“I have a patent in the UK. Can’t I use that to stop infringers in China?”

As in most jurisdictions, registered IP (trademark and patent) protection is territorial – if you do not register in China with the appropriate Chinese authorities you have no rights there. Failing to register may make it difficult, if not impossible to seek administrative or judicial assistance should problems occur.

Read the rest of “Changing attitudes to IP and product quality issues in China – Part 2” or post a comment >>

By Wang Jun and Stephen Lou

Termination due to financial difficulties

Under the second financial difficulties option, Article 41 of the PEL provides that employer may terminate employees without their consent. Under this option, employment may be terminated and, but for a one time severance compensation to be paid at the time of termination, the employer will no longer be required to continue to pay employee salaries.

Legal Requirements

In order for the employer to utilize this termination option, the employer must satisfy two legal requirements. First, the employer must show that it is in fact suffering financial difficulties. Second the termination must apply to more than either 20 employees or 10% of the employees at one time.

In regard to the first requirement, the Chinese law merely provides a broad provision with no strict and specific requirement to determine how the financial difficulties requirement is met. Read the rest of “Practice and Procedures for Termination of Employees Due to Financial Difficulties in China – Part 2″ or post a comment

By Steven Dickinson

Many small and medium sized companies that engage in OEM manufacturing/ outsourcing in China fail to take the steps necessary to protect themselves. When problems arise, they can do little or nothing to protect themselves because they have no legal basis for protection. The fact is that outsourcing disputes must be resolved in China, under the Chinese legal system. The Chinese legal system has improved greatly over the past ten years and taking a few basic legal steps can greatly reduce your risk. The cost of such protection is modest compared to the protection it will provide.

The following five basic steps will greatly reduce your problems with Chinese manufacturers, while improving your chances of recovering should any problems arise. Read the rest of “Outsourcing in China: Five Basics for Reducing Risk” or post a comment

By Matthew Kowalak.

There are, unfortunately, times when contracts, for whatever reason, need to be voided. The problem is, when can contracts legally be voided in China? There are specific circumstances when this indeed can be done. But to make it work, you have to meet specific legal criteria.

The key to understanding these types of contracts is to note when they are actually voidable. There are three situations in which you have the option of voiding a contract in China.

1. A contract made by a “significant misconception” – This one is tough, because there are not really enough cases on the books in China to even attempt to take a guess at what “significant” implies. Tentatively, if you are able to prove that in some aspect of the contract, one of the parties made significantly misleading promises that are not in sync with industry standards, you may meet this standard.
2. Contracts that are “significantly unfair” – This has more to do with contracts in which
   some aspect of the agreement has changed significantly from the time the contract began to be effective to the time of performance by one of the parties.
3. A contract signed “under duress” – While this seems like a straight forward idea, no one can somehow force you to sign a contract and force you to perform it, in reality duress can be difficult to prove.

Read the rest of “Voidable Chinese Contracts” or post a comment

By Dan Harris

For the last few years, one of the main themes of this blog has been how China has and will continue to increase its enforcement of its commercial laws, particularly as they apply to foreigners. We have written about the increase in crackdowns on those in China without the proper visa, about closing of unregistered businesses, the need to comply with the Labor Contract Law, and a stepping up of environmental enforcement. I’d like to take some of it back.

In the last three months or so, the law for foreigners has definitely shifted a bit in China. It has not changed on the books, but it has changed out in the field and foreigners doing business in China and those considering doing business in China need to be aware of these changes and how they might impact their business.

Without delving too deeply into legal philosophy, let me just state that there is real value in having written laws that are consistently enforced. This is true for all kinds of reasons, many of which should spring immediately to mind. Read the rest of “China Law For Foreigners. Slip Sliding Away.” or post a comment