Author: Admin

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Steve Dickson wrote a great article entitled China Due Diligence. Not Optional – that I will steal and copy at length. His article appears on the China Law Blog. The blog is a must read for all doing business in China.

  • Most companies are not aware that due diligence is required whenever you do any kind of business with a Chinese company. If you do not already know the Chinese company with which you will be conducting business, you must confirm that the company really does exit and that you are dealing with the actual company and not an impostor.

Substitute Chinese with Korean and we have a good article for this blog.

I had a client contact me asking for advice on how to collect a debt of USD 150,000. I first asked the client for the name of the debtor and he gave me the name JH Park. I asked if he had any other information and he said he had an email address. How the heck can you send someone USD 150,000 without any information on the person?

He noted that he saw the website and I noted that the website has only an email address and the name JH Park. I felt really bad for this guy and agreed to try to dupe the “JH Park” into revealing more information, but of course the man was too smart to fall for our fishing exercise. Thus, we are left with a fake gmail account and a name that is more common than Joseph Smith in Utah.

Steve seems to experience the same issues I experience working in Korea.

  • It is easy in China to fake company seals, business cards, bank accounts and even a website. The unsuspecting foreigner makes a deal with the impostor and sends funds to the bank account. Product never arrives. The foreigner contacts the well established Chinese company and that company truthfully responds by saying “we have never heard of you.” It turns out the foreigner had been dealing with a fake, virtual company the entire time. This happens all the the time in China. Trust me when I tell you we see instances of this at least once a month.

Please, my friends at the China Law Blog and I have said numerous times, please do your due diligence. Read the below articles and one can get a better sense of what due diligence actually means.

  • Doing Business in Asia: Due Diligence, Agreements, Attorneys and Street Smarts
  • Listen to My Mother: JVs in Korea (Translated from Korean)
  • Debt Collection Cases in Korea on the Rise: Due Diligence Brother

I love Steve Dickson (in a Philadelphia way), since he is the smartest guy on the other side of the Yangtze and one of the most interesting and creative thinkers in law. I know, enough of the brown nosing. Hope he invites me one day to meet him in China. His blog may be found at: www.chinalawblog.com and the article may be found HERE.

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I remember watching a cartoon on Saturday mornings called Hong Kong Phooey. It was about this kung foo fighting dog that battled crime in Hong Kong. Now, I didn’t know where Hong Kong was or how to get there or if I would ever go there, but, I dug that kung foo dog and the way that good prevailed over evil.

Now that was the early 70’s and I was probably a burgeoning teenager with two karate lessons under my belt, which I quit because I couldn’t touch my toes and would rather have been playing basketball. 35+ years later and here I am in Hong Kong drinking coffee on a Wednesday morning before the organized chaos begins and I’m reading an article in the Asian Wall Street Journal about the influx of foreign (outside of Hong Kong) companies desiring to list on the Hong Kong stock exchange.

I thought, of course they want to list in Hong Kong because of the lower cost of listing, fair but not burdensome compliance – unlike the U.S. Sarbanes Oxley laws which make it cost prohibitive to list on the NASDAQ or NYSE for many firms. Also, the transparent and safe banking system and the access to capital. Why wouldn’t they want to relocate their company or alternatively set up a new company to handle their international or Asian business?

Freest country in the world. Easiest to do business. 16.5% flat corporate tax. 15% flat personal tax rate – even lower if it means you can pay less tax. No death tax, no capital gains tax, no tax on dividends, no sales tax, no consumption tax. No graffiti. World class medical care, world class schools, clean, safe, a bit crowded for those accustomed to living in a rural or suburban environment, but, a very livable city. In fact, Hong Kong was ranked number 1 in the Heritage Foundations 2011 Index of Economic Freedom.

I have to think that Hong Kong Phooey had something to do with this. Now, unlike Hong Kong Phooey, I don’t have a Phooeymobile to travel around Hong Kong, but I don’t really need it because the public transportation is the best I’ve ever experienced anywhere in the world – and it’s cheap. Anyway, if I had a Phooeymobile I would certainly get confused driving on the wrong side of the road, and those roundabouts would have my head spinning. I do have something similar to Hong Kong Phooey’s Hong Kong Book of Kung Foo which he consulted to fight bad guys, only to be saved each time by his trusty sidekick Spot – go figure a cat saving a kung foo fighting dog. What I have is a book of knowledge gained from being on the ground here in Hong Kong, advising my clients on Asian (specifically China) market entry via Hong Kong and on numerous transactions, mergers and joint ventures.

What I know is I am big fan of Hong Kong Phooey and a bigger fan of Hong Kong. I was with one of my clients yesterday and we were talking about Hong Kong – she’s been spending more time here as her global business grows. She said, “Hong Kong has everything, it is safe and easy and a world class city, I love it here.” What you should know about her is that she is a very experienced, talented and successful entrepreneur and has chosen to base her new ventures in Hong Kong specifically because of the economic freedom. She didn’t mention that her country, which is supposedly the “freest” in the world comes in at a distant number 9 on the list, which is generous and just one slot ahead of the economic megalopolis of Bahrain.

So, next time you and your business are feeling overburdened by regulations and taxes and lack of capital, look to the kung foo fighting dog and his trusty sidekick Spot. Look to Hong Kong Phooey!!

The post was written by Frank Caruso, the chair of the China Practice Group at IPG Legal.

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It’s been a busy Fall here in the Jungle (Shenzhen). With the rest of the world economies crumbling as a result of too much debt and their populations getting bigger because of too many carbohydrates, business and baking is booming here in China. The government continues to support an economy that is growing at somewhere between 8 and 12% and the people can’t get enough Ferrari’s, Mercedes, BMW’s, LV and Gucci bags, not to mention apartments and commercial office space. You really have to be here on a daily basis to see it, understand it and then appreciate it as the consumption is unlike anything most of us have ever seen in our lives, or will ever see again.

That being said, while we have been busy helping our clients enter and exit the manufacturing business in China, we seem to be advising an increasing number of clients on entering this market to sell their products to distribution or even at retail. As I have been telling anyone who would listen for the last 10 years, we are in the midst of the greatest (largest) economic boom that the world might ever see, purely because of the number of people here and their desire for the things that the rest of the world has. China will soon surpass the United States as the largest economy in the world.

One of my friends and clients, although he rarely requires my counsel, is one that is taking advantage of the Chinese quest for things that the rest of the world has, like Pizza. Thomson Ly is the founder of NYPD Pizza in Shenzhen, China and Hong Kong. We met many years ago when he opened his first delivery pizza place in a back alley here in the Jungle. I was shocked to see a picture of his pizza in the English language newspaper, Shenzhen Daily, and a story about his new venture. So, I called the pizza shop and he answered the phone and I asked him if his pizza was really as good as the picture made it look. He suggested I come over and try one and find out for myself. So, after an hour trying to find the back alley where he was located next to the tire repair shop I walked in on a diminutive Chinese American in jeans and a baseball cap. I checked again and thought, “this can’t be the place” “a Chinese can’t make a pizza as good as the one in the picture”.

Lo and behold not only can this ABC (American Born Chinese) who speaks fluent Mandarin, Cantonese, English and several other languages make a fantastic pizza, but after several years, multiple awards and a growing customer base of carbohydrated Chinese and foreigners he recently won an award in Hong Kong for the best pizza. He even beat out a place called Paisano’s which makes a pretty darn good pie.

Best Pizza in Hong Kong 2011 – NYPD

As the four of you who read my blog know, I like to write about my entrepreneurial friends and clients who are willing to take big risks and go all in here in the Jungle. Lot’s of people said that the Chinese wouldn’t like pizza or even order delivery pizza. Tell that to Thompson at NYPD and the next time you are in the Jungle, try ordering The Caruso http://www.nypdpizza.com.cn/ it’s my favorite.

The following post was written by Frank Caruso. Frank is the head of the China Practice Group at my Firm. Yes, the pizza is good. Not as good, of course, a Pepe’s in New Haven, Connecticut, but still great pie and the best I have had in Asia. The owner is also one of the nicest guys you will meet in the world.