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Restrictions for automakers in China may be ending

With the ongoing trade war, it appears that China may be attempting to reduce restrictions regarding certain industries. This includes a proposal to allow for full ownership of car makers in China within five years.

This is a significant concession in light of China’s auto industry being relatively new. The proposal would end requirements that car makers do business through state-owed partners. Such past practices have resulted in car manufacturers having to share their technology with possible competitors.

The risks and rewards for foreign investment firms in China

With a population of more than a billion people, China always presents a wide variety of opportunities for American businesses. Yet doing business in China can prove risky.

A number of large lenders including Citigroup and Goldman Sachs have also been trying to take advantage of the Chinese market. They hope to be at the forefront of lending money to Chinese companies. Yet in doing so, they will have to deal extensively with Chinese regulations. These banks and lending institutions will also be dealing with businesses already substantially in debt.

Weathering the storm

The rapidly escalating trade war between the US and China is definitely going to continue to affect business for a long time to come. The first to feel it will be importers and exporters, but eventually it has to hurt everyone.

There are ways of inducing pain on every business that we can expect will increase over the coming months if this keeps escalating. Tariffs are just one way of putting pressure on a nation, but there are many others. Businesses operating in China need to stay on top of the latest news and build close relationships with local partners to help weather the storm.

U.S. claims forced tech transfers in China

The United States alleges discriminatory technology licensing requirements by Chinese officials. A large concern of U.S. officials involves alleged Chinese mandates concerning transfers of technology.

There have been a number of complaints by foreign corporations that they must transfer technology to Chinese partners. President Trump states that such practices are in part the reason for imposing high tariffs upon manufactured Chinese products.

Protecting technological interests in China

California companies work extensively with China in marketing iPhones. Companies also market other technological devices there as well.

However, it now appears that technological companies in China are in a position to possibly dominate the industry. This could mean there will be less willingness to work with American companies. China is No. 1 in online-payments marketing. They also have access to increased computer capacity. These factors allow for them to export equipment throughout the world.

Food chains and business success in a Chinese market

Without question, the food industry has taken great interest in opening up franchises in China. Many American-based restaurants are growing faster in China than in the United States.

Part of this comes down to rebranding. Fast-food restaurants such as Pizza Hut have expanded their menus. They also do not necessarily target to the same market when doing business in China as in the U.S. While struggling to attract customers in the U.S., the pizza chain has become a hot spot for couples meeting for a date.

Business taxes in China

As with any other nation, doing business in China requires every business to pay their taxes. The system is more confusing than many nations, however, and compliance can be difficult.

For small businesses and American importers it is not an issue. But if you open an office in China you will be accountable for the Value Added Tax (VAT) and possibly even corporate taxes. The system is complicated and compliance can be difficult.

Tech secrets and doing business in China

Technological information means profits for American companies. But loss of that information due to trade theft can be extremely costly.

American companies make a variety of concessions when doing business in China. Before doing business, the Chinese government requires American companies to provide technological information regarding their products and services.

China’s cyber security law causing headaches

Doing business internationally is always difficult, and that is especially true with China. The high language and customs barriers are often matched by completely different understandings of law and sovereignty.

This has proven especially true with the new cyber security law that requires international companies to have data stored in China for inspection. The process for approval has never been made clear and is taking up a lot of time for those companies attempting to comply.

What is the DTSA and what does it do?

In a post last month, we offered perspective on U.S. laws that offer businesses protection against the theft of trade secrets. At the national level, most states have enacted the Uniform Trade Secrets Act, something close to it, or already have laws on the books that attempt to serve the same purpose. Those statutes handle issues that crop up state to state.

For intellectual property protection at the international level, there are several measures in play. The North American Free Trade Agreement sets minimum standards on trade secret protection that all signatories are required to follow. At the same time, the Economic Espionage Act (EEA) gives trade secret protection on a global scale priority status.

Shi Yan grid lawyer
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