The Shanghai Lawyer
Vol. 1 , No. 13 - December 6, 2002
Shanghai is one of the most dynamic and fastest growing mega-cities in the world. It is quickly establishing itself as the leading financial and economic center of the Far East, on par with the likes of Paris and New York. The Shanghai Lawyer is a bi-weekly publication providing up-to-date newsworthy articles and legal information to professional and business persons around the world. We hope you enjoy the newsletter and welcome your comments and feedback.
Letters from Shanghai
I just got back from a trip to Colorado Springs for the Annual Meeting of the TMA Conference. For the uninitiated, the TMA is the Turnaround Management Association, an association dedicated to bringing together professionals and groups involved in the corporate restructuring world. The TMA brings together turnaround specialists, interim managers, lawyers, accountants, lenders and investors for the purposes of exchange of information and professional advancement. Basically, these are the guys you call when your company becomes financially distressed and needs fixing (but usually your bank calls first).
We see enormous potential for this industry in China. The privatization of state owned companies has already begun and when it kicks into high gear it will be of a scale never seen before anywhere. There are literally tens of thousands of state owned companies in China being subsidized by the government due to their inability to turn a profit. The reasons for their underperformance vary, but many times it is due to ineffective management or lack of financial and operating controls or delay in keeping up with market changes - all prime areas that turnaround specialists have experience and could lend their "turnaround" expertise to set the company on the road to recovery. Lehman Lee & Xu is at the vanguard of this industry in China, being actively involved in restructuring, divestitures and acquisition projects. It is an area that holds great promise and we expect to see more activity and involvement from foreign players.
Blaine Turnacliff
Did you know?
Shanghai's many rivers and lakes comprise approximately 11 percent of the total area of the city. |
China Eases Way for Foreigners to Own Listed Firms
China made it easier for foreign investors to buy control of publicly traded companies, helping the government sell as much as $241 billion of stakes it holds without resorting to the stock market.
Foreign companies may now buy government-held stakes as long as they hold the shares for at least a year, the China Securities Regulatory Commission said. Foreign investors such as George Soros have been buying non-tradable state-owned shares in listed companies, on a case-by-case basis, since 1995.
The government, which owns stakes in 1,200 publicly traded companies, withdraw plans to sell the shares five months ago, amid concern that a stock market already suffering a slump and might buckle. It needs the money to finance welfare and pension spending, including funding for about 200 million people who will retire in the next 30 years.
Foreign companies that buy government stakes will be allowed to remit dividends and proceeds from any eventual stake sale abroad, according to the statement from the China Insurance Regulatory Commission, Ministry of Finance, and State Economic and Trade Commission. The Shanghai Composite Index, which tracks both yuan- denominated Class A shares and foreign-currency denominated Class B shares, has dropped 8.3 percent this year. The Shenzhen Composite Index has fallen 7.5 percent in the same period.
(Source: Bloomberg)
Shanghai Essentials
Private ownership of land is banned in Shanghai, as in the rest of China, but the Shanghai government allows for a system of land granting rights to individuals or legal entities. The maximum terms for granting of land use rights are 70 years for residential purposes and 50 years for business purposes. The land grant contract may however, be extended upon application by the individual or corporate grantee. The grant can be assigned or mortgaged and can even be inherited. If the grantee wishes to conduct business on the land, they must apply to the Shanghai Municipal Government for approval, business registration and tax registration. |
More expatriates work in city
More than 300,000 expatriates from 119 countries and areas live and work in Shanghai, and the number of expatriates involved in employment procedures in the first half of the year is up 31.79 percent from a year before, according to latest statistics. Up to 3,836 foreign people got employment certificates in the first half of the year, an increase of 43 percent on the previous year.
Expatriates that work in Shanghai can be classified into two groups, foreign experts and employees. Up to 80,000 foreign experts work in the city, with more than 70 percent acting as senior managers of the nearly 20,000 foreign enterprises in Shanghai.
The number of foreign employees in the city has grown at a pace of 10 percent a year in the past three years. More expatriates will work in the city in the near future, with a growing number of foreign people hunting for jobs in the local job market, competing with local job hunters.
(Source: Shanghai Daily)
Shanghai legal problem? Tell us about it. . . Mergers & Acquisitions * Incorporations * Commercial Contracts Contact Blaine Turnacliff at bturnacliff@lehmanlaw.com |
The Tennis Masters Cup kicks off in Shanghai
For the first time, an Asian city is hosting the year-ending tennis championship. The tournament was held in Lisbon and Sydney in the previous two years, respectively.
The six-day event has attracted nearly 300 journalists from around the world, including 147 from overseas and will be broadcast to more than 130 countries and regions.
The eight top players on the men's tour play a round robin tournament with the top two players from each pool moving on to the semi-finals, then the winners to the finals.
Hewitt, Safin, Carlos Moya and Albert Costa will face each other in the Red Group while Agassi, Juan Carlos Ferrero, Roger Federer and Jiri Novak are in Gold Group. Hewitt and Agassi are the only two players left in the hunt for the No. 1 ranking, but all eight competitors are in the running for a massive paycheck at the event, which features US$3.7 million in prize money.
Currently, Hewitt leads the pack with 767 points, 88 clear of Agassi. Players get points at the event for every victory, with an undefeated run worth 150 points, and the champion picking up US$1.52 million.
(Source: Shanghai Daily)
Need to File a Patent or Trademark in China? Contact LLX at mail@lehmanlaw.com and click below to download a Power of Attorney: | | |
Charters from Shanghai to Taipei for Chinese New Year closer
China may allow direct charter flights between Shanghai and Taipei, early next year. Taiwanese people living in China's mainland have asked their government in Taiwan repeatedly to improve the possibility of direct flights. Currently they have to fly through Hong Kong or Macao, because the direct links that were banned in 1949 have not been reopened since.
About 300,000 Taiwanese, living in Shanghai are expected to fly back to Taiwan to spend the Chinese Lunar New Year, starting February 1st 2003, at home. They have to spend much time and extra costs by taking a detour through Hong Kong and they are stepping up pressure on their government to allow direct air links. This is one of the reasons for wanting the links to open up, and direct charter flights may be a first step. A petition was held on October 27 in Taiwan's parliament.
Beijing is pushing for the establishment of three direct links: transport, trade and postal services. They consider the charter flights as an intermediary solution, until full links are established. The problems with establishing them are politically related. Taiwan wants to call them cross-country links, and Beijing talks about cross-strait routes, as it considers Taiwan part of China.
(Source: Chinabiz.org)
Overseas Investors Eye Shanghai's Service Sector
More than half the overseas-funded start-up companies in Shanghai are involved in service industries, a sector that has drawn flocks of avid investors in recent years, official statistics show. Of all the 1,113 overseas-invested businesses set up in Shanghai between July and September, 636 are engaged in the service trade.
Analysts predict China's service industries are set to become a major attraction for overseas investors now that the country has gradually opened up the sector in line with its commitments to the WTO. Many new investors have entered the Shanghai market through mergers and acquisitions, and solely overseas-funded firms make up 80 percent of all new businesses.
To date, most member economies of the Asia-Pacific Economic Cooperation have invested in Shanghai. The Hong Kong Special Administrative Region leads all other APEC members with investment in 5,677 enterprises, followed by Japan and the United States.
(Source: People's Daily)
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