We highlight the practical elements for enterprises to note when implementing the resumption of work.

1. Closed-loop management

Enterprise should implement a closed-loop pandemic control mechanism that is acknowledged by the authorities. Namely, a closed-loop refers to area zoning and category-based management for different areas to prevent physical contact between different groups of employees such as in production, common areas, or meeting rooms, as well as establishing no-contact with external individuals such as logistic suppliers (external individuals must hold a negative nucleic acid test certificate within 48 hours and on-site negative antigen test results). As result, employers should ensure the employees are segregated into groups, establish the work environment to permit one metre social distancing within the workplace, and restrict or limit physical contact between such groups to isolate positive cases to one group and prevent cluster outbreaks.

2. Emergency response plan

Enterprises shall formulate emergency response plans for COVID-19 outbreaks in the workplace. Any employees with abnormal antigen detection and nucleic acid detection should be reported to the official in charge and the Centre for Disease Control and Prevention. Transportation and treatment of those diagnosed with COVID-19 should be priorly established with the local government and temporary isolation measures should be implemented for close-contact staff. Large enterprise shall set up a shelter in the factory area.

3. Stock of Anti-Pandemic Materials

Enterprises should maintain a stock of anti-pandemic materials and purchase antigen self-test kits, face masks, alcohol-based disinfectants, hand sanitizers, infrared thermo-detectors, thermal imaging detectors, protective suits, goggles, disposable gloves, etc. whenever necessary. A minimum supply of anti-pandemic materials for 14 days is recommended. All used protective items shall be disposed properly and safely.

The Guideline also adds that enterprises should resume work and production under the guidance of district governments on a “one-on-one” basis. We suggest that enterprises consult with professionals to ensure the resumption of work is compliant with the local guidelines and district government.

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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Deng Xiaoping initiated the Reform and Opening Up policy and opened the door to the world in 1978. As a result, China’s GDP rose from 367.9 billion yuan in 1978 to 15.45 trillion yuan in 2020 and lifted China from a third-world country to becoming a global economic superpower.

In the last 40 years, China’s significant economic growth has increased its role in the world both as a trade and investment partner and as an international Institution member in the United Nations (1945), World Trade Organisation (2001), and World Bank (1980). As a result, China holds a more influential and significant role in the world today than 40 years ago and more recently demonstrating a more mature and assertive stance.

Internationally, China has increased activism and assertiveness within international institutions (“Institutions”) in recent years. Specifically, China increased engagement in formulating policies and positions within the Institutions and increasingly utilised such Institutions as platforms to articulate its’ position. Equally, today’s institutions represent a broader range of countries with different priorities, needs, and interests than the founding members. Therefore, Institutions are increasingly evolving from the post-second world war era, in which the USA played a primary role in the founding principles of the Institutions.

Domestically, China has adopted a collection of legislation to strengthen the national sovereignty and interests, including:

• The Cyber Security Law of the People’s Republic of China effective from 1 June 2017
• The Export Control Law of the People’s Republic of China effective from 1 December 2020
• Rules on Counteracting Unjustified Extra-Territorial Application of Foreign Legislation and other Measures, effective from 9 January 2021
• The Anti-Foreign Sanctions Law of the People’s Republic of China effective from 10 June 2021
• Data Security Law of the People’s Republic of China effective from 1 September 2021

For companies and individuals doing business in or with China, such legislation defines business operations – especially cross-border activities in several areas.

With a rapidly growing middle-class in China, the Chinese market for many companies is an increasingly important and growing market segment. Therefore, companies either invested or planning to invest in the Chinese market cannot disregard national sovereignty and interests’ compliance within their business operations. Below, we highlight the three key areas of national sovereignty and interests’ compliance applicable to companies doing business in or with China.

Cyber and data security

Cybersecurity for many countries is a top national priority to maintain secure networks and protect data from cyber-attacks.

In China, cyber security is centred on the security of the collected data, and companies are obliged to ensure networks collecting and processing the data are secure, monitored and shall not endanger national security or sovereignty.

The Cyber Security Law of the People’s Republic of China (“CSL”) and Data Security Law of the People’s Republic of China (“DSL”) are two primary legislation governing cyberspace and affect all companies working with data collection, processing, and management in China.

Cyber Security Law

The CSL establishes the compliance framework for network operators and is the overarching law for cybersecurity.

Under CSL, the network operator is defined as owners and administrators of the network and network service providers and obliged to ensure servers and data stored, transmitted, or created on such servers are secure and protected from cyber-attacks. Furthermore, the CSL outlines a Critical Information Infrastructure (“CII”), which subjects information crucial to national security and economy to store the collected and produced personal information and important data within the territory of mainland China. Any data required to be transmitted aboard shall be conducted under measures of the Cyberspace Administration of China.

Data Security Law

DSL sets forth an overarching framework to regulate data handling and management accordingly with national sovereignty, security, and development interests.

Under the DSL, the scope and definition of data include any record of information in electronic or other forms and imposes an extraterritorial application to China-related data handling and management.

Organisations and individuals are obliged to ensure and formulate data management policies, cooperate with public security and national security organs that require their data for national security or criminal investigation. Mismanagement of data, specifically those handling important data could face significant liabilities for both the company and individual.

Export Controls

Prior to the adoption of the Export Control Law of the People’s Republic of China (“ECL”), export controls were scattered across several laws. The ECL is the first comprehensive framework establishing export controls, a list of controlled items, and provisioning extra-territorial application to individuals and organisations outside of China who endanger national security and interests.

Under the ECL any export of the controlled items from an individual or organisation within the territory of mainland China to an overseas individual or organisation is subject to certain obligations including obtaining the relevant license from the State Export Control Authorities. Controlled items are defined under the ECL as the following:

• Dual-use items which can be for civil and military purposes or helping to improve military potentials, especially goods, technologies, and services in design, development, production, or application utilised for weapons of mass destruction;
• Military products comprising of equipment, special production facilities, and other related goods, technologies, and services utilised for military purposes;
• Nuclear materials, including nuclear equipment, non-nuclear materials used for nuclear reactors, and related technologies and services;
• Technical materials and data related to the items listed above.

For companies with an international supply chain or engaged in cross-border research and development, the ESL has a significant impact on exporting operations. For example, foreign items containing components assembled or manufactured in China could be deemed as controlled items or cross-border research or technology transfer, activities such as research, inter-company research (where the research and development centre are in China), or technology sales to foreign enterprises could be classified as related technical material and data – thus subject to export control.

Addressing sanctions

In 2021, China addressed the application of foreign legislation and sanctions to Chinese individuals and legal entities both within and outside of the territory of China. Two main legislation were enacted and established a stricter stance against foreign economic sanctions against Chinese organisations and individuals.

Rules on Counteracting Unjustified Extra-Territorial Application of Foreign Legislation and other Measures

Early this year, the Rules on Counteracting Unjustified Extra-Territorial Application of Foreign Legislation and other Measures (“Rules”) were promogulated by the Ministry of Commerce. The Rules provision a working mechanism for Chinese companies and individuals affected by extraterritorial foreign legislation that prohibit or restrict engagement in normal economic, trade, and related activities with a third State (or region) or its citizens, legal person, or other organisations. Affected individuals or entities are required to such matters to the State Council within 30 days. The State Council shall issue a prohibition order to oppose an unjustified extra-territorial application of foreign legislation and other measures.

Foreign companies in China especially multinationals should note the Rules stipulate any Chinese entities who comply with the unjustified extra-territorial application of foreign legislation subject to a prohibition order can be pursued in court.

The Anti-Foreign Sanctions Law of the People’s Republic of China

The Anti-Foreign Sanctions Law of the People’s Republic of China (“AFSL”) establishes the regulatory framework for foreign persons, both legal entities and individuals, acting against China’s national interests. Under the AFSL, organisations, individuals, and affiliated individuals who directly or indirectly participate in formulating, deciding, and implementing discriminatory restrictive measures against China shall be included in a Sanctions List (“List”). Those included in the List shall be subject to penalties including visa restrictions, prohibitions, or restricted conduct in transactions, cooperation, or other activities with Chinese organisations or individuals. Therefore, for foreign companies and individuals doing business in or with China, AFSL significantly impacts external conduct and communications, and public relations.

Whilst some may view a more assertive China negatively, China’s international significance and role cannot be disregarded. Specifically, in the business world, companies involved in the Chinese market should evaluate their full operations and third parties’ relations and update relevant policies or establish China-specific policies, otherwise risk legal penalties and economic losses. Unless companies forgo the China market completely, the recent legislative movements in strengthening national sovereignty and interests should be reflected in company operations and policies. Companies generating business from China cannot disregard China’s principles around national sovereignty and interests.

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. 

The post China’s assertive stance and the impacts for your company appeared first on China Collaborative Group.

The Personal Information Protection Law of the People’s Republic (“PIPL”) takes effect from 1 November 2021. Companies engaged in processing the personal information of individuals located in China are obliged to implement necessary measures.

Below, we highlight the mandatory requirements for foreign companies under the PIPL:

1. User Consent

Under PIPL, companies may only collect personal information when the individual’s consent is obtained. The consent shall be voluntary and the individual shall be explicitly informed. Individuals can request how their personal information is collected, stored, and require such information to be corrected and deleted.

Companies processing personal information (‘the processors’) are obliged to allow the individual to decline. When users withdraw their consent, the processors shall halt the collection or promptly delete the collected personal information.

Companies outside of China are not exempted from PIPL. Any company outside of China and processing the personal information data of individuals in China can be subject to PIPL. Specifically, PIPL outlines the following circumstances for companies outside of China:

• Where the purpose of the activity is to provide a product or service to an individual located within China;
• Where the purpose of the activity is to analyze or assess the behavior of an individual within China; or
• Any other circumstance as provided by law or administrative regulations.

Practically, companies outside of China should conduct a risk assessment of their personal information database.

2. Equal treatment for consumers

PIPL forbids companies from utilising automated decision-making functions to increase online sales. A company cannot implement unreasonable differential treatment of individuals – such as prices or terms. In other words, special discounts for new customers cannot be utilised, without reasonable grounds. Individuals shall also have the option to withdraw from any push marketing based on automated decision-making.

3. Stricter stance to sensitive personal information

The PIPL classifies the following as sensitive personal information and companies may only process such data for a specified purpose.

• Religious beliefs;
• Biometrics;
• Specific identities, medical and health;
• Financial accounts, whereabouts and other information of a natural person;
• Personal information of minors under the age of fourteen

Companies shall adopt strict measures to protect such data and inform the individual of the necessity and the impact on their rights and interests. For personal information of a minor under the age of fourteen, processors shall obtain the consent of a parent or guardian of the minor.

The stricter stance towards data collection of sensitive personal information significantly affects human resources and educators (minors under the age of fourteen). We advise such departments to align data management policies under the PIPL provisions, without any further delay.

4. Cross-border data transfers

Under PIPL, companies may only transfer personal information outside of mainland China by meeting one of the following conditions:

• Where a security assessment organised by the national cyberspace authority has been passed;
• Where a certification of personal information protection has been provided by a professional institution, under the regulations of the national cyberspace authority;
• Where a contract in compliance with the standard contract provided by the national cyberspace authority has been concluded with the overseas recipient, establishing the rights and obligations of both parties; or
• Where any other condition prescribed by law, administrative regulations, or the national cyberspace authority are met.

For companies, especially multinationals working with the personal information of employees and suppliers located in China, implementing the provisions to transfer personal information is essential to avoid penalties.

PIPL shall significantly affect businesses processing the personal information of individuals located in mainland China. Particularly, PIPL stipulates specific rights of individuals in activities related to the processing of personal information, including the right to access and make copies of the personal information processed.

Violators can face fines up to RMB 50 million (US$7,74 million), or up to five percent of annual turnover. Violators located outside of mainland China may be included in a blacklist and publicly announced.

Therefore, we recommend companies doing business in or with China to conduct a data mapping assessment including a thorough review to identify which data is collected, stored, process, and employee access to such data. Data management policies should be revised and relevant training provided to employees, so that PIPL is correctly implemented into the company.

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. 

The post Getting prepared for the first Personal Information Protection Law in China appeared first on China Collaborative Group.

Less than 30 days till the world’s largest import-themed expo, CIIE will be held in Shanghai from 5-10 November and CCG has been invited to exhibit for the second time.

CCG is made up of business and legal advisors who work together to provide clients with smart corporate solutions that effectively facilitate cross-border activities, CCG is honoured to participate again in this prestigious event.

PRESIDENT XI JINPING first announced the CIIE annual trade fair at the Belt and Road Forum for International Cooperation in 2017, with the first expo held in November 2018. With foreign direct investment (“FDI”) in the mainland rising year on year, CIIE is pivotal in assisting foreign goods and services launching in China and reaching Chinese consumers. Equally, the high international media coverage coupled with national and local government support offers foreign companies a crucial platform to generate business opportunities, strengthen international trade and cooperation with key industry players.

As part of the exhibition, CCG will highlight and discuss the most recent trends in laws and rules for foreign companies engaged in or with China.

With the consistent changing business landscape, businesses face challenges in navigating through numerous regulations. Many cross-border investment issues remain steeped in cultural and language barriers, especially for investments in unfamiliar jurisdictions, such as China. CCG offer foreign investors engaged in China a local gateway to facilitate their investments. CCG leverages multidisciplinary professionals to allow the client to speak with a local advisor in the comfort of their home country or region and erase language and cultural difficulties. The local team continuously follows the investment, so the controlling dashboard of the investment in China is always in the investor’s hands.

Dr Roberto Gilardino, CCG President

“For CCG, our participation at CIIE enables us to be amidst the action and within the significant exchange of western and Chinese entrepreneurs. As a result, the priority is to seize the opportunities, further our understanding of decision-makers and generate business projects. Equally, we remain committed to providing practical advice to our clients, which extends beyond the mere law and tax opinions and procedures. Our expertise offers clients updated know-how, seasoned experience, and an ability to anticipate challenges. Therefore we remain steeped in reality and practicality as opposed to the traditional approach of the typical law firms.

In 2021 we achieved successful and tangible results from the third CIIE, which propelled CCG’s recognition internationally. In addition, from the connections generated in our participation, we effectively facilitated several acquisitions in 2021. As a result, we anticipate good outcomes from this year’s participation to further projects in 2022. ”

Bas Besseling, Secretary

“CIIE plays a significant role in facilitating the development of professional services. Last year, through our participation of CIIE, we generated strong leads with our global clients and wider network. For many businesses, China is the market to develop and expand in, therefore having CCG professionals structure the investment in a jurisdiction, that is unfamiliar for many investors, enables the investors to focus on the business aspects. We are honored to be invited again to exhibit in CIIE and believe the expo will generate excellent connections with foreign businesses in China.”

Martin Hütte, Treasurer

“Whilst many may be concerned with China closing the doors for foreign business, we believe there is ample opportunity for foreign businesses. Although, the foreign investment landscape in China has significantly changed in the last 40 years. Companies entering China shall be aware of not only the changing market trends but the current legal obligations for foreign investors. CIIE is a fantastic opportunity for foreign companies to present and launch goods and services to Chinese consumers, as well as gain first-hand insights in the market. For CCG this year, we are focused on recent legislation adopted, which impacts both companies aboard and in China.”

Despite the pandemic, CIIE attracted approximately 400,000 visitors, 411 new products, technologies, and services were exhibited, and a total value of 72.62 billion USD in intended deals were signed. This year’s CIIE boasts an exhibition area of 360,000 square meters for enterprises.

If you want to know more about CCG’s participation in CIIE this year, please contact Ms Miranda Dong at hb.dong@theccgway.com. We look forward to you joining our CIIE experience.

The post News release: The countdown for the fourth China International Import Expo (“CIIE”) begins appeared first on China Collaborative Group.

The AFSL establishes the regulatory framework for foreign persons, both legal entities and individuals, acting against China’s national interests and expands the scope of penalties and obligations.

For foreign companies and individuals doing business in or with China, AFSL significantly impacts external conduct and communications and public relations.

Previously, several fashion multi-national companies faced criticism in China for boycotting cotton produced in Xinjiang province. Under the AFSL, such business conduct could constitute organisations directly or indirectly involved in discriminatory restrictive measures against Chinese organisations. In such a case, both the company, senior management, and affiliated individuals could face sanctions and penalties in China.

Therefore, China-related marketing conduct and public communications should be risk assessed before execution, specifically for multi-national companies. In this below, we highlight the main impacts of AFSL for those doing business in or with China

1. AFSL objectives

The formulation of AFSL focuses on two main aspects: safeguarding the national sovereignty, security, and development and protecting the legitimate rights of Chinese citizens and organisations.

AFSL provisions the right to take corresponding countermeasures to any foreign country that conducts the following:

• Violates internal law and
• The basic norms of international relations and
• Uses various pretexts or according to its laws to contain or suppress China and
• Takes discriminatory restrictive measures against Chinese citizens and organisations or interferes in China’s internal affairs.

2. Sanction list

The AFSL extends to organisations, individuals, and affiliated individuals who directly or indirectly participate in formulating, deciding, and implementing discriminatory restrictive measures against China. Such organisations and individuals shall be included in a Sanctions List (“List”) and subject to penalties.

For individuals and affiliated individuals included in the List, the AFSL defines as below:

• The spouse and direct lineal family members of the individuals included in the List;
• The senior executives or actual controller or the organisations included in the List;
• The organisations in which the individuals included in the List serve as a senior executive;
• The organisations which the individuals or organisations included in the List actually control or participate in their establishment and operation.

Therefore, such extension of the List could directly affect individuals and organisations indirectly involved in the violation. In practice, a contingency plan should be developed for both organisations and individuals since those blacklisted can face restrictions both in China and involvement with Chinese organisations and individuals, as highlighted in point 3.

3. Penalties

Organisations and individuals within the List and dependent on the actual circumstances could be subject to the following penalties:

• Refusal to issue visas, banning entry into China, invalidating visas, and deportation
• Sealing up, seizing, and freezing movable, immovable, and other types of property in China;
• Prohibiting or restricting from conducting related transactions, cooperation, or other activities with domestic organisations or individuals.
• Other necessary measures.

It is important to note that the penalties listed above are non-exhaustive and subject to the actual circumstances. Equally, though there are no extra-territorial measures explicitly stipulated in the AFSL, the restrictions of visa application and conducting related transactions, cooperations, and other activities with both domestic and individuals can subject violators outside of China to penalties – visa restrictions, conducting business with domestic Chinese companies and so forth.

4. Mandatory implementation of countermeasures

Organisations and individuals in China are required to implement any government countermeasures adopted by the relevant departments of the State Council. Any organisations or individuals who fail to implement or cooperate with such countermeasures shall be investigated.

Equally, an organisation shall not implement or assist in implementing discriminatory restrictive measures undertaken by a foreign country against a Chinese citizen or organisation. Such Chinese citizen or organisation could file a lawsuit to the people’s court to request to cease infringement and compensation for any loss.

For foreign companies, we recommend reviewing any future external communications and public relations. Additionally, we advise companies to develop internal China-specific policies to migrate indirect or direct violations from either/ both the company and individuals.

The AFSL follows from the China Export Law and the Rules on Counteracting Unjustified Extra-Territorial Application of Foreign Legislation and Other Measures effective from 1 December 2020 and 9 January 2021, respectively (“Laws’).

The enacted Laws establish a strict stance against foreign economic sanctions against Chinese organisations and individuals.

Though some may view the Laws as restricting business operations, the Laws reflect strong protection of national sovereignty and interests. For many companies doing business in or with China risking external mishaps such as insensitive cultural marketing or recognition of Taiwan as a country could lead to serious legal consequences and economic impacts such as loss of the China market. Therefore, companies shall implement policies to mitigate risks for both company and individuals.

If you have questions or would like to know more about the anti-foreign sanctions 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. 

The post China’s Anti-Foreign Sanctions Law: understanding the impacts for companies and individuals appeared first on China Collaborative Group.

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.