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Guidance needed in maze of Chinese regulations

Guidance needed in maze of Chinese regulations

The Chinese legal system is less exotic and provides more safeguards than most people tend to think. To the more seasoned international legal advisors, is it not exotic whatsoever. “We avoid using the typical ‘scare tactics’ to stimulate companies into hiring us. Chinese law is accessible and foreign parties can protect their rights reasonably well in China”, says Gerard van Swieten of HIL International Lawyers & Advisers, the oldest Dutch law firm active in China.

Seventeen years ago (1995), the Managing Partner Jan Holthuis of HIL first assisted Dutch companies coming to China. Chinese law was still in its early development at that time, with many unchartered and grey areas, but the basic system was there and functioning. In 2002, HIL was the first Dutch firm to obtain a license to open a branch office in Shanghai. Presently HIL also has a holding office in Beijing. Gerard van Swieten has a master in both Dutch law and Chinese law and currently advises European and Chinese clients from HIL’s Shanghai office.

Knowledge in demand

“Expert knowledge about Chinese law is in demand. We cover many aspects of Chinese commercial law including licence, joint venture, agency and dealership agreements, intellectual property rights and taxation and represent clients in arbitration on these topics. The status of Chinese law has changed significantly since 1995. The court system has become much more professional and Chinese parties are better aware of their rights and obligations. The significant and still increasing number of intellectual property cases between Chinese parties is an example of this.”

‘Scare tactics’

“In our view the ‘scare tactics’ of many China advisers (“the Chinese will cheat you on every occasion… unless you hire us”) are inaccurate and harmful to business. Chinese law is accessible and more and more enforceable. Similarly, arrangements with local contacts (called guanxi in Chinese) can be helpful but do not prevail over regulations. And when they do, usually amount to corruption. The consequences of corruption under Chinese law and regulations with global application, such as the UK Bribery Act, are severe. Reliance on these informal arrangements further creates dependence on those contacts and such arrangements cannot be enforced.”

Law with Chinese characteristics

Chinese laws are actually quite clear, but it can be challenging to determine the exact rules from a number of overlapping regulations. “There are a large number of different rulings, guidelines and interpretations issued on the same subject by various legislators and governmental departments. Power struggles between ministries or other executive governmental departments further complicate matters. Finding out which rules actually apply takes time and requires communication with various levels of government”

Gerard van Swieten

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