China Hearsay

An Interesting Byproduct of the Recent Apple Bashing in China

Stan — Tue, 14 May 2013 12:03:57 +0000

You recall the fun and games when the Chinese media went after Apple as part of the Consumer Day “celebrations,” right? CCTV led the charge, followed by various Op/Eds and in-depth reporting on the U.S. MNC’s product warranty policy. Whether Apple was in violation of the law or not, it certainly was slammed upside the head with a great deal of negative PR, which made fanboys around the world cry “Leave ‘em alone already!”

When the perception is that Apple has been unfairly targeted, it means, among other things, that the next time someone criticizes Apple in China (by “someone,” I mean an official someone), it will look like a continuation of a witchhunt. To some degree, I think Apple, at least for a few more months, has a bit of a free pass when it comes to China attacks, at least in the eyes of folks offshore and probably local cultists.

Check out the tone of this report from a tech site:

China has been having a good go at Apple lately, having slammed the company in March for substandard post-sale service and quickly following that up with charges of copyright infringement.

The latest accusation: tax evasion.

Oh, and pornography.

Apple’s online stores in China are not paying proper import taxes for software sold to Chinese customers, according to a report from the China Association of Consumer Protection Law published in the Legal Daily newspaper.

Also, Apple is liable — criminally so — for peddling pornography in China, a Peking University law scholar, Kang Shuhua, is quoted as saying.

The porn charge echoes an April 17 report from state-run People’s Daily, which named Apple as one of 198 companies under investigation for spreading lewd content.

OK, two issues here: porn and taxes. On the former, the government is continuously going after distributors of porn. This is not new, and it isn’t even the first time that Apple, which distributes a heck of a lot of content, has been caught up in the latest anti-porn campaign. What content provider in China hasn’t had to deal with this issue? This is not evidence of a lingering anti-Apple campaign.

What about the tax issue? No idea. As Americans recently discovered, politically-motivated tax investigations can be sticky situations. In this case, we do not know one way or the other why Apple was being targeted and whether there is merit to any complaints. But is it possible that the company has run afoul of a tax regulation? Are you kidding me? Again, this is pretty common.

Look, whether you want to talk about copyright infringement, a tax problem, or the latest porn crackdown, this is all fairly normal stuff for a company like Apple. And no, that is in no way a criticism. The company is gigantic, does a great deal of business here in China, and no doubt deals with legal and regulatory issues on a daily basis.

But timing is everything. A few months ago, a porn crackdown that happened to also involve Apple wouldn’t have received much attention. Now it’s evidence of an ongoing conspiracy.

‘Meat Is Murder’ and Other Meat-related Crimes

Stan — Tue, 07 May 2013 04:20:14 +0000

No one is talking about murder yet, but it’s just a matter of time. The latest food quality scandal in China is humming along steadily at the moment, with accusations flying, arrests being made, and protestations being hastily issued by restauranteurs and others in the food biz.

All this turmoil just because mutton was replaced with rat and fox meat to save a few shekels? Apparently so. As of last month, we only had to worry about whether our lamb was being fried in “gutter oil,” but that’s now old news. These days, you need to worry about whether that “lamb” that’s being fried in gutter oil is in fact lamb or some other animal, perhaps one with whiskers and sharp, pointy teeth.

I used to enjoy the hell out of Monty Python’s “Dead Bishop Sketch” because it was so absurd and silly. Now I can love it for being prescient. To set the stage, imagine a husband and wife sitting at the kitchen table after consuming their evening repast:

Man: What’s for afters?
Woman: Well there’s rat cake … rat sorbet … rat pudding … or strawberry tart.
Man: Strawberry tart?!
Woman: Well, it’s got some rat in it.
Man: How much?
Woman: Three (rather a lot really).
Man: … well, I’ll have a slice without so much rat in it.

Hits a little too close to home these days.

Perhaps the most humorous aspect of this whole scandal, though, is the terminology being used to describe it. The myriad infractions and violations have been categorized as “meat-related crimes.” This is awesome, a label worthy of dystopian fiction, or perhaps horror. Heaven knows what Clive Barker could do with that title. {shudder}

I know what I would do with it:

Customer: I’d like some dumplings. What do you have today?
Jiaozi Vendor: {clears throat and spits into a bucket at his feet} We have three varieties of boiled dumplings: rat & cabbage, rat & leek, and our vegetarian special.
Customer: Vegetarian? So there’s no rat in it?
Vendor: No rat, although there might be some fox.
Customer: Just as long as it’s kosher . . .

Lessons in US-China Diplomacy: Parsing the Special 301 Report

Stan — Sun, 05 May 2013 02:35:21 +0000

The annual Special 301 Report on worldwide intellectual property protection was recently released by the U.S. Trade Representative’s office. I always look forward to this, not only to see what the China section looks like to catch up on big-picture IP issues, but also to get a snapshot of the bilateral situation between the two countries.

This year, it seems to me that the language shows just a bit of frustration on behalf of the USTR authors, which I find leaking out from between the lines. They tried very hard to be as diplomatic as possible, but perhaps just a little too much. I’ll let you be the judge.

For the past couple of years, I’ve noted that the language in the China section of the Special 301 report reflects the plateauing of progress on IP in China. Perhaps “plateauing” is a bit too harsh; progress is still being made, but it is happening at a slow rate compared to previous years. In my mind, this is not primarily due to PRC government recalcitrance, but rather a product of the “low hanging fruit” being dealt with in the early years, with much harder problems left to be addressed.

I believe that the folks over at USTR have been consistently even-handed, fair and (as far as I can tell) substantively accurate with respect to China. While other parts of the government, particularly the legislative branch, tend to use inflammatory rhetoric when discussing China, the USTR has acted judiciously.

But enough with the generalizations. Here’s the first bit of the China section from this year’s report. I’ve added emphasis to some of the language to better illustrate what I consider to be a too-careful, diplomatic effort to be nice. To me, the diplo-speak is so obvious, I can almost hear the sarcasm.

In the past year, the climate for IPR protection and enforcement continued to reflect efforts toward and opportunities for improvement, as well as challenges for U.S. rights holders. Obtaining effective enforcement of IPR in China remains a central challenge, as it has been for many years. This situation has been made worse by cybertheft, as information suggests that 32 actors located in China have been engaged in sophisticated, targeted efforts to steal IP from U.S. corporate systems.

On a potentially more positive note, China is currently engaged in sustained legal reform efforts, which have resulted in the revision of laws, rules, guidelines, and judicial interpretations across the range of IPR disciplines. This large scale revision of the IPR legal regime presents an opportunity to improve IPR protection and enforcement, and the United States is hopeful that a legal reform effort on this scale signals China’s commitment to achieving major improvements. The United States urges China to continue to give due consideration to concerns expressed by the U.S. Government as well as by private sector stakeholders as these revisions proceed through the system.

At the same time, real world conditions for rights holders have overall seen little significant improvement.

Let me put on my international relations hat for a moment (gotta get some benefit out of that IR degree) and say that the above language could easily have been crafted by a State Department lawyer as opposed to a trade attorney at USTR. These reports from USTR are always written quite diplomatically of course, but I find this language even more careful than usual.

Let’s take that first paragraph. The use of the term “challenges” is not new; it’s a nice way of referring to problems, suggesting that current issues will be dealt with in the future. Added to that, however, is “continued to reflect efforts toward and opportunities for improvement,” which is rather remarkable. It’s all forward-thinking and hopeful, isn’t it? We may not be seeing much progress now, but we’re still moving towards improvement and keep seeing opportunities out there. Well crafted stuff, but keep in mind what it isn’t saying, which is essentially the negative conclusion reached in the third paragraph.

A quick note on this cybertheft item. No doubt you are aware of all the China hacking hullaballoo, and the bilateral tension that has ensued over this. Because reports on this issue never do more than trace attacks to specific geographical locations in China, the authors of this report had to be extremely careful not to blame hacking on the PRC government itself (analysts and folks in Congress have felt no such hesitancy). Hence the non-specific and mysterious “actors located in China.”

The second paragraph, which covers legal reform, continues the theme. Look at the words here: “presents an opportunity,” “hopeful,” “potentially” — sounds great, until you realize this means absolutely nothing is happening right now. But USTR is trying to be as nice as possible, saying that China has a “commitment to achieving” IPR protection and “continue to give due consideration” to issues raised by the U.S. Does this latter bit simply mean that Beijing is still listening? Rather an empty statement, in my humble opinion, but it sure is dressed up to sound nice. I just wonder whether the author winced when writing that sentence.

Let me wrap this up with a qualification: I’m a big fan of USTR and the talented lawyers that work (long hours) there. Their task in drafting the Special 301 report every year is unenviable. It has to be substantive and accurate while being as diplomatically palatable as possible. Not easy, folks. And we know that as soon as the report comes out every year, Beijing pushes back with news articles and Op/Eds that express the government’s “deep regret” over the USTR’s conclusions.

Bleah. To make matters worse, the days of easy progress on IPR enforcement are over, and we’re down to slogging through the difficult issues. I assume these guys would prefer that the China section could be limited to two parts: “Part I – no dramatic progress was made this year; and Part II – here are the items that U.S. corporations complained to us about.” This would make the drafting process much, much easier.

I’d be frustrated too if I had to write this thing every year.

PRC Official: IPR Reputation a Result of “Groundless Labeling”

Stan — Sat, 04 May 2013 05:27:24 +0000

Um, wow, not sure where to start with this one. Look, I think you’d be hard-pressed to find anyone who has consistently written for as long as I have that China’s IP situation is improving, that it isn’t as bad as most folks think, and that the stereotypes are generally unfair.

But I also temper that with frequent acknowledgements of the many problems over here with the IP protection system. The situation downright sucks in some geographical areas and industry sectors, and depending on the product and type of IPR in question. When apologists fail to fess up to the problems, they come out sounding pretty lame.

Tian Lipu, director of the State Intellectual Property Office, claimed Thursday that foreign media accusations of China’s weak protection of intellectual property rights (IPR) were groundless “labeling.”

“If they had based their comments on the facts, they may have changed their views,” Tian said at a press conference, adding that it is a paradox that at a time when China is being blamed for its poor IPR protection efforts, it still remains attractive to many foreign enterprises and investors.

“China has been receiving a large number of patent and trademark registration applications from foreign enterprises, and to my knowledge, the growth rate of foreigners’ new patent applications in China is much higher than the international average,” Tian said.

“Moreover, China has been a considerable source of foreign companies’ profits in the forms of patent, trademark and copyright royalties, a fact that was largely neglected in media reports,” the official added. (Xinhua)

Odd, to say the least, particularly coming from someone like Tian, who has been at this for a very long time. IP protection must be OK because foreign investors are still coming to China? Yes, those things are related, but Tian seems to have forgotten that many firms have huge risk appetites and have thrown all caution out the window going apeshit in pursuit of growth.

This accounts, by the way, for the increasing trademark and patent registrations. Are registrations higher because folks trust the system more than they used to? Sure, but I’m betting growth is a much more important factor.

Meh. This discussion started off silly and continued into ridiculousness. I’m bailing.

A Writing Tip for Lawyers Doing Newsletters

Stan — Wed, 01 May 2013 03:13:26 +0000

As someone who has been writing legal newsletters (or similar) for about 15 years, I speak with authority on this subject. I’ve also helped to train a boatload of lawyers with respect to drafting a variety of documents, both formal and informal.

The problem is that most lawyers are wholly unfamiliar with the concept of “audience.” Let me use the example of acronyms, since this will help me get to the point that much faster. Say you’re a private practice lawyer writing a brief email to your client, specifically an in-house lawyer who specializes in PRC corporate law. Would it be acceptable to use “MOFCOM” to indicate the Ministry of Commerce in that email? I would say yes.

However, if you’re writing a memorandum for that same client, an opinion that may be passed around internally by that same corporate in-house guy, say to the General Counsel or to the CFO, CEO, the Board of Directors, etc., is it still OK to use an acronym like MOFCOM without defining it first? If the company is a foreign one, the answer is a resounding “no way.” Normal practice would be the usual “blah blah blah Ministry of Commerce (“MOC”) blah blah.”

And now my actual point. I’ve noticed that not only do lawyers have a lot of trouble switching from the different audiences noted above, but they are really terrible at writing in a marketing situation. Sure, they can write formal stuff for a brochure (maybe), because the same writing rules and style generally apply.

But ask a lawyer to write a newsletter or blog? Bleah. You get stuff like this:

As one of the three anti-monopoly enforcement authorities in the People’s Republic of China (the “PRC” or “China”), the National Development and Reform Commission (the “NDRC”) is in charge of the examination and regulation of price-related monopolistic activities.

Now, this is not bad writing. It’s perfectly fine, and certainly good enough for a newsletter. There are no errors or Chinglish here, which is always a turn off.

But when you’re writing a newsletter that is going out to a wide audience, let’s drop the lawyer writing style, huh? Noting the abbreviation for China/PRC looks goofy and childish (the writer does the same thing for “EU” later on — {sigh}). If you write out “People’s Republic of China” and then later refer to “China” or “PRC,” no one is going to get confused. This is not a contract whose language will be parsed in the future by some judge to determine whether the parties actually meant Mainland China or Greater China, including Hong Kong, etc. In other words, lawyers writing this kind of thing need to chill out and adopt a more informal writing style that is easier for the reader to get through without giggling.

As to the NDRC acronym, the article in question was about that agency, and after using “National Development and Reform Commission” in the first sentence, no one is going to start scratching their head if you simply call it “NDRC” the second and subsequent times.

One compromise, if you’re looking for one, is the one I use sometimes in informal emails and this blog, which I’ll call the “slightly more informal acronym reference.” For example, instead of all the messing about with bold, bequotation-marked acronyms, a simple reference, which I believe journalists use, is a lot less off-putting. For example, “the National Development and Reform Commission (NDRC) is quite busy these days . . . ” Not so jarring.

Are you bored yet? OK, I’ll let you go. One final note: I took the above quote from the “China Matters” newsletter (PDF) put out by the Paul Hastings law firm. The newsletter is a good one, and I wasn’t trying to single them out for any particular reason. I just happened to be reading that one today.

Michael Jordan Reputation Rights Case Begins in Shanghai

Stan — Mon, 29 Apr 2013 02:42:22 +0000

Normally I wouldn’t bother you with the news that a case I have already discussed many times has kicked off. No real news to report here, at least not yet. However, after reading the coverage in Xinhua, I just felt obligated to pass along this little treasure from the alleged infringer’s crack legal team:

The defendants argued that the word “Qiaodan” is simply a translation of the common surname “Jordan,” instead of the full name of the former NBA player. The real intention of using the Chinese name “Qiaodan” is to mean “grass and trees in the south,” said lawyers for the Qiaodan Sports.

You might be thinking these guys are hacks, but I’d like to disabuse you of that notion. Only true professionals can issue statements like that with a straight face. That sort of in-your-face, unabashed bullshit is a work of art. I know that if called upon, I would be unable to put forward that argument without erupting into belly laughs. My ass would be fired immediately.

Kudos to those lawyers. They are true professional advocates, and a credit to our profession.

© Stan for China Hearsay, 2013. | Permalink | One comment | Add to del.icio.us
Post tags: Michael Jordan, Qiaodan, trademark infringement

China Arbitration Follies

Stan — Sun, 28 Apr 2013 00:58:10 +0000

A while back, I wrote about the feud between the China International Economic and Trade Arbitration Commission (CIETAC) and, well, itself, specifically Beijing (aka headquarters) and its sub-commissions in Shanghai and Shenzhen. The latter two went rogue, with Beijing saying that the “CIETAC” moniker was no longer available to them and that anyone choosing to arbitrate with CIETAC in those locations would have to go through Beijing from now on.

The inevitable break between these organizations has occurred, and now both Shenzhen and Shanghai must go it alone without the valuable CIETAC brand. Good luck to them, but as a recent article put out by law firm Hogan Lovells illustrates quite well, bizarre and complicated branding is not going to help.

Upon the approval by the Shanghai Municipal Government and agreed by the Shanghai Commission for Public Sector Reform, the China International Economic and Trade Arbitration Commission Shanghai Sub-commission (“CIETAC Shanghai”) has officially become the SIETAC. It will also use the SHIAC concurrently as the official name.

These guys say that they will accept cases under the names SIETAC, SHIAC, and CIETAC Shanghai, but we’ll see what the CIETAC folks up here in Beijing have to say about that. Something tells me that the Ministry of Justice is going to step in and knock some heads together.

Since I don’t do dispute resolution work, or at least not directly, this situation is mostly just amusing. Moreover, in local agreements I draft that choose China dispute resolution, I don’t generally use either Shenzhen or Shanghai arbitration anyway.

However, those of you who do need to resolve disputes in those places, beware. CIETAC Shanghai? SIETAC? SHIAC? Just don’t use SEA-TAC, or you’ll end up in a completely different jurisdiction altogether.

If China IP Had an Album Cover, This Would be the Artwork

Stan — Fri, 26 Apr 2013 04:47:38 +0000

If I told you to think about intellectual property enforcement in China and asked you what was the first image that popped into your head, I’m betting it would look something like this (courtesy of China Daily):

Nothing is more iconic than the old steamroller picture. It’s also a great symbol of the statistics-driven way the enforcement system here is evaluated, and how futile and unimpressive the simple destruction of a few thousand DVDs is.

As usual, if you can’t see the image for some reason, go to the China Hearsay page directly.

AmCham Business Surveys: Not Exactly Scientific, but Undeniably Useful

Stan — Mon, 22 Apr 2013 12:14:40 +0000

The American Chamber of Commerce in China regularly publishes surveys of its members, which routinely include criticism of the government/legal system/business climate and complaints about anything from IP infringement to protectionism. So I’m not too surprised to see this pushback from the Ministry of Commerce put out by Xinhua:

An official with the Chinese Ministry of Commerce said Wednesday that a recent survey conducted by the American Chamber of Commerce in China, or AmCham-China, has under-represented foreign businesses in China, making the survey results debatable.

According to the group’s annual business climate survey, which was released on March 29, 28 percent of respondents said they saw China’s investment environment improving, down from 43 percent the previous year. The report also said more than a quarter of respondents said they had experienced data breaches or theft in their China operations.

The MOC official, who works with the ministry’s Department of American and Oceanian Affairs, said AmCham-China’s report was based on answers from 325 respondents among its 1,100 members, but the number of foreign-funded enterprises in China has exceeded 285,000, with over 20,000 funded by American firms.

While no one should be surprised by this, the more interesting issue is whether or not this guy from MOC has a reasonable point. He went on to say that if indeed the results are misleading, then potential foreign investors might get a skewed view of conditions in China, leading to poor investment decisions. He also criticized the media for essentially treating these surveys as gospel, without questioning how representative the results are.

I think these are fair points. Obviously the AmCham surveys are not scientific, and as is the case with surveys like this, I have a feeling that certain folks are over-represented, plus the complainers probably respond in greater numbers than companies that are more satisfied with how things are going.

So yes, it’s possible that potential investors are getting misleading information. Who can we blame for that? AmCham itself? The media?

I don’t think I’m ready to throw AmCham under the bus for the way it handles member surveys. When AmCham publishes these things, the surveys are upfront about methodology, and although I haven’t checked recently, I dimly recall that accompanying press releases make clear how the data was collected.

I’m gonna let AmCham off the hook for this.

How about the media? Well, I’m slightly more open to a bit of criticism, but only a little. When the media reports on a new survey, the articles written generally contain the basics on methodology that you find in the AmCham press release. Anyone reading one of these articles carefully will understand the limitations of the survey.

However, and this is the only area where I’ll let Mr. MOC have his moment in the sun, a cursory glance at these articles, with their screaming headlines, might mislead folks who are skimming their way through the news. Headlines tend to be sensational, and they are usually written in such a way that focuses on one particular hot-button issue.

Shocking, I know. Unfortunately, the editors who write these headlines know what they’re doing. Which of these two headlines would catch your attention?

Seventy-eight percent of U.S. companies in China say they’ve been hacked.

AmCham: 78% of respondents to a survey with a 24% response rate say they’ve been hacked.

Right then. So a small amount of criticism for headline writers, with a fair amount of contributory negligence on behalf of lazy news readers. Aside from that, I’m giving AmCham and those who report on these surveys a pass.

One final point. I read these surveys on a regular basis. Even though they are not scientific and only represent a fraction of the companies over here, they do help to identify problem issues. As a private lawyer, this was useful in giving me a heads-up about matters that I would sooner or later see from my clients. As an in-house guy, it tells me what some other companies are dealing with. I think a lot more people out there benefit from this intelligence than are misled by it.

U.S. Fails to Name China blah blah Currency blah {yawn}

Stan — Mon, 15 Apr 2013 12:25:08 +0000

Not exactly my most eloquent post title, but really, did anyone out there actually notice that once again, the U.S. Treasury Department decided that China shouldn’t be on the list of currency manipulators? Yes, the wire services ran little blurbs, as did the major papers that have good China coverage. But they were just going through the motions. The only folks who care anymore these days are paid lobbyists and paid politicians, and who gives a shit what they think, anyway?

Even Xinhua was kind of listless in its coverage this time around. Just the facts, for the most part:

In the latest Semi-Annual Report to Congress on International Economic and Exchange Rate Policies, US Treasury highlighted the need for greater exchange rate flexibility and transparency, most notably by China, but also by other major economies.

“China’s current account surplus has declined from a peak of 10. 1 percent of GDP in 2007 to 1.9 percent of GDP in 2011 and 2.3 percent in 2012. China has taken a series of steps to liberalize controls on capital movements, as part of a broader plan to move to a more flexible exchange rate regime,” the Treasury said, adding that in light of these developments, it concluded that China did not meet the standards of a currency manipulator.

Fairly boring stuff, with the exception of the last two paragraphs of the Xinhua piece, which note that the US Treasury also has its eye on Japan. From the viewpoint of your average Xinhua editor, this is all good news.

But let’s face it, this issue of China currency manipulation is about as lifeless as my Friendster account. I couldn’t even find the usual outrage-laden Op/Ed on The Huffington Post written by Worthington J. Rentseeker of the United Workers of Dead Industries Union, or NAMBLA.

So why, pray tell, did the Treasury Department stick with the usual inane and cowardly practice of releasing its report on a Friday (I’m assuming in the afternoon)? I can only guess that it’s force of habit at this point. I wonder if Senators Lindsay Graham and Chuck Schumer, or economist Fred Bergsten, held press conference on this issue over the weekend? These guys are probably still trying to convince folks that the RMB is 40% undervalued. To be fair, though, I think Chuck Schumer has a press conference on a daily basis no matter what’s going on.

I periodically threaten to stop writing about this issue. I obviously have nothing substantive to say about it anymore. Hell, I went out to dinner a few nights ago and audibly gasped when the check came – this place is too cheap? I think not.

On the other hand, this topic was one of, if not the very first, subjects I ever blogged about. Call it nostalgia, but I think I’ll tough it out. My goal is to wait until some day in the future when China complains that the U.S. is making too much cheap crap and flooding the world with its exports. At that point, I’ll retire. Gladly.

Michael Jordan’s China Lawsuit Takes a Sad Turn

Stan — Wed, 10 Apr 2013 14:54:08 +0000

You may recall that Michael Jordan sued a Chinese sportswear company in 2012, claiming that they infringed upon Jordan’s Chinese name and several logos that were similar to those used by Jordan or his sponsors. The case was filed in Shanghai and basically has just sat there for many, many moons (I assume pending settlement negotiations). A minor news blip on the radar today: Qiaodan (it was reported) filed a suit against Jordan.

Back in December, there was a rumor about a counterclaim, basically that Jordan’s case was crap and that the smear on their good reputation was harming their business. For example, their planned IPO withered and died.

My reaction at the time? “This is amusing.” Why did I say that? Because Jordan’s case obviously has merit. The man was definitely famous in China at the time the marks were filed, and I assume he can prove that. The fact that this is a sportswear company and that several of the logos are basically copies of Jordan-type logos seals the deal. Oh yeah, the company also filed the names of Jordan’s kids as trademarks. Malicious lawsuit? I think not.

I also said that there was a 1% chance that the company would really file a counterclaim. If you ask me, they’d have to be stupid to do so since it’s such an obvious loser and transparent attempt at influencing the judge/negotiation. Lame strategy.

As I’ve told you many times in the past, you really shouldn’t listen to me. My predictions suck. They actually went ahead and filed against Jordan, according to news reports. I assumed earlier today that it was a counterclaim and that all of this would be dealt with in Shanghai, but as I read up on the news this evening, I found it was a separate suit filed in Fujian Province. Still a ridiculous suit, though, and the case should not be accepted (but you never know – these guys essentially filed the case on their home turf, and you know what that means).

The WSJ was nice enough to interview me about the case this afternoon (and didn’t mention my awful prediction). I incorrectly told them that the original case and the latest fiing would be dealt with at the same time, but that was based on my assumption that this was a counterclaim filed with the same court. Oops.

If you look closely at the video, you might be able to see the toy Black Knight (from The Holy Grail) my sister gave me, perched on the bookshelf in my office. It was in the frame when I was on Skype anyway; I hope it wasn’t cropped out. I haven’t actually seen the WSJ feed since my Net connection at home isn’t allowing me to stream anything. So I got that going for me, which is nice.

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Post tags: Michael Jordan, Qiaodan, trademark infringement

Finally, a Worthwhile “Apple: What Have We Learned?” Article

Stan — Fri, 05 Apr 2013 10:31:00 +0000

You’ve probably read more than one story about Apple’s current troubles in China. This latest kerfuffle involves a broadside against Apple’s warranty and repair policies by local media (e.g., CCTV, People’s Daily) and at least one consumer agency.

Why have I avoided it? While it’s big news for Apple, and for all you Cult of Mac folks out there (oh yeah, and journalists/pundits), I can’t find anything here that can really be put in the “new” category. In other words, all we’ve got is another huge multinational that is being singled out by the government here.

Been there, done that. Does this signal some sort of new policy stance by Beijing? I have no idea (and no one else does either). Is this evidence of protectionism or revenge for the hits taken by Huawei and/or ZTE? Maybe, but once again, no one knows for sure. I didn’t much feel like speculating, since I probably have even less information than most pundits out there.

All that being said, I break my much-appreciated silence (I assume) on this issue not to weigh in, but to simply point you towards one of the only articles written so far that I find useful, David Wolf’s “Kowtow Now” in Foreign Policy. And I’m not giving a thumbs up to this because of any groundbreaking news or opinion; in fact, it is totally well-tread ground (if you’ve been paying attention to China for the past decade or so). However, it’s a very well-written piece and I agree with it wholeheartedly.

What I like is that the article does not focus on Apple so much, but rather takes a broader look at how foreign companies are treated in China. This is useful stuff, and if I may say so, David’s conclusion is something I’ve been repeating for many years:

The better course of action for companies is to try to avoid becoming a target. Take the double standard and use it as an advantage by proactively behaving at a higher benchmark: when in Rome, doing as the Christians, as it were. Making China a “most favored nation” by adhering in China to your highest operating standards from around the world — in finance, customer service, hiring, and ethics — is not just a nice idea, it is a corporate survival strategy.

Excellent advice. If you want to waste your time speculating about Apple and what the government might be doing, go right ahead and troll through the usual news coverage. But if you’d rather learn something useful, go read David’s article.

Baidu v. NYC Dissidents Kicked on a Technicality

Stan — Sun, 31 Mar 2013 07:00:01 +0000

You might remember a strange little case that was filed back in 2011 by some Chinese dissidents in New York. Their ~~weak ass~~ sadly untested argument was that Baidu was censoring search results such that their anti-China content did not come up when folks did a search. The plaintiffs argued that this was a violation of the U.S. constitution.

While fascinated by the case, I nevertheless said it was a big fat loser, and last week, it was indeed tossed by a New York federal judge. However, the decision did not go to the merits of the case, but rather procedural issues. The case thus appears to be only temporarily dead, but don’t be fooled by this; in fact it’s actually completely dead, as I explain below.

First, the news from Reuters:

Baidu Inc on Monday won the dismissal of a U.S. lawsuit brought by pro-democracy activists who claimed that China’s largest search engine operator, as well as the country itself, should be punished for censoring them over the Internet.

U.S. District Judge Jesse Furman in Manhattan said dismissal was proper because the defendants had not been properly served with court papers, and China had invoked an international treaty in claiming that service would infringe its sovereignty.

Yes, a procedural issue that has to do with the Hague Convention, an international treaty that governs cross-border service of process and related issues. I don’t know the details here, but if the plaintiffs had to serve Baidu in China, then the Hague Convention specifies a procedure that includes China’s Ministry of Justice.

If I have that right, it means that to fix the procedural defect and move forward, the plaintiffs would essentially need the cooperation of the Chinese government to serve Baidu with papers. That ain’t gonna happen, which is why I’d say this case is all the way dead, not just very tired and in need of a rest.

Note that I’m not up on cross-border litigation issues, so maybe someone (Dan Harris? Don Clarke?) could chime in with a correction/confirmation.

This is all kind of a let down. I was worried about something like this when I wrote about the case back in 2011 (also this post):

We’ll have to wait and see what happens next, but if the case gets kicked on jurisdictional objections, or other pre-trial motions, then we’ll unfortunately never know how these guys ever thought they could win a case like this.

Yeah, it looks like that’s what happened. That’s unfortunate, because I’m pretty sure that this case not only had procedural defects, but also substantive problems as well, big giant furry ones. I wrote about the jurisdictional and constitutional issues in my first post on the case. Suffice it to say, I saw no bright rays of sunshine for the plaintiffs there.

Looking back on this, it’s kind of ironic that the reason I find this suit so odious is its argument based on the First Amendment. You’d think that the plaintiffs are the ones who are treading the moral high ground with respect to free speech here; after all, they are lashing out at the PRC’s censorship regime.

But two wrongs do not make a right, and I see this attempt to force a private company to conform to certain content rules, whether liberal or not, as not at all within the spirit of the First Amendment. As I wrote in 2011:

Look, if I wanted to start a new site called ‘Nazi Search Pig’ that omitted all blogs written by Jews (like China Hearsay) in search results, I should be able to do that. Whether Baidu is censoring porn or political speech at the behest of the Chinese government is irrelevant — the US constitution simply does not prohibit that kind of activity. However, if Baidu were to be found liable, who’s next and where does it end? What other positive requirements like this are we going to place on our platform operators?

In other words, Baidu is a private company that should be left alone when it comes to content. Its motivations for censoring search results can be criticized, but it shouldn’t be up to the U.S. legal system or government to tell it what to do in this regard. Indeed, if Congress decides to actually get involved with this sort of thing, passing local content rules for web sites (they wouldn’t officially call it that, of course), you realize what the end game would be, right? There would have to be an enforcement mechanism for sites that failed to meet the standards. I’m thinking some sort of domain/page level blocking could be done, perhaps with the assistance of ISPs or a new government-run technical agency.

But I suppose that would be OK as long as the U.S. was doing it in order to secure our First Amendment rights.

Expat Exodus: Emigration Me-Too-ism

Stan — Sat, 30 Mar 2013 11:48:08 +0000

After the latest “Why I’m Leaving China” column came out and the usual tongues started wagging, I realized that many of these missives are simply thinly-veiled advertorials. “Hey, I’m leaving China after a bunch of years, and by the way, here’s the name of my new company and a brief bio of my past achievements. If you have some money or an biz opportunity, ping me and we’ll do lunch.”

Congratulations to Marc van der Chijs for getting some free pub, not to mention grabbing yet another opportunity to tell everyone that he can run long distances (enough already, please).

I was glad to see that Matt Schiavenza, international raconteur and friend of the show, responded with an Atlantic blog post, reminding everyone that there is in fact no expat exodus. Someone has to keep the tongue waggers honest — thanks, Matt.

I’m also quite pleased that no one has written to me and asked why I left China. Aside from a two-week trip to suburban Philadelphia, I haven’t, but the serious decline in blog posts over the past few months might have made some folks wonder. If anyone is still paying attention, that is.

Speaking of which, here’s some me-too-ism from yours truly, something I would like to entitle: “Why I’ve Partially Left China, Although Only Sort of in a Mental/Philosophical, or Perhaps Just Professional Context.” Not the best title, I suppose, but that’s the only one that came to mind. I have a cat sleeping in my lap who is purring quite loudly, and it’s pleasantly distracting. (How’s that for stereotypical blogger behavior?)

So how can I be sitting here in Beijing and yet say that I’ve left China? Well, for the past 14 years, most of my days have been spent dealing with China law issues. That was my job, you know. Even if I wasn’t blogging, my profession kept me squarely in China one way or another.

That has now changed with my new job. I didn’t quite realize this before I took it, but my new position has me spending my days dealing with legal and commercial issues in a wide variety of jurisdictions. On some days, I might not touch on a China legal matter at all.

I didn’t really notice the change much until I attended a meeting last Thursday, a China group meeting of a software association. I found myself in a room with a bunch of software guys, all of whom are China based and China focused. As we discussed new regulations and initiatives, I realized that drilling down into such detail on China matters was simply no longer in my job description and, although I found it fascinating intellectually, I realized that I probably wouldn’t be able to justify the time spent doing any China sub-committee work for the organization.

So you see, I’ve already left China, or to be more exact, I’m now mentally travelling to other places in Asia these days in addition to China. The end of an era, and pollution and traffic had nothing to do with it.

Not quite the same thing? Well, I tried. Gotta give me that. My feeble attempt at remaining topical.

Fan Bingbing, Token Chinaman

Stan — Sat, 30 Mar 2013 10:32:43 +0000

Earlier today Marvel announced it will be releasing a Chinese version of its upcoming blockbuster, Iron Man 3, which will differ from the film that audiences outside of China see.

The announcement also included the detail that Chinese actress and singer Fan Bingbing will be cut out of the non-Chinese version of the film. (The Diplomat)

Kudos to Marvel and DMG for rolling with the punches and localizing content to get the most out of a theatrical project. If putting in special bonus “China” content makes Beijing happy and gets the film better distribution over here (and, I assume, more ticket sales), then I guess it’s win-win.

But I’m just wondering what Fan Bingbing feels about all this. Happy to get a paycheck and be part of a big title, sure. On the other hand, kind of a hit to the old ego, eh? “Sorry, honey, you’re good enough for the local version of this flick, but you’re still not up to snuff when it comes to the top international markets. Come back when you grow up.”

If it was me, I’d be kind of pissed off. And if I was representing a top Chinese actor, the next time a foreign studio came calling, I’d insist on a “will appear in foreign release” clause in my contract.