One client of mine designed women’s clothing. Her Chinese factory was scheduled to begin production, and she came to China to supervise quality control. Before going to the factory, as was her practice, she used to visit local Chinese boutiques. She was shocked to find her designs being sold in some boutiques under a different label. In fact, this was so common (and China was perceived to be so poor), that many companies haven’t even cared so long as the sales remained in China and under a different label. Of course, the risk for counterfeits, and sub-standard products all being exported to your markets remain. So even a company with no presence in China should have concerns (which can be addressed) with proper auditing. Furthermore, don't underestimate the size and wealth of the Chinese marketplace, nor the technical abilities of their factories. They have the money and expertise to buy and sell whatever can be bought and sold.
Such issues are discussed below.
On the other hand, doing business is fraught with hidden and obvious legal challenges, which can become costly, problematic, and even criminal. One is required to not only follow the relevant laws, rules, and regulations, but also to see that they are fairly applied and enforced when applied to you, the foreigner in China.
While things are changing at a rapid pace in China, things are quite anarchistic at the current time Furthermore, it is likely that the next round of legal developments will actually be to enforce existing laws, to the detriment of those who ignore them, especially foreigners, even though there are simultaneous efforts to “liberalize” laws for foreigners.
The USA law known as the Foreign Corrupt Practices Act (“FCPA”) provides extra-territorial jurisdiction for the actions of USA citizens in places like China. In the old days, what one did in a foreign country was between that person and the foreign country. After Americans became victims of terrorism, the USA and other countries began to take the view that they had legal jurisdiction over conduct which occurred outside the USA by non-USA citizens and also by USA citizens. That quickly spread to “sexual tourism” and the FCPA, as examples. Other countries have similar laws (the UK has the UK Bribery Act for example). As we all know, there is now a tremendous focus on tax evasion, tax avoidance, and money laundering which is occurring outside the “domestic” country. Where this will lead, no one knows.
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