Category Archives: Operation

Risk and Its Prevention for Dormant Investment in China

By Luo Yanjie

Recently, Shanghai Huangpu People’s Court issued white paper about cases involved Non-State-Invested Units. The white paper disclosed that the dormant investment is ubiquitous in Non-State-Invested Units during the process of their establishment, and that not only makes investors’ rights and interests unguaranteed, but also cause a serious threat to the commercial good-faith. As introduced, some actual investor would not like to establish the company in their own names considering various factors, but registered the company in others’ name. It results lots of disputes. Now we would like to discuss the risk of “dormant investment” and introduce how to reduce the risk as follows:

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Bonded Import: What Drives Goods “One-Day-Trip” to Hong Kong?

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It’s said early in 1990’s, that the container truck drivers shuffling between mainland China and Hong Kong were in excess of 10 thousand. Their main duty is to transport the mainland manufactured components and parts to Hong Kong, yet with no dispatch in the terminal, they would immediately turn around and head back to the mainland for part assembly. That was called “goods one-day-trip to Hong Kong” by Ms. Wu Yi, the deputy Premier of China at that time.

So, what drives such trips which cost however much? First, to transport mainland manufactured components to Hong Kong could make Chinese factories enjoy the tax refund as introduced in the last issue; second, for the assembling in China, any components thereby imported is under a bond, which means no tariffs shall be first paid for that import. After the export of the assembled articles, such tariffs shall then be paid. In conclusion, with this processing trade mode, less raw material or components would be occupied and the company could run the business under a no tax status; the advantage hereby produced is outrageous. Then, what tariffs may be paid during the process?

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Why to Protect Legal Benefits of Units in Labor Disputes?

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By You Yunting

Recently, following a disputed labor case I have noticed an inadequate protection of the unit by the existing laws and regulations, and such inadequacy has made an unfaithful employee gain immoral advances from such inadequacy in the case, and on the other hand, hundreds of innocent labors may suffer losses from this. So, we would like to put the case in discussion now:

A senior employee asked for sick leave of 1 year (it was found afterwards that the hospital has never prescribed medicine after the issuance of the medical certificate, yet the hospital also refuses to admit involvement in the false sick leave), contrary to this the employer later found that the employee was actually running her own company then entrusted lawyers to investigate it. After the check of the registered information of the suspected company, the employee was proven to be the general manager. Meanwhile, the lawyer also contacted the employee in the name of business contact through the contact telephone number on the home page of the company, which further confirmed the employee’s service with the company. The call was notarized.

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Proview Was Charged by Its Lawyer for Fee Payment Failure

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By You Yunting

According to a news report (note: the link is in Chinese), the iPad battle in China has ended in reconciliation with Apple’s payment of 60 million dollars to Proview by the agreement. However it seems that Proview will soon be trapped in another dispute afterwards and related to the battle, its agents of Grandall Law Firm (the “Grandall”) filed a lawsuit to the local court on the 23rd of July, demanding the professional fee of 2.4 million dollars.

As introduced by the attorneys from Grandall, their entrustment by Shenzhen Proview was on a contingent fee, by which it could gain 4% of the total conciliation expenses or the compensation (namely 2.4 million dollars by the final settlement agreement). Also all the litigation fee or expenditures paid for custom record in the trademark battle was firstly paid by Grandall. However, after the end of the dispute, Proview refused to cash the fees into Grandall’s account as agreed and has even collected the money paid by Apple at the end of June.

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Is It Necessary To Differentiate Virtual Currency and Game Coin in Game Designing?

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With the rising of the mobile internet, more imported games have entered into the boosting online game market in China; however, the country has many limitations on the game, concerning the gambling, virtual currency and other aspects. Once the games developed overseas could not meet the legal standard, they will get no license from the General Administration of Press and Publication of PRC (GAPP) and Ministry of Culture(MOC) for the game operation in the country. To bring the international game developers a closer and clearer look into the current law system on game in China, we will post several articles for the introduction to the laws and regulations concerned.

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Infringement on Privacy? Comment on Enterprise’s Monitoring of Employee’s Chat

Recently, Techweb, a technology website in China interviewed our lawyer for the company’s monitoring on employee’s chat, and the following is the digest of the interview:

Q: For the monitoring on phone call and online chat of the employees by the company, could you share us you opinion on it from the professional view?

A: For the monitoring on employee’s phone call and chat in working time, there’s no corresponding regulation in law, and we usually reply to our clients for such questions like this:

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Different Local Regulations on Compensations and the Effect of Non-competition Agreement

The system of noncompetition is regulated in China Labor Contract Law, “If　a　Employee　has　a　confidentiality　obligation,　the　Employer　may　agree　with　the　Employee　on　competition　restriction　provisions　in　the　employment　contract　or　confidentiality　agreement,　and　stipulate　that　the　Employer　shall　pay　financial　compensation　to　the　Employee　on　a　monthly　basis　during　the　term　of　the　competition　restriction　after　the　termination　or　ending　of　the　employment　contract.” By the article, a financial compensation is demanded for the conclusion of non-competition agreement, while no legal regulation on the effect of such articles when no compensation is paid. Therefore, on the issue, the adjudication or decision made by local courts or labor arbitration committee in China varies much, and today’s post is our analysis on it.

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Does Combination of Youku and Tudou breach China Anti-monopoly law?

Reportedly(the report is in Chinese), the two Chinese leading video websites, Youku.com Inc. (NYESE: YOUKU) (“Youku”) and Tudou Holdings Ltd. (NASDAQ: TUDOU) (“Tudou”) jointly announced today that on 11th March, 2012, they have signed a definitive agreement for the combination of Tudou and Youku in a 100% stock for stock transaction, which has been approved by each party’s board of director but still waiting for the shareholders’ approval, and is planned to be completed in the third quarter of 2012.I think, it shall be noted that some anti-monopoly issues may be arisen from the combination of the two Chinese biggest video websites, which possibly resulting adverse impacts on the rights and interests of consumers and fair competition.

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Why SARFT’s Order for Price Limit on Movie Ticket Daily Deal Is Illegal?

As reported, the State Administration of Radio, Film & Television (“SARFT”) has issued the Exposure Draft of “The Guideline on The Further Regulation of The Movie Tickets Management” (the “Exposure Draft”) to its affiliated industry associations, which says that the price of the member ticket, group ticket and the preferential ticket shall not be less than 70% of the listed price in the cinema. The regulation has aroused wide argument for it focusing on the heating ticket group buying business. In our opinion, the Exposure Draft is to establish the price cartel, which is suspected to violate the Price Law, Anti-trust Law and Anti Unfair Competition Law. And the following is the opinions from Bridge IP Law Commentary: (the image above is the logo of NUOMI.COM, the first daily deal website selling movie ticket in China)

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Apple Ignores the Interests of App Store Consumers in China?

Some suggestions to Apple’s Chinese Operation

As reported by IT Times (note: the link is in Chinese), some apps in Apple’s App Store are complained by clients for its poor quality due to the loose supervision by the company, and also the settlement on the problem is difficult when encountered such problems. (the image above is the screen shot of one of the complained apps in App Store)

Therefore, we have searched the reports and news concerning the apps on the internet, by which we have found more than ten apps are charged for its fraudulence, including the apps designed for Taobao, the biggest online shop in China, mobile phone carrier service apps and traffic violation record, and the complains focus on the non-conformance to its publicity or being available. Besides, it also comes to our attention that the refund application is complicated for the entrance for the refund application is too difficult to be found shall there were no aid from Apple’s service tel.

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Newly Revised Investment Catalogue: JV can Operate Online Music in China without VIE now

The Guiding Catalogue of Foreign Investment in China (the Catalogue) revised in the last year has come into effect on 30th January, 2012. The new Catalogue contains some modified regulation on foreign investment in China, and today Bridge IP Law Commentary would like to introduce you the change in respect of internet business in the Catalogue. (the image above is the logo of myspace.cn, invested by Mr. Rupert Murdoch through VIE, which is claimed temporary shut down for technology reasons)

I. Permission of foreign investment in online music industry

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Tax Preferential Policy in China’s Animation Industry

It is reported by SECURITIES DAILY (note: the link is in Chinese) that there will be adjustment on tax policy in China animation industry. In recent, China Ministry of Finance and the State Administration of Taxation jointly issued a new policy supporting the animation industry, which introduces the VAT and the preferential business tax. And less tax and taxation of the both VAT and business tax will be made hereby.

I. For the sales of the independently developed animation software by the company of the general tax payer itself, the VAT shall be levied at the rate of 17% first, and the exceeding 3% amount of the actual tax bearing will be refunded. That’s the so called levy-refund policy.

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