Category: Startups

Watch-Out for Using KOL’s Social Media for Advertisement or Promotion

As on-line social media such as Weibo or WeChat (the Chinese counterparts of twitter and Facebook) became an indispensable part of everyone in our era, businesses simply cannot stop using these communication resources to do advertising and product/service promotions. Among others, the so-called “key opinion leaders” which are popular online regardless of whether they are actually leading any public opinions anyhow (“KOL”) is most ideal resources as such KOL draws most eyeballs and what they say in most times look or sound like personal opinions or private discussions of individuals.

Historical Issue of Fire Protection and Legal Position Analysis

“Historical Issue” is a frequently used terminology in the context of PRC operation. However, what does it mean remains to be very foreign to most foreign managers in multinational companies. In a nutshell, the rapid economic development over the 3 decades has given rise to wide spread non-compliance with various prevailing government regulations that failed to sit well with the said economic development. When such non-compliance, which as a matter of fact had its own economic rationale, became too common for the local government to enforce, it will stay there for generations and generations of administration and then became a “historical issue”.

Legal Position of Anti-Smuggling Risks in Processing Trade

To most foreign invested enterprises (“FIE”) that carry out a reasonable compliance standard, smuggling should be a rather remote concept. However, this may not be the case for those FIE that treat Chinese operation as the sourcing site and relies heavily upon the business model of processing trade (in a nutshell, processing trade refers to importation of materials free from Chinese duties and VAT (“Bonded Materials”) to manufacture finish goods and in turn export such finished goods back overseas pursuant to Chinse laws and regulations.

Are Buyers’ Sourcing Agreements Free From Anti-Trust Concern?

The strength of anti-trust enforcement of Chinese government (Chinese Development and Reform Committee (“NDRC”) in particular) against price fixing arrangement with distributors has become unprecedented. The amount of penalties has reached hundreds of millions of RMB, not to mention the scary process of investigation such as dawn raid and the corresponding interruption to business.

Legal Caveat on Joining Trade Associations II

Following the article about the general position regarding the legal positon about joining trade associations, we appreciate that the reality that most small or medium size enterprise may not have the necessary resources to follow our tips that decisions regarding joining trade association should be referred to senior legal in-house counsel.

Therefore, we would like to supplement the following list do-and-don’t as the preliminary roadmap for reference:

Legal Caveat on Joining Trade Associations I

In our ever changing regulatory environment driving by the emergency of new technology that change our lives overnight, it is indeed critical for the government to hear the voices of the industry. It has been a long while joining trade associations in various forms to fulfil such purpose, by way of the platform provided by such trade associations to carry out research, raising common concerns, pointing out joint issues and sharing best industrial practice.

What Can “Life Time Guaranteed” Advertisement Claim Legally Guarantee?

When you open your television, walk by a bus station or come across any other media, it is more than often to see advertisement pop up to claim that their product or service are “life time guaranteed” in certain respects. This is especially the case when the products are pretty long lasting such as renovation / decoration products or white household electronic products.

In most cases, alongside the eye catching advertisement claim slogan, there will be some explanations / disclaimer printed in a way much smaller font (probably because the advertisement claim is reviewed by the in house legal department before issuance?)

Prohibiting the Abuse of Intellectual Property Rights to Preclude or Restrict Competition

On 7 April, 2015, the State Administration of Industrial and Commerce (“SIAC”) promulgated the Rule on Prohibiting the Abuse of Intellectual Property rights to Preclude or Restrict Competition (“Rule”), which is expected to significantly impact the practice of both of intellectual property protection and anti-molopoly.

We summarize the major objectives, aspects and highlight of the Rule as below to offer a high level overview of the Rule.

Chinese “Deep Rock” Subordination of Shareholder Loan?

–A Brief Comment on Precednet Case Published by the PRC Supreme People’s Court (2015) regarding Shagang v. Kaitian

On 31 March, the PRC Supreme People’s Court (“SPC”) published 4 precedent cases with binding effect. Among others, the enforcement objection case between Shagang and Kaitian was considered the first PRC case borrowing the “Deep Rock Doctrine”, a U.S. equitable subordination doctrine well established in the Taylor v Standard Gas & Electric Company (1939) case holding that claims, as creditors, upon an insolvent subsidiary company by controlling shareholders or other insiders (such as managers or directors) shall be deemed to receive the same treatment as shares of stock owned by the said insider, and thus shall be subordinated to the claims of all other creditors.

The Chinese Case Law System

–A Brief Comment on Notice of the Supreme People’s Court on Issuing the Provisions on Case Guidance

It has been conventional wisdom that PRC is a codified and civil law jurisdiction where the cases already ruled by the court is not binding and precedent effect upon the later case. In that sense, legal practitioners can only rely upon the general and vague black and white statutes and thus give rise to unbridled judicial discretion for possible corruption.

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