By Mark Schaub and James Zhang  King & Wood Mallesons

Hschaub_mow It Happens?

It was an ordinary Tuesday morning in February when Mandy, a senior accountant in MCA Corporation Ltd, a major US machinery manufacturing company, received 2 emails from company’s CEO Steve Green. This email address was not Mr. Green’s usual one but Mandy did not pay much attention to this since Mr. Green did on occasion use alternative email addresses.

The email came with the subject ‘Urgent and Confidential’.  The first line of Mr. Green’s email stated “Below information is highly confidential, please communicate with me via this email and do not copy in anyone else”.  Mandy read on. According to the email, Mr. Green was currently in China conducting a top secret M&A deal and was being supported by a firm named Elite Consulting. The email attached two bills from Elite Consulting requesting immediate payment of in total USD$4,320,000. As prompt and efficient as Mandy always is, she wired the amount on the same day to the Chinese bank accounts that was indicated in the email.

The next morning, Mandy was shocked to see Mr. Green pass by her office thinking ‘shouldn’t he be in China?’ All of sudden, the unfamiliar email address with nobody else copied, the mysterious consulting firm, top secret communications, urgent payment to China all pointed to MCA having been the victim of a fraud.  
Continue Reading Taking Immediate Action: Responding to Cross-border Fraud in China

By Alex Zhang and Xuelin Ma   King & Wood Mallesons’ IP Group

I. INTRODUCTION

By 2015, the Chinese government plans to double the number of patent applications filed with the State Intellectual Property Office (“SIPO”), such that applications will increase from 1 million in 2010 to 2 million per year.[i]  According to SIPO’s “National Patent Development Strategy (2011-2020)” (the “Patent Strategy”), “China will rank among the top two in the world in terms of the annual number of patents for inventions.”[ii]  The Chinese government also expects that “the number of overseas patent applications filed by Chinese entities and individuals will double.”[iii]  However, this ambitious plan cannot relieve concerns about the quality of Chinese innovation.  The basis for these concerns is that “the vast majority of these applications are for utility model patents that merely undergo a preliminary examination for formalities rather than substance—a concept that does not exist in the US.”[iv]  According to a Shanghai-based patent attorney quoted by the Economist: “Patents are easy to file but gems are hard to find in a mountain of junk.”[v]
Continue Reading Recent Proposed Amendments to China’s Patent Law: Will it help to improve the enforceability of patents in China?

By Richard W. Wigley  King & Wood Mallesons’ IP Litigation Group

wigley_richardThe framework for variants of class action-type litigation in the People’s Republic of China has been in place since the initial promulgation of the Civil Procedure Law of the P.R.C. (“CPL”) in 1991. The amended CPL provides requirements for filing a “joint litigation” for suits where “the object of the action is of the same category and a party consists of numerous persons” and where the parties may choose to elect a representative.[1] Further as to whether standing is afforded the plaintiff and the filing requirements for such litigation, the CPL provides that “[t]he plaintiff must be a citizen, legal person, or an organization having a direct interest with the case … there must be a specific defendant … [and] there must be a specific claim and a specific factual basis and grounds ….”[2] In short, the CPL provides a framework which allows for what is a variation of what is commonly referred to as a “class action lawsuit”.
Continue Reading Class Action-type Litigation in China

By Mark Schaub and Ray Black King & Wood Mallesons’ FDI Group

More than any other country,China has greatly benefitted from globalization. In the last 25 years China has risen to become the world’s workshop and a manufacturing giant.

However, there has been a small country that has undergone its own transformation in recent decades. Israel, a country in a “challenging” neighbourhood with a very limited domestic market, has become a technology innovation powerhouse. Indeed Google Chairman Eric Schmidt considers that “Israel has the most important high-tech centre in the world after the US.”

These two very different yet very complimentary countries are likely to find great scope for collaboration in the coming decades. They are certainly now looking for it.
Continue Reading Start Up Nation meets Buy Up Nation: How Israel can Play a Major Role in Making China an Innovation Giant

Susan Ning and Yin Ranran

Recently, the Ministry of Commerce (MOFCOM) announced that its Anti-monopoly Bureau is to put up a signboard for the "Office of State Council’s Anti-Monopoly Commission (AMC)".  According to Mr. Yao Jian, a spokesman for MOFCOM, the State Council has approved the formal establishment of the AMC Office (even though the AMC Office has been operational within MOFCOM since the enactment of the Anti-Monopoly Law (AML) in 2008).  

As the third anniversary of the AML draws near, Mr. Yao expects that this move will further enhance effective enforcement of the AML and the coordination among the various ministries under the AMC.

Continue Reading Formal Establishment of Anti-Monopoly Commission Office within MOFCOM Approved

By Susan Ning, Chai Zhifeng and Angie Ng

On June 2, 2011, Ministry of Commerce (MOFCOM) publicly announced the first conditional merger clearance in 2011. At its [2011] No. 33 Announcement, MOFCOM cleared Uralkali’s proposed acquisition of Silvinit (the Parties) (both potash producers based in Russia) with conditions.  This is the 7th conditional merger clearance since the enactment of the Anti-monopoly Law (AML) in 2008.   MOFCOM is obliged by statute to publish conditional clearances. 

The following are the salient points to note vis-à-vis this conditional clearance:

Continue Reading The Russian Potash Deal – first conditional clearance of 2011

By Susan Ning, Yin Ranran, Huang Jing

There have been concerns about Chinese government’s foreign investment policy ever since the State Council announced the formal establishment of the national security review ("NSR") regime in China.  At a press conference of the Fourth Session of the 11th National People’s Congress held on March 7, 2011, China’s Minister of Commerce Chen Deming reiterated that China’s "opening-up" policy will remain unchanged.  According to Chen, whereas China is in the process of further opening up to the world, introducing the NSR regime ensures that national security concerns will be addressed in a transparent manner and it is in line with international practice. 

The NSR regime is not particular to China.  The United States first instituted the NSR process in the 1980s.  Other jurisdictions, such as Australia, Germany, Canada, also have similar processes (see our article entitled More on China’s national security review regime – the American regime vs the Chinese regime).  Through our research, we find that during the past few years, the following contemplated outbound investments by Chinese companies underwent the NSR process:

Continue Reading List of Outbound Investments by Chinese Companies Scrutinized for National Security Concerns

By Yuan Min, Wang Jianzhao , and Kirby Carder, King & Wood Insurance Department, Beijing Office

Last Sunday during a press conference held during the National People’s Congress, China Insurance Regulatory Commission (CIRC) Chairman Wu Dingfu announced that the CIRC is currently creating its policy for the use of insurance premium funds to invest government subsidized affordable housing projects. He specifically stated that China does not have a legal barrier to insurance companies investing insurance funds in affordable housing projects, and he also said that the CIRC plans making Shanghai the first city where this is possible. However, he cautioned that the main priority in insurance fund investment must still be risk management because any investments must provide a return so that an insurance company’s duty to pay its policyholders claims can be met.

Continue Reading The China Insurance Regulatory Commission has Announced that it will Pilot Allowing Insurance Funds to Invested in Affordable Housing Development Projects in Shanghai