China's reforms offer opportunities, challenges: panel
Updated: 2014-06-11 05:41
By Bonnie Wong in San Francisco (China Daily USA)
Representatives of law firms and business-consulting firms took part in the seminar "Ring on Fire: Business and Legal Challenges of Dynamic Pacific Rim” at the Nixon Peabody LLP law office in San Francisco on Monday. From left: The panelists were K.H. Kim, partner at Yoon & Yang LLC; Linda Ji of Nixon Peabody LLP; Jordi Casas Thió of Roca Junyent; Patricia Ginsberg of Pamir Law; Jiang Jiang of Hylands Law firm; and Andrew Willder of Lander & Rogers. [BONNIE WONG/ CHINA DAILY]
Recent economic reforms in China are attracting more foreign direct investment (FDI), which presents both legal and business challenges, according to law firm representatives and business consultants, who explained some of the new regulations and rules at a symposium.
"Ring on Fire: Business and Legal Challenges of Dynamic Pacific Rim" was held at the law offices of Nixon Peabody LLP in San Francisco on June 9.
Jiang Jiang, a lawyer with Hylands Law firm, which specializes in international business and investments, said that it is essential to understand the differences between China's domestic and foreign policies that may be different from previous ones. "Chinese leaders are committed to boost China's economy, but there may still be aggressive restrictions," Jiang said.
He said current reforms are relaxing restrictions on foreign investment in China's market. Shanghai's Pilot Free Trade Zone (FTZ) has been attracting attention due to its relaxed laws since being established in September 2013, he said. Though the FTZ rules are new, they represent a trend, he added.
Linda Ji, a partner in Nixon Peabody's mergers and acquisitions and corporate transactions practice group and China and Asia Pacific practice group, discussed new regulation that went into effect in March. They removed minimum capital-contribution requirements and the time frame in which foreign investors must contribute to capital investment.
"Before, after approval from the Chinese government for a business license, within 90 days from the date of issue of the business license, foreign investors had to inject typically about 15 percent to 20 percent of committed capital and within two years, all the capital," Ji explained.
The removal of the time frame will now allow more freedom for businesses and foreign companies to invest within their own desired time frame, she said.
"The biggest risk is not being prepared and not having good counseling to reduce risk and companies discovering big surprises along the road," Ji told China Daily. "The Chinese government is trying their best to create a better investing environment."
Jordi Casas Thió of Roca Junyent, a law firm specializing in European legal markets with offices in Barcelona, Madrid, Palma de Mallorca, Lleida and Girona, Spain, and Shanghai reiterated the importance of understanding differences in legal restrictions for foreign investments by businesses entering China's market, including labor and tax laws that just apply to foreigners.
"In China the law is written in a broad sense. So this may give room to different interpretations," noted Casas Thió. "This is one of the first things that it is important to be aware of. It is not enough to depend on the wording of the law; you have to be a step ahead and understand what it really means."