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Another China WTO Loss. Another Nail In The Coffin Of World Trade. (Feb 6)
By: Steve Dickinson Preserving its track record of major defeats before the WTO, China recently lost its appeal of the WTO panel decision in the minerals export case. The appeal decision was issued on January 30 and can be found here. Briefly stated, the original panel report held that Chinese export duties and export quotas for certain industrial minerals violate WTO requirements. China was ordered to reduce its duties and dismantle its export quota system. China appealed and lost on all important issues. This decision has important implications. As most observers have noted, the real issue is export quotas and the real target is China’s export quota system for rare earths. Under the terms of this decision, China’s rare earths quota system is in clear violation of the WTO. The U.S. and others expect China to now act on its own and terminate the rare earths quota system. If this is not done voluntarily, the U.S. and the European Union have threatened to bring a follow-up action in t...

Dr. Clarisse von Wunschheim On Arbitrating Your China Disputes, Part III. Is Enforcement Overemphasized? (Feb 5)
This is part III (the last) of Dr. Clarisse von Wunschheim's three part series of guest posts on China arbitration. I asked Dr. von Wunschheim to write this series because arbitration is so important to so many China transactions and she literally wrote the book on China arbitration: Enforcement of Commercial Arbitral Awards in China. More from Dr. Von Wunschheim: PART 3: Relevant Criteria for Selection between Arbitration in or outside China – Are enforcement issues really so important? In my previous posts, I set out the context of the battle between arbitration in or outside China and the arguments that the supporters of each option commonly rely upon. I further explained the reasons why I am not convinced by most these arguments, the main reason being that I believe the pros and cons invoked by the supporters of either option to be largely directed by their fear and ignorance of the other option, and are not made in due regard of the specific needs and possibili...

Dr. Clarisse von Wunschheim On Arbitrating Your China Disputes, Part II. Inside Or Outside China? (Feb 4)
This is part II of Dr. Clarisse von Wunschheim's series of guest posts on China arbitration. I asked Dr. von Wunschheim to write this series because arbitration is of such crucial importance to so many China transactions and she literally wrote the book on China arbitration: Enforcement of Commercial Arbitral Awards in China. More from Dr. Von Wunschheim: PART 2: Pros & Cons of Arbitration Inside and Outside China In my previous post, I tried to establish that though the question of whether to arbitrate in or outside China may seem to be primarily relevant for so-called ‘foreign-related’ contracts, it actually concerns all kinds of China-related contracts. Today’s post aims to determine the main pros and cons of each option, as well as the current trends which they give rise to. Referring to the arguments most often invoked by the supporters of each option, the main pros and cons can be summarized as follows: ARBITRATION OUTSIDE CHINA PROs CONs - ...

Dr. Clarisse von Wunschheim On Arbitrating Your China Disputes, Part I. The Legal Context. (Feb 3)

We are always writing on the importance of China contracts having a well-crafted dispute resolution provision. My favorite line about this is the following, from the post, "Arbitration In Your China Contract. Adult Supervision Required": With sushi restaurants, it's the yellow-fin.
With new houses, it's the windows.
With international contracts, it's the dispute resolution provision. The "it" I am talking about is the one easiest, fastest, most accurate, way to judge whether something is good or not. And the way I judge international contracts is by heading straight to the dispute resolution provision. The well crafted provision is, above all else, unambiguous. If it calls for litigation, it says where it will be and what law will apply. And it says who will pay for it and under what circumstances. If it calls for arbitration, it says where it will be, how many arbitrators will be required, how the arbitrators will be chosen, the language of the proc...

The End Of Cheap China, Part IV. More On How YOU Must Prepare For It. (Feb 1)
By: Steve Dickinson In my previous post in this series on the end of cheap China, I noted that the risks relating to purchases from Chinese manufacturers are rising in the export sector in China's Eastern provinces. Given the risks, it surprises me that I still see many buyers who continue to use the worst payment system possible in their dealings with Chinese manufacturers. The standard (terrible) system for payment in most of the export sector is: 30% down payment on signing of contract with the remaining 70% payable prior to shipment.

Why is this a terrible system for the Buyer? Let's consider the deposit system first. It is common for a Buyer to learn that the manufacturer is not able to make the product, makes the product with excessive defects or substantially delays in delivering the product. If the Buyer has paid a 30% deposit, the Buyer is basically "stuck" with the manufacturer and is not able to go elsewhere even after these problems are discovered. I have seen many Buyers...

The End Of Cheap China, Part III. How YOU Must Prepare For It. (Jan 30)
We have been writing frequently regarding the end of cheap China because we are just about every day seeing how this impacts our (mostly American) clients. This post by Steve Dickinson is on how buyers of manufactured product from China's Pearl River Delta are going to be impacted by the end of cheap China. Here is Steve's post: The excellent Chinese financial journal Cai Jing recently published an article, entitled, Dire Straits in the Pearl River Delta, detailing the financial problems facing export-oriented manufacturers in the Pearl River Delta region of Guangzhou Province. The article includes the standard lament that these businesses are not being adequately supported by the central government. However, the truth is that these manufacturing businesses are under financial pressure simply because they are no longer competitive. These manufacturers of toys, clothing, shoes, furniture and housewares are standard high volume, high employment, low technology and low margin operators...

Learn Chinese For Business? The Pros And Cons (Jan 30)
The following is a guest post by Jonathan Poston. Jonathan is the Editor-in-Chief of the Learn Chinese Business Blog and Chinese Carolinas. Though learning Chinese well is obviously helpful for doing business in or with China, actually accomplishing can be so difficult that many a learner has given up or just pondered whether it is worth it. I asked Jonathan to write a post on the pros and cons of learning Chinese for business because his Learn Chinese Business blog so often delves into issues relating to China's business culture. Here's Jonathan's post:

If you Google “When will Chinese economy overtake US,” you will notice how many of the top results spit back a year that is closer than five years away: 2016. Though no one can predict the future, consider that China is already the second greatest economic power in the world, which begs the question as to when learning Mandarin-Chinese will be mandatory for aspiring international business people worth their mettle. Let’s take a look ...

China Rep Offices, Bankruptcies And The Perils Of Being Chief Representative (Jan 26)
I know I keep reading how China's economy is just fine, but my firm just keeps getting more inquiries and more work relating to shutting down offices and companies in China. Of those, the most heartbreaking are coming from Chief Representatives of China Representative Offices who are concerned about their own liabilities when their China Rep Office closes. Typically, the Chief Representative tells the Rep Office employees that the Rep Office is going to be shutting down. Naturally enough, the employees ask about their getting paid. The Chief Representative usually tells them not to worry, which causes them to worry more and go to their local government. A local government official then comes by and informs the Chief Representative that he or she is PERSONALLY responsible for paying the Rep Office's employee salaries AND all outstanding taxes. The Chief Representative then contacts my firm and we tell him or her that he or she does indeed run a very real risk of being on the hook f...

China Product Quality Problem? Here's My Template Answer. (Jan 24)
Because I receive countless emails every day and because so many of them involve the same questions, I have developed various templates to respond. Here's the template I use when a US company writes me with a China product quality problem and the contract they have provided me is not good at all. Much of the time the US has no contract at all, but usually when they do have one, it is usualy so bad as to work against them. Here's my "stock" answer in that situation. This is our template response when the contract calls for arbitration in a US city but is pretty much silent on everything else (a far too common scenario when non-lawyers draft a contract). It's a tough case and your contract does not help matters at all.

What you probably will need to do is begin arbitration in [US City] and serve [the Chinese company] via the Hague Convention. This will require translating the complaint into Chinese and serving it through the Chinese court system, which takes months. We write our arb...

China Grammar Wiki. What A Great Idea! (Jan 22)
I think (and hope) this is the first time we have used an exclamation point in a blog post title and I assure you that this will not become common. I just am so impressed by the idea and the ingenuity and the hard work and the sheer helpfullness of the AllSet Chinese Grammar Wiki. I first learned of the Wiki from Ryan over at Lost Laowai, who in his post, "Chinese Grammar Wiki: Learning Chinese grammar just got easier," had this to say about it: AllSet Learning, the Shanghai-based language learning consultancy founded by long-time China blogger John Pasden, has just released what is surely a boon for mandarin learners who aspire to achieve better Chinese grammar — the Chinese Grammar Wiki.... As an on-again, off-again Chinese learner, I’m pretty excited for the resource. Few people I’ve met have spent as much time as John thinking about language learning, particularly as to how it relates to Chinese. His blog and various resources at Sinosplice have been extremely helpful over ...