Week Two successfully completed. The last three classes included the “guts” of a classic study of China foreign-invested enterprises, including business structure options, establishment, corporate governance, etc. In some ways, one could end the course right now — the most important stuff has already been taught.

But . . . onward.

Next week is taxation, labor, and what is turning out to be an abbreviated and weird little section on land use rights and real estate.

Couple of points on land/real estate. I always end up second-guessing myself when I teach areas of the law with which I am relatively unfamiliar (compared to IP or corporate law, for example). Am I limiting the teaching time because of my unfamiliarity or because the topic really doesn’t deserve a lot of time?

I think both are probably true when it comes to real estate and, to a lesser extent, taxation.

But let me make my case for why I am only devoting an hour or so to land issues:

1. Real estate is a huge part of China’s economy right now, and a lot is going on, but the current restrictions on foreign investment in this area have shut off a great deal of FDI activity. Why spend a lot of time on a closed industry?

2. Real estate law/practices are so bizarre and arcane, and in many cases unknowable, that it is quite difficult to teach. There are few real experts in the law that could deal with the subject from a national perspective, and those folks would even then find it uncomfortable telling students about actual practices in the industry, scary as they are.

3. Land use rights, on the other hand, are a very important concept in FDI work and deserve mention in class for a variety of reasons. However, once you get the basics down, the most important lessons for FDI come down to due diligence investigations. Extremely important, but not all that complicated.

So it seems to me like there is no need to spend a great deal of classroom time on the subject. My Chinese students can, and should, get a solid grounding on property law in another class. My foreign students simply don’t need to know all that much if their goal is to learn about FDI law.

Any dissent out there?

With respect to tax, there is a lot more to say, so I’m shooting for about two hours of class time. Not anywhere near the nine hours I’m devoting to IP later in the course, though (but that’s my area of expertise, so it gets the most attention).

I think FDI lawyers should have a grounding in the types of tax issues that are important to foreign investors. They should know the various kinds of taxes that a foreign company may be subjected to, including the ways that a Representative Office can be taxed. FDI lawyers should also know a bit about individual income tax when it comes to expats (clients always ask), business tax on service contracts, taxes on royalties and other cross-border transactions, etc.

But that’s mostly it. I do not believe in forcing students to memorize tax rates, technical rules governing specific incentive programs, or details on individual tax treaties. For the most part, you just need the basics as a corporate lawyer. If questions go deeper than that, chances are that a specialist will get involved.

Labor issues are big, and I’m planning on three hours for that subject. Could be even longer, but three hours seems OK. Labor is the first topic in the course, however, that could include some real in-class policy discussions, so hopefully there will be sufficient time for that. I wouldn’t mind bringing up the most recent Labor Contract Law and the way that some foreign companies and groups (US Chamber of Commerce, I’m looking at you) spoke out against it during the drafting stage.

Your opinions on the above are welcome.