The legal environment and risks for foreign investment in China / Shoushuang Li.

Format:

Book

Author/Creator:

Li, Shoushuang.

Language:

English

Subjects (All):

Investments, Foreign--Law and legislation--China.

Investments, Foreign.

Investments, Foreign--Law and legislation.

China.

Foreign trade regulation--China.

Foreign trade regulation.

Joint ventures--Law and legislation--China.

Joint ventures.

Joint ventures--Law and legislation.

Risk management--China.

Risk management.

Physical Description:

xxii, 320 pages : illustrations ; 25 cm

Place of Publication:

Berlin ; New York : Springer, [2007]

Summary:

The Chinese market is appealing, but its legal environment is very complicated and full of nooses that await investors. This book intends to provide an in-depth analysis of the legal environment and its hidden risks for foreign investment. It covers two basic investment modes which are green-field and M&A and almost all concrete legal issues including political risk, tax, land use rights, labour etc. Among them, three chapters focus on the legal system and its risks for the foreign investment in three special industries as private education, water market and insurance. The last chapter illustrates the inside operation mechanism of the main dispute resolution channels available in China. The author provides risk management measures to stave off legal risks, and the last section of this book especially points out the shortcut ways to manage the future under the power oriented economy of China.

Contents:

1 Introduction: The Legal Risks of Foreign Investment in China 1

1.1 Definition of Legal Risk of Foreign Investment 1

1.1.1 Risk and Legal Risk 1

1.1.2 Types of Legal Risks Embedded in Chinese Legal System 3

1.1.3 Legal Risks for Foreign Investment in China 4

1.2 Macro-analysis of Legal Risks in Investment Institutions 5

1.2.1 Macro-analysis of the Legislation Regarding Foreign Investment and Its Risk 5

1.2.2 China's Commercial Law and Its Legal Risks for Foreign Investment 7

1.3 Macro-analysis of the Risks Arising from Foreign Investors Behavior 23

1.3.1 The Risks from the Authorities 24

1.3.2 Risks Arising From Foreign Investors' Behaviors 25

Part 1 Legal Risks of Foreign Capital Entry

2 The Legal Risks of Green Field Foreign Investment 29

2.1 Case Study: Legal Risks Behind the Curtain of Carley 29

2.2 The Risk in Partners Choosing 33

2.3 Risks of Registered Capital Contribution 37

2.3.1 Legal Rules Regarding Registered Capital Contribution of Foreign-Invested Enterprises 37

2.3.2 Some Special Risks with Contributions 39

3 The Legal Environment and Risks for M&A by Foreign Investors in China 47

3.1 Macro-Analysis of Current Legal Environment for M&A by Foreign Investors in China 47

3.1.1 Insight into the Macro Legal Environment for M&A by Foreign Investors from the Perspective of Legal Rules 47

3.1.2 Insight into Macro Legal Environment for M&A by Foreign Investors from the Perspective of Market Access 51

3.2 Micro-analysis of Current Legal Environment of M&A by Foreign Investors in China 57

3.2.1 Industrial Policies for Market Access 57

3.2.2 Governmental Approval Procedures 58

3.2.3 Asset Appraisal 60

3.2.4 Transaction Pricing for State Assets Transfer 62

3.2.5 Forms of Payment 63

3.2.6 Time Limits of Payment 64

3.2.7 Anti-trust Approval 65

3.2.8 Labor Issue 66

3.3 The Legal Risks of Foreign-Funded M&A 68

3.3.1 Institution Risks 68

3.3.2 Risks with Property Rights Transfer 69

3.3.3 Operational Risks 69

3.3.4 Risks Arising from Change of Enterprise Ownership 72

3.3.5 Other Risks 73

Appendix Laws and Regulations Regarding M&A by Foreign Investors in China 74

4 Modes and Risks for Foreign Investments in Restricted Industries 85

4.1 Industry Entry Rules for Foreign Capital 85

4.1.1 Basic Regulations 85

4.1.2 Rules of Entry to Specific Industries by Foreign Investors 86

4.1.3 Other Specific Arrangements 91

4.2 Dancer in Shackles: Modes of Foreign Investment in Restricted Industries 91

4.2.1 Case Study: Shanda's Contractual Control Mode 91

4.2.2 Modes for Foreign Investments in Restricted Industries 93

4.3 The Legal Risk of the Modes for Foreign Investment in Restricted Industries 98

4.3.1 Risks with Effectiveness of Contracts 99

4.3.2 Risks in the Administration of Foreign Exchange 100

4.4 The Outline of Anti-risk Measures for Foreign Investment in Restricted Industries 103

4.4.1 Draft the Contracts to Be Perfect 104

4.4.2 Risk Evasion by an Offshore Company 104

4.4.3 Reversion Clause 105

Part 2 Legal Risks in Operation of Foreign-Invested Enterprises

5 Changeable Government: Political Risks for Foreign Investment 109

5.1 Nationalization and Expropriation 109

5.1.1 History of Nationalization and Expropriation 109

5.1.2 Nationalization 112

5.2 The Risk of Changes to Economic Policies 115

5.2.1 Huang Qiao Case 115

5.2.2 Types of Change in Government Policy 116

5.2.3 Suggestions for Combating Political Risks 124

5.3 The Risks Coming from Local Government 125

5.3.1 Localized Policy when Inviting Foreign Investment 125

5.3.2 The Legal Risks of Localized Policy 126

6 Corporate Governance Troubles in Sino-foreign Joint Ventures 129

6.1 Difficulties in Managing Legal Entities Shown in the Upsurge of Foreign-Invested Enterprises 129

6.2 General Situation of Corporate Governance Modes of Joint Ventures 132

6.2.1 Corporate Governance of Joint Ventures Review 132

6.2.2 Survey of Sino-foreign Joint Venture Corporate Governance 137

6.3 Review of Legal Risks Arising from Sino-foreign Joint Venture Corporate Governance 139

6.3.1 Risks of Existence Reliance: Review from the Aspect of Imbalance Between the Control Right and Residual Claim Right 139

6.3.2 System Risks in Contorted Sino-foreign Joint Venture Management Structure 143

6.4 Can Sino-foreign Joint Ventures Tend Towards Harmony? 145

6.4.1 Failure in Dong Feng Nissan Joint Venture and Born of the Fundamental Law of Dong Feng Nissan 145

6.4.2 Way for Joint Ventures to Go Toward Harmony as Shown in the Dong Feng Nissan Basic Law 147

6.4.3 Political Policy Being the Essential Reason for Joint Venture Governance Troubles 148

7 Tax Risks Under the New Tax Law Environment 151

7.2 Cat and Mouse Game Between Tax Evasion and Anti-tax Evasion 151

7.2.1 Black Hole in Foreign-Invested Enterprises' Tax 151

7.2.2 Road Map for Tax Evasion by Foreign Investors 152

7.3 Anti-tax Evasion Action Upgrading in China 156

7.3.1 Spread of 'Anti-tax Evasion Storm' 156

7.3.2 APA Limits Transfer Pricing 157

7.3.3 Prevention of Weakening Capital Started by the Enterprise Income Tax Law (Draft) 159

7.4 Unification of Income Tax and Its Risks for Foreign Investment 160

7.4.1 Income Tax Reform Coming 160

7.4.2 Games on Unification of Income Tax Reform 160

7.4.3 Unification of Income Taxes Moving Ahead Under Debating 162

Appendix I Tax Law Applicable to Foreign-Invested Enterprises 163

Appendix II Current Chinese Foreign-Invested Enterprise Income Tax System 170

8 Land Use Right Risks in Foreign Investment 175

8.2 Legal Issues in Foreign-Invested Enterprises' Use of Land 176

8.2.1 Policies Change 176

8.2.2 Ways for Foreign-Invested Enterprises' to Obtain Land Use Right 178

8.2.3 Fee for Land Use Right 180

8.2.4 Term for Land Use Rights 181

8.3 Land Risks in Foreign Investment 181

8.3.1 Legal Risks in Developing Zones' Land Transfer 181

8.3.2 Legal Risks in Land Requisition 184

8.3.3 Legal Risks in Contribution with Collectively Owned Land 188

8.3.4 Legal Risks in Land Offered by Local Governments for Free 190

8.3.5 Lack of Judicial Remedy to Land Disputes 191

9 Labor Legal Risks of Foreign-Invested Enterprises 195

9.1 Labor Legal Risks Shown in Trade Union Disputes 195

9.1.1 Widespread Foreign Enterprises' Refusal of Establishing Trade Unions 195

9.1.2 Risks Increasing in Refusal to Establish Trade Unions 196

9.1.3 Reflection of Tense Employer-Employee Relation by Refusal of Establishing Trade Unions 198

9.2 Overview on Foreign-Invested Enterprise Labor Law Rules 199

9.2.1 Foreign-Invested Enterprise Labor Legislation 199

9.2.2 Provisions on Labor Contracts of Foreign-Invested Enterprises 200

9.3 Insight into Foreign-Invested Enterprises' Labor Risks 203

9.3.1 Case Analysis of Foreign-Invested Enterprises' Legal Risks 203

9.3.2 Brief of Labor Legal Risks in Foreign-Invested Enterprises 204

9.4 Legal Risks Arising from Controversial China's Draft Labor Contract Law 209

9.4.1 Highlights of the Draft 209

9.4.2 Implications of the Draft 212

Part 3 Legal Risks for Foreign Investment in Specific Industries

10 Modes and Legal Risks of Foreign Investment in Non-governmental Education in China 217

10.2 Foreign Investment Modes of Non-governmental Education 219

10.4 Legal Risks for Foreign Investment in Non-governmental Education in China 229

10.4.1 Legal Risks Shown by Ren Jingxi's Withdrawal 229

10.4.2 Insight into Legal Risks for Foreign Investment in Non-governmental Education 230

11 Legal Risks for Foreign Investment in China's Water Market 241

11.1.1 Basic Information of Foreign Investment in China's Water Market 241

11.1.2 Big Events in Foreign Investment in the Chinese Water Market 244

11.2 BOT Mode of Foreign Investment in Water Industry 245

11.2.1 BOT in China 245

11.2.2 Case Study: Chengdu Sixth Waterworks 247

11.3 Insight into Legal Risks for Foreign Investment

in Chinese Water Market Under BOT Mode 249

11.3.1 Foreign Water Companies' Failures Under a Flawed BOT Legal Environment 249

11.3.2 Detailed Analysis on Legal Risks for Foreign Investment in the Chinese Water Market Under BOT Mode 251

Appendix Laws and Regulations on Foreign Investment in China's Water Market 264

12 Legal Risks for Foreign Investment in the Insurance Industry 267

12.1 Introduction of Foreign Investment in China's Insurance Industry 267

12.1.1 Brief View on China's Insurance Industry 267

12.1.2 Brief View of Foreign Investment in China's Insurance Industry 269

12.2 Laws and Regulations on Foreign Investment in China's Insurance Industry 272

12.2.1 Participation in Insurance Companies 272

12.2.2 New Establishment 276

12.2.3 Specialties of Capital Contribution 278

12.3 Legal Risks for Foreign Investment in China's Insurance Industry 279

12.3.1 Withdrawal of Foreign Insurance Companies Signals Risks 279

12.3.2 Insight into Legal Risks for Foreign Investment in Insurance Industry 280

Appendix List of Chinese Insurance Laws and Regulations 288

13 An Insight into Foreign Investment Dispute Resolution in China 291

13.1 Insight into Commercial Dispute Resolution in China 291

13.1.2 Assessment of China's Civil Justice System 291

13.1.3 Current Reform and Further Proposals 294

13.1.4 Alternative Dispute Resolution (ADR) 295

13.1.5 China's Perspective on Commercial Dispute Resolution 296

13.1.6 Conclusion: How to Choose an Ideal Commercial Dispute Settlement Mechanism in China 298

13.2 Characters of a Chinese-Style Judicial Decision-Making Process 299

13.2.1 The Government-like Judicial System and Judicial Decision-Making 299

13.2.2 Decision-Making by the Judicial Committee 301

13.2.3 Local Governments and the Peoples' Congress' Influence on Decision-Making of Localized Courts 302

13.2.4 CPC's Committees or Committees of Political and Legislative Affairs' Influence on Judicial Decision-Making 302

13.2.5 Lobbying and Judicial Decision-Making 303

Appendix A Typical Chinese Judicial Process 304

13.3 Insight into Chinese-Style Arbitration 306

13.3.1 A Crisis in China's Arbitration History 306

13.3.2 Chinese Characters of Arbitration 307

13.3.3 The Root of Risk in Chinese Arbitration 309

13.4 Mediation in China 310

13.4.1 Mediation in the Litigation Process 310

13.4.2 Mediation in the Arbitration Process 311

13.4.3 Mediation in the Mediation Center 311

14 Managing the Future - The Strategy for Foreign Investment Under Power-Oriented Economy 313.

Notes:

Includes bibliographical references (pages [317]-320).

ISBN:

9783540483748

3540483748

OCLC:

79447614