Legal Considerations

1. China does have a comparatively full-scale legal system, but the law enforcement is a major problem. What the law says and how it is implemented are not always consistent.
2. The judiciary in China is not as independent as it is in the U.S. Court judgments are sometimes influenced by politics, even by personal relationships. Therefore, recourse to the court system is often not effective, especially if you don't have powerful connections or contacts in China.
3. Intellectual property is not well protected as a result of lack of law enforcement in China. However, the Chinese government is trying to improve its laws for intellectual property protection. US companies doing business in China need to pay more attention to the protection of their own Intellectual Property Rights.
4. Although there are certain problems in the law systems in China, it works to make the whole society in a comparatively stable order. You don't have to be afraid of these kinds of problems when you decide to expand your business into China, especially if foreign investment is involved.
5. China's commercial laws are in the transformation to correspond to WTO rules and some Western commercial laws, but the process is still on going.
6. China has many laws that encourage, restrict and prohibit investment in certain industries.
7. As always, it is very important to make a clear contract with your Chinese counterpart to avoid future arguments, and protect your interests in case of a lawsuit.
8. If you import from China into the US, determine if the import is subject to certain restrictions under US trade laws or quota requirements by the US government.
9. According to the US trade laws, exports of certain products and high technologies to China are restricted. Check the export requirement for the specific products or technologies before you export them to China.
10. While gift giving is an important cultural custom in China, the US Foreign Practice ACT prohibits American companies from making “corrupt payment” of money or anything of value to foreign officials for the purpose of obtaining or keeping business.