Legal Strategies Foreign Companies Need to Adopt in China

Overseas companies willing to invest in China need to understand the requirements of the Chinese government first. Chinese authorities want several things from foreign enterprises that are willing to sell to the Chinese population. Here is a rundown of their requirements-

 

  • The Chinese government wants that foreign companies must open factories to employ and give preference to employing Chinese workers.
  • Foreign companies must share their technology and forcing foreign firms to hand over their technological secrets as the price of entry to the massive Chinese market.
  • Foreign firms must strictly adhere to the China employment law and do business over here in a Chinese way.

 

Environmental compliance for foreign businesses in China

China is undergoing an environmental paradigm shift that has dramatically strengthened the enforcement of its environmental regulations. Companies and public institutions that discharge listed pollutants directly into the environment will pay taxes for producing noise, air, and water pollution as well as solid waste. China now has the toughest emissions standards in the world. The foreign companies who have a manufacturing hub in China need to familiarize themselves with the Environment Protection Tax Law as they may now be subject to additional obligations and liabilities.

 

Conduct a Proper Business Analysis

While China has started to open up its economy in some areas, there are restrictions on the extent to which foreign companies can operate in large areas of the economy. Personal relationship networks can exercise significant influence. There is a widely held perception that local companies may also enjoy greater political protection, including from local courts. Working in and with China is not easy and the Westerners find it very difficult to continue doing business with their Chinese counterparts.

 

A business analysis risk assessment – assessing, combining, and grouping the risks as identified in this process, as well as determining the Company’s responses to those risks is the most crucial part. China seems like the perfect destination for expansion. But with lengthy bureaucratic procedures and a constant risk of IP threat, having a trusted China law firm on hand to help navigate the complex business arena of China is vital.

 

The Chinese administration has brought in a legal and policy framework that fundamentally alters the landscape for foreign businesses doing business in China or with China. The most notable thing that US, Canadian and UK businesses should keep in mind that China enforces its laws unevenly. China enforces many of its laws depending on who is violating them.

 

 

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