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By Xia Dongxia and Yang Ting King & Wood Mallesons’ Dispute Resolution Group
 

The Interpretation of the Supreme People’s Court on Issues Concerning the Application of Law for Hearing Cases of Sale and Purchase Contract Related Disputes (the “2012 Interpretation”) was promulgated on June 5, 2012, and came into effect on July 1, 2012. The 2012 Interpretation, which includes eight sections and forty-six articles, explicitly regulates the establishment and validity of sale and purchase contracts, delivery and transfer of title, risk allocation, inspection and acceptance of subject matter, liability for breach, retention of title, and special sale and purchase contracts. The 2012 Interpretation clarifies several ambiguous issues in judicial practice, and also supplements the PRC Contract Law[i](the “Contract Law”).

This article summarizes the main content of the 2012 Interpretation.

[i] The PRC Contract Law was adopted at the Second Session of the Ninth National People’s Congress on March 15, 1999, and became effective as of October 1, 1999.

Continue Reading Understanding and Clarification–China’s New Judicial Interpretation of Contract Law

 By Susan Ning,Hazel YIN,and Han WU 

On 13 August 2012, the Ministry of Commerce (“MOFCOM”) approved Wal-Mart Stores Inc(“Wal-Mart”)’s proposed acquisition of 33.6% share of Niu Hai Holdings (“Niu Hai”),which enables Wal-Mart to have a controllin stake in the online direct sales business of Yihaodian, the largest e-supermarket in China.1 The approval is not without conditions,though.It is the fifth conditional merger clearance decision (“Decision”)MOFCOM issued in 2012 and the first conditional clearance relating to the online retail sector.
 Review Process
 
 MOFCOM received notification of the transaction on 16 December 2011 and officially accepted it on 16 February 2012.
Continue Reading MOFCOM Approved Wal-Mart’s Acquisition of Controlling Stake in Yihaodian but Said NO to VIE Structure

By Susan Ning, Sun Yiming and Kate Peng

On the International Symposium on Controversial Issues regarding Chinese AML Enforcement held in Hangzhou on Monday this week, both the National Development and Reform Commission (“NDRC”) and the State Administration for Industry and Commerce (“SAIC”) announced that they will increase the transparency of their enforcement actions under the AML. 

NDRC and SAIC are the regulators for anti-monopoly conducts in China. The powers are divided between the two authorities in the way that NDRC is responsible for price-related monopoly conducts, and SAIC is responsible for non-price related monopoly conducts.Continue Reading Chinese Antitrust Regulators Vow to Increase Transparency

By Tony Dong and Philip Liu King & Wood Mallesons’ Tax Group

Technology innovation is the engine that will drive the 21st century economy. With growing economic demand for core technologies from Chinese enterprises, recent years have witnessed the robust development of Intellectual Properties (“IP”) transactions in China, in which tax issues are often important elements to consider when structuring IP transactions, especially for the IP transfers carried out in the context of IPOs, mergers, acquisitions, or investment projects. We will discuss in the article the major PRC tax considerations for IP transfers, especially for cross-border IP transactions, with a view to achieve tax optimization and ensure tax compliance for such transactions.

 I .Tax Cost of IP Transfers
Continue Reading Tax Considerations for IP Transfer

By Monique Carroll, Huang Tao King & Wood Mallesons’ Dispute Resolution Group

‘Political risk’ in foreign investment is the risk that an investment will be adversely affected by a host country’s political or regulatory decisions. These political or regulatory decisions might result in unfavorable tax legislation, revocation of a business license or, nationalization or ‘expropriation’ of an investment by, for example, the direct or indirect taking of control over the investment by the government. For instance, earlier this year the Argentinean Government announced that it would assume ownership and control of YPF, Argentina’s biggest energy company. At the time, YPF was privately and partly foreign owned and controlled.  

Foreign investors can take steps to minimize exposure to political risk. These steps include structuring the foreign investment so that it falls within the protections provided by an investment treaty to which the host country is a party.
Continue Reading Arbitration as A Tool to Manage Political Risk in Foreign Investment

By Chen Changhui and Jiang Zhipei King & Wood Mallesons’ IP Legal  Group

For decades, more and more Chinese overseas students and experienced employees in foreign enterprises have been flocking to domestic enterprises. In some cases, these employees have successfully developed products, that had been monopolized by enterprises in western countries in the name of trade secrets. Thus, Chinese enterprises are highly vulnerable to allegations by transnational enterprises of trade secret infringement. For Chinese enterprises, how to avoid falling into the pitfall of trade secret infringement and relevant legal risks, is the more immediate issue.

A trade secret falls within the protective scope of intellectual property (“IP”) laws. It refers to technical or business information which is not generally known to the public, but which has utility and can bring economic benefits to the right holder; the right holder must also have taken security measures to keep the information secret.
Continue Reading Coping Mechanisms for Trade Secret Infringement in Outbound Investment

By Susan Ning and Hazel Yin

August 1, 2012 marks the fourth anniversary of China’s Anti-Monopoly Law (“AML”). 1 With only 57 articles, the AML introduces a series of new regimes governing not only transactions but also day-to-day operations of domestic and foreign companies.  This article presents an overview of how the AML has been implemented so far, with particular focus on the latest development, and where it may go in the near future.   

Merger Control

The Ministry of Commerce (“MOFCOM”) is responsible for reviewing concentration of undertakings that trigger a certain turnover thresholds. 
Continue Reading China’s Anti-Monopoly Law: Retrospect and Prospect on the Fourth Anniversary

By Zhang Yi, Alan Du and Hu Xia King & Wood Mallesons’ Securities Group Shanghai Office

In the April, 2012, it was reported by various media sources that the National Development Reform Commission (NDRC) had issued certain policies requiring that an RMB fund (the “FIE GP Fund”) with a foreign invested enterprise (FIE) acting as the general partner (the “FIE GP“) and domestic investors (exclusive of FIEs established in China) acting as limited partners be regarded as a foreign investor. Being defined as a foreign investor means that the portfolio investments of such a FIE GP Fund shall be subject to foreign investment approvals, which are read by the public as referring to approvals from the Ministry of Commerce or its local counterparts(MOFCOM).
Continue Reading NDRC Reply on RMB Fund with FIE GP

By Dang Zhe and Jiang Zhipei King & Wood Mallesons’IP Litigation Group

This spring has witnessed several important moves in copyright law related legislation in China. On March 31, the National Copyright Administration issued the draft of the PRC Copyright Law (Revised Draft) (the “Draft”)to gauge public opinion. Indeed the articles on copyright liability for ISPs caused heated discussion. On April 22, the Supreme People’s Court, in a similar attempt to gauge public opinion, issued the exposure draft of the Regulation of the Supreme People’s Court on Several Issues Concerning the Application of Law Involving Civil Disputes over Cases of Information Network Dissemination Right Infringement (Exposure Draft) (the “Exposure Draft”), which contains more comprehensive and specific provisions on the copyright infringement liability of Internet Service Providers (“ISPs”). Although these two documents are not in force yet, they can be assessed to better understand the legislative and judicial intent of the national copyright administration and the highest judicial organ on the copyright related legal liability for ISPs.
Continue Reading New Trends in Legislation on the Adjudication for Copyright Related Legal Liability for Internet Service Providers

By Harry Liu & Sam Li  King & Wood Mallesons’ Dispute Resolution  Group,  Shang Hai office

The Hemline Index, presented by American economist George Taylor in 1926, suggests that the hemlines on women’s skirts and dresses rise and fall with the rise and fall of the economy. Under this theory, the popularity of short hemlines coincides with a booming economy, but in bad times, long skirts and dresses show the modesty that bad economic times seem to require. However, assorted 2009 fashion weeks did not really reflect staying power of this economic theory. Only a few top luxury brands had ankle-length skirts in their fashion lines. This lack of modesty in the face of the recent recession probably has more to do with the fact that the clothes were designed one season before the weight of the recession had come to bear. Yet, even with fashion not reflecting the angst of the economy, people are seriously concerned about how the world will face this economic downturn.[1]
Continue Reading How Luxury Brands Can Cooperate with Agents to Protect Their Rights