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If A equals success, then the formula is: A = X + Y + Z. X is work. Y is play. Z is keep your mouth shut.” Albert Einstein.

“By working faithfully eight hours a day you may eventually get to be boss and work twelve hours a day.” Robert Frost

Our firm helps aspiring business owners turn ideas into viable business opportunities. We accomplish this by seeking on-going relationships with our clients, advising clients on a variety of business formation issues, and routinely helping clients throughout the course of their business. China Law Blog often takes preventive steps on our clients' behalf to ensure their interests are fully protected.

If you are interested in learning how a lawyer from our firm can help you reach your business formation goals, contact our firm to arrange a consultation. At China Law Blog, we give clients honest assessments regarding attorneys' fees. We also offer evening and Saturday hours to accommodate busy schedules.

Advising New Business Owners on Choice of Entity
Our firm advises new and aspiring business owners on the legal, financial, and contractual issues related to starting a business. We advise clients during the process of choosing an entity such as LLC, corporation, S corporation, non-profit, partnership, and LLC. Determining the appropriate entity under which a business should operate will be based on a variety of factors. We ask clients questions such as the following:

l       Who are the owners?
l       Who will be the members and the managers?
l       Who will be the directors?
l       What are the business's liability limits?
l       Where will you be doing business?
l       With whom will you be doing business?

Depending on the entity chosen, we help clients with other legal aspects of business formation including:

l       State Employer Identification Numbers
l       Shareholder agreements
l       Operating agreements
l       By-laws
l       Employment agreements
l       Employee manual
l       Severance agreements
l       Acquiring Commercial Property

If you are interested in buying commercial property for your new business, China Law Blog can help. We offer experienced representation during the process of acquiring land, offering a full range of services before, during, and after closing.

Our firm also advises clients during on-going business operations including business transactions and business succession planning. We also serve as registered agents for businesses.Contact our firm to arrange a consultation to discuss business formation.

The situation where founders contributing different amounts of capital in a China company law issue

Ihave come across a difficult legal problem (at least one I have not yet had the fortune [or misfortune] of encountering in my still-young career). You always face difficult situations even  you are experienced China lawyer, trust me!

There are 5 founders of a company, a just incorporated China type Limited Liability-corp; four are going to be working on the company, while the fifth is essentially the "money" guy. He has agreed to invest significantly more cash than the other founders, and as far as I understand, aside from advice/expertise/contacts, isn't going to be as active in day-to-day operations as the other founders.


Different types of companies in China

As China corporate lawyer, we share following rules and regulation about China business organization laws with you. China’s Company Law recognizes two types of companies.

Limited Liability Company

This type of entity requires a minimum capital of RMB 30,000 with less than 50 shareholders.

The capital can be in the form of cash, industrial property or land use rights.

Company Limited by Shares

This type of entity is to be set up by promotion or share offer with a minimum share capital of RMB 5 million. For incorporation, no less than two promoters are required. Establishment by share offer is subject to the approval of China’s securities regulator.

Foreign Investment Entities

Foreign investors are allowed to set up the following types of business entities:

1. Cooperative Joint Venture (CJV)

A CJV has the option to register as a legal person with limited liability. The parties in a CJV have the flexibility of choosing whether to operate the enterprise as a limited liability company or to operate it as an unincorporated entity under which partners bear unlimited liability. The profits of a CJV are allowed to be shared by participants as specified in the joint venture contract, and not necessarily in proportion to their capital contribution. As a result, this type of venture is ideal when the foreign investor is only looking for a short-term project. After obtaining a fair or premium return on investment, the foreign investor returns the majority or full ownership of the enterprise to the Chinese partner.
•A cooperative venture does not require a new business licence if it is arranged in contractual form under the auspices of an existing joint venture enterprise.
•There are no expiry periods or limitations on the length of the venture. The contractual terms can be renewed at any time and for any extended period, subject to the approval of the government.
•Investment contributions from each party are not limited to financial capital but may also include non-financial assets such as intellectual property rights, buildings, materials or machinery.
•Transfer or withdrawal of investments is not subject to the approval of the government. Foreign investors can deploy their registered capital as they see fit.


China Manufacturing Agreement, China Manufacture Contract Drafting

Compared to domestic transactions, the risks associated with international sales are greatly multiplied. It is a rare international sales agreement that can rely on minor variations of standard terms, as is so often the case in domestic agreements. Especially when you are to sign a manufacturing agreement or manufacturing contract with a Chinese factory or manufacturer, it's essential to draft a very good manufacturing contract to protect your interest in case any dispute arise out of the transaction. Our China contract lawyer's assistance is vital for your success when you are doing business in China.

Foreign laws, export/import and currency exchange controls, treaties, transit issues, inspection of goods, insurance, tariffs—all these and more must be taken into account in contract negotiations.

We incorporate hundreds of model clauses designed to cover every contingency, including such factors as the following (and a great deal more), which are the essential terms and conditions should be included in a China manufacturing agreement:

  • definitions;
  • Incoterms;
  • price adjustments;
  • documentation;
  • labelling;
  • delivery dates;
  • transportation modes;
  • limitation of liability;
  • confidentiality;
  • arbitration; and
  • antitrust issues.

As an experienced attorney, John Miller have gradually developed a list of 60 practical contract-drafting tips. As a refresher, he routinely refer to my tip-sheet (as well as other checklists) just before he draft a contract. Additionally, he uses this list (as well as other checklists) when he review someone else’s contract. I think his advice is very helpful.


Tips of Contract Manufacturing or License Manufacturing from China Commercial Lawyer

When a hiring firm wishes to have a product manufactured they often seek outside Chinese manufacturers. This is known as contract manufacturing. As experienced Chinese lawyer, we extensively assist our foreign clients find Chinese manufacturers. We summarized the opinion we gave to our clients and we hope these tips will help you along the way doing business with Chinese partner. However, please keep in mind these tips are not supplement of our China commercial lawyer's professional service. You are highly recommended to consult us before you make your business decision in China.

The contract manufacturer takes the components or the complete product design and produces the product for the hiring company. This is done to help minimize cost and usually is more efficient in a production standpoint for a company wishing to quickly develop a product and move it to market. This allows the hiring firm to continue to design products for the product life cycle without having to assume the overhead cost of a manufacturing plant. This can be a tricky process because the hiring firm must quickly and correctly choose a contract manufacturer that is a good fit to develop and produce their product. Failure to do this correctly can have catastrophic results. Here are 7 tips for firms wishing to use contract manufacturing-

1. Ask questions to gauge the contract manufacturing firm's reliability. The hiring company needs to determine whether a prospective manufacturer offers quality service, on-time delivery and quick attention to problems. This may require a bit of homework. Ask for referrals from other customers. The hiring company can also gain further clues about a potential candidate from data on its size, past clientele and financial history. All of these should indicate that a company is in the business for the long haul.


China Contract Manufacturing - China Business Lawyer's Tips

Contract manufacturing or OEM manufacturing in China refer to the production of goods by one firm, under the label or brand of another firm in China. As China is the universal factory, many business owners select China partners as their manufacturer. As experience China contract law and business lawyer, we have extensive experience in helping clients screening Chinese manufacturers and verifying the legitimacy of the Chinese suppliers. Contract manufacturers provide such service to several (even competing) firms based on their own or the customers' designs, formulas, and/or specifications. Also called private label manufacturing.

Are you in the search for a company that can provide you with contract manufacturing services? Do you have temporary manufacturing needs that need to be answered promptly? Do you lack the human resource for this task? If you have answered yes to any of the above questions, then it would be great news to say that there are groups and organizations which can do your needed service for reasonable prices.

Here are some useful tips that you can consider when searching for contract manufacturing outsourcing company:

1. Choose a company which can prove excellent track record.

Whenever you need to get a job done, it always pays to find someone who can do it and has a track record to speak of. You would not want a job to fail or to fall below your expectations. Wanting to spend within budget is never enough reason t get below standard output. If you want to look for an outsourcing company which can answer to your business’ temporary needs, then find a group that has proven itself in terms of quality work output and reliability.

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I am a licensed China lawyer. Most clients are foreign nationals and companies. China Lawyer Blog have associates in Beijing, Shanghai, Tianjin, Guangzhou, Suzhou, Nanjing, Qingdao, Fuzhou, Hainan, Hefei, Wuhan, Xian, Changsha, Xiamen and Hangzhou. Learn More

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This China Lawyer Blog is aiming at providing better knowledge and understanding of Chinese law for foreigners. Should you have any legal issue in China, do not hesitate to contact China Lawyer Blog for consultation. Preliminary consultation is free. Further legal service, however, will be charged in due rate and in due course.

You are welcomed to ask for a quotation pursuant to your specific circumstance.

About author

China Lawyer BLog AuthorPeter Zhu, an experienced China attorney licensed to practice law for more than ten years, the author of this China Lawyer blog, welcomes any enquiry or consultation related to Chinese law.