August 2009

Chinese Contracts 101 By Ella Xu

When you are doing business with Chinese company in China, there are ten key points you should know when making and checking a contract.

1) The contract must have Chinese Version
The Chinese Government will not help you to translate your contract from French or Spanish to Chinese when they read it. Only the contract with Chinese Version can be acceptable and looked as the valid document in China.

2) Sending money to your vendor’s appointed bank account means nothing in China
There is a different concept between western country and China about what legal force it can represent when sending money to another party. In China, it could not certify there existing any trading relationship between the funds receiver and sender if you don’t have a contract. The money you send to the vendor will disappear in the air without any reason if there is not a legal contract can protect you.

3) Chop

ACU is Coming, Are You Ready to Salute It? By Ella Xu

Since the beginning of 21st Century, the father of EURO, Mr. Robert A. Mundell, predicted that the EURO, USD and ACU (“Asia Currency Unit”) will divide the world into three main areas in about 10 years. Now, the time line is coming. China sent out a signal to the world to remind everybody what he said had been correct.

The Chinese Government publicized and implemented a new rule about RMB use in cross-border transactions directly with 10 countries in Asia, HK Special Administration Region and Macao since July 1, 2009.

For example, firms in Hong Kong will be allowed to use the yuan to settle trades with their counterparts in five major mainland cities as soon as this month. Signed by the People’s Bank of China and the Hong Kong Monetary Authority on Monday, the pact with Hong Kong to use the yuan as a settlement currency for trade is the latest step toward China’s long-term aim of internationalizing the yuan. At present, the yuan is not fully convertible on the world market.

What does ‘international counselors’ mean?

Often discussed in a face-to-face meeting in our Shekou office, there is generally a primary ‘short form legal opinion’ process that we start with when undertaking acquisition or existing entity restructuring works for our clients.  These tend to be several hundred pages long and are based on a month or two of specific and detail oriented work among ourselves your Board, CEO, CFO, legal counsel, marketing, human resources and other essential personnel divisions as you see fit.

Regarding Foreign Investment in Materials Processing Factories, A Middle Way

In late August 2008 the General Office of the Shenzhen Municipal Government issued File No. 91 Opinions Regarding Foreign Investment in Materials Processing Factories in Shenzhen and Their Continued Operations.  That document embodies a Central Government assignment of authority to each local Special Economic Zone to draft and coordinate a workable solution to keep those foreign investments here in China, while also recognizing the changes in Chinese law that we all have to remain in compliance with.
The good part of that new set of guidelines is that foreign investors are now legally permitted to continue to run a Materials Processing Factory (also known as an “APC”) and also to establish a Wholly Foreign Owned Enterprise (“WFOE”) operation in the same physical location for a transition period. 

Business opportunities on China's mainland abound, but be prepared for truly foreign laws. CORPORATE COUNSEL Magazine

CORPORATE COUNSEL Magazine, New York. October 2004.

Business opportunities on China's mainland abound, but be prepared for truly foreign laws.

       In the three years since China joined the World Trade Organization, much has been written about new business opportunities "on the mainland." But setting up shop in China isn't as easy as it sounds. Companies wanting to sell or manufacture products here must understand that the legal environment in China is unlike any other in the world. All investors -- whether foreign or native -- must jump through a series of statutory "flaming hoops."

The Recorder, San Francisco, California, Scaling The Great Wall - A Look on the Other Side, 14 July 2004

While it is not possible to itemize every element of a successful foreign investment in Mainland China in a few thousand words --- based on responses from our last submission to this publication, we wanted to provide a compass rose for those considering a journey here. Any useful map will show the user North-South-East-West in the compass rose.
In the United States, this means the compass rose will show you North. The transliteration of the word compass in Mandarin Chinese is needle-point-south. Here, we'd like to point out a few items to help keep the map from being looked at upside down.
All gibberish in the media aside, there are still really only three primary foreign investment options here for 95% of inbound capital: a Representative Office, a Wholly Foreign Owned Entity ("WOFE") and a Joint Venture ("JV").

Applying a Chinese Approach when coming to China. This article is the first of a series printed in San Francisco in 2004

 This Article first appeared in the April 14, 04 issue of The Recorder.
       "Yes, your idea would conform to the technical requirements of Chinese law, but we would advise against it...."
       The client rose, thanked us for our time and excused himself so he could report back to the home office in Palo Alto. He was relieved, contented and almost smug. The Hong Kong based Asia VP for a Silicon Valley high tech company was going to be able do things in China the way he wanted and was not going to violate Chinese law. Several times a month this happens. A potential client approaches us to ensure their business plans; choices and preferences for doing things in China are not going to run afoul of local legislation.

Reach for the stars.jpg

Reach for the stars.jpg



Attorneys & Staff

Michael Sylvester
After graduating from the University of Florida, Mr. Sylvester attended Rijksuniverseteit der Utrecht, The Netherlands, Faculty of Law, where as an Erasmus Scholarship student he studied Comparative and International Law in the lead up to the Treaty of Maastrict and the formation of the European Union.
Next came a year of work on the evolution of legal systems with Phillie Nonet at the Jurisprudence and Social Policy PhD program at UC Berkeley School of Law. Thereafter, he received a J.D. and LL.M. from Golden Gate University School of Law in San Francisco where he also oversaw the International Legal Studies program, which brought 80 lawyers a year from around the world for advanced degrees in Tax, US Law and Procedure, Comparative Law, and Public or Private International Law.