Our LawPact member firm in Hong Kong and Shanghai, Oldham, Li & Nie, recently sent an article by Richard Healy of that firm pointing out three practical tips on doing business in China. Here is a capsule highlight of those tips:
- Remember in protecting trademarks in China, that China is a “first-to-file” jurisdiction. You may decide to do business in China only to find that someone has already registered your trademarks there. This can raise all sorts of unpleasant issues for you that will need to be resolved. So it is better to act early rather than later in seeking registration there if doing business in China is on your radar screen.
- For those contemplating making direct investments in China, they will most likely channel those investments through a Chinese Wholly Owned Foreign Enterprise (“WOFE”). Establishing a WOFE takes considerable time and effort to both create and to terminate in the event of subsequent sale of the business. Their recommendation is that the WOFE be held by a Hong Kong or other off-shore holding company, which makes disposition of the business far easier as well as offer some additional protections.
- As the legal enforcement of contractual rights is rather recent to China and in some respects still evolving, it may make great sense to provide in contracts with Chinese parties that the contracts will be subject to the laws of the Hong Kong Special Administrative Region of the People’s Republic of China and subject to arbitration in Hong Kong. Interestingly, Hong Kong’s legal system is based on English common law.
These are three quick tips, but demonstrate that it is prudent to receive legal assistance and advice before doing business in a foreign country. If you need a contact at Oldham, Li & Nie, please contact Mike Margrave.
Michael W. Margrave