Six years ago, InsideCounsel provided readers with a comprehensive legal guide designed to offer insight to companies about best practices when considering expanding their businesses into China’s burgeoning marketplace. We reported on the workings of the country’s court system, its outlook on intellectual property, its stance on environmental law, its evolving labor laws and more.
There’s no mystery about why it’s important for corporations to establish themselves in China.
“Any company that wants to be global has to be in China,” says Lee Cheng, chief legal officer at Newegg Inc., an online retailer of IT and consumer-electronic products that does business in China. “It’s the fastest-growing market in the world and the world’s second-largest economy. It’s potentially going to be the biggest economy in the world within two to three decades.”
Although China operates under a civil law system and therefore isn’t bound by stare decisis—or the rule that lower courts must rely on judicial precedent when deciding cases with similar issues—changes to the country’s court system indicate a move toward ensuring more uniform decision-
making among courts.
On Nov. 26, 2010, the Supreme People’s Court of China (SPC) promulgated the “Provisions on Work Related to Guiding Cases.”
A country long known for its manufacturing, China has been trying to move from “Made in China” to “Designed in China” by promoting indigenous innovation. China hopes to increase the number of patent applications filed in the country to 2 million by 2015, even though it already had the most patent applications in the world in 2011—1.63 million.
To reach this lofty goal, the government supports tweaking foreign technology, defining indigenous innovation in its science and technology development plan as “enhancing original innovation through co-innovation and re-innovation based on the assimilation of imported technologies.”
Despite recurring media reports of poor working conditions in China at places such as electronics manufacturing giant Foxconn’s factories, experts say that Chinese worker rights have been steadily improving over the past six years. While labor rights activists may not yet be satisfied, Ricardo Ernst, a professor of global logistics at Georgetown University, says progress in China should not be measured against another country’s standard.
“It’s not a fair comparison to say that the working conditions in the U.S. are the same as the working conditions that they [should] have in any and every other place around the world,” Ernst says. “Every place has its own working conditions, and that’s why you need to evaluate in light of what the local conditions are.”