In the news: FTZ speculation, regulatory disputes and life sciences challenges
September 26, 2013 | BY
clpstaff &clp articles &Shanghai's Free Trade Zone remains the focus of speculation, while a solution has been proposed for the standoff between US and Chinese regulators. Life sciences companies are having an increasingly tough time protecting their IP in China.
Shanghai FTZ – speculation continues
This week the South China Morning Post reported that internet users in the Shanghai Free Trade Zone would be able to access websites blocked in the rest of China, such as Facebook and Twitter. This has since been denied by officials quoted in the People's Daily. Microsoft has announced a joint venture with Chinese Internet TV company BesTV New Media that will be based in the new Free Trade Zone, possibly in the expectation that the ban on the sale of games consoles will be lifted in the zone. Meanwhile, Bloomberg is reporting that property prices near the FTZ have surged 30%.
It feels like every day there is a new rumour about the FTZ. Although headlines are being grabbed by stories about Facebook access or what effect the zone may or may not have on Hong Kong, some more interesting ideas are emerging. As Susan Finder, editor at Practical Law China, noted this week Lv Hongbing, deputy president of the All China Lawyers Association, mentioned the possibility of a Free Trade Zone Court and Lv Guoqiang, head of the Shanghai IP Administration, is developing plans for a “one stop shop” to enforce IP rights in the FTZ.
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A solution to regulatory battles
Paul Gillis gave an update on the battle between the Public Company Accounting Oversight Board (PCAOB) and SEC with the Chinese regulators over audit working papers. The dispute made it to the agenda of the most recent Strategic Economic Dialogue between the two countries in July, but little has been mentioned since. There is still a standoff over the key issue of PCAOB inspections. Gillis proposes that the Big Four agree to conduct quality control reviews on each other's US listings using reviewers from the US member firms. These reviews should be done with the oversight of the CSRC.
As Gillis admits, this is “not an ideal solution” but it is an innovative approach. It would take the PCAOB out of the process and therefore sideline sovereignty issues. With Alibaba having reportedly chosen a US listing after talks with Hong Kong regulators broke down, these accounting issues are likely to come under increasing scrutiny.
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