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Articles by Dan Harris
How to Change Your China Company’s Legal Representative
Changing Your China Company Legal Representative With so many foreign companies looking to close down their Chinese entities (almost always a WFOE) and leave the country, my law firm’s China lawyers are having to deal with a lot of WFOEs whose legal representatives are no longer with the foreign company.
The China NNN Agreement that Wasn’t
Introduction to NNN Agreements and Our Pioneering Role Our law firm was among the first to emphasize the importance of securing a China-centric NNN Agreement before sharing confidential information with Chinese manufacturers. We have consistently emphasized the value of NNN Agreements in the decades since. See, e.g., China NNN Agreements and China NNN Agreements Up Close.
Navigating China’s Evolving Legal Landscape: A 10-Point Checklist for Foreign Businesses Original
Table of Contents Conclusion A China Legal Checklist for Foreign Businesses This post examines ten key legal areas that often present hurdles for foreign companies in China. Most importantly, it provides basic and concrete recommendations on how to deal with China’s legal landscape and avoid costly missteps.
Just Say “NO” to a China Mutual NDA
Beware the China Mutual NDA Should I Sign a Mutual NDA With a China factory? Our international manufacturing lawyers get this question once a week, which is up from maybe once a year only a few years ago. Our usual answer is no, because these agreements are usually just a ruse to steal our client’s intellectual property. Mutual NDAs with Chinese companies rarely protect a foreign company’s intellectual property or confidential information. And this is exactly why Chinese companies like them.
China Distribution Contracts
China Distribution Contracts Over the past few years, China’s changing political, economic, and regulatory landscapes have posed increased challenges for foreign businesses. From escalating trade tensions to regulatory clampdowns, businesses have been navigating a minefield of risks in the country.
China Distribution Contracts
Table of Contents Toggle China Distribution Contracts Over the past few years, China’s changing political, economic, and regulatory landscapes have posed increased challenges for foreign businesses. From escalating trade tensions to regulatory clampdowns, businesses have been navigating a minefield of risks in the country.
China’s Economic Downturn and the Implications for YOUR Business
China’s Economic Downturn and the Implications for YOUR Business As economic uncertainty roils China, foreign companies operating in or with China face rising risks. From capital controls to supply chain disruptions to Chinese firms outright turning on their partners, businesses worldwide must navigate a more precarious China environment. This article examines the current economic situation in China and its very real implications for international companies.
The Chinese Government Has Your Data And There’s Not Much You Can Do
China’s Data Security Landscape This post addresses the options foreign companies have for operating in China and protecting their critical data. The assumption is usually that there must be a technical solution that allows foreign companies to protect their private technical data in China. The problem is technical, so there must be a technical solution. This is a symptom of unrealistic techno-optimism. There is almost nothing you can do.
The Perils of China’s “Good Enough” Attitude on Manufacturing
The “Rush it Through” Attitude in Chinese Manufacturing A recent newsworthy incident in China where construction workers damaged a section of the Great Wall by cutting through it in order to save time highlights the “get it done quickly” attitude that permeates Chinese manufacturing. See China’s Great Wall damaged by workers looking for shortcut.
Basic China Manufacturing “Advice”
Got an email this morning from a company asked only “for advice” about importing their specific product from China into the United States and the EU. My response was as follows: My advice is if you are not paying in advance, you do some combination of the following: Chinese Company Reputational Reports: You should have a due diligence report done on each company to which you will be sending money, before you send the money. You can find out about our due diligence reports here. NNN Agreements.
How to Avoid Problems When Using the Internet and AI for Your Legal Research
The internet and AI can provide you valuable insights, but they also come with inherent risks, especially when seeking legal guidance for your business. Here’s some advice for safely navigating these resources: 1. Always Question Online Legal Information: Avoid treating it as definitive. 2. Double-Check Laws: Before making decisions, ensure you have the latest and most accurate legal information.
The Misunderstood World of Patents and the Need to Diversify Your IP Protection Strategy.
Companies often put too much faith in patents alone to protect their intellectual property (IP) when manufacturing and selling overseas. But a one-size-fits-all approach to IP protection rarely works. Though patents have benefits in some cases, they are frequently not the most effective or economical choice. A wiser strategy involves exploring multiple IP protections and crafting a plan tailored to your specific business needs.
The Misunderstood World of Patents and the Need to Diversify Your IP Protection Strategy.
Table of Contents Toggle Companies often put too much faith in patents alone to protect their intellectual property (IP) when manufacturing and selling overseas. But a one-size-fits-all approach to IP protection rarely works. Though patents have benefits in some cases, they are frequently not the most effective or economical choice. A wiser strategy involves exploring multiple IP protections and crafting a plan tailored to your specific business needs.
Why Lawyers Should Stay Out of China Business Negotiations
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Why Lawyers Should Stay Out of China Business Negotiations
Table of Contents If you’re doing business in China, you might be tempted to ask your lawyer to step in and help you negotiate with your Chinese counterpart. However, this could be a big mistake that could jeopardize your deal and your relationship. In this post, I explain how lawyers play a different role in China than in the US, and how you can best communicate with your Chinese partner without involving your legal team. The Role of Lawyers in China vs.
Navigating China’s Evolving Trademark Landscape
1. The Changing Nature of Securing Trademarks in China Once upon a time, securing English-language trademarks in China was relatively straightforward. Our China trademark lawyers would determine the appropriate trademark category or categories under China’s trademark system, select the right class (or classes) and subclass (or subclasses), and secure approval from the China Trademark Office to file a specific trademark.
Russia, The Wagner Group and the CCP’s Demise
I am lately getting a ton of calls from reporters wanting examples of companies leaving China because of its increasingly oppressive cybersecurity, data security and counter-espionage laws. When I tell them I have no such examples, they are surprised. I then explain how companies tend to believe they are capable of navigating such things and avoiding being singled out by the Chinese government.
Russia, The Wagner Group and the CCP’s Demise
Table of Contents 3. A spark. I am lately getting a ton of calls from reporters wanting examples of companies leaving China because of its increasingly oppressive cybersecurity, data security and counter-espionage laws. When I tell them I have no such examples, they are surprised. I then explain how companies tend to believe they are capable of navigating such things and avoiding being singled out by the Chinese government.
Hong Kong Arbitration: Lawyers and Companies Are Just Saying No
Table of Contents In August, 2019 — in Hong Kong for International Business: Stick a Fork in It, I wrote how Hong Kong’s days as Asia’s leading international business hub were over and I made the following predictions: Companies that were deciding between Hong Kong or Singapore for their Asian headquarters would choose somewhere other than Hong Kong. Growing companies with offices in Hong Kong and elsewhere in Asia would reduce their hiring in Hong Kong and increase it elsewhere.
Sourcing Agents When Manufacturing Overseas: The Long Version
You have a great product that you want to be made in a foreign country about which you know little. What do you do? Do you use a sourcing agent and if you do, how should you pay that agent and what should you have it do? Perhaps most importantly, how should your various contacts with your agents and your manufacturers be structured? The below seeks to provide answers all these questions. 1. Should You Use a Sourcing Agent for Your Overseas Manufacturing? You essentially have two choices.
Sourcing Agents When Manufacturing Overseas: The Long Version
You have a great product that you want to be made in a foreign country about which you know little. What do you do? Do you use a sourcing agent and if you do, how should you pay that agent and what should you have it do? Perhaps most importantly, how should your various contacts with your agents and your manufacturers be structured? The below seeks to provide answers all these questions. 1. Should You Use a Sourcing Agent for Your Overseas Manufacturing? You essentially have two choices.
Sourcing Agents When Manufacturing Overseas: The Long Version
You have a great product and you have no other options but to have your product made in a foreign country to which you have never been and know little to nothing about. What do you do? 1. How Sourcing Agents Charge for Their Services You essentially have two choices. You bring in and pay a person or a company to help you find the right foreign manufacturer or you do it yourself. Both of these have their pros and cons.
Should I use a Sourcing Agent for my Overseas Product Manufacturing?
You are a new company just starting out. You have a great product and you have no other options but to have your product made in a foreign country to which you have never been and know little to nothing about. What do you do? You essentially have two choices. You bring in and pay a person or a company to help you find the right foreign manufacturer or you do it yourself. Both of these have their pros and cons.
Should I use a Sourcing Agent for my Overseas Product Manufacturing?
You are a new company just starting out. You have a great product and you have no other options but to have your product made in a foreign country to which you have never been and know little to nothing about. What do you do? You essentially have two choices. You bring in and pay a person or a company to help you find the right foreign manufacturer or you do it yourself. Both of these have their pros and cons.
In or Out. Thumbs Up or Down on Mexico.
Last year, I asked my good friend Andrew Hupert of North American Strategic Planning to explain what is involved in moving manufacturing from China to Mexico. I chose Andrew for this because he has spent so much time in both China and Mexico, navigating their manufacturing systems from the inside. My law firm frequently consulted with Andrew when we first started doing China legal work, and at that time Andrew was living in China.
In or Out. Thumbs Up or Down on Mexico.
When it comes to getting China-based companies production-ready in Mexico, I have in my head what I call my “Checklist of One.” This checklist of one is the cheapest, most important step you’ll ever take on a business survey: Is Mexico right for you? Yes ___ No ____ Need more info ____ Westerners in China and Asia ask me about Mexico often.
Top Ten Reasons Chinese Companies Fail in America (and Mexico)
Way back in 2010, I wrote Ten Reasons Chinese Companies Fail In The U.S. for Forbes Magazine. My top ten list in that article was as follows: 1. Chinese companies focus on a Chinese consumer, not an American one. 2. Chinese companies fail to realize how one reputation-damaging mistake in the United States can doom them forever here. 3. Chinese companies fail to realize takes time for to make an impact in the United States and they are usually not willing to spend the time and money necessary to do so.
Top Ten Reasons Chinese Companies Fail in America (and Mexico)
Way back in 2010, I wrote Ten Reasons Chinese Companies Fail In The U.S. for Forbes Magazine. My top ten list in that article was as follows: 1. Chinese companies focus on a Chinese consumer, not an American one. 2. Chinese companies fail to realize how one reputation-damaging mistake in the United States can doom them forever here. 3. Chinese companies fail to realize takes time for to make an impact in the United States and they are usually not willing to spend the time and money necessary to do so.
China Spying: It’s Everywhere
You have almost certainly heard by now that there is a massive Chinese spy balloon currently hovering over U.S. airspace in violation of international and U.S. law. Or if you actually believe the CCP, it is merely a weather balloon that went very far off course. 1.
China’s Business and Negotiating Culture: Good Luck with That
A client yesterday emailed me an article he had saved since 2007 and in his email he remarked how “when it comes to dealing dealing with Chinese businesspeople nothing ever changes.” I am not so sure nothing changes, but I am sure that what this article describes about dealing with China has not changed much, if at all.
China’s Business and Negotiating Culture: Good Luck with That
A client yesterday emailed me an article he had saved since 2007 and in his email he remarked how “when it comes to dealing dealing with Chinese businesspeople nothing ever changes.” I am not so sure nothing changes, but I am sure that what this article describes about dealing with China has not changed much, if at all.
China Scams: The Holiday Edition
One of our oldest and most cherished traditions is to write about China scams at the end of every year. We do this because history shows this is the biggest month for them. Scammers increase their activities at the end of the year, hoping to be less noticed/less examined due to the usual end of the season rush.
How to Close a China WFOE
1. Foreign Companies Are Leaving China Foreign companies are tiring of the difficulties and the risks that come from doing business in China. Not surpisingly, our China lawyers have been getting a ton of questions on how to close a China WFOE. It is difficult and time-consuming to form a WFOE in China. As you might expect, the procedure for shutting down a WFOE is also subject to formal procedures and regulations.
Ranking Creditors: Chinese Companies are Dead Last.
I recently had a brief phone conversation with a long term client. This client had called me to discuss its difficulties in getting paid and its difficulties in making its payments. They wanted my help in figuring out how to deal with both those they owed and with those who owed them. I suggested a Zoom meeting, to which they bring all documents relating to all those to which this company owed “substantial” money and to all those that owed this company substantial money.
Choosing the Jurisdiction for Your China Contract Disputes
I love when blog posts come pre-written. In cleaning out old emails today I found one from one of my law firm’s international dispute resolution lawyers to a Canadian client’s in-house lawyer who had proposed writing a contract that would give the client the choice of suing its Chinese counter-party in either Canada or China. In response, our international litigator explained why this jurisdiction provision sounds good in theory but is too risky in practice for China contracts, along with.
Choosing the Jurisdiction for Your China Contract Disputes
I love when blog posts come pre-written. In cleaning out old emails today I found one from one of my law firm’s international dispute resolution lawyers to a Canadian client’s in-house lawyer who had proposed writing a contract that would give the client the choice of suing its Chinese counter-party in either Canada or China. In response, our international litigator explained why this jurisdiction provision sounds good in theory but is too risky in practice for China contracts, along with.
Ranking Creditors: Chinese Companies are Dead Last.
I recently had a brief phone conversation with a long term client. This client had called me to discuss its difficulties in getting paid and its difficulties in making its payments. They wanted my help in figuring out how to deal with both those they owed and with those who owed them. I suggested a Zoom meeting, to which they bring all documents relating to all those to which this company owed “substantial” money and to all those that owed this company substantial money.
China Scams: The Holiday Edition
One of our oldest and most cherished traditions is to write about China scams at the end of every year. We do this because history shows this is the biggest month for them. Scammers increase their activities at the end of the year, hoping to be less noticed/less examined due to the usual end of the season rush.
Manufacturing Outside China: Apple Likes It and You Should Too
1. Manufacturing Outside China: Apple Likes It and You Should Too Yesterday, in Apple Makes Plans to Move Production Out of China, the Wall Street Journal wrote how Apple is accelerating its plans to move production outside of China, mostly to India and Vietnam.
How to Avoid Getting Scammed When Buying Product Overseas (Including from Alibaba)
More than a decade ago I wrote an article entitled “I Hate Alibaba” (it’s no longer still on the Internet but I still have it on my computer), voicing my concerns with foreign companies thinking they were safe sourcing through Alibaba. My concern at that time stemmed from the many calls and emails my law firm’s international dispute resolution attorneys get regarding really bad or never delivered product people had sourced through Alibaba.
How to Avoid Greenwashing in Corporate Sustainability Reporting
A nightmare scenario A retail giant was in the news. Its brand reputation, revenues and potential for litigation were all at risk. Sustainability teams had invested time and resources into a new supply chain tracking system and were going to market with a “green” product line in their retail clothing stores. But soon after the rollout, they began hearing rumblings from environmental activists, then from the mainstream media.
Your Company and China: Should You Divest, Decouple, or Double-Down?
I love the subtitle of the Economist article because the phrasing of this question is exactly how the international lawyers at my law firm typically discuss these various issues with our clients. Should they divest from China (I often refer to this as lightening their China footprint)? Should they decouple from China entirely? Or should they double-down by actually increasing their China exposure?
China WFOE Shutdowns: Fast or Legal?
A while back (I am being intentionally vague here to avoid identifying anyone) a U.S. client company contacted our China lawyers about shutting down its China WFOE and/or terminating all of its roughly 47 China employees in one fell swoop.
Chinese Communism with North Korean Characteristics and “ZERO-China”
For many years I’ve been saying that China was trending more towards North Korea than Germany or Japan. I would base this “prediction” on China’s increasing belligerence towards other countries, its increasing government control over its economy, its increasing control over its own citizens, and Xi Xinping’s increasing megolomania. China’s just completed party Congress has borne all of these things out.
Selling Your WFOE When Exiting China: Good Luck With That
WFOEs leaving China is nothing new and though we have not seen a massive uptick in that (with the possible exception of 1-5 person consulting WFOEs that had essentially stopped doing much if any business in China years ago).
China’s Relations With the West: Straight Line Decline
There are those who believe China’s ongoing Party Congress will bode well for companies that do business in or with China. I am firmly convinced that the opposite is true and that it will used as yet another opportunity by China to show that it will not be cowered by the declining relations and sanctions/counter-sanctions between the United States / EU / Australia / Japan on the one hand, and China on the other.
Doing Business in and with China During COVID Lockdowns
The following four things in the last 24 hours have “compelled” me to write this post. One, a client yesterday asked me to explain China’s current COVID quarantine rules for incoming travelers. My response was that I had no idea what those rules were because he was the first person to ask me in months.
President Xi Will Hold Onto Power, BUT . . . .
At least once a day, someone — usually a client — asks me whether President Xi will hold onto power. And every day, I give a much shorter version of the following half-serious, half-facetious answer: He will hold onto power, but for how long I don’t know. It’s like the stock market. I can right now confidently tell you that it will go up. I can also confidently tell you that it will go down. And with either prediction my confidence is justified because I’ll be right. But so what?
China’s Latin American Ground Game and YOUR Business
Increasing enmity between China and the West, stemming from China’s increasingly aggressive actions regarding Taiwan, China’s COVID-zero policy and a whole host of other issues have caused foreign companies that do business in or with China to reassess. See Nancy Pelosi’s Visit to Taiwan is Really Bad for Your China Business and Sourcing Product From China Just Got Even Riskier.
China Factory Joint Ventures
Huge swaths of China’s manufacturing sector are being thrown for a loop. Large numbers of foreign buyers of Chinese manufactured product have ceased or reduced their manufacturing in China and even larger numbers are looking to do so. Chinese manufacturers are rightly concerned and our international manufacturing lawyers are seeing the results of all this like never before.
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