Dan Harris is one of my favorite bloggers. His blog, China Law Blog is one of the best blogs about Asian Business. He mainly writes about business law in China in his blog and thus it is a very useful blog for everyone who wants to do business in or with China. It is an absolutely wrong perception that only European and American companies are doing business with China. Rather, companies of all the South Asian countries are doing business now. That is why I became eager to carry out an interview with Mr. Harris by email about doing business in China. Here is the interview:
SouthAsiaBiz: Please tell about your blog and about yourself a bit for the readers?
Dan Harris: The goal of our blog is to help those doing business better understand how Chinese law can help or hurt their business. On top of this, we often write about Chinese business matters, usually from a practical perspective.
There are two of us who write for the blog. I am an international lawyer who first got involved with china around ten years ago when I was contacted by a company that needed help getting its bowling alleys re-categorized for Chinese tax purposes. I succeeded in securing him a six figure reduction and have been hooked on China ever since.
Steve Dickinson is the other person on the blog. Steve is completely fluent in Chinese and has been deeply involved with China for more than twenty years. Steve practiced international law in Japan for a couple of years, then in the u.s. for maybe ten years, and then he taught Asian and Chinese law at the university of Washington Law School and also would occasionally teach law (in Chinese) at Beijing University. We were able to lure him back into private practice mostly because he is so excited about the changes going on in china. Steve spends most of his time in china.
SouthAsiaBiz: What are the main legislative obstacles for foreign industries in China?
Dan Harris: Surprisingly few. I would have answered this differently even last year, but Chinese law permits foreign companies to do just about anything domestic companies can do, with only a few exceptions. On top of this, foreign companies are treated more favorably under Chinese tax laws than domestic companies. Foreign companies are restrained in certain areas, like media, construction, and the military.
SouthAsiaBiz:If a foreign company wants to do business in China what are the legal processes?
Dan Harris: It depends. If all the company wants to do is buy product from china or sell product into china, then there are almost none. If the company wants to actually go into china, they should form a company and register. Generally, the best way to go into China is as a wholly foreign owned entity (wfoe) or as a representative office, but there are other options as well, including as a joint venture. China does have certain minimum capital requirements but these tend not to be particularly onerous. The most important thing a company going into china must do is to register its trademarks.
SouthAsiaBiz: From your point of view if India and China wants to attract more foreign investors what kind changes in the legal system should be made?
Dan Harris: I do not know enough about India's legal system to answer this question regarding India. The answer for china is easy. China must improve its protection of intellectual property. The laws are fine, but enforcement is not. Chinese courts do generally enforce trademarks, once brought to their attention, but patent protection in china is quite bad.
SouthAsiaBiz: China at present is emphasizing on Intellectual Dan Harris: Property Rights Law- what are the major problems for implementing the law? How would compare China with India in this regard?
The biggest problem in implementing the intellectual property laws in china is that the Chinese do not believe that the implementation of strong patent laws is in their own best interests. Until that perception changes, patent law enforcement will remain weak. The Chinese do understand the importance of trademarks, however, and judicial ip enforcement of trademarks is not bad. I have heard India is somewhat better in this regard, but, again, my knowledge of Indian law and practice is very limited.
SouthAsiaBiz: At present China is going through rapid industrialization, do you think the present Industry laws and regulations are good enough or the government should change the laws to gain better control of the industrial growth in China?
Dan Harris: I am a big believer in the free market so the last thing I want to see is for the Chinese government to do anything to try to exert more direct control over private businesses there. Private business in china is thriving right now and much of the dynamism of China's economy is coming from the private sector, not from the state owned entities. Chinese business laws are, for the most part, pretty good. Change needs to come from the enforcement side. One of the problems is that the laws are so new and so sophisticated that many of the judges do not understand them.
Hello Rahzib, I know for a fact that most Chinese businessmen don't believe in intellectual property rights. For them, it's so much money to spend on just paying others for their trademarks and consider it an additional burden for their businesses. I think this sentiment regarding intellectual properties will take a really really long time before it can see the light of day among the Chinese people.
Posted by: nepspeed82 | June 20, 2006 2:28 PM | Permalink to Comment