Danone & Wahaha Dispute: Rules of Law May Not Become A Failure !

The Shenzhen Economic Daily of 17 April 2008 made an official comment and review on the subject matter coming to the points, and its contents are cited here for reference.

The Danone and Wahaha' negotiations are still coming to the deadlocks, even though their disputes have always been full of hot points at intervals. Since releasing to the public of the dispute one year ago, the two parties have got used to different sorts of "pouring shits fight". For the time being, Wahaha chairman ZONG, Renqing is deeply involved in the "Tax Evasions Gate', but such kind of fight has also labelled Danone as a "cunning" merchant.

There are no winners in respect for the "flesh fighting war", for Wahaha chairman ZONG, Renqing has suffered from "sick" fame, while Danone has "lost" hearts of the ordinary people. We are happy to see that the Chinese government's stance is still clear and cool about the matter. Media quoted an relevant official from the Chinese Ministry of Commerce as saying yesterday that they can not make any comments on ZONG, Renqing'a personal income tax evasions, but believe that the tax incident and the Danone / Wahaha dispute should not have many connections. For the time being, the Ministry of Commerce(Foreign Investment Division) is performing the governmental duty to mediate therein by offering an negotiation platform. The dispute was originally an economic conflict, then evolved into a "political incident". The Ministry of Commerce's stance has clearly shown its determination of disolving the disputes under the rules of law.

It is no doubt that Wahaha chairman ZONG, Renqing, who has been claiming himself as a "Nationalist Banner Raiser", is in the passive position, for various facts disclosed in the past one year have let the ordinary people cast doubts over the inconsistencies of Mr. ZONG's statement and his actions, e.g. nationalities of ZONG's wife and daughter(s), offshore companies, personal tax evasions at issue, even though all behind may show Wahaha's images, but compared with what Mr. ZONG's highly-profiled statement of "state economic safety", "protections of national brands", etc, all of which have led the ordinary people to form feelings that they have been "made good used of" or "rocked".

The "water mouth fight" has not positioned Danone as a winner, but a loser, for to pour dirty water to the rival party will firstly make dirty of its own hand, too. Danone is also facing a new media challenge. Take the huge amounts of money in relation to Mr. ZONG's "Tax Evasions Gate" for example, the said money was paid by Danone in the form of "service fees", but what is the definition of "service fees" ? Some media state that to analyze the time of payment, the said money could be deemed as commercial bribery. Should the commercial bribery be legally defined and listed, Danone shall not only "shit" Wahaha's chairman ZONG, Qinqing, but also "shit" itself.

The year-long dispute is still of no hope but seemingly indicates mutual failure. Wahaha's chairman ZONG, Renqing may fail, Danone may fail, but the only thing that can not lose is our rules of law.

First of all, there must be a definite definition and explanation about the some hundred millions of evasive taxes. No matter how Mr. ZONG makes explanation in the regard, and despite of the dispute fact between Danone and Wahaha, there can not be any "cunning" things in terms of the tax evasions.

In additions, whether the "service fees" shall be defined as "commercial bribery" shall also require definitions. Once there are sufficient evidences concerned, the responsible persons shall not only be Wahaha chairman ZONG, Renqing, but also Danone.

Last but not the least, from the current Wahaha / Danone dispute, we sincerely hope to be able to establish efficient resolution channels, for it is truly anticipated that there will occasionally be more commercial conflicts among the "national enterprises" and multinational companies, but how to avoid such sorts of commercial disputes to be politicized, and how to build up a fair and transparent dispute resolution option remain to be realistic issues. What has made us feel happy is that the responsible Chinese Ministry of Commerce has been maintaining an objective and rational mind.


Marks & Spencer Has Spent 10 Years to Probably Win A VAT Case ! Do You Dare to Easily Make A Lawsuit in Britain or China or Other Jurisdictions ?

According to the South China Morning Post of 11th April 2008, the British leading retail operator of Marks & Spencer will get a full refund of the HK$54.06 million in tax that British authorities charged for years on its teacakes, the European Union's highest court said.

The firm has been fighting with authorities for more than 10 years to get a refund of the value-added tax it paid between 1973 and 1994.

Jason's comments:

1. It is generally the legal right for a corporate / individual person to make a lawsuit in China or in Britain or in any other jurisdictions, but the plaintiff has to think it over and over again whether it is truly necessary and also whether they could prepare or have prepared sufficient amounts of money to pay for their lawyers and may probably endure the years-long time and sufferings before a lawsuit is actually brought to a court.

2. It is no doubt a good alternative to settle a dispute via negotiation and mediation before and during litigation, in order to save time, money. Relatively speaking, to find an acceptable solution may still be much better than pursuing a marathon-long satisfactory judgment, without talking about potential legal risks.

3. Lawyers may help clients, but only the clients themselves have disposals and absolute rights to instruct and lead how to appropriately settle a dispute or tough case to much extent.


American Pfizer Has Recently Failed in Its 9-year-long Lawsuit in China over its Trademark of Viagra

According to the Beijing Youth Daily of 8th April 2008, the American Pfizer Pharmaceuticals Limited has recently be judged to be a loser to a Chinese enterprise by the Beijing Higher People's Court over the Chinese-character trademark ownership of Viagra, and the final judgment rules that Pfizer's requests against a Chinese company can not be upheld and further decides that the Pfizer does not own the trademark ownership of Viagra in mainland China.

In its writs to the Chinese court, Pfizer stated that the trademark related lawsuit started from 1998 when the magic pill of Viagra freshly came into existence, the Cantonese WeiErMan Pharmaceuticals Limited immediately applied to the Chinese trademark authorities for registrations of the Chinese-character trademark of Viagra, resulting in Pfizer unwillingly to register Viagra in China some other Chinese characters of WanAiKe. The Cantonese company not only declared the Chinese-character of Viagra was its own trademark, but also consented other companies to make use of it. Pfizer brought lawsuits to the Chinese court and expected the court to rule that Viagra is a famous trademark unregistered in China, and further rule that the Cantonese company as defendant to compensate Pfizer RMB500,000.

Beijing No.1 Intermediate People's Court of 1st instance tried the case and decided at last to overrule Pfizer's requests, followed by an appeal to the Beijing Higher People's Court by Pfizer.

Beijing Higher People's Court of 2nd instance, after trying the case, believes that according to the independent protection principal for trademarks, Pfizer does not own relevant interests in the trademark of Viagra in mainland China; in additions, verification of famous trademark is beyond the court's jurisdiction. Therefore, the court has recently overruled again the legal requests from Pfizer, ending the 9-year-long trademark lawsuit in China.

Italian Chocolate Firm Ferrero Wins Court Battle Against China Fakes

According to the South China Morning Post of 9th April 2008, A five-year-old Sino-Italian chocolate war has ended, with the mainland's highest court ordering a Chinese manufacturer to stop producing nutty knock-offs of italian giant confectioner Ferrero's signature gold-wrapped chocolates.

The Supreme People's Court also ordered manufacturer Montresor to pay "symbolic" damages of 500,000 yuan(HK$557,104) for making fake Ferrero Rocher chocolates.

Victory was sweet for the Turin-based chocolatier, which said the ruling was important for all Italian firms because copies of "Made in Italy" products were widespread.

"It is already hard for Italian companies, and foreign ones in general, to get into China, overcome resistance put up against foreign produts, build up a commercial network and invest in the country, only to be faced with a strong and invisible enemy such as the counterfeiting industries ," the firm said.

Ferrero Rocher chocolates are a popular gift for mainlanders, especially during the Lunar New Year, and almsot ubiquitous in Hong Kong.

The confectioner said it had spent more than US$1 million battling counterfeiters but would look at further investment on the mainland.

The ruling was applauded as a landmark victory by upmarket brands combating illegal Chinese-made clones, but legal experts said similar judgments in the past had proved hard to enforce.

There are at least 35 chocolate products that look like Ferrero Rocher in mainland supermarkets, according to mainland media reports.

Ferrero began legal action against Montresor and its virtually identical "Tresor Dore" chocolates in 2003, as it was the only imitator judged dangerous enough to take a real bite out of Ferrero's market share.

Montresor registered its Chinese trademark, "Jinsha", an unofficial but popular translation for the Italian chocolates, in the early 1990s. It registered "Tresor Dore" in 2003 for its cheap imitations, which were priced at one-third of the genuine product.

Yet Montresor was named a national prestigious brand and has exported throughout Southeast Asia since 2000.

Jason's comments:

(1)IP infringement lawsuits and other influencial commercial litigation in China may also be time-consunming or as long as the marathon race, this 5-year-long litigation case is just another live example. Please bear in mind that commercial litigation in China is not (much) shorter than Hong Kong or other common law countries.

(2)for international companies related (IP) litigation cases in China, a large porporation of battling fees shall also be prepared in advance, for this particular case, US$1 million is used up, while for the Danone/Wahaha (joint venture / IP disputes) case, US$2 million has been spent by Wahaha so far,...

(3)litigation for justice should continue forward, but fake products may also survive, the playing game of cats and mouses may still be widespread in the developing country of mainland China and other countries or regions with similar economic living standards.


Schroders Bets on QDII Funds Growth in Greater China

According to The Standard of 8 April 2008, UK fund firm Schroders hopes to double its managed assets in the next five years from the current US$16 billion(HK$124.8 billion) by tapping growth opportunities in China, Hong Kong and Taiwan, its Asia top executive said yesterday.

Bank of Communications Schroders Fund Management Company, its joint venture with BoCom(3328), won approval to launch funds for global securities investment under the QDII(qualified domestic institutional investor) scheme last year.

Schroders Asia Pacific chief executive Lester Gray said the company would launch a new QDII fund this year through the joint venture depending on market conditions.

The fund firm currently has 31 QDII funds through four foreign banks in the mainland.

Gray Expects China investors to be skeptical about offshore in the short term after overseas equity markets peaked at the end of last year, saying it would take time for them to regain confidence.

"It is bad timing," he said.

"It has nothing to do with the QDII product itself. Plus, it has just been six months , too short to tell."

Despite the highly volatile market conditions this year, Gray said the company doesn't see any redemption pressure in the first quarter.

"Retail investors are still confident that things will go better."

2008: The Year of M & A for Mainland China

The following article is taken from Jack's Corner in earlier April 2008(for more details, please visit: www.gcsl.info)

The CPI is constantly increasing. The RMB is projected to accelerate its appreciation to RMB6 to USD1 by the end of 2008. The banking reserve ratio increased to its highest point of 15.5%. A stronger monetary policy has been announced. The export tax rebate incentive has been cut down dramatically...

Chinese Domestic Enterprises (“CDE”), especially the small and medium size CDEs, will certainly face a tough business environment in 2008. These CDEs will not only need to re-think their sales and market strategies, but they also will need to consider various other issues including, but not limited to, financing, forex, cost management, investment portfolios, etc. Given these issues, many CDEs are currently looking for foreign financing or co-operation to solve their difficulties.

Therefore, 2008 will be the year of Mergers and Acquisitions (“M&A”) and good opportunities for foreign investors to enter or expand in the China market.


What Are the Benifits to Us If We Hire CHINA LAW OFFICE As Our PRC Lawyers ?

A Thailand businessman's daughter came to my firm yesterday afternoon with his brother in order to get Chinese legal consultations on their Thai father's recent detaining by the Hainan provincial prosecutor/presecurate, the meeting lasted almost one and a half hour. What struck me most at the meeting, however, is their question of why they shall hire my firm to be their PRC lawyers to deal with their father's tough case, which may necessarily require us lawyers to fly to Hainan back and forth for several or probably quite a few times, even though they were referred to us by a chief Hong Kong arbitrator.

In fact, this is not the first time that we are asked such a sort of question, generally applicable to the new-coming clients. I had to think it over again and also decide now to list as follows the main reasons so that I may easily give them the replies via emails or read them aloud in the futures:

1. China Law Office lawyers are all licensed PRC lawyers, no different from the other Chinese lawyers, but we are headquartered in Hong Kong beyond Mainland China, focusing on serving the Hong Kong and other overseas clients.

2. China Law Office is the sole Mainland Chinese law firm nowadays to be named with "China", for according to the PRC Lawyers Law, no Chinese law firms can be named with "China", my firm is exceptional, for it was established and is always existing in Hong Kong which adopts the "one country two legal system" state policy, beyond Mainland China. Such a "big" name may to much extents reflect its special status, almost all of my firm's lawyers were originated from Mainland China, but had once studied or lived abroad for some years before their joining in the firm, having gained years of overseas experiences which can no doubts help serve better the Hong Kong and overseas clients.

3. China Law Office is a Chinese law firm with the PRC Ministry of Justice backgrounds, or to be more exact, the Beijing based PRC Ministry of Justice established in Hong Kong in 1987 its "window company" of China Legal Service (Hong Kong) Limited, which is still existing, and China Law Office was established in 1997 in Hong Kong under the umbrella of China Legal Service (Hong Kong) Limited, 2 or 3 partners of China Law Office are designated by China Legal Service(Hong Kong) Limited, even though legally speaking, China Law Office is a partnership commercial law firm with unlimited liabilities, just as all the other law firms in Hong Kong, and/or as most of the other Mainland Chinese law firms. Therefore, China Law Office has more or less / indirect governmental backgrounds or at least we lawyers are officially easier to communicate with the mainland Chinese central/provincial/municipal governmental authorities, courts, public bureau and prosecurate, also there is no need for us lawyers to worry about or concern more about the local governmental stances or "threats" upon (local) lawyers.

4. China Law Office lawyers have practiced Chinese law in Hong Kong for more than 20 years, for before 1997 when China Law Office was officially established, all of our lawyers had practiced the Chinese law in the name of / within China Legal Service (Hong Kong) Limited, but after 1997 in the name of / within China Law Office, having gained almost two dozens of legal experience for the Hong Kong and overseas clients, having known how to better serve the Hong Kong and overseas clients, having earned widespread reputations, otherwise, how can we survive in the most expensive city of Hong Kong for 20 years(note: we lawyers have not been financially supported by the legal company or any other governmental authorities)?

5. China Law Office is headquartered in Hong Kong, with liaison offices(not representative offices) in Shenzhen, Shanghai and Beijing. Moreover, we have also established a nation-wide cooperative lawyers' network covering up almost all capital cities of different Chinese provinces, may easily instruct any of such cooperative local Chinese lawyers to take immediate actions for our overseas clients, or make efficient searches for any Chinese companies/properties/land, or deliver and receive documents as necessarily required by some local Chinese authorities or by clients, or to do other simple / minor matters.

6. With regard to our professional fees and disbursements, we quote competitive service fees, in fact, we have noticed that my firm's hourly charge is almost the same as or generally lower than those leading law firms in Beijing and/or Shanghai, for they usually quote professional fees for overseas (M & A or PE) clients in 2007 and 2008 for US$500 up per hour, while we usually quote the hourly rate for US$450 around. As for the travel expenses, they are separately billed to the clients as cost, no big differences in the regards between my firm and the leading Chinese law firm.

7. China Law Office has a list of Hong Kong and world leading clients, annually on their outside lawyer list, reflecting their strong trust and confidence in us lawyers.

Isn't it clear enough for the Hong Kong and overseas clients to consider using China Law Office as one of their selective PRC law firms in order to better protect their lawful interests in relations to their complicated with unique cultures Mainland China affairs ?