China business laws
By WORLDLawDirect [January 10th, 2011]
For centuries China stood as a leading civilization, outpacing the rest of the world in the arts and sciences, but in the 19th and early 20th centuries, the country was beset by civil unrest, major famines, military defeats, and foreign occupation. After World War II, the Communists under MAO Zedong established an autocratic socialist system that, while ensuring China's sovereignty, imposed strict controls over everyday life and cost the lives of tens of millions of people. After 1978, his successor DENG Xiaoping and other leaders focused on market-oriented economic development and by 2000 output had quadrupled. For much of the population, living standards have improved dramatically and the room for personal choice has expanded, yet political controls remain tight.
Constitution of the People's Republic of China
The Constitution of the People's Republic of China is the highest law within the People's Republic of China. The current version was adopted by the National People's Congress on December 4, 1982 with further revisions in 1988, 1993, 1999, and 2004. Three previous state constitutions–those of 1954, 1975, and 1978–were superseded in turn. The Constitution has five sections: the preamble, general principles, the fundamental rights and duties of citizens, the structure of the state, and the national flag and emblems of state.
The Constitution was amended on March 14, 2004 to include guarantees regarding private property ("legally obtained private property of the citizens shall not be violated,") and human rights ("the State respects and protects human rights.") This was argued by the government to be progress for Chinese democracy and a sign from CPC that they recognised the need for change, because the booming Chinese economy had created a new class of rich and middle class, who wanted protection of their own property.
For more information see... Constitution of the People's Republic Of China
Arbitration Law of the People's Republic of China
Adopted at the Ninth Standing Committee Session of the Eighth National People's Congress on August 31, 1994. And promulgated by the Decree No.31 of the president of the People's Republic of China on October 31, 1994.
For more information see... Arbitration Law of the People's Republic of China
Arbitration Rules of the China International Economic and Trade Arbitration
Adopted on March 17, 1994 at the First Session of the Standing Committee of the Second National Congress of the China Council for the Promotion of International Trade (China Chamber of International Commerce). Effective June 1, 1994.
For more information see... China: International Trade and Arbitration Rules
Trademark Law of the People's Republic of China
Adopted at the 24th Session of the Standing Committee of the Fifth National People's Congress, on August 23, 1982.
The system of trademark law in mainland China is administered by the Trade Mark Office (with an appeal function administered by the Trademark Review and Adjudication Board and the courts). The two principal pieces of legislation forming the trademark system are the Trademark Law, and the Unfair Competition Law.
Only registered trade and service marks are protected in the PRC: there is no common law protection for unregistered trademarks (except for "well-known" marks, as detailed below).
Amendments to the PRC's Trademark Law on October 27, 2001 allows three-dimensional trademarks and colours to be registered as trade marks. Collective and certification trademarks can also now be registered in China. "Well-known" trademarks are also now recognised under Chinese law (the courts and administrative bodies will take into account the level of knowledge of the trademark by relevant consumers, the length of use of the trademark, the amount of publicity given to the mark in China, and the history of the mark).
For more information see... Trademark Law of the People's Republic of China
International Copyright Treaties
Provisions on the Implementation of the International Copyright Treaties
Promulgated on September 25, 1992 by Decree No. 105 of the State Council of the People's Republic of China, and effective as of September 30, 1992.
For more information see... China and International Copyright Treaties
Provisions on National Standards Involving Patents
On September 21, 2004, the Standardization Administration Committee (SAC) under the General Administration of Quality Supervision, Inspection and Quarantine, circulated for public comment a draft of the Provisions on National Standards Involving Patents.
The draft provisions apply the concepts and definitions contained in the Patent Law of the People's Republic of China to the formulation of national standards for patented high and new technologies. In principle, national standards may be formulated if the patented technology is difficult to replace and there is no substantial reason for exclusion. A proposal for a national standard that includes patented technologies must include an annotated list of the patented technologies, together with documentary evidence regarding the patents, as well as a declaration from the patentee to permit any user of the national standard (1) to exploit the patent for free or (2) to exploit the patent under reasonable and non-discriminatory conditions and time periods. According to a recent report by the US-China Business Council, the SAC is still accepting comments of the draft provisions even though the official period for submitting comments ended on September 30.
Shanghai's Regulations to Lure Foreign Investment
In hopes of advancing industry reform, Shanghai is redoubling its efforts to improve the investment environment through five new measures that promote international practices in economic operations.
According to the Shanghai Municipal Economic and Trade Commission, the measures will promote assets reorganization, open the market and treat foreign enterprises the same as domestic ones (Wenhui Daily).
Here are the five measures:
1. Strengthening assets reorganization: Instead of introducing technologies, multinationals will be invited to help construct the Shanghai Chemical Industry Zone. To develop the zone, enterprises from different markets will form alliances to channel investment into certain areas.
2. Encouraging foreign investors to acquire state-owned enterprises: Shanghai will allow foreign investors to acquire part of the assets of state-owned enterprises and use them to form joint ventures or wholly foreign-owned enterprises.
3. Promoting use of capital markets in setting up joint ventures: While encouraging domestic enterprises to list overseas, Shanghai will allow foreign investors to buy the state-held shares and corporate shares of listed Chinese companies and will permit joint ventures to be listed domestically.
4. Increasing reliance on financial and other intermediary institutions to lure foreign businesses: Shanghai will invite foreign businesses and absorb foreign investment by increasing reliance on the services of domestic and overseas financial institutions and other intermediary institutions.
5. Absorbing foreign investment: Shanghai will simplify approval procedures and enhance the efficiency of the approval process. Foreign investors will be encouraged to invest in the Shanghai Industrial Development Zone, especially in the information industry and other high-tech sectors.
See also "Instructive Directory on Industries Restricting and Prohibiting Foreign Investment"... China: Industries Restricting Foreign Investment
Foreign Investment Projects
Regulations of Shanghai Regarding Application and Approval of Sino-foreign Equity and Contractual Joint Ventures and Wholly Foreign-Owned Enterprises
Beijing DRC FIE Approval
On October 18, 2004, the Beijing Development and Reform Commission ("Beijing DRC") circulated a draft of the Interim Implementing Measures for Beijing Municipality on the Review and Approval of Foreign Investment Projects. The draft implementing measures follow the Provisional Measures discussed above in the Spotlight section and apply to the establishment of Sino-foreign equity and contractual joint ventures, wholly foreign owned enterprises, the acquisition of domestic enterprises by foreign investors, and to increases in registered capital and other review and approval issues related to FIEs.
Under the draft implementing measures, the Beijing DRC is the final review and approval authority for encouraged and permitted projects with a total investment of less than US$100 million and restricted projects with a total investment of less than US$50 million. The Beijing DRC will conduct a preliminary review of applications for projects with a total investment in excess of these thresholds and pass the applications to the NDRC for final review and approval. The district and county development and reform commissions in Beijing will conduct a preliminary review of applications for encouraged and permitted projects with a total investment of less than US$30 million and pass the applications on to the Beijing DRC for final review and approval. The local departments in charge of development and reform are not permitted to conduct a preliminary review of applications for restricted projects.
Export Processing Zones
On September 24, 2004, the Shanghai Municipal People's Government issued the Measures on the Administration of Export Processing Zones, effective on November 1, 2004. The measures supersede interim measures issued on October 19, 2000 and March 27, 2002 that governed the Songjiang and Waigaoqiao export processing zones, respectively. According to the measures, each processing zone will establish an administrative commission responsible for the approval and administration of investment projects within its jurisdiction. The measures set forth the scope of authority and approval limits of the administrative commission for the establishment of enterprises within the two zones, and restate the authorities and responsibilities of the departments in charge of industry and commerce, planning, land, construction, hygiene, environment protection, customs, labor and social security.
Recordal and Registration of Commercial Websites
On October 1, 2004, the Beijing Municipal Administration for Industry and Commerce issued the Measures on the Administration of the Recordal of Commercial Websites, effective immediately. The measures consolidate and supersede the Measures on the Administration of the Recordal and Registration of Commercial Websites and its related detailed implementing rules. The measures apply to all enterprises and independent contractors that make use of an electronic platform for business purposes, and set out the conditions for filing an application to record a commercial website, the criteria for naming the site, and the procedures and documentary requirements for recording, amending, transferring or deregistering a commercial website.
Foreign Trade and Import and Export
Law of the People's Republic of China on Import and Export Commodity Inspection
Adopted at the Sixth Meeting of the Standing Committee of the Seventh National People's Congress on February 21, 1989 and promulgated by Order No. 14 of the President of the People's Republic of China on February 21, 1989, amended in accordance with the Decision on Amending the Law of the People's Republic of China on Import and Export Commodity Inspection adopted at the 27th Meeting of the Standing Committee of the Ninth National People's Congress on April 28, 2002.
For more information see... China: Import and Export Commodity Inspection Law
Foreign Trade Law
Foreign Trade Law of the People's Republic of China
Adopted at the Seventh Session of the Standing Committee of the Eighth National People's Congress on May 12, 1994.
For more information see... Foreign Trade Law in China
Sino-Foreign Joint-Venture Trading Companies
Provisional Measures on the Establishment of Sino-Foreign Joint-Venture on a Pilot Basis (September 30, 1996)
For more information see... China Law: Sino-Foreign Joint-Venture Companies
According to the Provisional Measures on the Establishment of Sino-Foreign Joint Venture Foreign Trade Corporations published by the Ministry of Foreign Trade and Economic Cooperation, foreign investors will have easier access to the mainland's import-export sector as from March 2003. The most important step taken is the lowering of the "threshold" for foreign firms, as they will no longer be required to have a turnover of at least US$5 billion in the year prior to submitting their application. This policy change is particularly favourable to Hong Kong's SMEs.
For more information see... HKTDC: China and Foreign Trade Sector
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