Subject: CHINA IMP/EXP NEWS (940801)

From: [email-masked] (Cheng Wang)
Date: Mon, 1 Aug 94 23:06:24 CDT

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		    AUGUEST 1  1994     (CN940801)

		      (TODAY'S CHINA MARKET)

               	BUSINESS   LAW   AND   LAW   FIRMS        

CONTENTS                                                          LINES
========================================================================

EDITOR'S NOTES: ............................................... 50 lines

THE UBAN REAL ESTATE MANAGEMENT LAW SET TO PROTECT FARMLAND ... 34 lines

SHANGHAI CHECKS FAKE, SHODDY IMPORTED PRODUCTS ................ 44 lines

FEDERAL LAWS ON "MADE IN THE U.S.A." LABELING ................ 176 lines

AMERICAN LAW FIRMS IN CHINA .................................. 222 lines
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           NEXT ISSUE: INFORMATION SUPERHIGHWAY IN CHINA
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EDITOR'S NOTES: .............................................. 50 lines

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THE UBAN REAL ESTATE MANAGEMENT LAW SET TO PROTECT FARMLAND ... 34 lines

========================================================================

   Beijing, july 16 (CBJ) -- The state land administration is
preparing to implement china's first real estate law, which will
restrict sales of arable land, "china daily" reported.
   The urban real estate management law, which is going into
effect next year, will regulate the land and property market,
officials with the state land administration said.
   They hope that a well-regulated land market will enable
investors to compete in a fair and open way.
   The law will also protect the country's finite arable land
resources. it will help regulate and solve problems which have
arisen in the fledgeling land market.
   The state land administration and its local agencies will be
expected to help publicize the law and be ready to implement its
provisions.
   According to the officials, top priority will be given to
drafting and perfecting a national land distribution scheme, which
will approve land to be used for various projects.
   A proposal for marketing part of the country's urban land will
also be put forward soon.
   The officials urged agencies under the state land
administration to estimate and publicize nominal, standard and
official land prices.
   During the rest of the year the state land administration will
work out a land evaluation system and a register for authorized
surveyors.
   Large stretches of state-owned land have been sold to
developers for little profits.
   The officials called on local agencies to develop their systems
for recording the transfer of state-owned land sold or leased in
the market.           

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SHANGHAI CHECKS FAKE, SHODDY IMPORTED PRODUCTS ................ 44 lines

============================================================================

   Shanghai, july 16 (CBJ) -- Shanghai's market is spoilt by
fake and shoddy imported consumer products, a survey conducted by
the local authorities declared here yesterday.
   During recent years the market for imported consumer products
has been expanding and there is a great diversity in  dealers and
channels of importing the products, according to wu shiliang,
vice-director of the shanghai bureau for the inspection of import
and export commodities.
   During may and july this year, commodities inspection and
commercial and industrial departments in shanghai jointly
conducted an inspection of imported color televisions,
air-conditioners, milk powder, canned food and chocolate.
   Of 17 imported color televisions examined, seven had rather
serious problems, of which three were fake or shoddy products and
four were assembled in china.
   Of 12 air-conditioners, only two were qualified in all
functions. eight have defects in terms of safety. of the other
two, one was second-hand and the other had no fan.
   Of 130 kinds of milk powder made in 12 countries and regions,
68.3 percent were qualified in terms of production dates,
preservation period, packages and edibleness.
   The qualification rate for nine brands of canned food made in
seven countries and regions was 89.3 percent.
   Of 12 varieties of chocolate, 97.5 percent were qualified.
   Commercial departments found that some of the fake and shoddy
products were directly imported from overseas, some were repaired
or old foreign machines or assembled with spare parts and some
were assembled with imported parts in china carrying famous brands.
   Officials said that they will check all the possible channels
of importation and production of shoddy goods and deal with
concerned cases according to laws and regulations.     

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FEDERAL LAWS ON "MADE IN THE U.S.A." LABELING ............... 176 lines

============================================================================

The views expressed are those of the author and do not necessarily
reflect the views of any department or agency of the Federal
Government.

I.   Article 5 of the Federal Trade Commission Act, 15 U.S.C.   45

          The Federal Trade Commission Act is a consumer protection
          statute whereby any false or misleading representations
          as to the origin of a commodity constitutes an unfair or
          deceptive practice in commerce.

          The rationale for the rules stem from the belief that the
          public sometimes prefers domestic over foreign products
          and will assume a product is of domestic origin unless
          stated otherwise.  Consequently, the public is deceived
          if not informed of foreign origin.

II.  Customs vs. FTC Jurisdiction

          Customs has jurisdiction over foreign articles entering
          the U.S. customs territory.  Customs determines origin
          (and whether the good is properly labeled) under the
          substantial transformation rule and other judicial and
          administratively created rules.

          The FTC then has jurisdiction over the proper labeling of
          goods that have undergone substantial transformation in
          the United States pursuant to the rules set out below.

III. FTC Practice

          No statutes or regulations govern specific labeling
          requirements with regard to FTC labeling requirements
          (with certain exceptions referenced below).  FTC practice
          is completely administrative (advisory & staff opinions).
          For purposes of determining if a product may be labeled
          "made in the U.S.A." or an equivalent expression, the FTC
          employs the following cost analysis:

          1.   100% U.S. - If the product is 100% U.S. parts and
               labor, it may be labeled as "Made in the U.S.A." or
               any equivalent expression.

          2.   100% Foreign - If the product is entirely of
               foreign origin it must be labeled with a foreign
               country of origin label pursuant to Customs
               jurisdiction.

          3.   50% or More U.S. - If more than 50% of the value of
               the product (parts plus labor) is U.S., the
               manufacturer may:

               (i) remain completely silent about country of
               origin (thereby not deceiving the public); or

               (ii) provide an accurate disclosure of foreign
                    component parts, i.e., "Made in the U.S.A. of
                    American and X country component parts".

               [in other words, if less than 50% of the value is
               foreign, it is not considered to be deceptive to
               remain silent, but if disclose anything, must
               disclose it all.]

          4.   50% or More Foreign - If more than 50% of the value
               of the product is foreign, the manufacturer must
               accurately disclose the foreign component parts
               "Made in U.S.A. of American, Taiwanese and Chinese
               parts".

          5.   50%-50% Split - No advisory opinion has been issued
               regarding a 50%-50% split of U.S. and foreign
               value.  According to the FTC, given the nature of a
               complete cost breakdown (parts plus labor), it is
               unlikely that an exact 50-50 split would occur.

IV.  Enforcement

     1.   Federal Trade Commission Act - Pursuant to Article 5 of
          the FTC Act, the FTC may issue a cease and desist order
          requiring a person using unfair or deceptive acts or
          practices in commerce to cease and desist from using such
          act or practice found to be unlawful.  Such order is
          subject to review by the U.S. Court of Appeals.  If a
          person violates a final order by the Commission, a fine
          not to exceed $10,000 for each violation may be levied.

     2.   Lanham Trade Mark Act, 15 U.S.C.   1125 (1993)

     --   Provides a private right of action against another
          private party for false declaration of origin or any
          false description or representation with regard to goods
          entering commerce if it is likely to cause confusion or
          to deceive purchasers into believing that the source of
          origin of goods is another.  This does not merely refer
          to geographical origin but also to origin of source of
          manufacture.

     --   Statute provides for civil action by any person that
          believes that he or she is likely to be damaged by such
          act.

     --   The purpose of the provision is to prevent unfair
          competition by enabling producers to differentiate their
          products from those of others and to protect consumers
          against deceptive designations of origin of goods.

V.   Special Rules

     1.   The Federal Trade Commission also regulates several
          specific labeling acts:

     a.   The Wool Products Labeling Act of 1939, 16 C.F.R.
          300.1-300.35, generally requires that all wool products
          bear a label indicating: the percentage of the total
          fiber weight of the wool product of wool, recycled wool,
          each fiber other than wool, and the aggregate of all
          other fibers of the product.  The label must also
          indicate the maximum percentage of the total weight of
          the wool product, of any nonfibirous loading, filling or
          adulterating matter.  Moreover, the Label must include
          the identification of the manufacturer.  Additionally,
          the label must include the name of the country where the
          wool product was processed or manufactured, including if
          processed or manufactured in the United States (if the
          product is advertised in mail order promotional
          material).

     b.   The Fur Products Labeling Act, 16 C.F.R.    301.1-301.49,
          generally requires that all fur products bear a label
          indicating: the name(s) of the animal(s) that produced
          the fur; that used fur is present in the product if such
          is the case; that the fur product was artificially
          colored, if such is the case; that the product is
          composed of tails, paws, bellies or waste fur, if such is
          the case; the name of the manufacturer; and the name of
          the country of origin of imported fur used in the
          product.

     c.   The Textile Fiber Products Identification Act, 16 C.F.R.
             303-303.14, generally requires that all textile
          products bear a label indicating: the name of the
          constituent fiber or combination of fibers in the textile
          product; the percentage of each fiber present, by weight;
          the name of the manufacturer; and the name of the country
          where the product was processed or manufactured,
          including if processed or manufactured in the United
          States.

     2.   American Automobile Labeling Act, 15 U.S.C.   1950
          (1993), regulated by the Department of Transportation
          provides new labeling requirements for passenger
          automobiles for sale in the U.S.  Labels must indicate
          the percentage of equipment originating in the U.S. and
          Canada, the names of at least two foreign countries
          contributing the greatest value of parts, as well as the
          country of origin of the engine, the transmission.

Allyson L. Senie
Office of the Chief Counsel for International Commerce
May 1994

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AMERICAN LAW FIRMS IN CHINA ................................. 222 lines

=========================================================================

07 JUL 94

1.  summary and introduction:  american law firms were among the first
to set up informally when the people's republic of china first opened
its doors to foreign investment in 1989.  in july 1992, the chinese
ministry of justice, jointly with the state administration of industry
and commerce, issued interim provisions on the establishment by law
firms of offices in china.  according to a ministry of justice name
list provided fcs beijing, at present some 41 foreign law firms are
registered in china, eight of which are american firms.

2.  among other issues of concern, american law firms would like to be
able officially to open offices in more than one city, hire chinese
lawyers and form joint ventures with their chinese colleagues.
ultimately they would like to be able to qualify to practice chinese
law with no restrictions.  end summary and introduction.

regulation of foreign lawyers
-----------------------------

3.  under chinese law, only chinese citizens can qualify to become
lawyers.  nonetheless, in july 1992 the ministry of justice, jointly
with the state administration for industry and commerce (saic), which
is china's registration authority, issued the interim provisions on the
establishment by foreign law firms of offices in china.   as of the end
of june 1994, 41 foreign law firms had offices registered in beijing
(19), shanghai (10), guangzhou (nine), shenzhen (two) and haikou
(one).  of these, eight are american firms (six in beijing, one in
shanghai, and one in guangzhou).

4.  only law firms that have been approved by the ministry of justice
(moj) and registered with the saic are to open offices in china.  the
approval and business license are given for a term of five years, which
may be extended.  moj approval will take into consideration whether the
applicant's home country permits chinese law firms to operate there.
law firms are not allowed to provide legal services under the guise of
a consultancy or commercial company or other form of business.

5.  the provisions permit foreign lawyers to provide opinions on
international law and the law of the firm's home jurisdiction (or
wherever its lawyers are authorized to practice law), handle legal
matters abroad on behalf of its clients or under mandate from a chinese
law firm, and retain chinese lawyers to work in china on behalf of
their foreign clients.  under the rules of the china international
economic and trade arbitration commission (cietac), foreign lawyers can
also represent clients in arbitration proceedings in china.

6.  foreign lawyers cannot, under the provisions, handle chinese legal
affairs, which prohibition includes appearing in chinese courts;
interpret chinese law to their clients; or hire chinese lawyers to work
for them (unless those lawyers give up their licenses to practice
chinese law).  in addition, under current practice foreign lawyers
cannot form joint ventures with chinese law firms or join the chinese
bar.  they also reportedly cannot open more than one office in china,
although they can accept business from anywhere in china.  the rule on
multiple offices is not spelled out in the provisions, and many foreign
law firms continue to maintain offices that predate the provisions in
more than one city.

7.  despite the restrictions, as a practical matter, foreign lawyers
can be quite helpful in setting up investment projects, drafting
contracts, and providing advice and assistance short of giving formal
legal opinions and appearing in court.

8.  registered foreign law firms are to settle accounts in china for
legal services provided in china, and provide annual reports on their
professional activities, income and expenses, taxation and other
matters to the local department or bureau of justice.

modest liberalization in the works
----------------------------------

9.  a ministry of justice official recently announced that the state
council was ready to approve up to 100 foreign law firms, up from the
current number of 41.  he commented that the "experiment" of allowing
foreign law firms in china has been a success, as these firms play an
active role in helping more foreign investors enter the chinese market,
promoting chinese-foreign cooperation and training chinese lawyers.

10.  that official also revealed that foreign law firms will be
permitted to open in more coastal cities and provincial capitals, other
than the currently allowable five cities of beijing, shanghai,
guangzhou, shenzhen and haikou.

issues of concern
-----------------

11.  among the issues most of concern to u.s. law firms with offices in
china are the following:

--  the ability to hire chinese lawyers licensed to
practice in china
--  the authority to form joint ventures or partnerships
with chinese lawyers or law firms
--  the right to sit for the chinese bar exam and qualify
as china-licensed lawyers (as chinese lawyers have the
right to qualify to practice law in the united states by
sitting for a state bar exam and meeting minimum
educational and "character" requirements)
--  the authority to advise clients informally on chinese
law (i.e., making clear they cannot issue formal legal
opinions or appear in chinese courts unless licensed as
chinese lawyers)
--  the right to open offices in more than one city, and
in any city of their choice

12.  other issues of concern include burdensome reporting requirements
and unreasonable fees charged for administrative requirements, lack of
transparency in the legal system and the requirement to hire local
employees through designated labor service units such as beijing's
fesco.

list of american law firms in china
-----------------------------------

13.  below is a list of american law firms that appear on the moj list
as being approved to have offices in china.

--  baker and mckenzie
beijing office
world trade tower #1504
1 jianguomenwai dajie
beijing 100004
michael moser  (chief representative)
tel: (86-1) 5050591/5050592
jon eichelberger/michael
aldrich/paul mckenzie
fax: (86-1) 5052309
guangzhou office
suite 427, china hotel, liu hua road
guangzhou, guangdong
david ho  (chief representative)
tel: (86-20) 6665959; 6666888 ext. 427
fax: (86-20) 6665950

--  becker and poliakoff, p.a.
guangzhou office
suite 1506, north tower
guangzhou world trade center
371-375 huanshi east road
guangzhou
michael x. zhang, manager
tel: (86-20) 775-7708
fax: (86-20) 777-9738

--  coudert brothers
beijing office
jing guang centre #2708-09
hujialou, chaoang district
beijing 10000
bruce schulbert (chief representative)
tel: (86-1) 5012851-52
philip critten/tao jianzhou/zhu ming
tel: (86-1) 5012851-52
fax: (86-1) 5012856
shanghai office
room 1804, union building, 100 yanan dong lu
shanghai 200002
tel: (86-21) 365800/3201697
fax: (86-21)  3200203

--  davis wright tremaine
shanghai office
room 1008, 1009, jingjiang hotel
59 mao wing nan road, shanghai 200002
j.h. jerry zhu (attorney-at-law)
tel: (86-21) 2582582, room 1008, 1009
fax: (86-21) 472-3344

--  grham and james
beijing office
citic building #1903, 19 jianguomenwai dajie
beijing 100004
liu fengming (chief representative)
tel: (86-1) 5002255 x 3564
fax: (86-1) 5002557

--  hong, fr
edrick w. law offices
guangzhou office
room 721, garden hotel tower
368 huanshi dong lu, guangzhou 510064
frederick hong (attorney-at-law)
tel: (86-20) 3338999, ext. 721
fax: (86-20) 3841625

--  paragon law offices
beijing office
international club #116, beijing 100020
donald paragon (chief representative)
tel: (86-1) 5325238
fax: (86-1) 5325238

--  paul, weiss, rifkind, wharton and garrison
beijing office
scite tower #1910
22 jianguomenwai dajie
beijing 100004
helen kolenda  (chief representative)/nicholas c.
howson
tel: (86-1) 5123628/5123629-30
fax: (86-1) 5123631

--  shearman and sterling
beijing office
capital mansion #2205,
n0.6 xin yuan nan road
chao yang district
beijing 100040
hong liu  (chief representative)
tel: (86-1) 4654574/4654575/4660088-2205
fax: (86-1) 4654578

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