China Esquire

PBS recently aired a series on its Frontline program called “ Young and Restless in China“.  It covers the stories of nine young people in China who come of age in a rapidly changing society.  Those 9 include a rapper, a consultant, a marketing executive, a hotel owner, etc.  Of course, it wouldn’t be on this website if it didn’t have a lawyer, and here is her bio from the website:

Zhang Jingjing
Public interest lawyer

Jingjing’s parents worked in a chemical fertilizer factory on the outskirts of Chengdu (near the epicenter of the May 12, 2008, earthquake). Her father was an engineer and her mother a doctor.

Jingjing’s fondest childhood memories are of playing in the yellow sage fields around the plant. While the scenery was lush and beautiful, it was also marred by the waste that ran out of the factory and into little rivulets through the fields. Her parents often discussed the high cancer rates among the plant’s workers and wondered if there was a connection. So Jingjing became aware of environmental health issues at an early age. As she says, she never intended to take on the system; she just wanted to protect people’s health.

Jingjing’s candor in the film was remarkable. She had no idea of how we would cut together her story, what images we would use to help tell it. Her life is lived on the cutting edge of reform in China, a place that is never easy and never safe.

Related Links: Visit the Web site of Jingjing’s organization, the Center for Legal Assistance to Pollution Victims; click on the word “English” in the upper right corner for the translated site. In August 2007, Jingjing answered questions about China’s environmental challenges as part of a New York Times expert roundtable.

Since it’s summer and hopefully more relaxed for lawyers, we all have more time to watch programs like this.  It’s all online streaming video.

I was about to stop posting about American politics, but then Stan Abrams recent post alerted me to this post at Thomas Crampton entitled “Obama McCain advisors for China and Asia. Know them?”  So I couldn’t resist at least posting this information because it seems that the U.S. presidential election is on the minds of those of here in America.  Even my Chinese friends have been talking about U.S. politics.

The post at Thomas Crampton names the John McCain Asia team as:

Randy Scheunemann as chief of foreign and national security policy is the point man for liaison with former secretaries of state George Shultz and Henry Kissinger.

Former Deputy Secretary of State Rich Armitage enjoys a strong, long-standing personal relationship with McCain and should be listed as a “general guru” with an obvious personal interest in Asia, especially the US-Japan alliance.

Day to day campaign work is done by former Bush Administration defense, NSC and foreign policy officials Peter Rodman, Rick Williamson, Mike Green, the former NSC Senior Director for Asia, now at CSIS, with Dan Blumenthal, former DOD, now at AEI, Armitage International’s Randy Schriver, and McCain personal staffer Rich Fontaine.

And Team Barack Obama is:

Directly in charge of the Asia team is Amb. Jeff Bader, ex-State, NSC, USTR, also in charge of China, and administering the team via Mona Sutphen, of Stonebridge International, directly to the Campaign via Denis McDonough, a former Sen. Daschle expert on energy, the environment and trade.

China is run directly by Bader, with assistance from Richard Bush, ex-AIT now Brookings; Ken Lieberthal, former NSC; Mike Lampton, SAIS; Evan Medeiros, back at RAND again; Bob Kapp, former president of the US-China Business Council; Kevin Nealer, The Scowcroft Group; Bob Suettinger, former NSC and CIA now consultant.

Sounds interesting, though I can’t imagine most Americans caring that much about the team members themselves…

I’m surprised no one picked up on this editorial last week from Wang Qishan, Vice Premier of the State Council, entitled, “No More Chinese Knock-Offs”.  ( h/t to China Digital Times)  It followed pretty closely after the State Intellectual Property Office (SIPO) released its 5 year IPR protection plan here.  ( h/t to China Law Practice Blog)  Wang writes:

Prior to this week’s economic talks with the U.S., the Chinese government unveiled the Outline of National Intellectual Property Rights — a new strategy to tackle the many issues surrounding IPR. This new strategy will improve IPR protection in China and attract greater intellectual resources from abroad.

Moreover, the implementation of this strategy — a milestone in the institution of China’s IPR regime — will boost innovation at home and turn China’s abundant human resources into intellectual resources, with a positive and far-reaching impact on economic and social development in China.

This is really big talk.  While I agree that China has done a lot to improve its IPR enforcement, this is a huge claim: that it will boost innovation at home and turn China into a player at the IP level.  While I don’t doubt the intelligence of the Chinese people, as many of my friends and acquaintances are far more intelligent than I, I do think it will take more than just IPR protection to boost innovation.  IPR protection will surely help innovation because there will be money to be made in invention and innovation.  But my long problem has been the fact that its China’s culture that stunts it from becoming a major innovator.  I believe IPR will help innovation.  I just think it will take a cultural shift over a generation or three to see this truly happen.

China has acceded to relevant international conventions, established IPR management and protection regimes, set up the Legal Aid Center for IPR Enforcement and the Service Center for IPR Protection, punished various IPR violations according to law, and protected the interests of IPR holders. On IPR, China has managed to accomplish in 30 years what took Western-developed countries more than 100 years.

Not to be negative, but without the Western-developed countries and their worldviews that developed IPR protection, China would never have developed this in 30 years.  China is standing on the shoulders of those who have gone before.  While I want to applaud China for doing this rapidly, I do not understand why it had to take a potential swipe at other nations.  Maybe Wang did not intend to do that, but it sounds like it.

In recent years, in order to stimulate enthusiasm for invention and innovation and to promote economic development and social progress, China has intensified IPR protection. Since 2004, a nationwide campaign for IPR protection has been carried out each year to end trademark, patent and copyright infringements — particularly in import and export and wholesale markets, trade fairs, original-equipment manufacturing (OEM), printing and reproduction.

The ongoing 2008 IPR protection campaign includes 280 measures in 10 areas. In April alone, more than 810 events under the framework of “IPR Protection Publicity Week” were staged by competent authorities in different localities to enhance public awareness. More than 1.3 million people were directly involved in these activities.

IPR protection in China has paid off. Thanks to intensified efforts to raise public awareness of IPR protection and severe penalties for IPR violations, more and more people have begun to say no to counterfeit products and pirated software; applications for trademarks and patents have multiplied; and enterprises are more aware of the importance of branding, resulting in more branded products and fewer counterfeits in the market.

While I am glad that China is getting the public involved, what I still want to see is stiffer penalties for IP infringement.  Cases like G2000 should become more common in my mind.  That will really scare infringers.  Right now, what I see is that a number of the small guys have been fined and shut down.  But its the big fish that get away with infringement who really need to learn their lesson.  I want to see greater damages in all sorts of IPR law suits.  The public is a good weapon.  It will reduce piracy.  But it will not completely eliminate it.  Call me a cynic, but even in America after the Napster lawsuits, people still continue to download mp3′s and movies.  (look at the universities)  Public awareness helps a little.  Nailing the people who are major infringers is more effective.  Scaring everyone with the threat of massive damages is possibly even more effective.

The Xiangyang Street Market in Shanghai, which was known for selling replicas of brand products, has been closed down as required by law. Meanwhile, Silk Street in Beijing, also known for its knock-offs, went through rectification and has since become a distribution center of famous brands. The number of foreign applications for patents and trademarks in China is growing rapidly. More and more multinationals have started setting up their R&D centers in China.

Yes, while this is true, I am not sure if this really feeds the Chinese innovation society argument that MNC’s are setting up R&D centers in China.  It would seem to me that it just shows that other nations are innovative and using Chinese human capital to achieve their innovations.  Again, just a quick cynical comment.

Wang offers these practical tips that he expects the SIPO and the relevant government authorities to take:

- First, we will make timely revisions to IPR legislation, including the laws on patent, trademark and copyright, as well as regulations on their implementation. We will also bring forward legislation in the areas of hereditary resources, traditional lore, folk arts and geographical marks so as to improve the overall framework for IPR law enforcement and management.

- Second, we will speed up the revision of laws and regulations on punishment of IPR infringements, and strengthen the systems of judicial protection and administrative law enforcement. We will mainly rely on judicial protection for protecting intellectual property rights. We will mete out more severe penalties, reduce the cost of IPR protection, and deter violation by raising its cost.

- Third, we will properly define the scope of intellectual property rights to prevent their abuse, ensure a level playing field, and protect the lawful rights and interests of the public. We will ensure a better mesh of our IPR policy with those of culture, education, scientific research and public health to uphold people’s rights to properly use the information and fruits of innovation in ways permitted by law in their activities in culture, education, scientific research and health, and make sure that innovation achievements are shared more equitably.

- And finally, we will launch extensive educational programs among the public to further encourage innovation, promote such moral standards as honesty and credibility, and condemn plagiarism, piracy and counterfeiting. We will raise people’s IPR awareness and foster an innovation-friendly IPR culture in which knowledge and integrity are respected, and laws and regulations are complied with.

I don’t disagree with him on these.  I want to see law take a greater role in China as much as anyone else, especially in the IP arena.  While these are all good steps, what I want to see is how #1-3 will be enforced.  I think enforcement is still the biggest problem China has right now.  Don’t get me wrong–China has done a great job working on its IP environment.  But it still a lot of work to do still.

I told everyone that I would be posting more often now, but I have since been experiencing difficulties with my trusty Thinkpad T42.  (apparently there is a fairly well documented problem with the soldering of the graphics chips on T42′s)  No made in China jokes please.

So, I would like to apologize for disappearing over the past week.  Thankfully it’s been a slow season at many other blogs, so I don’t feel quite as guilty for not posting as often as I would like.

Okay, not a law based, but more of a business conference.  It’s a lunch conference hosted by the Monterey Bay International Trade Association (MBITA) entitled “Market Your Website to the World!” and sponsored by Richard Schneider Enterprises (RSE) a leader in providing global translation and interpretation services with 27 years of experience, working in over 170 languages for many different industries.  I apologize for the very last minute notice.

The 2 hour event from MBITA’s own words:

This luncheon will explore translation, localization, internationalization and globalization in general and how these services help companies communicate throughout the world and what expertise is needed to create a well-translated and localized website.

Always a good thing for an MNC wanting to do business in China, or a Chinese business wanting to spread further.  I have seen terrible international websites where only the decent site is in the native language of the company’s HQ.  So I expect there to be good practice information.

Here’s the registration information.

Date Friday, June 20, 2008
Place Fuji Buffet – 525 Water St. Santa Cruz, CA 95060
Time Noon lunch to 1:30 pm, 11:30am registration
Price ONLINE REGISTRATION: $25 members; $35 non-members
(online registration until June 19 @ 5:00pm)
Pay at door: $30 members, $40 non-members (cash or
checks only)

RESERVATIONS REQUIRED
Contact the MBITA office at 831-335-4780 cristina@mbita.org

In a recent post entitled “Barack Obama v. John McCain on Foreign Trade”, a number of comments suggested that the pre-election rhetoric was always more populist and protectionist than every president’s actual post-election policy. Well, it seems like we may see this pre-election rhetoric lightening up already, though a tad earlier than most of us thought it would.

CNN Money ran an article entitled “Obama: NAFTA not so bad after all”:

The general campaign is on, independent voters up for grabs, and Barack Obama is toning down his populist rhetoric – at least when it comes to free trade.

In an interview with Fortune to be featured in the magazine’s upcoming issue, the presumptive Democratic nominee suggests he doesn’t want to unilaterally blow up NAFTA after all.

“Sometimes during campaigns the rhetoric gets overheated and amplified,” he conceded, after I reminded him that he had called NAFTA “devastating” and “a big mistake,” despite nonpartisan studies concluding that the trade zone has had a mild, positive effect on the U.S. economy.

Does that mean his rhetoric was overheated and amplified? “Politicians are always guilty of that, and I don’t exempt myself,” he answered.

That tone stands in marked contrast to his primary campaign’s anti-NAFTA fusillades. The pact creating a North American free-trade zone was President Bill Clinton’s signature accomplishment; but NAFTA is also the bugaboo of union leaders, grassroots activists and Midwesterners who blame free trade for the factory closings they see in their hometowns.

The Democratic candidates fought hard to win over those factions of their party, with Obama generally following Hillary Clinton’s lead in setting a protectionist tone.

Of course, John McCain has not changed his tune at all:

Republican nominee John McCain, for his part, is emphasizing his consistent position as a free-trader. In a press conference in Boston this week, he attacked Obama as protectionist: “Senator Obama said that he would unilaterally – unilaterally! – renegotiate the North American Free Trade Agreement, where 33 percent of our trade exists. And you know what message that sends? That no agreement is sacred if someone declares that as president of the United States they would unilaterally renegotiate it. I stand for free trade, and with all the difficulties and economic troubles we’re in today, there’s a real bright spot and that’s our exports. Protectionism does not work.”

Anyways, I just wanted to post this because it follows up on my previous post. In light of this article and the precedent of history, Chinese businesses have nothing to fear if either candidate gets to the White House.

I had been waiting for a package to come in for quite some time, and so today, I was already in a good mood to get the box. In there was a
brand new updated version of Selecting and Forming Business Entities, 2d Edition, from California’s CEB (Continuing Education for the Bar). CEB
is of course, affiliated with Jiazhuo Daxue, or the University of California. Here are my brand new binders, which I will be keeping in my office.
These are now my personal copies.

For anyone wanting to understand California corporate entities such as corporations, LLCs, partnerships, limited partnerships, etc., then I highly recommend this publication. It lays out the pros and cons, as well as the forms that you need to form solid entities in California. For non-lawyer Chinese (and American) businesses, it is also a good way to test the mettle of your attorney, though I do not recommend asking too many questions as to annoy your counsel.

I was pleasantly surprised when I opened up the title page to see the authors. I had been saying that I was a contributor to this edition, but I guess CEB and the partners ( Ed Gartenberg and Ellis Wasson) recognized that the work I did was fairly substantial. And so, the pictures that follow.

I guess you could say it felt a little like Christmas today. Anyways, I just had to post this. I will be back on topic tomorrow.

Yes, its the weekend and here is my favorite article of the week. A Modern Lei Feng, who is also a lawyer but blogs about other things, had a post about InBev’s bid for Anheuser-Busch. A European beer maker trying to take over an American one? How much could that possibly effect China or have to do with? Plenty it seems:

There is a lot of talk about the potential takeover of Anheuser-Busch by InBev, the world’s biggest brewer. InBev, which earned over 14.4 billion euros last year, controls the European and South American markets with a combination of its major brands and its local products. Despite InBev’s power in these markets and its size, the company’s US market penetration has really only taken place over the past few years with its brands like Stella Artois and Beck gaining in popularity. These merger/takeover talks have been around for over a year, but it now looks like things are getting serious and a deal could be forthcoming soon, if A-B is willing to give up its independence.

This is where US media usually ends it analysis of the proposed agreement. In my opinion, the reality, which is rarely touched on, is that while control of the Budweiser name and US market domination are nice, InBev’s focus on A-B has to do more with China.

InBev currently has 33 breweries in 8 provinces in China and their brands include Zhujiang (Guangzhou/Guangdong), Baisha (Changsha/Hunan), Jinling (Nanjing), and Sedrin. Sedrin has been expanding its advertising campaign over the past few months and set to make a go of it around the country while Zhujiang is dominant in Guangdong. However, that pales in comparison with A-B’s control of Harbin Beer and an equity interest in Qingdao, the number 2 and 5 beers in China and both establishing international presences. Further, A-B’s Budweiser brand is one of the top placed foreign brands in China. InBev is currently the 3rd biggest brewer in China behind Qingdao and China Resources, taking over A-B would lead them to controlling the China market through A-B’s Chinese brands and its shares in Qingdao.

An article from Beverage World, which is referenced to above, says this about the numbers:

InBev was incorporated in 2004 by Interbrew and PAB. Now it is holding 14 percent of the global beer market, with more than 200 beer brands.
Latest financial report of InBev indicates that the group recorded total sales of EUR 13.308 billion in 2006, with its sales in China rising 7.7 percent. The group has 33 beer brewhouses in eight provinces of China, with total output of more than 4 million tons each year. It has become the third largest beer brewer in China after Qingdao and China Resources.

By taking over Anheuser-Busch, Inbev will control completely the 100-year-old Harbin Beer and 27 percent stakes in Qingdao Beer.

Anheuser-Busch purchased Harbin Beer in June 2004 after buying 29.4 percent stakes in the Chinese company from SabMiller, the world second largest beer company, taking the whole industry by surprise.

In April 2005, Anheuser-Busch bought 27 president stakes in Qingdao Beer through a private share placement, having become the second largest shareholder of Qingdao Beer after the State Owned Asset Management Committee of Qingdao.

Interesting indeed. I wouldn’t naturally think of the Chinese beer market as being a target, though it makes perfect sense: over 1 billion people and both businessmen/young people hitting the bars. Anyways, I just thought it was interesting to see how China comes to play, and the growing Chinese market, in the attempted acquisition of two MNC’s that seem to have little to do with China. I’m not a drinker, but I can still appreciate China business and globalization… even if it comes with a beer.

There has been a lot of buzz about the new Labor Contract Law, and frankly, it has been difficult for me to weigh in without an English language version given that my Chinese reading skills aren’t good. So I was excited to see that China Law & Practice published an English version here. ( h/t to Dan Harris at China Law Blog)

Dan has a lot of articles there already on topic, so I am not sure how much meaningful commentary I will be able to generate later, but I might give it a shot later. Things have been busy, so I apologize if you think I dropped off the face of the earth, I haven’t… yet. I hope to start posting more frequently again next week.

American Conference Institute is hosting a conference focusing on the Foreign Corrupt Practices Act (FCPA) entitled “China Summit on Anticorruption”. The 2 day conference takes place in Shanghai on July 15-16, 2008 at the Shanghai Intercontinental Pudong. (I wish I could be there, but I will be on a family vacation then) I don’t think the FCPA is anything new to MNC’s and companies doing business in China–at least, it really shouldn’t be–given the amount of corruption and bribery that is the subject of many China business anecdotes. (I also have a post about it here)

Here is ACI’s description of the program:

Corruption is a serious problem in China’s rapidly developing economy. China’s leaders have recognized this problem and adopted increasingly aggressive policies to deal with it. According to Chinese authorities, tens of thousands of corruption allegations against Chinese officials are investigated each year, and offenders are prosecuted or otherwise disciplined. China has also begun vigorously enforcing commercial bribery laws in its private sector. Foreign companies operating in China are thus faced with a rapidly evolving domestic anti-corruption compliance environment.

FCPA compliance is especially challenging in China, where government regulation of the economy remains rigorous and state-owned enterprises continue to dominate many sectors. These difficulties are reflected in recent FCPA prosecutions. Several published cases in recent years – Lucent, Schnitzer Steel, York International, Diagnostic Products – have focused on activities in China, and many pending investigations reportedly also involve compliance issues in China.

The faculty includes Stephen Maloy (General Counsel – Asia Pacific, GE), Ma Wen (Head of the National Bureau of Corruption Prevention – Beijing), Mark Mendelsohn (Deputy Chief, Fraud Section Criminal Division, USDOJ), and a host of Chinese and American attorneys. This is a sampling: Wu Wei (King & Wood – Beijing), Richard M. Tollan (Mayer Brown JSM – Hong Kong), Amy L. Sommers (Squire, Sanders & Dempsey – Shanghai), and Robert J. Bittman (White & Case – Washington), just to name a few.

The conference will attempt to cover:

* Creating a code of conduct that matters in China
* Overcoming cultural and legal challenges in rolling out an anti-corruption compliance program
* Working with state-owned enterprises (SOEs)
* What kinds of gifts are acceptable and in what instances?
* Due diligence: best practices for third party relationships in China
* Who is a “government official” in China?
* Conducting internal investigations in China

Registration can be found here. It looks to be a promising program.

Wow, as if there weren’t enough ABA law schools–191 of them–and a whole host of other unaccredited schools, some of which are seeking accreditation, there is talk of an ABA approved school in China. If it happens, it would be the first school approved outside of the U.S. and it’s territories that I know. There are 2 in Puerto Rico, but this would take the cake.

From the National Law Journal (free subscription required) article:

Peking University School of Transnational Law wants to become the first foreign law school accredited by the American Bar Association.

The school in China will welcome its inaugural class this fall, with 55 students enrolled.

Founding dean Jeffrey Lehman will seek ABA accreditation for the school so that graduates can take bar examinations in the United States. Lehman is a former president of Cornell University and former dean of University of Michigan Law School.

The three-year program at Peking University School of Transnational Law will be taught in English and will cover American law. The school expects to become a supplier of lawyers to international law firms needing help in foreign offices. It will function independently of Peking University’s Chinese-based law school.

No other foreign law school is accredited by the ABA, nor has any foreign school sought ABA accreditation, said an ABA spokeswoman. The ABA standards do not limit accreditation to U.S. law schools only, the spokeswoman said.

Well, I am not sure how to respond to this. First, I think the U.S. already has a system in place where ABA accredited law schools allow foreigners to do a 1 year LL.M. program in American law. And then qualify for most bar exams, including New York, which is probably the most important of the U.S. licenses for foreigners. If it ain’t broke, why fix it? Other than the fact that this new school in China will probably be yet another cash-cow for Beijing Daxue. Does BeiDa need such a program? Not really…

Second, there is something to be said about studying American law in America. To understand the law, its not merely a matter of black letter law. That ends up making awful lawyers who don’t care about nuances and policies, who don’t know how to argue and litigate changes to the law (and loopholes), etc. I think there is much to be said about studying American law here. Just as I think studying Chinese law in an America law school is folly. I won’t say utter folly, but it is still not the brightest of ideas.

Thid, it seems to be foreign firms and even US/British firms are just fine in hiring local law graduates. Why bother with a J.D., 3 years of your life and tuition, and another 2 months to take a bar exam to “practice” law that you won’t really practice? It goes back to my cash-cow argument.

Call me a cynic, but I just don’t see a need for this school.

You can hardly click on a U.S. news website or a newspaper talking about Barack Obama’s historical milestone of being the first African-American Democratic Party nominee for President… at least, if you are living in America, this is all you will hear about. This is how CNN put it:

Barack Obama made history Tuesday night when he became the first African-American in U.S. history to clinch a major party’s presidential nomination. But the Illinois senator faces several challenges as the campaign now turns to the general election — notwithstanding a first order of business of helping to heal the wounds of a deeply divided Democratic Party.

So now that we have 2 clear candidates to consider for president, I wanted to go to Going Global, where Craig posted some good information about each candidate, in his post entitled, “Presidential Primary Edition — The Candidates, the Parties and Their Positions on Global Trade”. He posted, however, back when there were still multiple candidates left in the primaries. Now is probably a good time to review what he said about the 2 major candidates. First, America’s new rock star politician (who has nothing about China policy on his website):

Of the 3 U.S. Senators in the race, Barack Obama has the shortest tenure and therefore a somewhat truncated voting record. He was firmly against CAFTA. Although he wasn’t around to vote on it, he has made it repeatedly clear that he thinks NAFTA should be reopened and amended to provide more protectionist labor provisions. In his one departure from a fairly consistent anti-free trade record, he voted in favor of a free trade agreement with Oman. I’m not sufficiently familiar with the provisions of that agreement to understand what it was that distinguished that agreement from other FTA’s in the Senator’s mind, but at least it does indicate that he’s not anti free trade all the time under all circumstances.

And here is Craig’s take on John McCain, who has been on the campaign trail for some time:

Senator McCain . . . has the longest national public record of any of the candidates and therefore has established perhaps the most definitive positions on trade. If one is pro international trade, McCain has a record to be admired. Mccain According to OnTheIssues.org, the Senator has a near perfect voting record in supporting free trade agreements including NAFTA and even the recently defeated CAFTA. Last October he gave a speech making the point that “every time the U.S. went protectionist, we paid a heavy price.” Just this month he gave a speech calling for a continued reduction in barriers to free trade, recognizing that “globalization is an opportunity.”

McCain’s website seems to promise “John McCain Will Lower Barriers To Trade“. This should prove to be very interesting because ironically,

it used to be that the Republican Party was pro-trade and the Democratic Party tended to be more protectionist given its traditional base of support among labor unions

Being a Chinese-American who enjoys politics, that was how I used to view the parties and their stances as well. I have a feeling those who in favor of free trade, which does bring a heavy benefit to China and has helped sustain its burgeoning economy, will be supporting John McCain this November. If Obama does end up being protectionist, it won’t help China. Even in spite of growing nationalism, you’d really have to be blind to think that China doesn’t need America either.

But then again, with the popular coverage on Obama, it’s pretty easy to lose sight of the issues that matter to Chinese businesses…