Dan Harris Partner

United States-based lawyer Dan Harris, a founding partner of Seattle international law firm Harris Sliwoski and co-author of the China Law Blog, said that the new law was “more of a change in degree than brand new things”

But he added uncertainties remained and that businesses were unclear on how to handle confidential information under the domestic legislation.

Harris said there were also concerns over liability for unintentional national security breaches.

United States-based lawyer Dan Harris, a founding partner of Seattle international law firm Harris Sliwoski and co-author of the China Law Blog, said that the new law was “more of a change in degree than brand new things”. But he added uncertainties remained and that businesses were unclear on how to handle confidential information under the domestic legislation. Harris said there were also concerns over liability for unintentional national security breaches.

In May, Dan Harris, a Seattle lawyer who works with foreign companies in China, told The New York Times he had seen businesses looking to reduce their presence in China without abandoning the market altogether.

Are companies really leaving their China partners behind, and if so…why are they leaving? Is it export restrictions making life too complicated for certain product lines? Is it the Uyghur Forced Labor Prevention law that makes pretty much any business operating in Xinjiang carry a red flag for importers? What about tariffs? Are companies leaving because of the imposition of Section 301 tariffs set in 2018?

In an interview with CPA, Dan Harris discusses the answers to these questions, including the top reasons clients are leaving China, the difficulties experienced when exiting joint ventures or business entanglements, and the challenges of moving manufacturing locations.

“Companies are very, very concerned about their people going to China. Why wouldn’t they be?

“Sometimes the bags are made [off hours] in factories that produce legitimate handbags by day.”

United States-based lawyer Dan Harris,  a partner at Seattle law firm Harris Sliwoski and co-author of the China Law Blog, declared that “Hong Kong is over.” He said foreign lawyers had snubbed the city in contracts that did not involve parties from China.

In fact, judgments in American courts have “virtually no value in China,” attorney Dan Harris of the international law firm Harris Sliwoski wrote in a blog post last year, noting that China and the U.S. don’t have a treaty or other reciprocal accord on civil court orders.

“The best way for the U.S. government to reduce CCP strong-arming against US companies is to help those companies leave China.”

“Yes, if [Musk] not doing so costs him more,”

“I don’t see Mexico or Vietnam or India stopping to sell products for political reasons, but we live under that constant threat with China,” he said, pointing out how China hoarded personal protection gear for hospitals, things like masks and hospital gowns that are almost all made in China.

One client put it bluntly when he said that his happiness at securing an 7% cost reduction was tempered by the fact that his supplier flat-out told him that it was concerned about being able to continue getting the component parts it needed to make the client’s product because so many of its sub-suppliers were going out of business. This is the yin and yang of China’s falling economy.

Dan Harris, a Seattle lawyer who works with foreign companies in China, said he has heard from an unusually large number of businesses in recent weeks looking for ways to reduce their presence in China without leaving the market altogether.

One of his clients, a U.S. furniture manufacturer, is working on a deal to distribute its products through a Chinese firm so it can remove its American employees from the country. A U.S. education company, also a client, is shutting its China units and licensing its technology to its current Chinese employees. He declined to offer more detail, because he advises clients not to discuss leaving China until they are gone.

Dan Harris, a Seattle lawyer who works with foreign companies in China, said he has heard from an unusually large number of businesses in recent weeks looking for ways to reduce their presence in China without leaving the market altogether.

“Just about everything they do on the ground puts them at risk,” said Dan Harris, a corporate lawyer with past dealings in China, who has had clients who have conducted supply chain due diligence in China.

Dan Harris, a partner at Harris Sliwoski in its Seattle, Washington office and an expert on collecting international judgments who is not involved in the matter, said that initially appearing in a litigation case and then becoming unresponsive is a common tactic by Chinese-based entities.

Harris said a strategy to collect a judgment in personal injury litigation is to convey to the corporation that if it fails to pay, it will encounter interruptions in its international supply chain.

Harris provided an example of a North Pacific company that intended to deliver $10 million worth of crab to a foreign port of a Chinese corporation that owed the attorney’s client $5 million. Ahead of the delivery, Harris would connect with a contact from the North Pacific company.

“I’d say to Jim, ‘How about you tell us right before you are about to send over that $10 million, and we can seize $5 million of it,’” Harris said. “For your help, we’ll pay you $100,000, and he’s like, ‘Sure.’ So, you can get into their faces all around the world. You can do a lot to recover the judgment, but you need to know how to do it.”

Mexico’s business culture is more risk averse and less open to newcomers, according to a recent podcast with international lawyer Dan Harris and supply chain expert Andrew Hupert. They emphasized that companies can succeed in Mexico, but finding suppliers and negotiating agreements will be more challenging than in China. The number of potential suppliers will be smaller, in addition to them being harder to find.

The revised legislation expands protected information to include all “documents, data, materials or items related to national security” from simply “state secrets and intelligence” beforehand. It didn’t elaborate on what sort of materials would fall within the scope of these revised provisions.

“The key terms are not defined and are so vague,” said Dan Harris, partner at Harris Sliwoski, a law firm that advises on investments in China. “The old law basically covered state secrets and now it covers national interests.”

“People are terrified of three things with China,” adds Dan Harris, attorney at law firm Harris Sliwoski: tensions between the country and Taiwan, its Covid-19 response, and rising prices and shipping costs. “And those three together have caused people to say, I’ve got to diversify. I’ve got to get out, and they’re willing to pay more to be in Mexico.”

Harris says: “People are finally waking up to the idea of Latin America. Even in the last six months, people are saying, I want to go into Mexico because I want to be selling more into Latin America. Or I want to go into Colombia, or Peru. People are starting to look at Latin America as a market.”

To be clear, there are certain downsides to leaving China that experts Dan Harris and Andrew Hupert of the international law firm Harris Sliwoski detailed in a Feb. 23 webinar titled, “Moving Your Manufacturing from China to Mexico.”

Chief among those dangers is the very real possibility of losing access to your company’s assets and intellectual property (IP) if you announce plans to leave China before moving all molds, tooling, and personnel out of the country, Harris cautioned.

“I’m here to dispel the notion that leaving China involves basically pushing a button — it’s a lot more than that. There are risks involved in leaving China. To quote one of my clients: ‘Hell hath no fury like a Chinese factory spurned.’”

Still, the government’s Covid policy shift and its efforts to reassure foreign investors have not swayed American manufacturers to reconsider exiting China, according to Dan Harris of the law firm Harris Sliwoski.

“They want out of China because they do not believe China is any longer good for business, and they are also worried about China’s relations with the rest of the world,” said Harris, who advises American companies doing business overseas.
Even companies that have profited handsomely in China were trying to reduce their footprint in the country to minimise their risks, he added.

Harris painted a bleak picture next year for foreign entities with China-based manufacturing, saying the country’s immunity to the coronavirus was not strong and that it lacked “good vaccines” for it.

“If you look at the people who draw the analogies between Google and Facebook and TikTok, they’re either unsophisticated or they have an ax to grind in favor of TikTok,” said Dan Harris, a lawyer who works with foreign companies in China and writes the China Law Blog. “Most serious people see a difference. It doesn’t mean they’re all great or all bad, but there is a difference.”

The whiplash is just part of doing business with Beijing. “What China giveth, it can taketh,” says Dan Harris, a lawyer whose firm, Harris Sliwoski, has counseled U.S. companies on business in China for nearly two decades. (Harris advised Fast Company’s parent company, Mansueto Ventures, on a matter several years ago.)

“Every single one of our clients would like to stop manufacturing in China, and people say, ‘Why don’t they?’” said Dan Harris, a founder of the law firm Harris Sliwoski, which advises American companies on doing business overseas. “There’s a million reasons why it’s just not that easy.”

“Nobody really wants their name associated with China, but what can they do?” attorney Dan Harris of firm Harris Sliwoski told ESPN. “They’re sort of betwixt and between. If they say what Americans want them to say, it’s death in China. If they say what China wants, it’s death in America.”

Dan Harris, a trade lawyer who specializes in doing business in emerging markets and co-authors the China Law Blog, said the business calculus has changed because of the sanctions imposed on Russia.

“Companies that are not sanctioned … they are saying ‘I’m out’ because of reputational reasons or because it’s not worth figuring out and risking getting in trouble to sell a hundred thousand dollars’ worth of product to Russia. It’s just easier and safer to get out,” he told VOA Mandarin by phone.

Corporate lawyers such as Dan Harris of US-based Harris Sliwoski are advising clients to start thinking about “asset light” strategies, such as licensing or franchising where appropriate. At the very least, diversification of manufacturing elsewhere in Asia, or even further afield, should be a priority.

“It’s going to be terrible,” said attorney Dan Harris of Harris Sliwoski Sliwoski LLP, who helps companies do business in emerging markets. “There will be no IP protection in Russia.”

In an article entitled “China Cyber Hacking: The Full Story” posted on the China Law Blog website, Dan Harris and Arlo Kipfer, two attorneys at the international law firm Harris Sliwoski, spell it out in simple terms: “The government seeks to ensure all network activity conducted within China is transparent to the state.”

Nearly a decade ago Dan Harris, an attorney who works with American companies doing business in China, wrote, “The key to weathering China’s slowdown will be … to go back to basics: think afresh about what a company contributes to China’s economy and how that is likely to shape policy makers’ opinions; focus on scrupulous regulatory compliance; and renew focus on due diligence at a company-to-company level. Above all, no Western company doing business in China should blithely assume that a slowdown won’t affect it.” That’s wise advice today.

The highlighting of such risks is vital, according to Dan Harris, founder of U.S. law firm Harris Sliwoski.

Dan Harris, attorney at Harris Sliwoski, an international law firm that has warned clients on the legality of VIEs for more than a decade, said the Chinese Communist party had “lashed out at big companies and now all signs point to them going after VIEs”.

Dan Harris, attorney at Bricken Harris, an international law firm that has warned clients on the legality of VIEs for more than a decade, said the Chinese Communist Party has “lashed out at big companies and now all signs point to them going after VIEs”.

Dan Harris, attorney at Harris Sliwoski*, an international law firm that has warned clients on the legality of VIEs for more than a decade, said the Chinese Communist party had “lashed out at big companies and now all signs point to them going after VIEs”.

Dan Harris, an international lawyer and author at the China Law Blog, told VOA Mandarin that he believes democratic entities, such as the United States, Japan, Korea, Australia and the European Union, are going to realize they “need to enact special laws to deal with China and China’s hoovering of data.”

“Nearly all Democrats assume Trump was making stuff up about China for political reasons – which is not so crazy, as he did that all the time,” said Dan Harris, a partner in the Harris Sliwoski law firm and author of China Law Blog.

Bloomberg Washington Correspondent Joe Mathieu delivers insight and analysis on the latest headlines from the White House and Capitol Hill, including conversations with influential lawmakers and key figures in politics and policy. Guests: Dan Harris, founder of Harris Sliwoski

One of its problems, some legal experts said, is that its success has been difficult to quantify. “I don’t know what the measure would be,” said Dan Harris, a partner at Seattle’s Harris Sliwoski law firm and co-author of China Law Blog.

The details remain sketchy, but it seems that the Trump account was set up for business purposes—either as a wholly owned foreign enterprise or as a joint venture with an unknown Chinese partner. In that case, having a bank account would be not only legitimate but also advised, Dan Harris, an experienced China business attorney, wrote in a text message.

“Maybe he was operating 100 percent legally in China,” Harris said. “But he simply didn’t reveal it (as he should have done) because the optics were so bad for him.”

For some, the reshoring discussion often begins and ends with China.  One of my favorite blogs is the China Law Blog that is authored by Dan Harris and the lawyers at Harris Sliwoski.

Dan Harris, a leading authority on Chinese law and an attorney at the same law firm, wrote an op-ed in 2019 urging Americans not to teach English in China. He said that since 2018, there has been a huge increase in emails from foreign teachers in China seeking legal help with visa, employment contract, medical and landlord issues.

By this reckoning, TikTok, or for that matter any Chinese company, can’t be trusted, because China can’t be trusted. “There are probably many people at TikTok who just want to run a profitable company. But they can’t,” said Dan Harris, a founder of the law firm Harris Sliwoski, which specializes in business in China. “If you know how China works, you cannot claim that TikTok is secure.”

“They’re going after these people not because of a business dispute in China. They’re going after these people because they violated Chinese criminal law,” said Mr. Harris. “They’re not only doing an end-run around the State Department and the DOJ. They’re really doing an end-run around U.S. law.”

Dan Harris, a lawyer in Seattle who advises on business deals in China, said that he recently got a call from one company that ordered a shipment of protective masks. Instead they got Halloween masks. (He didn’t know what type.) “You’re wondering, why do they bother sending Halloween masks rather than nothing at all?” Harris said. The answer, he said, is that it buys them time. When an order ships, a buyer gets proof of shipment, and in the weeks that the Halloween masks are on the water the factory can scam other buyers.

“It’s a complete mess,” said Dan Harris, a lawyer whose firm Harris Sliwoski has advised companies on sourcing from China for more than 15 years. He called the current situation “unprecedented,” especially as frenzied Chinese suppliers attempt to recoup losses after months of quarantine.

Dan Harris, a lawyer in Seattle who is helping hospitals verify mask sellers in China, said he has reviewed the same “proof of verification” certificate more than a dozen times, indicating it is fake or copied.

“They are either hucksters or con artists,” Mr. Harris said. “Normal safeguards are being ignored right now.”

Dan Harris, a Seattle lawyer who represents companies in emerging markets, wrote on his blog that he recently heard from three companies that were each scammed out of more than $1 million after placing N95 mask orders from China — with one firm receiving “dusty, moldy Halloween masks.”

Dan Harris, a Seattle lawyer who represents companies in emerging markets, wrote on his blog that he recently heard from three companies that were each scammed out of more than $1 million after placing N95 mask orders from China — with one firm receiving “dusty, moldy Halloween masks.”

Dan Harris, a lawyer who has participated in cases against Chinese companies in disputes over force majeure, believes that these certificates “are very important in a Chinese court. They are probably decisive”, although he stresses that outside the Asian giant they lack legal weight.

Dan Harris of Harris Sliwoski, an American law firm, worries that today’s trickle of mainland suppliers declaring force majeure (fm), an obscure legal manoeuvre used to get out of contracts, could turn into a tidal wave.

Chinese legal expert Dan Harris emphasized supply chain risks based on questions his firm’s attorneys are hearing about production in Chines factories.

This could indicate that even though there is an agreement in place, Beijing might ignore it, as Dan Harris of the China Law blog points out.

“The problem isn’t the law,” he says. “It’s that when something is important to China – some cutting edge technology that it wants – then those laws don’t have any use at all.”

“It all sounds great in theory,” said Dan Harris, a Seattle lawyer whose firm advises companies of all sizes on operating in China. “The problem is, China has a long history of putting very-good-looking things into law, especially its intellectual-property laws, and then not following through when it doesn’t want to.”

“US financial sanctions are incredibly powerful because the dollar – though weakened – is still very powerful. Companies that operate internationally do not want to be on the wrong side of US financial sanctions. Look what Huawei is accused of having done to try to avoid them,” Harris said.

Corporate debt defaults have jumped this year in China, another sign that companies have been having a financially difficult year. Chinese firms are also increasingly failing to meet deals with foreign companies, as the lawyer Dan Harris points out. Meanwhile, midsize U.S. enterprises have already started to pull away from Chinese supply chains.

“China’s laws allow them to keep people in detention for a long time,” said Dan Harris, a founder of Harris Sliwoski, an international law firm that specializes in China. “The charges are purposefully vague as a message from China … we can convict them on whatever it makes sense for us to convict them on so as to best influence what happens to Meng Wanzhou and to best send a message to Canada and to the rest of the world that China will act in China’s own interests by crushing you, international law be damned.”

Two months into the Hong Kong protests this year, the respected lawyer Dan Harris wrote on the China Law Blog, “Not sure why nobody has just come out and said this yet, but Hong Kong as an international business and financial center is no more.” This week, he elaborated in comments to the Guardian: “It’s finished as an international business center because it was based on trust, safety and the rule of law and that’s all gone. Companies are looking to leave. No one is thinking of moving in.”

Dan Harris, a lawyer at the Seattle firm of Harris Sliwoski who has done business in the region for decades, says the ongoing protests mean Hong Kong as an international financial centre is “no more”.

“It’s finished as an international business centre because it was based on trust, safety and the rule of law and that’s all gone. Companies are looking to leave. No one is thinking of moving in,” he said.

He also believes there is no appetite in Beijing to save the way Hong Kong is currently established. After all, it only accounts for 3% of the mainland’s economy, compared with 11% at the time of the handover from the British in 1997. Harris thinks forceful intervention by the mainland is inevitable.

“There is no resolution to this. China does not care about Hong Kong. A lot of people in Beijing hate the place and they want to put it in its place. Who’s fighting for Hong Kong? Not many people. China is not backing down because they want to send a message to Xinjiang and Taiwan.”

The site’s author, Dan Harris, compares the mood in China today with the situation in Russia in the 1990s, when outside businesses would get repeatedly ripped off by their Russian partners, and would go away mystified that these partners would take the short term payouts of burning a foreign partner, at the expense of the much larger upside they could realize from an ongoing arrangement. For these Russian entrepreneur/bandits, Harris says, “They do not believe they will be able to operate freely five years or even one year from now. So though you see them as having irrationally sacrificed massive long term gains for much smaller short term rewards, they see themselves as having quite rationally grabbed what they could while it was still there.”

“China has become a risky place,” Dan Harris, a lawyer at Harris Sliwoski, a firm that specializes in investment with China, said in an email. “If you are going to do business there you had better know what the laws are and you had better follow them, because China is not going to let anyone slide, especially not an American or a Canadian.”

Dan Harris, a lawyer who represents U.S. importers, said he has received increasing requests for help dealing with Sinosure demands for payment on behalf of Chinese exporters.

“Before the trade war, I might go … four, five months without getting a Sinosure email, now I’m getting four or five a week,” said Harris, managing partner at international law firm Harris Sliwoski.

Even if Hong Kong’s demonstrators have all 5 of their demands met (right now it’s 1 down, 4 to go), China has made it abundantly clear that it has no respect for the “one country, two systems” framework, which in any case is scheduled to end in 2047. Hong Kong is arguably the most internationally integrated city in the world, which means the only direction from here is backwards. As Dan Harris put it 3 weeks ago in China Law Blog, “Hong Kong as an international business and financial center is no more.”

“If China is viewed as having ‘taken over’ Hong Kong it will become difficult for any politician to argue for keeping [Hong Kong’s] special status because it will be hard to argue that its system is all that different from the [People’s Republic of China’s],” says Dan Harris, the founder of Harris Sliwoski, a law firm that specializes in investing in China.

Dan Harris, managing partner of law firm Harris Bracken, said that over the past three months businesses have been asking: “Is Hong Kong safe? Should I send our people there?”

He is based in the US and advises clients on their strategy in China and Hong Kong.

“What we are mostly getting is clients saying they will not be setting up in Hong Kong, or just asking our opinion on what they should do to lower their footprint in Hong Kong.”

“The ability and desire to catch foreign companies and foreigners operating illegally in China is higher now than it has ever been,” said Dan Harris, founder of Harris Sliwoski, a US-based law firm that specialises in China.

Even if an American brand does not plan to sell in China, the firm should still guard its trademark.

“We were contacted by four European companies that controlled, maybe, around 80 percent of a particular product market,” said lawyer Dan Harris, who advises companies that do business in China. The firms all produced in China but didn’t file for Chinese trademarks. One of their Chinese manufacturers went out and registered all four European brands.

“Once [the Chinese manufacturer] got their China trademark, they told these four companies: you cannot ship product from China anymore. It was a disaster for these four companies,” Harris said.

The accord now being drawn up to resolve the trade fight between the world’s two largest economies promises better treatment of U.S. companies in China and more Chinese orders for U.S. crops and other products. But rattled businesses on both sides of the Pacific are skittish about rushing back in to revive the once-booming investment activity between the two countries. “There is no way any deal between China and the U.S. will cause everyone on both sides to say, ‘We were just kidding,’” said Dan Harris, managing partner at Harris Sliwoski, a law firm that specializes in investment with China. “The tariffs and the arrests and the threats and the heightened risk have impacted companies and that will not go away.”

“Laws in China on something like forced technology are paper; the reality may or may not match that paper,” said Dan Harris, Seattle-based managing partner of law firm Harris Sliwoski, which helps firms navigate legal issues overseas including in China.

“I generally think that on something like this, past history is the best predictor of future performance, and few dispute that China has for the last 10 years been saying it would open up and it all but stopped about five years ago.”

There have also been notable improvements in the arena of commercial law. Last year Chinese courts began hearings in 152,000 intellectual-property disputes, up nearly tenfold over the past decade. The explosive growth in IP cases has been fuelled by the growing litigiousness of domestic companies, which have more to protect as they become more innovative. But foreign companies are also benefiting. In August a court ordered three Chinese firms to pay 10m yuan ($1.5m) in damages to New Balance, an American footwear company. It was one of the largest trademark-related awards ever made by a Chinese court.

Luke Minford, chief executive of Rouse, a consultancy, has calculated that foreign companies win 74% of their IP cases against Chinese firms, well above the 55% success rate for plaintiffs in cases that only involve Chinese entities. There are, to be sure, still unwritten limits. Dan Harris of Harris Sliwoski, a law firm, says it is a “very different calculation” if the company being sued is a big state-owned enterprise.

Some experts say that handing over technology has effectively become a cost of doing business in China — a market too big for most companies to ignore.

“Many Chinese companies go after technology hard and the tactics they use show up again and again, leading us to believe there is some force (the government?) teaching them how to do these things,” said Dan Harris, a Seattle-based attorney who advises international companies on doing business in China.

“The thing is that the foreign companies that give up their technology usually do so at least somewhat of their own volition,” he told CNNMoney. “Yes, maybe they need to do so to get into China, but they also have the choice not to go into China, right?”

New Balance disagreed with the ruling for a host of reasons, one of which was that the company barely used the Xin Bai Lun name except on some advertisements and websites, never on shoes. It said the name hardly constituted a trademark. The company has hired a new counsel and appealed the decision. But so far New Balance has lost the fight it picked—and as it waits for a higher court’s ruling, it’s worth asking whether it’s time for them to bow out.

China’s trademark laws, though relatively advanced, break with Western ones in several key ways. The most important one: China is a first-to-file country. “This means that whomever files a trademark first gets it,” says Dan Harris, a partner at Harris Sliwoski in Seattle focusing on China, regardless of whether another company is already making a product with the same name in, say, America.

And as they increasingly expand internationally, they will need to manage their reputation and won’t want to be known for eluding courts and skipping out on legal bills, says Dan Harris with the law firm Harris Moure in Seattle.

But for now at least, Harris says the Chinese can’t always fathom how U.S. courts operate, aren’t used to judges who are mostly immune to bribes and don’t understand the consequences of defying court orders.

“This group of people will distinguish the recent Supreme People’s Court ruling because it was an earlier set of documents, not entirely the same as the V.I.E. structure,” Mr. Dickinson predicted. “But what the court said is that any contract that is designed to avoid the clear requirements of Chinese law is void from the very first step. That is what the V.I.E. is.”

Considering the possible wide-reaching implications of this recent ruling, is it being underplayed?

“Accountants, lawyers and stock brokers make a ton of money off I.P.O.’s so they have no incentive to slow them down,” said Dan Harris, a China lawyer with Harris Sliwoski and a co-author of the China Law Blog. “They have every incentive to keep the V.I.E. structure going.”