Lowered percentages

Effective from the 27 March till the 31 December 2022, the percentage related to two types of social security have been lowered.

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Recently, rapid Chinese demand for domestic design products is paving regulation reforms in intellectual property rights (‘IPR’) protection.

Both qualitative and quantitative growth in the design market is advocating the protection of intellectual property as fundamental in sustaining the industry within China.

The Chinese authority promptly acknowledged this issue and with the fourth amendment of the “The Patent Law of the People’s Republic of China” (“Patent Law”), approved by the Standing Committee of the National People’s Congress on October 17, 2020, reformed legislation to comprehensively protect patents and intellectual property. The newly amended law recently came into force on 1^st June 2021 and for designers offers several tools to protect innovation.

The main amendments can be summarised as follow:

1. From generic design protection to partial design protection.

In the evolution of the design industry and continuous innovation, the revised Patent Law aligns with the current design landscape. The revised Patent Law increases the design scope, specifically, both the design product in its entirety and constituent parts (partial protection) can be patented.

Previously, only complete products could be patented, whilst under the revised Law patent protection can be applied to the indivisible components of the design. For example, for the design of a ceramic teacup with an original motif on the handle, patenting the handle of the motif offers sufficient protection, the patent of the entire cup is no longer required.

Such amendment aligns with the best practices of the European Union, the United States, and other major economies in the world, and offers an effective approach in combatting counterfeits.

2. The design protection term increases to 15 years

The validity term for design patents extends from 10 to 15 years. In this way, the Patent Law aligns with the requirements for accession to the Hague Agreement. The Hague Agreement requires at least 15 years term for the international registration of industrial designs.

3. The national priority on patents

For design patent applicants who have filed the first design patent application in China, the Patent Law allows the priority for the second design patent application. Specifically, a design patent application shall be filed within 6 months to claim the right of priority for a second Chinese design patent application.

4. Introduction of the Open License

The Patent Law grants patent holders to provide an open license for non-exclusive usage during the period. Patent holder shall notify the State Council of the intent to provide an open license with a written declaration. For patent holders who adopt an open license, the annual patent fees paid by the patentee will be reduced or exempted.

5. Tighter sanctions for counterfeiters

Finally, the revision stipulates stricter penalties for the counterfeiting of patented goods. Statutory damages for patent infringement have been significantly increased, from RMB 10,000~1,000,000 to RMB 30,000~5,000,000 and related illegal earnings shall be confiscated. In addition,  The statute of limitation extends by one year: the patentee has 3 years to file a complaint against the patent infringement, as opposed to the previous 2 years.

If you have questions or would like to know more about the corporate services available to you from Horizons, please contact us at +86 21 5356 3400 or email talktous@horizons-advisory.com.

This content appears as a courtesy of Horizons Corporate Advisory, a proud member of the China Collaborative Group (CCG Association). It is informational in nature and does not constitute legal advice or establish an attorney-client relationship between you and its author, publisher or any member of CCG. For more information, please visit www.horizons-advisory.com. 

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During the last ten years, the Republic of Serbia has dramatically improved the country’s legal framework for foreign investors. This is largely driven by two things: (1) making the incorporation of companies a relatively easy process and (2) the providing of significant stimulation from the State in the form of investor incentives.

What’s more, adding to investment appeal has been the meaningful expansion of markets where products produced in Serbia can be placed under favourable conditions regardless of the origins of the capital, the founder or the financier of the project.

Starting your company

Registering companies in Serbia, especially limited liability companies (the “LLC”), is quite simple and fast. Namely, there are no restrictions on the number of founders, the number of stakeholders, the number of mutual relations and the manner of placement of funds.

The law allows the investor(s) to independently regulate the status of the company, without significant restrictions and with a minimum initial capital of 1 Euro, bearing in mind strict adherence to measures related to the prevention of terrorism and extremism. In this manner, there is a special register in which the authentic owners must be entered, which is not available to third parties, but only to the founders and the bank holding the company’s business accounts.

While LLCs are formed with relative ease, joint-stock companies require somewhat more complicated procedures, which includes a minimum capital of 25,000 Euros and appropriate documents submitted to the stock exchange, as well as the obligation to appoint a broker.

State-driven incentives

In relation to the incentives provided by the Serbian state to investors, each year a special regulation is adopted which governs the number of incentives, taking into account the amount of investment, the number of employees and the region in which it is invested.

Monetary incentives apply to each job and can be up to 10,000 Euros per job, depending on the region, and reach upward of 10% of the amount of the investment. Projects worth more than 200 million Euros, or those of special importance for the Republic Serbia, will come with additional negotiations on the number of incentives and can be realized in amounts higher than the standard.

What you can look forward to

In the immediate future, we can expect new regulations to further encourage foreign-investment, particularly with the effects of the global economic situation caused by the COVID-19 pandemic.

To date, Serbia has granted significant relief to existing companies, including postponing the payment of taxes and contributions for 2021 and paid the amount of minimum wages for all employees.

What’s more, the state has made way for the possibility of interest-free borrowing from the Development Fund and agreed upon special credit arrangements with commercial banks in which the state will take a guarantee of up to 80% of the loan value.

Products coming out of Serbia

It should be noted that the overseas market, in terms of Serbian product placement, is extremely large. This is the result of bilateral agreements made between the Russian Federation, Belarus, Kazakhstan, the European Union, USA, Turkey, Australia and Japan, as well as the Central European Free Trade Agreement (CEFTA) and European Free Trade Association (EFTA) agreements, which altogether allow Serbian goods to be exported to these countries without paying taxes.

Goods of Serbian origin are considered to be goods that have a share of 51% of Serbian raw materials or invested labour, technology or other parameters that are provided depending on the type of product.

There are fifteen customs zones in the Republic of Serbia, with the fact that the existing customs zones can be extended to neighbouring territories covered by one customs administration, and in that sense, it is possible to work in the zones in compliance with European regulations.

With steady economic growth and an increasing level of foreign investment, Serbia has grown into one of the premier investment locations in Central and Eastern Europe. 

This content appears as a courtesy of Law Office Kosic, a proud member of the China Collaborative Group (CCG Association). It is informational in nature and does not constitute legal advice or establish an attorney-client relationship between you and its author, publisher or any member of CCG. For more information related to its content, please visit www.kosiclaw.co.rs

The post CCG SERBIA: Investing in the Republic of Serbia — a brief overview appeared first on China Collaborative Group.

On 18 November 2018, The China Collaborative (CCG) officially formed as an advisory collective. CCG is comprised of 19 legal and tax advisories, including those from China, Costa Rica, Cyprus, France, Germany, Hong Kong SAR, Indonesia, Italy, Macau SAR, Mexico, Nigeria, Portugal, Spain, Switzerland, The Netherlands, Turkey, the United Kingdom and the United States. 

The CCG members collaborate as one team to support clients in making smart decisions when working across borders. Since the group’s formation, CCG has advised several successful Chinese outbound investments within overseas jurisdictions. 

We took some time to talk with three CCG advisors involved in the group’s latest Chinese outbound investment project in Italy (“NewCo”, a business established in the packing sector) exploring why the China Collaborative Group is becoming one of the top advisors for Chinese outbound investment. 

What CCG is

Roberto Gilardino, CCG China (Horizons China) and president of CCG

Q: Having recently formed the China Collaborative Group, what has been the reception of CCG among clients?

Roberto Gilardino: Many experienced investors are familiar with big-name global advisories and, in the beginning, we needed to indicate how our services are differentiated from the big-name firms. What our Chinese clients found in choosing CCG is the ability to access a multidisciplinary team without leaving China. The CCG platform has allowed them to be able to speak directly to our Shanghai team without experiencing cultural and language barriers commonly associated with cross-border deals; our Shanghai advisors were able to establish a suitable professional team to fully connect with the client and begin meeting their needs from day one. 

In this scenario, from start to end, the investment is continuously followed by the Shanghai team so there is no complication with multiple players from multiple jurisdictions all seeking to communicate with the client. In this approach, global results are achieved by fully serving clients locally, which erases geographical distances and element of cultural misunderstanding at such an early, important stage. 

The latter approach results in the client being fully confident in moving their investment forward, knowing that the investment is compliant with all laws in the geographical places that it touches, be they at the local, national or international level. What’s more, the client’s “dashboard” access to controlling matters is always in their hands allowing advisor-supported decision making to nimbly take place, as we — CCG — work together as a fast-moving team, addressing local, foreign and international issues in short time.

Q: Against a backdrop of the changing corporate landscape and a competitive market, how does CCG add value in serving clients?

RG: CCG works with Chinese entities to overcome the longstanding challenges inherent in cross-border business activities. With extensive experience in China and the ability to leverage a global international team, CCG’s feet are deeply rooted in China while its’ hands extend across the world. Through this multi-country, multicultural practise, CCG serves client needs with a genuinely global mindset and avoids the common pitfalls that occur when independent entities with little knowledge of one another come together ill-prepared to do business. 

The real value of CCG is not solely focused on the expertise of each jurisdiction, rather CCG’s ability to bridge local expertise with international law providing comprehensive solutions which fully realise and safeguard Chinese investments aboard.  

Q: In recent years, Chinese outbound investment has gradually matured. What are the main concerns facing Chinese investors today?

RG: Chinese investors have not the lack capital to invest abroad, rather the biggest obstacle has been the requirements for Know Your Client (“KYC”) and related procedures, which, with the same aim, vary greatly across jurisdictions. 

Often the Chinese investors’ source of funds and wealth are not properly valued and expressed because KYC formalities being incorrectly completed and their funds not being properly understood or explained in a coherent way. In this instance, capital flow can become a major problem during any stage of the investment. 

CCG works with each client to identify the required capital to fund the entire investment operations and their source of funds and wealth so that a clear and transparent proposal is provided to the Chinese government for approval. With capital funds approved in China, KYC requirements and capital injection abroad can be seamlessly completed. 

China outbound investment procedure

Maggie Yu, Horizons China legal lead for investment projects

Q: From 2017, it has been reported that the Chinese government promogulated regulations to tighten outbound investments. Is this a true reflection of the landscape?

Maggie Yu: The outbound investment regulations reflects a robust move to mitigate risk and instability in outbound investment both in China and overseas. There is continued encouragement for Chinese investing abroad in a sustainable and responsible manner, as well as in line with the principles of the New Era Belt and Road initiated by President Xi Jinping.  

Q: Currently, you are leading the HCA Legal team in investment projects out-of-China and, in this specific case, Italy. Can you give a general overview of the general procedures that are followed?

MY: The procedure for overseas investment projects are dependent on the scope of an investment entity, investment activities and investment country. In this particular project with Italian NewCo, the Chinese entity is a non-state entity establishing a solely overseas entity in Italy within the packaging sector. Therefore, the project is classified as a “non-sensitive” project and subject to three procedural stages that include [1] filing, [2] a project report and [3] foreign exchange registration.  

In stage one, non-sensitive investment activities and countries as provisioned in the Administrative Measures for the Outbound Investment of Enterprise are subject to record-filing. As the investment fund was below 10 million USD, the project is verified and approved by the provincial Development and Reform Committee (DRC).  

In stage two, the project report consists of a feasible and environment report. The requirements of the report can vary according to the local regulations of the DRC or if the project is subject to National Development and Reform Committee (NDRC) approval, it shall fulfill the requirements of the NDRC. Generally, the feasible report describes the details of the project and the usage of the investment fund, such as place of incorporation, corporate governance, number of employees, office rental and other expenses. The environment report outlines the reasons for the outbound investment and the selected investment country, as well as the economic, cultural and political risks of the investment. Therefore, investors should have a clear investment proposition.

Stage three involves foreign exchange registration. After undergoing the examination and obtaining approval from overseas direct authorities, the foreign exchange registration can proceed, allowing transfer the investment funds abroad. It is important to demonstrate the source of foreign exchange funds in the procedure, therefore, funds from the company profits can be easier to demonstrate than funds sourced from company assets. 

After the investment is completed, a report is required to be submitted to the DRC within six months. CCG, fully in compliance with all relevant laws, will expedite this process. This is where the real value of the CCG team comes in, serving investors in ways that yield results while saving valuable time.

Q: For Chinese companies looking to go abroad, what are the important factors to consider?

MY: Chinese investors should have a clear investment proposition and an understanding of the foreign investment laws and regulations in the investment country. Without the ability to demonstrate why such investment is beneficial and profitable to the Chinese entity and how risks in the investment country can be resolved, government approval could be difficult to obtain. Equally, the investment capital should cover all expenses related to the investment; any further capital requires a new application. 

With our Italian CCG partners, Lucia Myriam Netti and Gad Matalon, we were able to utilise our expertise in both China and in Italy to provide solutions for understanding and navigating both the domestic laws of China and Italy, as well as international law, to fully service the client’s needs and obtain approval from the DRC.   

A soft landing in Italy 

Lucia Myriam Netti, CCG Italy (Horizons Italy); Gad Matalon, CCG Italy (Lawyalty Law Firm)

Q: From your experience working with Chinese investors, what is the main challenge?

Lucia Myriam Netti: Primarily, many Chinese investors lack good access to local information, technical knowledge and target country expertise because they view Europe as one country. Though most European countries are members of the European Union, rules and regulations around foreign direct investment differ in each European country. In order to submit a feasibility report for China outbound investment procedures and adhere to Italian regulation — in our instance — at the early stages of the investment, we had to determine the location of the new company in Italy, NewCo. 

Considering the business activities included the import and export of packaging machinery, sourcing a suitable location required us to work with local advisors to select the right building [property] and obtain permits to execute such activities. Without this local expertise, Italian NewCo could be subject to penalties which affect not only the business operations of Italian NewCo, but also the investment completion report required to be submitted to the DRC.

Q: It is reported that, though Chinese investment has increased, there are few successful cases. Do you agree?

Gad Matalon: Chinese investors are not lacking the capital to send abroad, but often overseas investments are unsuccessful because proper governance in the company is not firmly established, resulting in investors lacking control of the company. Controlling any company from overseas is geographically challenging. However, strong corporate governance can be established to mitigate such risks. 

In Italian NewCo, we appointed an Italian citizen as the Managing Director, and defined his responsibilities and limitations within a resolution of the Board of Directors, which was registered with the Italian Companies’ Register (“Resolution”); the investors further remained on the Board of Directors. In this manner, the registered Resolution can be utilised as a tool to safeguard the company from any damages and losses if the Managing Director violates responsibilities or engages in any unlawful behaviour. Here though, it should be noted that the parameter of the Managing Director’s role must be clearly laid out. The investors, being members of the Board of Directors, have the possibility — and the duty — to supervise any act of the Managing Director. 

Q: After the newly released European Union (EU) framework for screening of foreign direct investments, effective from 1 April 2019, did you foresee a decrease in Chinese investments in Europe?

GM: With the new framework, we’ve begun to see more sustainable and responsible Chinese investment in Europe. It’s clear that increased regulation is paving a more stable environment for investments to be optimised and achieve success. Although, investors should carefully plan investments and pay very close attention to the laws, rules and regulations of the investment country. 

Establishing the correct legal, tax, fiscal, labour and accountancy framework within the early stages is essential to obtaining regulatory approval. This will allow investment in a smooth, ‘pain-free’ manner. 

With Italian NewCo, the Shanghai team worked with the client to identify a clear investment proposition so that the Italian team could build the correct structure to execute the investment, as well create the correct intercompany relationship between the China headquarters and Italian NewCo. As a result, our client was able to submit a clear and transparent report to the Chinese government, so that from both sides, the project is fully compliant and safeguarded.

For more information about CCG, cross-border investment or other related corporate matters, send us an email at ccg@theccgway.com, and we’ll have a CCG professional contact you.

The post CCG CHINA, ITALY: CCG efforts prove to be a success — a case study for China outbound investment in Italy appeared first on China Collaborative Group.