Even in the best of times, employee terminations in China are fraught with risk. A mishandled China employee termination (or even just the discussions surrounding the termination) can quickly cause problems. China's declining economy has weakened its job market and made both employees and the government more likely to fight back against any little termination mistake.
Even though China private equity (PE) activity has cooled down (see here and here), our law firm has even this year been involved in many U.S. PE transactions involving China entities, employees, and assets. These deals are typically conducted at the U.S. entity level between two private equity groups, with the seller in each instance
China employer rules and regulations are necessary for small as well as large companies
About six months ago, in Deliberately Bringing China Down, Factory by Factory, I wrote about a couple of Americans who were buying product on credit from Chinese factories, with no intention of ever making the required second payment: The “this” to which I am referring is an underground (I say underground because I have never
We have put the kibosh on many China-related deals, and that is what this post is about, especially in this environment with financially distressed companies popping up all around thanks to the trade war and Covid. For ease of explanation and to camouflage the identities of those involved, I have amalgamated a bunch of them into one. This scenario is incredibly typical, including the retirement of the owner precipitating the need for the deal.
Follow these three rules to succeed in selling your Made in China products in China.
A China company chop is an official seal or stamp that legally binds the company to what it has agreed to in the document on which its company chop has been stamped. Under Chinese law, a company chop is strong legal evidence of the agreement of the company whose chop is on the document. The company chop (a.k.a company seal or company stamp) essentially replaces a signature on contracts and other important documents. The company chop binds the entire company, usually no matter who (if anyone) actually puts their signature on the document.
Translating contracts for China does not a China contract make; you need a contract that has been written for China.
China employee problems are increasing. We explain how to prevent such problems from occuring and how to nip them in the bud when they do.
As the Chinese government continues to expand its power and get more concerned about its slowing economy and how it is viewed by its citizens, it just keeps getting tougher on foreign businesses that are not 100% abiding by its laws. China is right now in one of its perpetual crackdowns on foreign companies doing business in China. This makes now a good time for foreign companies doing business in China or with China to determine their China risks. The following questions are a good starting point for making that calculation.
