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China crisis highlights legal need to pick strong business partners


By Neasa MacErlean

25 August 2015 at 00:16 BST


China's economic problems are likely to weed out the weaker local businesses, meaning that foreign investors have to be more careful to chose smart local entities to partner with, according to the China Law Blog.

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Dan Harris of Harris & Moure in Seattle, the author of the China Law Blog, is used to advising clients when the Chinese economy takes a hit. This time he says that 'something positive is happening in China as well'. This is: 'A greater number of China businesses are getting savvier, more sophisticated and more international.' That means that foreign firms which partner with them are less likely to find themselves in trouble. A cause of problems is being cut off from funding and not having enough reserves to deal with that.

Document transactions

Mr Harris continues: 'It is the under funded Chinese companies that can so quickly and so devastatingly harm foreign companies.' In cases in which a foreign firm in a joint venture with a Chinese one finds the going difficult, Mr Harris advises that such a firm should 'document your transactions fully' - so that it will be clear which assets belong to the foreign firm if the worst comes to the worst.  Source: China Law Blog

 
   
 
 
 

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