China’s top 5 business law trends of 2010

Dan Harris is an international lawyer based in the United States. Here is what he thought China's top 5 business law trends of 2010 will be (Click here for the full article):

1. China will step up even further its crackdown on foreigners in China violating its visa/immigration laws. If you lack an employee visa, you may be at risk.

2. China will increase its efforts to root out and shut down illegal and unregistered foreign businesses. I have seen ample evidence of this already happening in the last 3-6 months and I have no doubt this will continue. Providing jobs to Chinese citizens does not let you off the hook.

3. China will increase its tax collection efforts. This has been going on at a rapidly accelerating pace over the last six months or so. If your China operations are not making a healthy profit, do not be surprised if the government imputes healthy profits to it. In particular, the government will look very closely at your transfer pricing and in many cases it will not like what it sees.

4. China now sees itself as a full-fledged economic power and with that perception we can expect it will be stepping up its anti-monopoly monitoring of mergers and acquisitions. I predict China will seek to impose at least some conditions on all mergers and acquisitions that touch on China, if only just to show that it can.

5. The number of cases brought by employees and resolved in their favor will continue rapidly increasing. This will be particularly true with respect to foreign companies as this will be a great way for the government to show its willingness to protect its own.

Is China's Legal System Reliable?

Often, one of the top concerns of many business investors who are considering going into the Chinese market is if they are protected while doing business in China. While China's legal system is far from perfect, however, the progress is comforting to many. The following are inserts from an article published by the New York Post (for full article click here).

When President Obama arrives for his first China trip, he will find a country with a legal system vastly improved from a generation ago, particularly in the area of business law. And when it comes to dealing with China, as American businesses know, confidence in commitment to legal obligations is critical in giving assurances that business can be carried out effectively. For the United States, it provides a bilateral and multilateral negotiation framework.

At the provincial and city levels, out of sight of the country’s central leadership, legal enforcement remains unreliable. There are strong indications that enforcement of laws related to the environment and corruption is uneven and subject to favoritism. Yet even here, China has made progress. For example, the major western city of Chongqing is in the midst of broad corruption sweeps to clean up organized crime, providing a more stable civil and business environment.

Evidence that China has benefited from an increasingly robust legal framework is clear. China’s rapid economic development has stemmed both from relaxing state control over the economy and also its move toward a law-based society.