- Rio Tinto executives plead guilty, Google chooses to exit rather than comply with China's content censorship laws. Dan Harris says these cases show that: everyone who has moaned about too much gray area and inconsistent enforcement of business law are getting what they wanted. Black and White. And a Sheriff who doesn't care who you are, the Law is the Law.
: Greetings everyone. This is The China Business Network and I'm Michael McCune.
Joining me today for a discussion on rule of law in China is Attorney Dan Harris. Originally from the state of Michigan, Dan now makes his home in Seattle, Washington, where he is one of the name partners in the firm Harris & Moure. Dan is an expert on China business law and regularly publishes and speaks on this topic in multiple forums. You can find almost daily contributions from him at China Law Blog
where he is a contributing author. Dan, thanks for speaking with us today.
: Thank you for having me, Michael.
: Dan, it seems like a good time to talk about the rule of law in China. I know it is a big topic, but in the wake of some headline-grabbing cases and actions, maybe you can do some level-setting for the company who is about to establish an operation in China. Can you put today's legal climate in context for us?
: Sure. The first thing I’ll do though is limit the discussion to business law in China. People talk about rule of law and it includes criminal law and business law, but I’m only going to talk about business law because my knowledge of Chinese criminal law is minimal. I think that it’s business law that people want to hear about. Putting everything into context – it’s a little bit funny to do it today in light of the Google case and the Rio Tinto case. The reality is that China’s business laws are getting better all the time.
: Let’s think about that. For somebody coming in now to put an operation on the ground, be that manufacturing or service oriented, they’re in a very different legal context even a decade ago in terms of both rules regulations and laws on the books as well as the ability to enforce or adjudicate those cases.
: That’s absolutely right, and part of the reason there’s been so much consternation lately regarding China’s business laws is not because they’re arbitrary, not because they’re bad, and even not because they’re being enforced unfairly, but because they now have them and they’re being enforced. A lot of smaller American companies, smaller foreign companies that were used to skirting the law or ignoring the law are now being cracked down upon and cracked down upon very hard.
: I want to bring up the phrase that used to be talked about quite freely in the 1990s and early 2000s, which is to say: "not legal doesn't mean illegal." So if you didn’t see a law on the book that expressly forbade you it didn’t mean that you couldn’t do it, it just meant that maybe there hadn’t been a law yet. That provided a gray area which some people saw as opportunity, and in other people it created great discomfort with them. Nevertheless, subjectivity seemed to be the rule. Are their still a lot of gray areas still, or are mostly items or cases being addressed?
: I don’t think there are a lot of gray areas. I mean, there are always going to be some gray areas, but I think today the gray areas are grossly exaggerated. I think they’re grossly exaggerated by companies that have been caught. And then they say “Oh, how was I supposed to know? It was a gray area.” Well, it wasn’t
a gray area.
The other reason I think that so many people talk about gray areas is because the laws are gray to them because they’re reading bad translations of them. For people who are reading the laws in Chinese, they’re not so gray. The reality is a lot of China’s business laws are extremely clear and extremely well written. However, China does have the tendency to enact laws and say that they’re going to issue regulations that will really explain the laws. And then they cannot get a real consensus on the regulations, so there’ll be this period where there can be incredible uncertainty because there’ll be a law that’s very general, and the regulations which are supposed to tell us what we’re supposed to do in specific instances, are slow to come out. Although in the last 6 months, even that, it seems China’s getting a lot better than they were two or three years ago. So this idea “do whatever you want and see what happens” – generally not a good idea.
Overall they’re business laws are pretty much there. It doesn’t mean they can’t use improvement across the board, but it’s become a fairly sophisticated system of commercial laws now.
: I’ve been speaking today with Dan Harris, the name partner at the law firm Harris & Moure. If you’re fortunate enough to be in San Francisco next week you can catch him at the Commonwealth Club on Tuesday evening. Otherwise look for his next entry on China Law Blog.
This is Michael McCune for The China Business Network. Thank you very much for joining us.
Dan Harris is a founding member of law firm Harris & Moure. He routinely speaks publicly about China Law and has appeared on Fox News and BBC World Radio. In 2006 he was named one of Washington’s “Amazing Lawyers for International Law” by Washington CEO Magazine. Read more...