China in-house interview: Embracing the long arm of the law

What are the main areas of focus for Sony China's in-house team?

While our corporate, legal and regulatory support covers contract negotiations, litigation and compliance, we also have to spend a tremendous amount of time in dealing with product compliance, new business model evaluation and risk assessment under new legislation.

To what extent do you outsource work and to which law firms?

Like many other MNCs in China, the majority of the legal support is taken care in-house by the Sony China Legal & IP team. Of course, due to law restraints and the complexity of some legal matters – including but not limited to litigation and M&A – we resort, from time to time, to outside counsel. These include major global firms such as Baker & McKenzie and O'Melveny & Meyers, as well as leading local firms such as King & Wood, Jun He, Zhong Lun, Lee Zhao, T&D, Tong Fang and Beidou.

A few years ago, in what was seen at the time as something of a test case for the subsequent AML, local battery maker Tsum (Sichuan) Technology filed a lawsuit against the company alleging monopolisation and abuse of a dominant marketing position. How do you think the AML has evolved since then?

The PRC AML had not become effective when said case was on trial. The Court's Judgment was based solely on the PRC Anti-unfair Competition Law (中华人民共和国反不正当竞争法). Sony was gratified by the Judgment rendered by the 1st Intermediate People's Court of Shanghai, which confirmed and supported Sony's position at trial, and rejected all the claims of the plaintiff.

The PRC AML entered into effect in 2008, and we have never heard of any comment from the legal community that the Judgment would have been different under the AML. The AML has made it crystal clear that the law is intended to protect competition rather than a competitor, and to protect consumers rather than a supplier.

* Some feared the AML might be used to curb the IP rights of foreign companies. Has this happened, and how do you feel the Supreme People's Court of China has performed in interpreting the steady stream of IP laws and regulations?

It is not surprising that people had that fear as the entire AML touched upon the IP issue with merely one short provision of “this Law is applicable to where Undertakings abused the IP right to exclude or restrict competition”. So far, neither the Law itself nor any implementing rule has provided a definition or an attempt to define the “abuse”. In addition, my understanding is that there has not been any judicial precedent that can help clarify the essence of such “abuse” under the AML. It was said that the relevant implementing rules on the abuse of IP rights were in the drafting process by the SAIC.

In light of the recent worker suicides at Shenzhen-based Foxconn Technology, labour lawyers are advising multinationals to place greater focus on production issues such as working hours. What is the company's official position on this?

Like all other MNCs, Sony has paid great attention to the labour issue and has been monitoring the progress of these serious events. Sony China has more than 40,000 employees nationwide and fortunately there has never been an unusual labour dispute. This is due mainly to our constant and consistent efforts in improving working conditions and employee relations in our manufacturing facilities in accordance with global human resource policies and the rules of Sony Corp.

Sony has for a long time voluntarily adopted the EICC Code of Conduct, having committed to upholding the human rights of workers. Sony treats workers with dignity and respect in full compliance with the requirements of the laws and regulations on, among others, health and safety, working hours, wages and benefits, non-discrimination, human treatment, freely chosen employment, avoidance of child labour and freedom of association. Our next tier suppliers are also required to acknowledge and implement (i) the Sony Supplier Code of Conduct, and (ii) the Operational Rules for the Sony Supplier Code of Conduct.