China Esquire

Okay, I am about to post another potential fire starter.  Everyone has heard about China’s human rights record.  You’d have to be deaf and blind to not hear it in the west, or probably in China as well.  CNN recently did an article about Amnesty International’s annual report, and some of the results are predictable:

Irene Khan, Amnesty’s secretary-general, said that in particular, “the human-rights flash points in Darfur, Zimbabwe, Gaza, Iraq and Myanmar demand immediate attention.”

The report, the group said, “reveals a world riven by inequality, scarred by discrimination and distorted by political repression.”

According to its count, people are tortured or subject to other ill treatment in at least 81 countries, face unfair trials in at least 54 countries and are not allowed to express themselves freely in at least 77 countries.

Of the 150 countries and regions listed in the report, Amnesty paid particular attention to China, the host of this summer’s Olympic Games.

This is nothing really new.  If you don’t know about Darfur, you probably haven’t been following last year’s “Genocide Olympics” rhetoric.  This, however, was the fascinating part.  (and don’t get me wrong, I am a Chinese-American with deep loyalties to both nations, and as an American trained attorney, I have a particular attachment to the U.S. Constitution and the system–this is not America bashing)

Amnesty also criticized the death penalty in the United States, where 42 people were executed last year. It noted New Jersey’s decision in December to abolish the death penalty made it the first U.S. state in more than 40 years to do away with executions.

As it has in previous annual reports, Amnesty criticized the detention of hundreds of foreign nationals at the U.S. naval base at Guantanamo Bay, Cuba.

“The USA must close Guantanamo detention camp and secret detention centers, prosecute the detainees under fair trial standards or release them, and unequivocally reject the use of torture and ill-treatment,” Amnesty said.

In fact, more is written on the United States than any other country listed in the report. Asked about that at a press conference Tuesday, Khan said, “We certainly devote a lot of time to Sudan, to China, to Zimbabwe and other countries. But we look to the U.S. to provide leadership around the world. Governments around the world look to the United States as a role model for their own behavior.”

Wow.  America got the lion’s share of Amnesty’s annual report about human rights violations?!  Well, it does seem patently unfair given that the U.S. probably has overall one of the best human rights records in all of history.  Even if you hate America, I think you can at least agree that this is pretty good in this regard.

But at the same time, its somewhat justifiable.  The world leader on human rights, which often brings these charges against nations, gets skewered for potential hypocrisy.   Interesting situation indeed.  What does everyone else think?

Just wanted to post this quickly from the New York Lawyer. I recently had a post that linked Donald Clarke’s PDF resource on the usefulness (or lack thereof) of having a Chinese LLM. Well, yesterday, the NY Lawyer published this article saying that foreign firms want staff their firms by having foreign attorneys with U.S. LLM’s. I suppose its an interesting turn of events:

Law firms with roots in the United States are increasingly tapping master of law degree programs here to recruit foreign lawyers for building out their international networks.

For instance, McDermott, Will & Emery, which was founded in Chicago and now has six offices outside the United States, this year is cultivating closer ties with U.S. law schools that offer so-called LL.M. programs for foreigners in the hopes of luring some of the graduates to its non-U.S. offices.

Firms are turning to the LL.M. programs as a source of foreign lawyers who have law degrees from their home countries and other requisite credentials, plus an understanding of the U.S. legal system and strong English-language skills, law school officials said.

While some large international firms have been recruiting from the programs for years, they’re expanding their use of them now at the same time that some newly global firms are coming to the idea.

The demand from firms for attorneys from certain countries rises or falls each year, depending on which areas of the world are experiencing the most growth, law school officials said. Firms currently are particularly interested in students from Germany, Brazil and China, said Lidija Rebic, the acting career adviser for the LL.M. program at Northwestern University School of Law.

In the past, many of the foreign LL.M. students simply got their degrees and perhaps took advantage of an automatic option to work for a year at a U.S. firm, but then headed home to a prior employer. Now, there are more opportunities for the students to join a new U.S. law firm employer permanently, school officials said.

So, for those of you wanting a Chinese LLM, the applicant pool is becoming more diverse than just U.S. JD’s with Chinese LLMs.

China Esquire made 2 more blogrolls since my last update: China Business Services Blog, a long time China business blog run by Jeremy Gordon, and the newer China Law Practice Blog, which is published by Greg Sy and Stephen Lou of Grandall Legal Group in China.

Things are busy so I may not be able to post until the weekend. My apologies if that is the case.

The International Lawyer published article a few months back from Professor Xiang Gao at China University of Political Science & Law in the Winter 2007 Edition (Vol. 41, No. 4) entitled “The Fraud Rule in Law of Letters of Credit in the P.R.C.” While the article may make for interesting reading about letters of credit and the history of the fraud rule, I am more concerned about what the fraud rule means today for practicing attorneys. On the whole, I am rather impressed with the sophistication and policy decisions that were made in the 2005 draft of the fraud rule after reading this article, and thought that parts of it would be worth sharing.

I will not expound on letters of credit for those who are not familiar with the topic. For a basic understanding, Wikipedia does a decent enough job. I just want to highlight certain sections:

Standard of Fraud

The fraud rule is developed to prevent fraudsters from using letters of credit to unjustly enrich themselves. It is applied when fraud is found in the transaction . . . .

In the P.R.C., fraud is defined under Article 68 of the Interim Opinions of the Supreme People’s Court Concerning the Implementation of the General Principes of the Civil Law of the P.R.C. (IOGPCL) as “one party intentionally telling the other party a lie or concealing the truth of a fact in order to induce the other party to come to a decision it would otherwise not come to.”

Of course, this standard can be tough to apply. It is not quite like U.S. fraud rules because it seems the causation bar in the IOGPCL seems higher: to cause a party to do something it would otherwise not do. Of course, it is vague, so the article lays out some examples:

(i) The beneficiary has forged documents or presented documents containing fraudulent information;

(ii) The beneficiary has intentionally failed to deliver goods or delivered goods with no value;

(iii) The beneficiary has conspired with the applicant or a third party and presented fraudulent documents whereas there is no actual underlying transaction; or

(iv) Other circumstances that constitute letter of credit fraud.

The article goes on to expound on each of these categories. The most sophisticated part seems to address the third option, where companies can use the fraud rule in order to conspire to cheat banks for funds or avoid the law of foreign exchange control. That to me shows an alignment with reality and appreciation for modern economic concerns.

Parties Immune from the Fraud Rule

A people’s court shall make a ruling to suspend the payment or a judgement to permanently stop the payment under a letter of credit when fraud is established, unless one of the following has happened:

(i) The nominated person or the person authorised by the issuing bank has paid in good faith in accordance with the instructions of the issuing bank;

(ii) The issuing bank or its nominated or authorized person had accepted the draft under the letter of credit in good faith;

(iii) The confirming bank has paid in good faith; or

(iv) The negotiation bank has negotiated in good faith.

While “immunity” from the fraud rule seems like it ends up protecting wrongdoers to some degree (and it does), it also impresses me that there is enough sophistication in this law to create such a category of immune parties because the letters of credit law deals with business transactions that ideally are outside the realm of the law. As well, letters of credit involve 3 separate commercial transactions due to banks acting as escrow services, and thus, end up being highly complicated. One instance of fraud can grind the entire process of transactions to a halt.

Jurisdiction

[O]nly the following courts can hear foreign-related commercial cases or are competent courts that can hear letter of credit cases:

a). People’s courts of the Economic and Technological Development Zones approved by the State Council;

b). Intermediate people’s courts of the capital cities of provinces, autonomous regions and municipalities directly under the control of the Central Government;

c). Intermediate people’s courts of the Special Economic Zones and Municipalities financially directly report to the Central Government;

d). Other intermediate people’s courts specially designated by the SPC for the jurisdiction of foreign-related commercial cases; and

e). High People’s Court.

Currently, all letter of credit cases in the SPC are under the jurisdiction of the No. 4 Civil Division.

Again, this is good information for any practicing Chinese lawyer to know. You don’t want to file suit in the wrong court or the wrong division of the right court.

There is a lot more to Professor Gao’s article, but I think these are the most relevant to any China practitioner. If you want to read me, pick up the article.

Donald Clarke recently posted an updated version of an FAQ type of resource about foreigners who want to get an LLM (Master of Law) degree from a Chinese University. It covers everything about which programs to consider and if such a degree will help you get a job in China. You can find it here.

I thought it to be important to those considering continuing education as well as those interested in China. The bottom line: the LLM probably won’t help you to find a job in China all that much.

Either way, its a good resource and will shed a lot of light onto the subject of a Chinese LLM. I reckon that there is probably growing popularity of this subject due to blogs like Boulder2Beijing.

UPDATE: As noted in comment, the document is not easily accessible from China because China Law Prof Blog is hosted on TypePad.  I have it posted here now as well.

I have been thinking about the role of the media in both societies. And I have long been critical of the media no matter what country you are in. Here’s why.

Within the past few months in America, we have seen China being vilified for the Tibet uprising, the Olympic Torch relay coverage being dramatized (and somewhat overblown in my view, at least, with the San Francisco portion), and now a lot of sympathy in the China quake. Now it seems that China can do no wrong: it has been transparent in its reporting, and western journalists have been singing China’s praises for the last week. It almost seems like the CNN coverage is bi-polar. Of course, it isn’t. But I know that many of my Chinese friends and colleagues were deeply offended one month ago and now fairly happy about the media coverage as of late.

Yes, this blog post is not about law and business, but about the role of the news reporting. While the Chinese might accuse the media of being anti-Chinese and yet very fair in the rest of its reporting, let me assure you that the media is going to be biased… I don’t think it is necessarily anti-Chinese, though I do think it is biased period. Even when it reports on American news. It is hard to find purely objective reporting on anything.

I was reading this little tidbit on CNN the other day about American politics. (yes, I know its not the normal purpose of this blog) And it takes a particular political leaning that has little to do with reality:

The House Judiciary Committee on Thursday served a subpoena on former top Bush aide Karl Rove to compel his testimony concerning allegations that the Department of Justice had dismissed U.S. attorneys based on party affiliation.

It had authorized the subpoena earlier, but only delivered it Thursday after Rove’s attorney said he would not appear voluntarily, Chairman John Conyers, D-Michigan, said in a written statement.

“It is unfortunate that Mr. Rove has failed to cooperate with our requests,” Conyers said. “Although he does not seem the least bit hesitant to discuss these very issues weekly on cable television and in the print news media, Mr. Rove and his attorney have apparently concluded that a public hearing room would not be appropriate. Unfortunately, I have no choice today but to compel his testimony on these very important matters.”

Now what does this have to do with the law? Well, quite a bit actually. Because by law, every President is allowed to hire and fire U.S. Attorneys. 28 U.S.C. section 541(a) reads “The President shall appoint, by and with the advice and consent of the Senate, a United States attorney for each judicial district.” It seems to me that it is the President’s right to hire and then subsequently can their judicial watchdogs. The folks on wikipedia justify their position by saying that the President’s power should be governed by “tradition”. But that is not what the law says. (this is a law blog, so you should expect that there is at least something law related here) Of course, CNN and other media outlets have been very selective reporting about the law. Perhaps the journalists tend to be Democrats–and frankly, I don’t doubt that.

But that’s not the point of this article. All media will be somewhat selective and biased… either for a political agenda, or for what I think is more true, an economic agenda. Reporting will be done to make money in the west. Yes, there is some truthful and transparent reporting involved… but much of the media here is also driven by money. Sell newspapers, sell ad revenue, etc. This is a product to sell. And what sells is usually not objective reporting.

It’s a little different than the Chinese media, which often has a political agenda. So which is better? Probably neither. For better or for worse, each media source, whether Chinese or American, will be trumping their own viewpoints.

The important part is to read as much as you can about any story–and get the facts. I tell this to American friends wanting to understand China. I tell this to Chinese friends wanting to understand America. Read as much as you can, and get both sides. Draw out the factual content. And then go from there. That’s how you can (hopefully) learn to read around media biases. The media has a powerful role in all cultures. And in an information driven world, it is even more powerful. And sometimes, that means we will have to do a little more homework so that we can get real news without the media biases–whether in China or America.

The proper way to undermine bias is not by being biased against that bias. The proper way to undermine bias is by knowing the facts and then drawing a reasonable conclusion. I have a feeling this post is going to ignite a lot of flames…

Yes, the famous line from the Rodney King Riots in the 1990’s seems to apply today so well. I wanted to highlight a piece by Paul Denlinger at China Vortex this weekend, partially because I enjoyed it, and partially because it ignited a storm of comments on his blog. Frankly, I thought it worth the read. So here you have it, the weekend review piece:

Following the Sichuan Wenchuan earthquake, it has been very interesting to watch how the Chinese government and people have reacted, and how many western observers have reacted. For the first time in Chinese history, the Chinese government has ordered that Chinese flags have to be lowered to half-staff, for three days from May 19-21. What is most significant, is that this is the first time that the flag has been lowered for ordinary civilians in Chinese history, ever.

Unlike in Washington DC, where you can find war monuments to Americans killed in WWII, the Korean War and the Vietnam War, there are no war memorials to Chinese soldiers or civilians killed in these wars, or to any who died as a result of bad government policy decisions. For the most part, they have just become unknown individuals who died and are now forgotten.

This is why the decision to lower the Chinese flag for ordinary civilians is so different and marks a break with the past. For the first time in its history, the Chinese government is saying that it is OK to mourn for ordinary civilians. This did not happen during the Tangshan earthquake, which killed some 450,000 civilians in 1976, or in 1989, or even so much during the SARS crisis of 2003.

For the first time, a Chinese government has embraced the idea that any human life, even that of ordinary human lives, has value. Actually, this is a very western concept, and is a very important step on the road to democracy. Is this not a valuable change in China’s reforms and opening up? This will make it that much more difficult for any Chinese government to dismiss the value of any Chinese lives which are lost in the future, whether they are due to natural disaster, or war, or for political reasons.

I don’t disagree at all… and in fact, I think its a great thing. I am not necessarily pro-democracy like Paul here, though I am American and I do recognize its benefits over most other forms of government. But I digress.

What caught me is this statement: “Chinese government has embraced the idea that any human life, even that of ordinary human lives, has value.” I don’t know if you think about this too much, but this is the basis for many rights, freedoms, and privileges. The idea of the right to life (and the subsequent abortion debate) springs directly from this. The value of a human life also means the value of a human to express opinions and dialogue… or freedom of speech. I don’t think I need to carry on too much about this. But it’s an astounding concept that China has picked up from the west. Because this can be the beginning of a worldview change for the Chinese people. I don’t know it if actually will be, but this is the concept that shakes up all things.

It also means that the rule of law should become more important. Which is something I heavily favor in any society. Yes, law can be abused, no question. And it can be harsh. But in general, rule of law means that each person is treated equally under the eyes of law. Which has a host of implications, frankly. But as an advocate for the rule of law, this is one concept that leads directly to it. Because without inherent human dignity, it is hard to figure out why we want treat people equally.

Maybe I’m asking too much, but can some people, Americans especially, try to look at China through the eyes of the Chinese, and not always try to scare and frighten other Americans into asking what the “rise” of China means to the US and the west? Is it too much to think or ask that maybe, just maybe, Chinese don’t spend everyday plotting how to steal their jobs and turn America into a third-world economy? And that maybe, they are just ordinary people who are trying to get along in life, and raise their child and get him/her in a good school, and buy a house? And that the government is far from perfect, but it has allowed ordinary Chinese to have a much better standard of living than before, and is now, for the first time, beginning to care for and mourn the loss of ordinary civilian lives?

There’s a very simple rule: If you reach out and treat people like friends, they tend to act like friends, and if you treat them suspiciously, they become enemies.

I am with Paul on this one too. Getting information and displaying true sympathy and empathy will go a long way in bridging the cultural gap that exists between Americans and Chinese.

I’ve talked about Americans decrying Chinese imported products on this blog, and the need for American and multinational corporations to get their act together in due diligence and quality control. (Dan Harris at CLB had a post on QC which quotes the good ideas from Nina Ying Sun’s post here recently, in case you didn’t read it)

Well this story was so strange that I had to post it. It’s not exactly your run-of-the-mill Trader Joe’s or even pet food melamine case. Instead, Congress is targeting importation of actual (plastinated) human bodies for display from China. ABC News reports ( h/t to Above the Law) here:

Twenty-one members of Congress have sponsored a bill that would strike a major blow to the multi-million-dollar industry that puts human bodies on display because they say the bodies could be from executed Chinese prisoners.

Republican Rep. Todd Akin of Missouri introduced the bill that would prohibit the importation of any “plastinated” human body part into this country. Atlanta-based Premier Exhibitions uses “unclaimed” Chinese bodies infused with silicone through a process called “plastination” for display across the nation in an exhibit called, “Bodies…The Exhibition.”

“This is a human rights issue about affording human dignities to people around the world,” said Rep. Akin, adding that he is concerned that the Chinese people in the exhibit did not give permission for their bodies to be on display. “We cannot verify the source of each body coming from China, so we decided the best approach was to say that in our country, you cannot import plastinated bodies,” he said.

This is arguably a QC issue: companies not verifying where their dead are coming from. Of course, I doubt that because it seems like its general knowledge that companies can get bodies without consent from China:

Gunther von Hagens who invented the plastination process puts on another show featuring plastinated bodies called “Body Worlds.” He, too, would be affected as his plastination factory is located on the German-Polish border. Von Hagens says all his bodies are donated and that he no longer works with corpses obtained from China.

So its not quite a QC issue. Because companies are knowingly doing it. This is not an issue of those “evil” and “greedy” Chinese manufacturers, and so, consumers cannot call it that. (unlike a situation such as Panama’s cough syrup with glycerine) It seems to me that the problem isn’t QC, its unscrupulous businesses using China as a source for bodies. And sadly, I would bet that those companies would go elsewhere if plastinated bodies weren’t available from China.

Note, this isn’t just a ban on Chinese plastinated bodies. It’s a ban on all such imports. So it’s not an anti-China matter.

And yes, there are domestic and international standards of decency and laws on the books on what you do with cadavers and human bodies. But this ban is not about QC or about the law. It’s about politics. Honestly, the nature of this debate is sort of sickening to me… which is why I chose law and not medicine. I am not sure I’d call it human rights when we are dealing with dead people, so it’s sort hard to come up with any sort of classification for this sort of mess.

Anyways, I thought it was interesting to at least think about. I hope it doesn’t ruin your lunch today.

Actually, I make no claim to be a China expert, though I am flattered to be considered one now. An expanded article of mine, originally a blog post that reviewed IP enforcement in China, is on China Success Stories. It is an expanded version because my original blog post just reviewed Professor Gruner’s article, whereas this article takes on some of the ideas there. Ultimately, I think IP enforcement is far more unpredictable than Gruner thought.

Here are the key excerpts I think:

Gruner observes that in the First China, “local authorities have strong motivations to pursue IPR enforcement as a means to both reward and enhance local innovators and to entice outsiders . . . to inject new technologies into the local economy through IP licensing.” He approximates the level of IP interest as being similar to those of highly technical western counties like the U.S.

Coastal China’s manufacturing “involves technologies originating in other parts of China or copied (often without proper IP licenses) from foreign sources. The interests of this region are thus largely tied to the . . . profitability of local manufacturing without any reciprocal concern over the lack of IP-based rewards for local innovators.” Gruner concludes about this area:

This region represents the greatest challenges for IP enforcement in China due to both its present economic interests in weak IP enforcement and the breathtaking scope of its infringement capacity in large-scale, low-cost manufacturing of unlicensed goods covered by IPR.

* * *

Second, it is increasingly difficult to try to segregate out Beijing, Shanghai, and Hong Kong (the “first tier” cities) from other major “second-tier” cities, such as Qingdao, Tianjin, or Dalian. Ironically, most of these second tier cities happen to be the Coastal Regions. Which do they fall under?

And how about a second tier city like Hangzhou? It is neither coastal nor within the direct influence of Shanghai. And yet, it is the Hangzhou Intermediate People’s Court that made headlines with the G2000 v. 2000 case. There, the court assessed damages of 20 million yuan–far beyond the damages of any of other China’s first-tier courts.

I think the first two categories are problematic to some degree. I still agree that the Beijing-Shanghai-Hong Kong triumvirate will provide greater IPR enforcement in general. But I also believe that Coastal China and China’s second-tier cities are much harder to group. Some areas will have strong enforcement while others fall directly into Gruner’s description. A better categorization would be that urbanized areas and coastal China outside of the 3 major cities fall within a sliding scale that is hard to determine. If you or your clients plan to be in these areas, then you need to do your due diligence to understand the extent of IPR enforcement.

Read the whole thing here and decide for yourself.

Death toll now over 51,000… Here is donation information for the earthquake:

“ More Ways to Help in the Aftermath of the Earthquake – UPDATED!” where I track reputable charities that are taking donations to help the quake victims.

I am going to keep the red badge on the site and close this thread.  The red badge actually will take you to the above link.

In case you don’t remember, I had a post 2 months ago for a Monterey Bay International Trade Association event called “2008 Global California” which featured:

This year’s conference will feature panels and presentations on using web based solutions for qualified information, marketing, trade finance, interpretation/translation, collaboration and security.

Well, MBITA just emailed me to say that all of the Powerpoint presentations are online here. The agenda is here if you wanted to match up each speaker’s name to a topic.

If I have time, I will personally be reviewing the presentations from a discussion about security, because that is extremely important for businesses sourcing in China. The description from MBITA was:

Security and Qualification, Imperatives for Online Global Trade

Survey after survey that have been submitted across the globe have indicated the number one concern for businesspeople when conducting online global trade is….security, security, security. When you press that keyboard key and send that sensitive and valuable information to someone at the other end of the globe, you want to make sure that your proprietary information is protected and for the eyes of the intended recipient only. Hear about new products and services for this major challenge in online global trade.

Moderator:
Tony Livoti, President MBITA

Panelists:
Daniel Feldman, Co-Founder and VP Inside Sales- OFID Microdevices
Charles M. Brown, President – Flying Circuit
Brian Farley, Sales Manager – DigitalPersona

If you click on the names above, I have hyperlinked each person’s presentation. Should be good weekend reading.

Last week, Bill Dodson posted “ Strategic Tectonics in China Investment” at This is China! (a clever wordplay on the earthquake I bet), and I thought portions were worth sharing. So before you march into China thinking that there is money to be made as an expat, or before you think sourcing in a major city will save you some money, this is worth reading:

The meltdown of the economy in the United States has been reflecting itself here in China in odd sorts of ways. The downward pressure on the value of the dollar; the housing loan crisis, even who will be the next President of the United States, has been compounded by rising costs of doing business in China – especially for exporters. All this has been forcing American companies to re-think their positions in the China. The big multinationals like an IBM, an Intel or a Chevron are simply heading to the second- and third-tier cities. They have the deep pockets to overcome many of the obstacles to investing in China’s interior that smaller companies cannot afford.

For Small and Medium Sized enterprises (SMEs) matters have been a bit more complicated: many SMEs have substantial investments in China supply chains while others have invested in factories in the Mainland. Overwhelmingly, the investors came to China with the plan of exporting most of their product to the States and then selling more product domestically as they learned the ropes of doing business in the country and as the domestic economy matured. However, the same forces that are buffeting multinationals are downright punishing many SMEs.

As a small to medium sized enterprise, I would urge some caution and detailed planning before jumping into the China market too deeply. The weaker dollar and rising costs (inflation) in China are going to cut your profit margins awfully thin. So think twice and make sure you know what you are getting yourself into for the long haul. In other words, have a good business plan with a few contingencies and an exit plan.

And for all you expat job seekers who are looking to China in a crummy U.S. job market, you might be surprised:

Outside of the Shanghai municipality, Suzhou has the most American investment in manufacturing in China. What my friends who are General Managers (GMs), Production Managers, New Product Development managers and other leadership positions have been experiencing is nothing less than dramatic – if not a bit traumatic.

A friend that had been hired late in 2007 to be Vice President of New Product Development for an American company that had been sourcing components in China for more than five years was suddenly fired a couple months ago. The company had originally considered setting up its own operation in China. After its China-based trading partner increased prices 20% on all components, the executives State-side decided it wasn’t a good time to venture further into China: domestically their market had sickened its worst in some twenty-five years.

A British expat that works for an American company put it to me this way: many of the companies that are invested in the region are pretty settled now. Many have been able to find Chinese talent – even if imported from other countries – to manage many of the operations. Expats are expensive, he said. Add to that the uncertainties back in the States, and “some of us who have made our lives here may not be around in a couple years.”

I thought this would be a helpful word of caution. That is, after all, what lawyers are best at.