Cross-border challenges


China’s GDP growth rate in the third quarter fell below 7%, a record low since 2009, but the market was not taken aback. The implication of the slowdown could only be that China’s economy is undergoing a paradigm shift. This huge economy is still generating plenty of inbound and outbound investment across its borders, and of course legal challenges remain.

PrologueWe’re watching you! looks at antitrust issues in cross-border business. Closely connected to the global market, China’s increasing focus on the regulation of monopolistic activities should be a top item on many companies’ watch lists. China’s three antitrust authorities have all been busy developing new rules, addressing controversial issues like the abuse of intellectual property rights.

Enforcement has become tighter as well. The record fine imposed on Qualcomm shocked the market earlier this year. Giant global automakers are under investigation at the moment. China is now widely seen as a major antitrust jurisdiction on a par with the US and EU, but experts warn that China’s antitrust regulatory framework is young by comparison, and its focus and practice may be very different.

Building the future explores China’s efforts in developing infrastructure at home and abroad. The construction of modern facilities has supported China’s past economic growth, and it’s still high on the central government’s agenda. A new trend is top regulators encouraging the involvement of private capital in domestic infrastructure through the public-private-partnership (PPP) model, but experts caution the PPP legal framework is still incomplete.

China’s regional efforts, such as leading the creation of the Asian Infrastructure Investment Bank and promoting the One Belt, One Road initiative, shows the country’s resolve to bring its construction expertise to developing countries lacking strategic facilities. But the target markets may not always be hospitable – local rules and political instability could cause investors to stumble.

For outbound Chinese companies, internal management is a big challenge. Guardian at the gate profiles Pei Rui, a senior counsel from Hanergy, a multinational clean energy group based in China. He shares his experience in managing the legal affairs of subsidiaries of different levels. The story also includes his thoughts on the challenges in protecting intellectual property in China. In addition to some weak awareness of patent game rules, he says, the low cost of infringement and insufficient enforcement also make IP protection an arduous task in China.

Financing is a vital element in many transactions, especially large cross-border deals. Neutralizing default risk addresses one headache for banks in cross-border financing – a parent company may not always be willing to offer a guarantee to its subsidiary’s debt. Financing experts from China Development Bank’s Hong Kong branch shed some light on the pros and cons of alternative credit enhancement methods.