In the news: CSRC boosts investor rights, companies face talent hurdle and dispute resolution clauses
October 17, 2013 | BY
clpstaff &clp articles &CSRC chairman has pledged to better protect investors' rights. A survey shows US companies are finding it hard to locate talent and ChinaLawBlog provides key tips for dispute resolution clauses
CSRC considers SME investor rights
The country's top securities regulator has stated the need to protect the legal interests of small and medium-sized enterprises (SMEs) in the capital markets by redesigning the regulatory system. Xiao Gang, the chairman of the China Securities and Regulatory Commission (CSRC) made the comments in an article published by the People's Daily this week. The chairman pointed out that the current regulation system lacks mechanisms to protect investors' legal interests as it focuses more on ensuring the market's financing functions.
Xiao took over from Guo Shuqing in April this year. In that time, he has spoken very little on the subject of protecting investors' interests. Xiao's comments show that the regulator is determined to repair the country's underperforming markets. It is also essential that a balance between small investors and corporate shareholders materialises. The CSRC's current policy means that large shareholders can deprive small investors of profits through mobilising large amounts of capital.
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Talent is biggest problem for US execs
A survey from the US-China Business Council released earlier this month shows that US executives in China find human resources their top problem. Specifically, the challenge of finding the right talent was above rising costs in a list of concerns. More than 90% of the respondents said their China business is profitable. However, issues like delays in licensing and market barriers have not improved, according to the Council.
Finding talent has been a major issue for multinationals operating in China. There is also the cost associated with finding and maintaining quality talent. Some companies have found that bringing expats to China is better value for money then hiring from a small pool of local people that can perform that job. However, expats have been reluctant in recent months due to quality of life issues in some of China's cities. The European Chamber of Commerce in China said earlier this year that air pollution is a key challenge facing companies and an underlying reason why expatriate workers choose to leave.
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Dispute resolution clauses
Dan Harris from ChinaLawBlog wrote about when he reviews contracts between a US company and a China company – he always goes straight to the dispute resolution clause. This allows him to determine the strengths and weaknesses of the US company's claims against the Chinese company. Harris talks of how litigation in the US is a big mistake when the Chinese company has no assets in the US. He also notes that some contracts have gotten too specific with precise Chinese court jurisdiction provisions, which the courts tend to ignore.
Harris' article serves as a reminder to the importance of getting your dispute resolution clauses right the first time. As he writes: “The whole reason for putting in a dispute resolution clause is to avoid the expense, the time, and the uncertainty of where and how to resolve any disputes.” It also shows that companies should not be afraid to draft a clause that calls for disputes to be resolved by a Chinese court. It is shocking that these mistakes are still happening and companies need to be careful.
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