior to importing any diary goods.
Import and sale of dairy products is a complicated procedure in legal terms, but business wise it can be very profitable. The Chinese consumer is increasingly willing to pay a higher cost for the perceived quality benefits of imported dairy products. As a China law firm specialized in such imports, Lehman, Lee & Xu can help you take advantage of this market.
Published by Crys Zheng on February 15th, 2017 tagged Uncategorized | Comment now »
The Trademark Law of the People’s Republic of China was first adopted in 1982. The State Council promulgated Regulations on the Implementation of the Trademark Law in 1983. The Trademark Law was revised in 1993 and 2001, and in 2002 new Implementing Regulations were issued, in part, to bring China’s trademark legislation into compliance with the WTO Agreement on Trade-Related Aspects of Intellectual Property (TRIPS). The revised Trademark Law extended protection to collective marks, certification marks and three-dimensional symbols, as required by TRIPs.
China has a “first-to file” system that requires no evidence of prior use or ownership, leaving registration of popular foreign marks open to third parties. China joined the Madrid Protocol in 1989, which requires reciprocal trademark registration for member countries, which include the United States. However, it is recommended to initiate a separate Trademark filing process in China. Like politics, Trademarks are ultimately local.
Foreign companies seeking to distribute their products in China are advised to register their marks and/or logos with the Trademark Office. Further, any Chinese language translations and appropriate Internet domains should also be registered.
Published by Jacob Blacklock on February 14th, 2017 tagged Uncategorized | Comment now »
What is Direct Sales?
Direct selling is a retail channel used by top global brands and smaller, entrepreneurial companies to market products and services to consumers. Companies market all types of goods and services, including jewelry, cookware, nutritionals, cosmetics, housewares, energy and insurance, and much more.
The direct selling channel differs from broader retail in an important way. It isn’t only about getting great products and services into consumers’ hands. It’s also an avenue where entrepreneurial-minded people can work independently to build a business with low start-up and overhead costs.
Direct selling consultants work on their own, but affiliate with a company that uses the channel, retaining the freedom to run a business on their own terms. Consultants forge strong personal relationships with prospective customers, primarily through face-to-face discussions and demonstrations. In this age of social networking, direct selling is a go-to market strategy that, for many companies and product lines, may be more effective than traditional advertising or securing premium shelf space.
Millions of people around the world choose to become involved in direct selling because they enjoy a company’s products or services and want to purchase them at a discount. Some decide to market these offerings to friends, family and others and earn commissions from their sales. The most successful consultants may decide to expand their business by building a network of direct sellers.
What is the benefit of direct selling?
Direct selling offers important benefits to people who want an opportunity to earn income and build a business of their own, to consumers as an alternative to retail stores, and a cost effective way for business to bring products to market.
Consumers benefit from direct selling because of the convenience and service it provides, including personal demonstration and explanation of products, home delivery, and generous satisfaction guarantees.
Direct selling offers an alternative to traditional employment for those wanting a flexible opportunity to supplement household income, or whose circumstances don’t allow regular employment. Direct selling opportunities can develop into a fulfilling career for those who achieve success and choose to pursue their independent direct selling business on a full time basis. Start-up costs in direct selling are typically low. Usually, a modestly priced sales kit is all that’s needed to get started, and there is little or no inventory or other cash commitment to begin. This stands in contrast to other businesses with the cost and risk associated with larger outlays.
Direct selling offers a distribution channel for businesses with innovative or distinctive products that for cost or other reasons are not suited to other retailing.
As the external Socio-Economic Impact Studies for the various markets show, direct selling is a positive benefit to the economies and people where direct selling companies operate and serves consumers with a convenient source of quality products.
What’s the development of direct selling in China?
Direct selling in China continued to enjoy dynamic growth in 2016, registering current value growth of 14%. The favorable policy of issuing direct selling licenses, combined with increasing consumer recognition, led to stable high growth. Up to the end of 2016, around 80 direct selling retailers acquired direct selling licenses, issued by the Ministry of Commerce. In addition, due to the rapid development of the internet, traditional direct selling players tended to boost their sales through social media platforms and online marketing. For instance, as WeChat became the most popular social media platform in China, various direct sellers, such as Infinitus (China) Co, promoted their products, built their brand reputations and connected with consumers via WeChat.
China Regulations on Direct Sales?
Two regulations, namely the Regulation on Direct Selling (i.e. Order of the State Council No.443), and the Anti-chuanxiao (Pyramid Selling) Regulation (Order of the State Council No.444), both adopted in 2005, govern the Direct Selling industry in China.
According to the Regulation on Direct Selling a company must obtain an approval from the government before it is allowed to engage in any direct selling or even establish a local company that intends to engage in such activities. With the introduction of the mentioned Regulation direct selling is formally taken as legal activity in China, but within the limits established by the Anti- Pyramid Selling Regulation, which specifically prohibits the so called Pyramid selling.
What is the difference between legitimate Direct Selling under Chinese law and an illegal“pyramid scheme”?
It should be clear that certain fundamental differences exist between legitimate Direct Selling and the fraudulent Pyramid scheme. For example, the requirement that sales personnel make upfront investments in inventory, the absence of a return-and-refund policy, and compensation based on number of people recruited are the marks of fraudulent scheme, or Pyramid scheme. Legitimate Direct Selling under Chinese laws does not permit such practices, and have adequate consumer safeguards in their operations. Substantially direct selling is a type of business model in which direct selling companies recruit sales promoters to sell products directly to end consumers outside the companies’ fixed outlets.
What are the requirements to initiate direct selling?
It is necessary to obtain the specific “Direct Selling License” from the Ministry of Commerce, which will issue the license to engage in Direct Selling activities only if the company meets the following requirements:
1. The applicant shall have sound business credit, and has no records of serious illegal operation during the past five years before filing the application; the company shall also have undertaken direct selling business for at least three years outside China;
2. The paid-in registered capital must not be less than RMB 80 million;
3. The deposit has been paid in full amount in the designated bank according to the provisions of the Regulation on Direct Selling.
What is the procedure to obtain the Direct Selling License?
The applicant for the Direct Selling License has to set-up a FIE (i.e. Foreign Invested Enterprise) in the form of a WFOE, thus it is necessary to get the approval of the MofCOM for this proposed investment. The investment is going to be approved only if the investor meets all the requirements listed above.
The procedure is the same as for setting up a WFOE:
Examination and Approval Department: Municipal bureau of commerce
Time limit:Within 100 working days
Documents and certificates to show the enterprise is capable of doing direct-selling;
Marketing plans reports, and service network plans in direct-selling area authorized by at least a local people’s government at county level;
Instruction of the products according to the national standards;
Samples of sales promotion contracts to be singed with salesperson;
Credit certificates issued by accounting firms;
Agreements between enterprises and banks in using deposits according to law;
Any other requirements by the Bureau of Commerce.
What are the permissible product categories?
The Direct Selling Regulation limits the products Direct Selling companies can sell to just five product categories: 1) cosmetics, 2) dietary supplements, 3) cleaning products, 4) health and exercise equipment, and 5) small kitchen appliances.
International practices only set restrictions within the following categories: restricted goods (e.g., firearms, prescription drugs), perishable goods (e.g., foods, fresh produce), goods whose value cannot be easily determined by the average consumer (e.g., gemstones, investment packages), and bulk commodities (e.g., metals, crops). Other than in these specific categories, product approval for Direct Selling should be consistent with current regulatory requirements for all products across all retail industries.
Direct selling involves special legal regulations from many perspectives, If you want to conduct direct selling in China, Lehman, Lee & Xu is able to provide professional legal service based on our past successful experiences as one of the foremost Direct Sales law firms in China.
Published by Myra Kong on February 13th, 2017 tagged Uncategorized | Comment now »
I have been working for a client as regards setting up a branch in Shenzhen and successfully obtained the business license on a single day. If you have handled such matter in other city of China, you will know how amazing it is, for in other cities, the period is always weeks. I really appreciate “speed of Shenzhen” and no wonder it is so developed and attractive for investment.
However, this is not what this article really intends to indicate. Getting business license is only the first step of setting up a branch, then you still need to make chops, open a bank account, do social security registration and handle tax issues. Among all these matters, opening a bank a account is the most important and most time-consuming. And now, things become more complicated because the central bank made new rules to tighten management and control over company’s bank account.
According to my legal research and consultation with staff members of several banks, there are two main changes in the procedure of opening a bank account for a company or its branch.
1. After submitting an application for an account, the bank will designate a client manager to go to the registered address of the company to examine and verify whether the company is real and is in operation, and the client manager shall do conduct due diligence and issue a report on the situation of the company. Only if the company pass the examination, formal procedure for opening a bank account will start.
2. Legal representative of the company or person in charge of a branch must be present at the bank. This new rule will really give rise to inconvenience and difficulty for some companies, for their legal representative or person in charge are foreigners and always are abroad. There is only one way to avoid the execution of this rule. If the company already has a familiar client manager in the bank, and the client manager could guarantee the authenticity of the identity certificate of the legal representative, the legal representative won’t be required to be present.
It becomes increasingly easier to set up a company or a branch in China, however, in some special areas, things go to the contrary. We must keep an eye on relevant laws and policies and only by that can we provide top service for the client.
Published by Mike Wang on February 10th, 2017 tagged Uncategorized | Comment now »
After the long vacation for Chinese Spring Festival, many companies will have to recruit new employees as there is always a resignation tide after the annual year-end bonus was distributed. During the recruitment, many companies will encounter the problem on the arrangement of salary and allowance for certain employee. A sound arrangement will attract the most competitive employee to stay and serve for you. We received an inquiry from one of our clients that one of their expatriate employees would like to claim meal allowance of RMB15,000 per month. They are not sure whether such claim is reasonable or not.
In China, there are certain types of tax exempt allowances prescribed for expatriate employees including housing subsidies, food allowances, moving fees, laundry fees, travelling allowances, transportation expenses for visiting relative (twice a year), language training expense and children education expenses. All these are required to be paid in non-cash form or in the form of cash reimbursement, and the amount of each type of allowance should be reasonable. According to Chinese law, the local tax authority should be responsible for determining whether the amount of allowance is reasonable for applying tax exemption.
When a company arranges for tax exempt allowances for foreign employees, as China lawyers, we suggest that following factors should be taken into consideration to help ensure the reasonableness standard of the China tax authorities is met:
A. Whether it is the actual expenses. For example, the reasonability of housing rent should depend on the average rental expenses cost within the same area where the housing is located. Thus, rental allowance should not be excessively higher than the average rental cost within the same residential area.
B. Whether the proportion of the total amount of tax exempt allowances to the total amount of the company’s revenue is within reasonable limit. Competent authority frequently decides that the amount of allowances within 30%-50% of total revenue should be reasonable.
C. Whether formal invoices are issued for tax exempt allowances. Tax authorities will calculate the amount of allowance and tax only based on formal invoices, called “fapiao” in Chinese, not regular receipts issued by a restaurant, hotel or other service vendors. Those invoices should be sealed with the financial chop. Therefore, it is important to ask for formal invoices from service vendors and keep them for further examination.
Published by Crys Zheng on February 8th, 2017 tagged Uncategorized | Comment now »
The new Standards improve upon the old version from the following aspects:
- added the examination of a sound trademark,
- added the CTO’s issuing of the Examination Opinion during the examination,
- added the application of Paragraph 4 of Article 19, Article 50, Paragraph 2 of Article 15 of the Trademark Law,
- added the identification of the “interested party”,
- amended the standard for examination under Article 10 of Trademark Law, and
- deleted and added some cases.
It is now possible to register soundmarks. The rules for registering these are conceptually similar to registering traditional trademarks in some ways.
When making the application, a sound sample that meets prescribed requirements must be submitted. The submission should include a written description, musical notations iff possible and a sample in .wav or .mp3 that has been placed onto CD.
Certain things such a sound that are similar to national anthems, offensive things or generic everyday sounds, like dogs barking cannot be registered.
Finally it is possible for a sound mark to be considered similar to a word mark – yahoo!
Examiners can now render opinions. They can only do this once however.
One situation in which they may render an opinion is to request further information from an applicant. This can be used to rectify defects or omissions in the application process and prevent the need for applications to begin the application process all over again. Additionally, it is useful to the examiner when they simply need to know more.
Opinions should also be issued when the CTO considers that a trademark registration application violates relevant provisions of the Trademark Law, but there is a possibility that the application may fall within a legal exception. Such situations include:
- Similarities to national emblems;
- Similarities to inter-governmental insignia;
- Similar to a government seal, stamp or quality mark;
- Place names are included in the registration;
- The registration seem indistinct; and
- Other situations as required on a case by case basis.
Cancelled, invalidated, expired or abandoned trademarks cannot be registered for one year after they cease to be registered. Additionally, similar trademarks may also be blocked.
As the purpose of trademarks involves protecting brand integrity and consumers, Article 50 ensures that when a business loses its Trademark rights, sufficient time is given to allow for any trademarked goods on the market to be phased out.
The only exception to article 50 is where the prior registered owner re-applies for the trademarks, which they lost ownership of “accidentally.”
Trademarks filed for registration in Bad Faith should not be granted, if genuine objections are made.
For an application to have been made in bad faith it must be made by a party who has a relationship with a person who had a prior interest in having the trademarks registered.
Recognised prior interests include:
1) The licensee of prior trademark right and other prior right;
2) The successor of prior trademark right and other prior right;
3) The pledgee of prior trademark right;
4) Other subjects who can establish that it has an interest in prior trademark right and other prior right.
The status of the applicant at the time of filing an opposition or invalidation action is important.
There are new rules for filing and opposing trademarks. If you are unsure of their impact on your IP please feel free to contact us. We are willing so give a short no-cost, no commitment consolation in the first instance.
Published by Christopher Fung on February 7th, 2017 tagged Uncategorized | Comment now »
The Government has recently announced measures to reform Trademark Review Cases. The proposed Measures comprise 21 articles and provide an oral hearing may be initiated upon the request of a concerned party or determined by The Trademark Review and Adjudication Board (TRAB) on the basis of the case’s circumstance.
If a concerned party has questions in relation to the evidence presented in a case and considers that there should be a cross-examination that party may apply to TRAB for an oral hearing. Such applications must be made within strict time limits.
TRAB will have the right to decide whether to allow the oral hearing and shall notify the concerned parties of its decision in writing. Where a hearing is allowed, the parties shall submit a written reply within 7 days after they receive TRAB’s decision. If no written reply is submitted by a party, TRAB may hear the case without the participation of such party. If neither party responds, the hearing will not proceed.
Only two participants may appear for each side, inclusive of the agents. More may attend, but only with the consent of TRAB. Hearings will include following steps:
- Organization of a collegiate bench compose of odd number of more than three members;
- Verification of the concerned parties’ identities;
- Investigation, including clarifying the facts in dispute, review requests and responses by the concerned parties;
- Presentation of all the evidence and cross-examination;
- Witness testimonies;
- Closing statements.
Notes will be taken to record the whole process.
It seems that China is taking steps to make a more transparent adjudication process. This can only be good for the country and in particular IP owners. However, this reform also signifies that in the future, lawyers will become more involved in contentious processes, which will undoubtedly cost more.
Published by Christopher Fung on February 7th, 2017 tagged Uncategorized | Comment now »
The newly enacted Law of the People’s Republic of China on the Administration of Domestic Activities of Overseas Non-governmental Organizations (“Foreign NGO Law”) has come into effect since January 1st of 2017. After more than a year of soliciting views from the public and revisions, this Law has attracted widespread attention from domestic and international non-governmental organizations (hereinafter “NGOs”), and forms another landmark piece of legislation governing NGO activities in China. Today I would like to talk about the key points of this Law.
This Law consists of 54 articles of provisions, covering from the registration and record-filing, activities standards, facilitation measures, supervision and administration to legal liability. I will try to outlines the main points which are noteworthy for your reference.
Definition and Scope of Activities
Foreign NGOs under this law, is stipulated as the foundations, social organizations, think tanks, and other non-profit-making and non-governmental social organizations legally established overseas.
While the official Chinese term for NGOs is “popular organization”. This comprises three subcategories, “social organization”, “private non-enterprise unit” (PNEU) and “Foundation”. They are non-profit-making, but social organizations and foundations are membership based whereas PENUs are not.
This Law specifies that Foreign NGOs are allowed to conduct activities beneficial to the development of social welfare in fields such as economics, education, science culture, health, sports, environmental protection and for areas such as poverty relief and disaster relief, while exchanges and collaborations between foreign schools, hospitals, natural science and engineering science research establishments or academic organizations and the domestic organizations within these same categories, is to be handled according to the relevant provisions of national law.
Moreover, this Law prohibits foreign NGOs from “engaging in or funding for-profit activities or political activities,” and “illegally engaging in or funding religious activities” within the territory of China. In order to provide guidance to overseas NGOs carrying out activities, the Foreign NGO Law requires public security authorities, together with the relevant departments, to draft catalogs of foreign NGOs’ areas of activity and projects, and to publish a list of competent administrative authorities.
According to the Foreign NGO Law, the approval authorities include registration management organs and competent administrative authorities.
- Registration management organs. Compared with the domestic NGOs, the registration management organs for Foreign NGOs is public security department of the State Council and public security department of provincial level, instead of Civil Affairs Ministry and civil affairs department of different levels.
- Competent administrative authorities. The relevant departments and units under the State Council and the relevant departments and units of the provincial level are the competent administrative authorities for Foreign NGOs conducting activities within mainland China. Foreign NGOs’ establishment of rep offices, modification of registration, and annual work reports for the last and the following year shall be submitted to registration management organs for filing or to obtain comments. The Public Security Department under the State Council and the public security department of the provincial level, together with the relevant departments shall publish a directory of competent administrative authorities.
Registration and Record-filing
The applications for establishment of rep offices of foreign NGOs in China shall meet specific requirements, and one noteworthy requirement is “existed for more than two years overseas and substantively conduct activities”. Currently, the factors to decide whether a foreign NGO has existed for more than two years, and what consists of the substantive activities are not clearly.
Forms of Operating
It requires the foreign NGOs to set up rep offices in China in order to legally conduct activities in China. What is noteworthy here is that no other form of legal entity is described in the law. Therefore, using WFOEs as entities for Foreign NGOs in China seems no longer viable, as a specific type of entity is prescribed. Additionally, as WFOEs are commercial entities, using one for a Foreign NGOs seems at odds with the prohibition against profit-making.
For the foreign NGOs who have no rep offices in China, they are only allowed to conduct temporary activities after record-filing in competent authorities, and the period for temporary activities shall not exceed 1 year.
Rules for Operation
- Prohibition of establishment of branches. The foreign NGOs are prohibited from setting up branches within the territory of China, unless otherwise stipulated by the State Council.
- Annual Plan and Reporting. Activity plan for the next year and work report for the previous year shall be drafted with specific contents such as project implementation, use of funds, and submitted to the competent authorities within the stated deadline.
- Resource of activity funds. The funds for foreign NGOs activities in China shall include the funds legally obtained overseas; interest on bank deposits within the territory of China; and other funds legally obtained within the territory of China. Foreign NGOs and their rep offices are explicitly banned from seeking contributions within China. This could be a major blow for those that are presently funded from within China.
- Account management. Foreign NGOs that have established rep offices shall use funds from bank accounts within mainland China that are recorded with the registration management organs. Foreign NGOs carrying out temporary activities shall use their Chinese Partner Unit’s bank account to manage and use funds in mainland China, perform independent bookkeeping, and use funds only as they are allocated. Foreign NGOs, Chinese Partner Units, and individuals must not use any other arrangement to receive and spend funds for project activities inside mainland China.
- Personnel recruitment. Foreign NGO representative offices hiring employees in mainland China shall report information on employed personnel to the competent administrative authorities and registration management organs.
- Prohibition on membership recruitment. Foreign NGO rep offices and foreign NGOs carrying out temporary activities are prohibited from developing, or covertly developing, membership within mainland China, except as provided for by the State Council.
For any foreign NGO which intends to develop in China, you’re welcome to contact Lehman, Lee & Xu, and we are glad to provide professional legal services in this area to make sure you will operate legally in China.