Doing Business in China: Some Key Differences. Carl B. Cheng October 27, 2017

Transcription

1 Doing Business in China: Some Key Differences Carl B. Cheng October 27,

2 Doing Business in China: Some Key Differences Legal Developments Relevant to Austrian Companies Question and Answer Session 2

3 Doing Business in China: Some Key Differences Business Activities Corporate Vehicles Approval Process Protecting Intellectual Property Rights Land Labor 3

4 Business Activities Foreign Investment Guidance Catalog Business Scope Issues 4

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8 Business Scope Design, development of computer software, internet technology, providing relevant technical consultation, sales of self-produced products (those subject to administrative licensing may only be conducted with the necessary licenses). 8

9 Corporate Vehicles Wholly foreign owned enterprises Joint Ventures Companies limited by shares / Limited liability companies Partnership Enterprises 9

10 Wholly Foreign Owned Enterprises Foreign Investor 100% equity Wholly Foreign Owned Enterprise 10

11 Advantages Limited liability entity Full control over Board of Directors Full control over management Disadvantages Limitations on foreign control? Commercial necessity for a Chinese partner? Full control over personnel 11

12 Equity Joint Ventures Foreign Investor Chinese Party x% equity y% equity Equity JV 12

13 Advantages Limited liability entity May satisfy limitations on foreign control May satisfy commercial requirements for a Chinese partner Disadvantages Lack of full control over: Board of Directors Management Personnel 13

14 Cooperative Joint Ventures x% cooperative contribution Foreign Investor Chinese Party y% cooperative contribution FOREIGN PARTY Management control Profits less payment to Chinese Party Distribution on liquidation Cooperative JV CHINESE PARTY One director Fixed payment or preferential profit payment Distribution on liquidation 14

15 Advantages Limited liability entity Disadvantages Problems of a Joint Venture Possibly: Greater control over Board of Directors Greater control over management Greater control over personnel 15

16 Matters requiring unanimous consent Amendment of the Articles Change in registered capital Dissolution Mortgage of assets Merger, division or other change in form 16

17 Company limited by shares / Limited liability company Shareholders Company 17

18 Approval Process Austria China Investor Domestic Investor Foreign Investor Commercial Register State Administration of Industry and Commerce Ministry of Commerce SAIC GmbH Company Company 18

19 Protecting Intellectual Property Rights 19

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21 Strategic Allocation of manufacturing capability Product selection Blackbox De-commoditize Suppliers Customers Workers 21

22 Land 22

23 Labor NOT employment at will 23

24 Legal Developments Foreign Investment: Approval to Filing Electric Vehicles Antitrust Anti-corruption Cybersecurity 24

25 Foreign Investment: Approval to Filing Austria China Investor Domestic Investor Foreign Investor Commercial Register State Administration of Industry and Commerce Ministry of Commerce SAIC GmbH Company Company 25

26 Electric Vehicles WFOE Free Trade Zones Vehicles subject to import duty of 25% 26

27 Antitrust Price Fixing Resale Price Maintenance 27

28 Anti-Corruption Criminal Law Anti-Unfair Competition Law Commercial Bribery Reasonable and customary bona fide business hospitality Seeking illegitimate benefits Properly recorded on the books Government Officials Cash or equivalent in the context of public service activities Gifts which influence impartiality Entertainment with corrupt intent 28

29 Cybersecurity Law Network Operators own or manage IT networks Checklist of technical security measures Require public users to provide true identity and retention of web logs Restrictions on transmissions of sensitive or inappropriate information Restrictions on cross-border transfer of personal information and important data (including cloud uploading) Consent Self-Assessment Government Assessment 29

30 Questions and Answers 30

31 Carl B. Cheng Phone: Ting Gao Phone: Xuezhong Lu Phone: Level 6, One IFC No. 8 Century Avenue, Pudong Shanghai , PRC 31