“Salvation lies within” – Compliance Inspectors instead of Prosecutors

China is on its way to build up a “system of compliance instead of prosecution”. Earlier in 2020, the Supreme Procuratorate designated 6 district procuratorates (including Shanghai, Shenzhen, Jiangsu Province and Shandong Province) to implement trial practices imposing compliance requirements as rectification on suspected private companies (vis-à-vis state-owned companies), refraining from approving arrests, charges or enforce substantial punishments on cooperative suspects meeting the set requirements.
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Brands Impacted by New Rules for Compliance of Promotional Sales Activities

Special sales promotions such as “6.18” and “Double Eleven” have shown to be a very successful to encourage consumption on e-commerce platforms, and so it is not surprising that sales promotions have become an important means for international and domestic brands to expand sales in the Chinese market.
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Tax Risks on Expatriates when Applying for Tax-free Rental Benefits

Expatriates that live and work in China continue to enjoy certain privileges when it comes to individual income tax (IIT) on their income, namely tax-free deductions for rent, relocation, language training, school, and home leave travel. The Chinese government has created these benefits to establish a favorable work environment for foreigners, which has contributed significantly […]
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Legal Briefing - Retail Compliance - Fourth Quarter 2020

In this quarter's briefing we focus on Retail in China and write about Legal Aspects and Best Practices for Retailers in China and China's Strict Rules on Advertising: Foreign Companies Be Prepared.
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China Continues to Enforce Compliance in Advertisements

3 November 2020
In recent weeks, Shanghai’s market supervision bureau (AMR) announced that it has penalized one of China’s leading domestic dairy companies, Bright Dairy & Food Co., Ltd., for an advertisement video on its website that did not show China’s “complete and correct territory” of China.
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Legal Briefing - Compliance - Third Quarter 2020

We are pleased to deliver you a new edition of our legal briefing. This quarter we focus on compliance and have selected a few important articles on China Social Credit System and Strategies for Dealing with Legal Compliance. We also include a letter marking the 10th anniversary of our firm.
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China’s Company Chop System and Risks to Foreign Investors

Since June 2020, a fight over the control of the China subsidiary of ARM, a leading semiconductor company, has centered around the possession of the company chop. ARM was reported to have fired its head of China, Allen Wu, who is still registered as the legal representative of ARM China. With control over the company chop and business licenses, Wu would seem to have a powerful weapon to use as a bargaining chip with ARM’s shareholders outside of China, even though there is no doubt he will eventually be removed from his position. How can physical possession of the company chop cause so much trouble for ARM’s shareholders?
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New Policies Impacting how Non-resident Companies Employ Beijing Staff

19 August 2020
Many international companies in China are based in one city, but may need to have employees based in another city. These employees will generally want social security in the place where they live and work, as this gives them crucial benefits in regard to medical care, schooling and housing. However, only locally-registered companies can make payments of social security premiums.
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The New Social Credit System - Corporate Compliance in China

24 June 2020
While some may continue to see China as a country where “anything is possible”, there is no denying that the Chinese government has been trying to create a more compliant business environment. The initiative with the biggest impact long-term may well be the introduction of a social credit system (SCS): every entity in China will be assigned a social credit score to reflect its legal compliance.
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SPC Issues Guiding Opinions on Handling Civil Disputes Involving COVID-19

On 20 April 2020, the Supreme People’s Court (SPC, China’s highest court) released the Guiding Opinions on the Proper Handling of Civil Cases Involving the Novel Coronavirus Outbreak in Accordance with the Law. Published soon after a batch of rulings issues on 24 March and 2 April, the Guiding Opinions emphasize a preference to have disputes resolved through mediation, but also reviews the conditions of the application of force majeure when handling civil cases involving the novel corona virus and the disease it causes, COVID-19.
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