Trump Blows it with China

As many of you know, I live in China. I read the Chinese news every day. I speak to nationalistic Chinese. I speak to [Communist] Party Members. The TPP was a shot against "over the bow" of China who (perhaps rightfully) is seeking dominance in many areas, especially in the pacific region. The TPP excluded China, and this pissed China off and directly threatened their dominance in trade. They have tried to come up with alternative arrangements to compete with the TPP. Yes, it was a trade deal, and "trade deals" have gotten a bad, and partly undeserved, partly deserved, reputation. But this deal was very different, especially as it gave the USA some added leverage over China.

Doing Business in and with the People's Republic of China - Compliance and Legal and Social Audits

 Many companies, big and small, are either doing business with companies (and people) in China or are thinking of doing this. If you don't think you are, just look at the seller on Ebay, As an American attorney who lives in Shenzhen China (near Hong Kong) here is some basic general advice (feel free to contact me for more information):

I.                   Methods of doing business with the Peoples Republic of China:

There are several methods of doing business with the People’s Republic of China. The easiest way is just to purchase goods (manufactured or otherwise) or sell goods, without any activity or presence in China. Historically, this is the reason Hong Kong became an economic powerhouse. Foreign companies dealt only with Hong Kong entities, and left it the their Hong Kong counterparts to deal with China. This has simplicity and minimization of risk as a principal advantage. Of course, hiring a third party company (such as one based in Hong Kong) can help avoid “having a presence” in China.

Nonetheless, as discussed below, depending on the nature of the Buyer’s/Manufacturer's business, and their specific needs and concerns, some of the issues discussed below still apply. For example, in the “Social or Moral Audit” scenario, it doesn’t really matter where title to the goods passed, nor does it matter if the financial side of the transaction is secure (for example COD with inspection), if one’s company becomes the subject of very bad publicity.

Furthermore, it is common for factories in China to copy or overproduce (for their own benefit) the goods for which they are contracted to manufacture for their clients. Similarly, sell a hot product to your purchaser in China, and don't be surprised if a good portion of what they are really selling turns out to be a Chinese manufactured copy of what they agreed to purchase exclusively from you.

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.

Of course, depending on how the transaction is structured, financially and legally, quality control can also be a big issue. An audit can supervise production and reject, on the spot, defective products, avoiding both delays and disputes, and even rejection by customs (in your country) when the goods are imported into your (foreign) country.

The need for proper protection becomes more acute if any intellectual property is involved. That includes trademarks, copyrights, and patents. China does offer protection for such property, but it is not automatic. Nothing should be taken for granted. Registration in China is necessary, and should be done promptly and correctly. It should be noted that China is notorious for taking advantage of foreign companies who fail to protect their intellectual property rights in China, or who delay in doing so.

The other side of the “picture” are companies who desire (or require) a presence, to some extent, in the People’s Republic of China. That may be merely an occasional visit from you or your employee (the foreigner) to discuss a purchase of goods. Or perhaps you will find it profitable to establish a foreign owned and managed company in China (whether a factory or retail sales). Each of these implicates additional needs for legal and other compliance protections. The greater your presence in China, clearly, the more you need (as both a legal and practical matter) to be protected and concerned.

Such issues are discussed below.

February 19 - Chinese New Year -Pictorial Documenting the Biggest Migration of People in History

The Chinese New Year is the largest movement of People.

Chinese Search Engine Baidu has a location tracker which it used to track the people returning home.
Notice that most people left one of four cities

Most Chinese no longer remain in their ancestral villages, but instead travel to the big cities to find more lucrative work. Those cities, Beijing, Shanghai, Guangzhou, and Shenzhen are filled with transplants from all over China. I live in Shenzhen, the 4th largest, with about 22 million people. It borders Hong Kong, and is in the same province as Guangzhou, the 3rd largest. Guangzhou was formerly known as Canton, the place where the British sold Opium to the Chinese. Both Shenzhen and Guangzhou are in the Guangdong Province, formerly also called the Canton Province.

I wanted to document this migration, so I asked people to send me various pictures from their trip home as well as their stay at home. I didn't want to tell people what kinds of pictures to take. I also found many pictures posted on Facebook, but even more on We Chat (Weixin)(the Chinese mobile Facebook) used by some 300 to 500 million Chinese.

People go home to their ancestral villages and home cities.  People travel great distances, if necessary. Trips range from one to three weeks, depending on one's job, finances, and available vacation days. Everyone has fun. People exchange Hongbao (or red envelopes filled with Lucky Money). Dumplings and special meals are eaten. Fireworks scare away evil spirits, while red banners bring good luck and prosperity. Unwed people over 25 complain they are harassed about the failure to marry.

The pictures tell the story far better than I could.

Notice the Picture of Chairman Mao in the Back

MORE PICTURES FOLLOW

Live Dispatch from China - Tensions Escalate - Japanese Militarization, Refusal to Acknowledge War Crimes, Whale Hunting, and Over fishing are a disgrace to the "Land of the Setting Sun"

The news from Japan is foreboding. Japan is  increasing substantially its military. The Prime Minister is paying respects to the Japanese war dead (from World War II). The former is an offensive measure and should be received with alarm. The later is just one in a long line of insults, but proves the Japanese haven’t changed and are unrepentant. The pretense of Japanese increased militarization is to counter increased Chinese military capability. This is a facade. It is the same type of specious propaganda asserted by Hitler (as his justification for the militarization of Nazi Germany prior to World War II.)

The instant dispute involves a bunch or rocks in the ocean somewhere between Japan and China referred to as the Diaoyu Islands. No one lives there. No one will ever want to live there. But these islands may be located near some natural resources (under the ocean). Fishing rights are involved. Japan needs natural resources. That was a major reason they [Japan] waged World War II in the first place (lack of natural resources). Here they go again. Lack of natural resources is not a justification for aggression and provocation, except to the Japanese, whose sense of superiority leads them to believe it is Japan’s destiny given by God. More war in the name of God.