James C. Chapman
The relationship between the economies of the United States and China continues to grow in scope and complexity. While constant change is the dynamic, Chinese companies looking to do business outside of China and foreign companies seeking business opportunities in China need experienced legal counsel with substantial transactional, intellectual property and problem solving experience on their teams.
In the 30 years since Deng Xiaoping’s “reform and opening-up” policy of 1978, the Chinese government has at times opened the door wide for foreign companies to participate in its domestic economic growth. At other times, it has kept the door firmly closed. Nevertheless, China’s GDP has developed at an unprecedented rate, averaging ten percent growth per annum. However, the growth of the Chinese economy has slowed of late. In 2016, China experienced its lowest growth rate in 25 years causing alarm among observers.
While some of these fears are grounded in reality, others are overblown. After decades of rapid growth and development, the Chinese economy is inevitably changing. China is transitioning to a service and consumption driven economy rather than one based purely on manufacturing and export. This transition is changing the way in which investors approach and operate in the country. In fact, between January and November 2016, foreign investment in China exceeded US$110 billion, a growth of nearly 34 percent year-on-year. Whether one is optimistic or pessimistic about the current dynamics, China’s $10 trillion economy is a never-before-seen force reshaping our global economy.
A significant part of China’s economic growth comes from manufacturing. It has been the factory of the world. Its products and increasingly, services, are exported all over the world. When Chinese companies are doing business in the U.S., they face many litigation relating to product quality, intellectual property infringement and contract disputes. As Chinese companies mature, some establish presence or go public in the U.S., thus facing U.S. government scrutiny and other types of litigation. In the past decade, Chinese companies start establishing presence in the U.S. through outbound investment, establishing subsidiaries, acquiring intellectual property or technology assets, investing in different industries, even acquiring large U.S. companies.
Chinese outbound investment hit a record high in 2016. Chinese investments into the US alone surged 359% in 2016. According to Mergermarket, Chinese companies invested $53.9 billion in the U.S. via 75 deals during the year (as of Dec. 12). Compare that to 2015 when Chinese investments in the U.S. totaled $11.7 billion.
However, concerned by the surge in overseas acquisitions -- with some companies buying assets completely unrelated to their core business -- Chinese authorities tightened capital controls to stabilize the currency. Regulators have also asked the China Banking Regulatory Commission to assess how much risk Chinese banks are facing after lending to certain Chinese companies making acquisitions.
Another challenge to Chinese companies looking to invest in the U.S. are stepped up capital controls back home. In November, China's State Council issued a statement pledging to strengthen oversight of offshore investments by state-owned companies. The statement comes as Beijing seeks to clamp down on capital flight and by tightening controls on Chinese companies that invest overseas. Government agencies have been ordered to scrutinize deals and investments by both state-run and private companies.
Rimon’s China Practice Group has represented many Chinese enterprises in cross-border IP transactions, business investment deals, and dispute resolutions. We have also counseled U.S. companies on a wide range of legal matters with regard to mergers and acquisitions, foreign direct investment, technology transfer, IP protection, and contract negotiation involving Chinese or Asian counterparts.
China, as the world’s second largest economy, presents valuable opportunities to the rest of the world. The Chinese economy is driven by unique market forces that are almost unparalleled in other market-based economies. Rimon’s China Practice Group consists of lawyers who have lived in China, worked with Chinese businesses for many years and have opened branch offices in China for multi-national law firms. We are conversant with the Chinese culture, business practices and language. We have collaborated with Chinese companies, government agencies, and local law firms, and are familiar with the law, legal system, and business environment of China.
To Chinese companies seeking to invest, acquire, or expand in the U.S., Israel, Russia, Europe, North and Latin America, or the Caribbean, Rimon’s attorneys can provide critical guidance and advice. With 17 offices spanning four continents, Rimon is truly a global law firm. Rimon’s International Desks have the experience and network to help Chinese companies to clear legal hurdles and navigate regulatory systems in any major market.
Rimon’s China Practice Group advises both U.S. and Chinese clients regarding legal matters related to real estate, private equity, and venture capital investments, infrastructural projects, and corporate mergers and acquisitions. Rimon lawyers have represented Fortune 50 companies in connection with their investment and technology transfer to Chinese or Asia-based companies. Rimon lawyers have also assisted Chinese companies in legal matters related to securities offering, corporate governance, equity financing, and regulatory compliance.
Rimon’s IP team includes IAM top 300 IP strategists and seasoned patent attorneys having years of patent drafting, prosecuting and dispute resolution experience. Rimon’s patent attorneys have counseled Chinese companies on IP protection and infringement issues before entering the U.S. market, and have worked with Chinese companies looking to acquire or license technologies from U.S. companies. In view of China’s rapid rise as a strong player in the IP protection field, Rimon’s IP attorneys can also help U.S. companies to protect and leverage their IP assets in China through patents, trademarks, trademark prosecution and trademark dispute, licensing agreements, portfolio management and business contracts. Rimon lawyers have represented U.S. companies in negotiation of OEM and manufacturing agreements with Chinese companies.
Rimon’s IP litigation team has represented many Asia-based clients in a variety of cases including IP (patent and trademark) infringement, misappropriation of trade secrets, and commercial disputes. Rimon’s litigation team has the resources, experience, and local connections required to handle cross-border investigations and litigations in China and other Asian countries.