The China Venture

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including laws, decisions and ratified international treaties. 7 The third level are the documents enacted by the Standing Committee of the NPC. As a consequence of the NPC’s meetings held only once a year, the Standing Committee in practice represents the most important organ for the creation of new laws. The forth level comprises the legal documents made by the State Council (administrative regulations) and the documents issued by its ministries, commissions and departments (administrative rules). The above four levels of the legal structure are in a way easy to understand and easy to track. When it comes to the legal documents of the lower levels of China’s governmental structure, there exists a practically insurmountable flood of rules and regulations. A very special part in the Chinese legal struc ture play the documents in relation with the “One country-Two Systems” policy of the PRC. This set of laws deals with the reunification of mainland China with Hong Kong and Macau. Thus when realising this reunification, the PRC may, according to Article 31 of the Constitution, establish special administrative regions to retain the capitalist systems in these regions. Additionally, the legal system of these special administrative regions may be safeguarded. Therefore, the NPC on April 04, 1990 adopted the Basic Law of the Hong Kong Special Administrative Region and decided to establish this special administrative region on July 01, 1997 when China resumed its sovereignty over Hong Kong. And on March 31, 1993 it adopted the Basic Law of the Macau Special Administrative Region and decided to establish this special administrative region on December 20, 1999 when China will resume its sovereignty over Macau. 8 As regards the separation of powers between the central authorities and the special administrative regions, the powers and functions enjoyed by the central authorities are strictly limited to those required for the protection of the national sovereignty and reunification of the motherland. 2.2.4 Judicial Structure As already explained above, the judicial structure in China not only refers to courts, but also to procuratorates. The presidents of courts and procurator -generals are appointed by the pe ople’s congresses on the same levels, whereas the judges and procurators are appointed by the standing committees of the respective people’s congresses. 7 A list of multinational treaties applicable to China may be found under: http://www.qis.net/chinalaw/treat1.htm. 8 Legal documents relating to the special administrative regions of Hong Kong and Macau may be found under: http://www.qis.net/chinalaw/lawtran1.htm. 12
The courts are the state organs exercising exclusive state adjudicatory power. Higher level courts supervise the work of the lower courts, and the courts at various levels are responsible to the respective people’s congresse s that created them. The courts have four levels, namely the Supreme People’s Court at the national level, high courts at provincial level, intermediate courts at prefectural level and basic courts at county and city level, respectively. The procuratorates are the organs for legal supervision. Within the structure of the procuratorates, higher level proc uratorates direct the work of those at lower levels. The procuratorial organs at various levels are responsible to both the corresponding people’s congresses which created them and pe ople’s procuratorates at higher levels. The trial process is greatly influenced by the civil law jurisdiction in which the judge is the dominant party conducting a trail. In principle, each case has at the most two trails, which means that the right to appeal is limited. However, the parties may challenge a final decision through a trial supervision procedure. According to law, courts are to exercise their power independently and free from interference from any organisations or individuals. However, there exist in practice all sorts of interfe rence from inside and outside sources. Whereas interference from inside sources are known to Western systems as well, interference from outside sources do create a certain unease among Westerners. Protectionism between judges and the respective appointing bodies is still quite frequent in contemporary China. Very often judgements are entered under pressure from local governments and other organisations to bend justice for local interests or economy. Also in some places, taking gifts from parties to a litigation is not an uncommon practice. 9 The above problems as regards the judicial independence are a lesser issue for foreigners than for China itself. The so-called Two-track System is a feature in Chinese law that treats foreign business concerns differently from domestic ones. In different aspects, such as taxation, foreign exchange, but especially in dispute settlement, foreign firms, as an incentive to investment in China, are accorded different, and in general more favourable, treatment than domestic firms. 10 According to this Two-track System, the principal institution for the resolution of disputes involving foreign firms is the China International Economic and Trade Arbitration Commission. It serves in all arbitration cases in which a foreign person, legal or 9 This problem has been addressed by a new law lately, the actual results however are yet to be seen. 10 From China’s point of view, this system appears to be a necessary stop-gap measure in the evolution of its economic and social reform. It was obvious that the general reform of the Chinese legal system would take time. But the special need for foreign investment law could not wait. Therefore, China had to start with the latter first, while at the same time beginning to build a body of domestic law. 13
Page 1 and 2: The China Venture: Business Environ
Page 3 and 4: Table of Contents List of Figures .
Page 5 and 6: 3.2.3.2 Special Funds for Setting U
Page 7 and 8: 3.4.1.1 National Culture ..........
Page 9 and 10: List of Tables TABLE 2-1: THE AREAS
Page 11 and 12: GBP Pounds Sterling GDB Guangdong D
Page 13 and 14: 1. Introduction: The China Venture
Page 15 and 16: After a short discussion with the p
Page 17 and 18: co-operate with other firms, especi
Page 19 and 20: The Chinese operating legal system
Page 21 and 22: First of all, Britain’s predomina
Page 23: democratic centralism, all governme
Page 27 and 28: more than three hundred intermedia
Page 29 and 30: 2.2.8 Company Law China’s first n
Page 31 and 32: Things seem have to become a lot cl
Page 33 and 34: 2.3.1.1 Financial sector developmen
Page 35 and 36: securities, trading, initial public
Page 37 and 38: underdeveloped compared with market
Page 39 and 40: established in January 1996 by 59 p
Page 41 and 42: Chinese Banks Foreign Banks Financi
Page 43 and 44: system formulation has been put on
Page 45 and 46: The separation of production and co
Page 47 and 48: swap centres (see also above). From
Page 49 and 50: investors with little experience an
Page 51 and 52: them, while a branch with a shortag
Page 53 and 54: Loans, public offerings of shares,
Page 55 and 56: is often to acquire foreign capital
Page 57 and 58: 2.3.3.2 Debt financing As getting t
Page 59 and 60: the approval of special authorities
Page 61 and 62: control compared to national enterp
Page 63 and 64: usiness in China and related issues
Page 65 and 66: 3. Pre-Entry Strategic Consideratio
Page 67 and 68: While the testing for the general r
Page 69 and 70: of relevant contacts to suppliers a
Page 71 and 72: partner companies with free servici
Page 73 and 74: strengths which his own company lac
Page 75 and 76:
Central Committee of the Communist
Page 77 and 78:
environment for foreign investment
Page 79 and 80:
legal and regulatory environment of
Page 81 and 82:
3.2.4.3 Legal Framework for Foreign
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• China’s entry into membership
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• stipulates that advanced techno
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Government approval. Foreign invest
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Co-operative Joint Venture Status P
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Reflecting on these points the foll
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Success Factors concerning Products
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Success Factors concerning Company
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high-technology are eligible for th
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Available Distribution Channels A m
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Available Distribution Channels Mar
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Page 105 and 106:
Illustrative Case Studies The follo
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Page 109 and 110:
Which Aspects should SME's Focus on
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Strategy No. 1: Have Cash A comfort
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expenses have a detrimental effect
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As a conclusion, network oriented m
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3.2.13 Case Study: Swisstec, Lyss 3
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factor which makes the foreign firm
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developed within the SME, its impac
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3.3.1.3 The Role of Technology Mana
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Indirect export and direct export a
Page 127 and 128:
maintenance or the use of establish
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Government Central Exploiting Sales
Page 131 and 132:
in the most advanced provinces and
Page 133 and 134:
network through which the products
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Siemens or Motorola, they may have
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Chinese partners. He also began to
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orders. However, a country may also
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Germany/Switzerland China democrati
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3.4.2.4 Conversation at the first m
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only after a certain time and even
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3.4.3 Experiences of European Compa
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ones who atte nded a course. They s
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Another Chinese tactic is, as menti
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4. Post-Entry Strategic Considerati
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and the other one in China. The com
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experience in operating production
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In these two cases, the companies m
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5. References Aharoni, Y. (1966): T
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Dony, A. G. (1998): Market Entry St
Page 165 and 166:
Islam, I. / Chowdhury, A. (1997): A
Page 167 and 168:
Madura, J. (1993): International Fi
Page 169 and 170:
Semkow, B. W. (ed.) (1995): China F
Page 171 and 172:
6. Appendix 6.1 Fact Sheet People
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