Recent Amendments to the Foreign Investment Regulations in China

China has been quite successful in encouraging foreign investments since the Sino-Foreign Equity Joint Venture Enterprise Law was promulgated in the beginning of the country’s economic reform in 1979.

With the passage of time, the Chinese government has recognized the limitations of the old case-by-case approval regime which is typically time-consuming and burdensome for foreign investors. The government has sought to test various reform measures as seen through the establishment of several Free Trade Zones and new rules that only applied within the boundaries of these Free Trade Zones.

In early 2015, The Ministry of Commerce of the Government of China (MOFCOM) published a draft Foreign Investment Law for public comments. The draft attracted great attention and extensive discussions as it would represent a complete overhaul of the then existing regime and would supersede the previous foreign investment laws that had been in force for decades. Some drastic reform proposals contained in the draft law were 1) allowing foreign investors pre-establishment national treatment subject to a “negative list” control; 2) establishing a record filing system for foreign investments and post-filing supervision mechanism; 3) introducing the concept of “actual controller” for determining the origin of investments.

Continue Reading

Resource for Doing Business in the U.S. – Installment #8 – Consumer Protection

iStock U.S. Flags and Wall Street SignAlmost everyone approaching the U.S. consumer market has heard nightmares about lawsuits and read damaging headlines from consumer claims.  These range from industry wide antitrust investigations to criminal indictments for racketeering to class actions for deceptive advertising.  In May this year, U.S., Canadian and Mexican government officials met to discuss cooperation in enforcing antitrust laws in an increasingly global market place, suggesting even greater cooperative activity in the antitrust arena relating to global markets.  It was recently announced that Uber is under investigation in China and in May this year, it was announced that Facebook was being investigated in Germany.  Although such global antitrust inquiries are not exclusive to the U.S. market, it is clear that no companies are exempt and the U.S. takes such matters seriously.  Similarly, people around the world read about the U.S. efforts last year to indict Fédération Internationale de Football Association (FIFA) officials on racketeering charges, making it clear that even non-commercial entities are not immune from racketeering charges.  And earlier this month, L’Oréal was sued for hundreds of millions of dollars due to alleged misrepresentation about a product it sold that promised “fuller, silkier hair” which instead was alleged to cause hair loss.

Our next installment of our Resource for Doing Business in the U.S. provides an introduction to Consumer Protection laws in the U.S. It aims to equip our readers with a basic understanding of the types of consumer protect claims a business might face, and it explains some of the state and federal laws that form the basis of such claims.

A Reality Check for Travel to Cuba in 2016

two old cars in front of airport Arrivals buildingWith news of the resumption of commercial aviation flights to Cuba, and other changes in the Cuba embargo accomplished through Presidential executive order, it would appear at first blush that the time is ripe to travel to Cuba to investigate commercial opportunities there. But appearances can be deceiving, and we wanted to report on the reality of Cuba travel and the opportunities there:

  • For most U.S. businesses, critical impediments for commercial projects must be removed by Congress, especially the restrictions on financing commercial projects. Many had hoped that the Obama Administrative would assure U.S. banks that financing and credit term restrictions would be eased, but this has been a very slow process.
  • There have long been congressional exemptions from the embargo, chiefly in the areas of medical supplies, agriculture and telecommunications, but the reality is that the Cuban government imposes demands and restrictions on these projects that make them significantly less feasible and profitable for U.S. businesses.
  • It is relatively easy now to visit Cuba, but making a trip to explore commercial opportunities has both legal and practical challenges for U.S. executives.

There is no shortage of U.S. and Cuba-based businesses who will assist U.S. commercial enterprises to investigate business opportunities in Cuba, but there is often a huge gap between what is promised, and what can be delivered. The simple fact is that the Cuban government has carefully negotiated and managed the expansion of large commercial projects in Cuba with many other countries in businesses over the past 20 years, and they are doing the same with U.S. businesses. The Cuban government has already embarked on large infrastructure, natural resources and tourism projects with Spanish, French, Chinese, Venezuelan and many other international companies, and many U.S. business will find they are “late to the party.”

While there are thousands of Cubans eager to engage in business with U.S. companies, the reality is that a relatively small number of senior Cuban government officials actually have the authority and political power to negotiate and execute transactions. And these Cuban officials will always cite the remaining statutory elements of the Cuban embargo as the prime example of why the U.S. Congress should loosen the embargo for a particular transaction. For those who have previously engaged in transactions with Cuba under general and specific licenses from the U.S. Department of Treasury Office of Foreign Assets Control (OFAC), the current rush to investigate Cuban commercial opportunities sounds like the same old story – U.S. businesses are often asked to be the “messenger” to the U.S. Congress from the Cuban government as part of extended, difficult commercial negotiations that drag out while that “message” is being transmitted.

There are several other important aspects of the reality check for Cuba:

  • While travel to Cuba involves very little chance of enforcement by U.S. Customs and Border Patrol (CBP) officers, the fact is that without a directly applicable general or specific license, a traveler may wind up having to withhold information about their trip to Cuba from CBP.
  • Even though Mexican and Cuban customs officials often try to make it easy for U.S. citizens to avoid CBP questions by not stamping passports, sometime a passport is stamped inadvertently, leaving permanent evidence of a potentially unlicensed travel to Cuba.
  • Executives from public companies who have Sarbanes-Oxley (SOX) regulatory compliance and reporting obligations have a greater burden when undertaking Cuban travel. The financial and credit terms of Cuba-related transactions are particularly complicated.
  • Potential corruption and solicitation of bribes are a fact of life when dealing with Cuban “business facilitators” or negotiating commercial transactions. The Foreign Corrupt Practices Act (FCPA), aggressively enforced by the U.S. Justice Department and the U.S. Securities and Exchange Commission, applies to licensed and unlicensed activities in Cuba. Executives traveling to Cuba need to recognize the same FCPA “red flags” that occur with other international projects.

So, while these are busy and encouraging times regarding U.S.-Cuban relations, U.S. business executives should think carefully about their strategic opportunities and challenges, their Cuban partners, and their SOX compliance obligations before they sign up for one of the myriad Cuban market exploration options now available. If the decision is made to make the trip, we recommend doing some “ground-truthing” between what U.S. and Cuban business facilitators are saying, and what the realities are.

Below are links to a few articles containing some practical advice for travelers to Cuba:

Emperor Akihito’s Curious Speech

Japanese Emperor Akihito, who is 82 and reportedly in failing health, gave a rare speech this Monday that suggested much more than what he actually said.  Emperor Akihito has served in the symbolic position for 27 years and has battled various health issues, including cancer.  During his speech, he expressed doubt that he would be able to continue fulfilling the duties of the emperor as he ages, but refrained from suggesting that he may leave the Chrysanthemum Throne.  So why can’t he just abdicate?  The answer is a unique interaction between the terms of Japan’s constitution and its post-war history.  After Japan surrendered to the Allies in August 1945, the Emperor’s father, Emperor Hirohito, renounced his divine status and agreed to a new constitution that removed all political power from the Chrysanthemum Throne and required that an emperor serve until death.  These changes to the authority of the emperor were extraordinary given the impressive power Emperor Hirohito had wielded prior to and during World War II.  But Emperor Hirohito took seriously the new ceremonial role, and Emperor Akihito has strictly followed that post-war tradition.  Today, Japan’s constitution binds Emperor Akihito to serve until death, but any suggestion that parliament should change the constitution could violate the Emperor’s careful avoidance of interference in the political affairs of Japan.  And so, Emperor Akihito hinted as strongly as possible in his speech that he would like to abdicate after his long years of service.  The next move belongs to parliament.

We’re Married! Let’s Move to the U.S.! – Bringing Your Foreign-Citizen Spouse Into the U.S. (July 2020)

It may be surprising, but moving to the U.S. with your foreign-citizen spouse is not as simple as you might imagine.  If you are a U.S. citizen working abroad and considering moving back to the U.S. with your foreign-citizen spouse and/or children, it is never too early to begin planning for return to the U.S.

If you are living outside the U.S. and have a foreign-born spouse and/or children, it may have been quick and easy for them to travel to the U.S. on holiday.  But moving back to the U.S. is an entirely different story, requiring government filings and significant lead time of as much as a year or even more.

Continue Reading

Bongs and Busts – the Danger of State Cannabis Laws to Non-U.S. Citizens

This article was first published on GSB’s Cannabis Business Blog.

Seattle, Washington, where I practice, is one of the most popular tourist destinations in the U.S.  Its natural beauty and cosmopolitan vibe are two of its biggest attractions.  But increasingly, Cannabis Tourism has been a draw.  That’s because Washington State, like Colorado, Oregon and Alaska, has legalized cannabis – also known as marijuana, for sale and personal use in the state.

But people who are not U.S. citizens[1] need to understand that these state laws do not protect them from extreme danger.  The federal government still considers cannabis to be a “controlled substance,” and the purchase, possession and/or use of cannabis is still a federal crime that could result in denied admission, deportation, and/or being barred from return – even if state law says it is perfectly legal.

Continue Reading

Resource for Doing Business in the U.S. – Installment #7 – Labor & Employment

iStock U.S. Flags and Wall Street SignIn our latest installment of our Resource for Doing Business in the U.S., we focus on key laws an investor in the U.S. needs to know when employing personnel in the U.S. These laws apply whether the personnel are transferred from abroad or hired locally – and, as you will see, there can be laws related to employees at the local, state and federal level. It’s definitely an area where one cannot merely assume the laws will be similar to the laws at home. The laws also vary state to state and city to city within the U.S. To avoid exposing their employers to significant risks, even experienced Human Resources managers seek legal advice in this area.

By way of introduction to the topic, the installment you find here sets out the basics of what you need to know as a new U.S. employer. GSB also offers AdviceOnline, a resource for employers that dives into much greater depth on various labor and employment related matters. It is a useful tool to help our clients deal with some routine undertakings on their own, and also to know when it is best to seek legal assistance.

We hope these tools are useful in providing you the necessary guidance to minimize legal claims from personnel and to keep your workforce happier.

The Hidden Cost Of “Going Home” — the Expatriation Tax for Long-Term Permanent Residents Who Return to Their Home Countries

AirplacePeople immigrate to the United States for many different reasons. Many come here for work reasons and, somewhere along the way, obtain permanent resident status, otherwise known as holding a “green card.” They may work in the U.S. for most of their careers, raising children and becoming integrated into the social fabric of their community. But for various reasons, some will wish to “go home” when they retire. Maybe the home country offers better healthcare. Maybe even after many years in the U.S., they feel more comfortable speaking their native language. Maybe their closest relatives are in their home country, and they feel that they need a support network as they age. Maybe the food is better.

Whatever the reason, those who have been green card holders for a long time (specifically, 8 out of the previous 15 tax years) need to be mindful of the so-called “expatriation tax.” The Heroes Earnings Assistance and Relief Tax Act of 2008 (the “HEART Act”) imposes a tax at the time of departure on U.S. citizens who have renounced their citizenship and on those who renounce their long-term permanent resident status after June 17, 2008. The HEART Act expatriation rules apply to those who, at the time of expatriation:

Continue Reading

Overcoming Past Indiscretions — Getting Into Canada

As many of you probably have in these past few weeks, I’ve been enjoying the NBA playoffs. Perhaps not as many of you have been wondering what I have been contemplating: how is it that NBA players with criminal pasts are admitted entry into Canada to play against the Toronto Raptors NBA team? As a Washington resident, I’m aware, due solely to proximity, not experience, that U.S. citizens with criminal pasts have found trouble entering Canada. Specifically, I’ve heard stories of U.S. citizens being barred entry thanks to decades-old driving under the influence convictions. So how is it that I’ve never heard of a famous athlete being barred entry? Did I miss it?

Continue Reading

DOJ’s New FCPA “Pilot Program” Targets Corporate Officers and Other Individuals

Magnifying glass on docFor years, FCPA observers have predicted that the Department of Justice (“DOJ”) will increase its prosecutions of corporate officers and employees for FCPA violations. These predictions have so far proven disputable, as the number of individual FCPA prosecutions has remained essentially flat and DOJ has struggled to convict individual FCPA defendants. However, high-ranking DOJ and SEC officials have recently stated their commitment to focus more on individual FCPA violators. DOJ has affirmed its focus with last fall’s Deputy Attorney General’s Memorandum on Individual Accountability for Corporate Wrongdoing (the “Yates Memo”).

Continue Reading