Foreign-funded Investment Companies Allowed to Use its RMB Income to Directly Invest in Other Companies

DOJ continues its aggressive antitrust deterrence efforts

The Antitrust Division of the U.S. Department of Justice (“DOJ”) has been stepping up its enforcement efforts against international corporations and their executives, including Japanese companies and nationals.  In February 2010, the DOJ, in cooperation with the Japanese Fair Trade Commission (“JFTC”) and the European Union, conducted a raid of well known Japanese auto parts makers suspecting a conspiracy to fix the price of electrical parts.  In February 2012, not unrelated to this incident, two Japanese companies reached a federal plea agreement with the DOJ regarding their price-fixing conspiracy on electrical auto parts, often described as the central nerve system of an automobile.  The combined criminal fines against these companies, which include jail sentences imposed on four Japanese executives, make one of the largest antitrust cases of all time.   Read More ›

Understanding “Representative Office” and “Wholly Foreign Owned Company” - Which is the Right Form for You?

A “Representative Office” (RO), as it name suggests, is the China representative of the foreign company.   It is not an independent entity; instead, it is considered to be part of the foreign company.  On the other hand, a “wholly foreign owned company” (WFOE) is a limited liability company organized under the laws of China and is a legal entity separate from its parent company back home.  Read More ›

Compliance with Transfer Pricing Rules - A new way to bridge differences between the IRS and Customs –

Multinational companies face compliance challenges and spend substantial time and money on transfer pricing issues.  Transfer pricing arises as an issue when affiliated entities within a business enterprise buy or sell goods or services between them.  Major car makers, for example, have many subsidiaries and affiliates throughout the world. They ship parts from one affiliate to another through a supply chain that produces an assembled vehicle.  To use a hypothetical, when a Chinese subsidiary ships a gear box to its parent company’s US assembly plant, this is a purchase/sale transaction between affiliates.  Two major governmental issues arise when this happens – taxes and Customs duties. Read More ›

Frost Brown Todd Japan Desk Seminar Series: Supply Chain Management in the Global Automotive Market

Japan exports 2 million transmissions a year to North America and another 6.5 million to other world markets. Delays and disruptions in the automotive supply chain, which have been caused by the recent major Tsunami/earthquake, are affecting not only the Japanese suppliers and automakers, but also many U.S. companies. This seminar explores both the concept and practice of automotive supply chain management today, and tries to shed some new lights for the future of the automotive industry.

Click here to view the seminar summary.

A Snapshot of Typical Structures for Private Equity Market in China

Despite the dire economy in the western world, Asian private equity had a vibrant year in 2010 and has kept its momentum.  It is largely attributed to funds denominated in RMB according to a study by professional researchers.  RSM Nelson Wheeler, a prominent accounting and consulting firm based in Hong Kong recently issued its November newsletter where it explored the typical structures and related tax issues for private equity activities in three of the most active markets in Asia including Hong Kong, mainland China and Singapore.  The newsletter summarized, among other things, the most common three PE structures used by U.S. persons, including: Read More ›

China’s CPI fell to 4.2% in November – lowest reading since September 2010

China’s consumer pricing index (CPI) eased to 4.2% in November from 5.5% in October, according to the National Bureau of Statistics.  The CPI hit a three-year high of 6.5% in July this year and has been gradually weakening since then.   The November’s lower than expected inflation rate was marked a 13-month low.  Taking the first 11 months together, the CPI rose 5.5% year-on-year in January-November, well above the government's full-year inflation control target of 4%. Read More ›

Food Safety Crisis in China –What Does It Mean to Western Brands?

After a series of recalls of frozen food products, including dumplings, because they contained traces of staphylococcus aureus bacterium, the China Ministry of Health announced a new rule on November 24 allowing a small amount of the potentially lethal bacterium in frozen food.  The old rules had zero tolerance.  The bacterium, sometimes called golden staph, can cause a range of mild to severe infections (and may even cause deaths in some cases) if it enters the body. This new rule received massive criticism from the media and internet users in China.  Read More ›

Blocking “Unfair Competition” from China - A new weapon for US Industry

US manufacturers have home-turf protection through Section 337 of the 1930 Tariff Act.  Enacted during the depts. Of the Great Depression, §337 has survived, while punitive tariff rates and many other protectionist provisions have been repealed.  As the United States changed from a fenced-in economy to a leader in freer-trade thinking, it kept §337. Read More ›

French Wine “Castel” Mark – An Interesting Case to Decipher

A recent move by a local court in Wenzhou, China may well indicate that in the future a lawsuit against a foreign brand owner in China could cause the foreign defendant to lose its valuable trademarks if it loses the case.  Earlier this year a local Chinese merchant sued a famous French wine producer in the Wenzhou Intermediate People’s Court and successfully secured an “ex-parte” relief, by which, the defendant’s valuable trademark would be subject to freeze until the case is decided.    Defendant in this case is Castel Group, which is the owner of the “Castel” trademark in China.  However, the Chinese plaintiff had managed to register the Chinese “Ka Si Te (卡斯特)” mark first in China, a phonetic translation of the famous “Castel” mark.  It sued Castel Group in the Wenzhou local court on three accounts of infringement and requested damages up to US$31 million.  Read More ›