20 Nov 2020 Legal News: PRC Adopted the Export Control Law
On October 17, 2020, the PRC Export Control Law (the “ECL”) was adopted and will take effect on December 1, 2020. This legislation is understood as greatly affecting foreign companies and foreign invested enterprises (the “FIEs”) in China due to its intensive coverage and extraterritorial jurisdiction.
The straightforward impacts on FIEs include:
• FIEs need to modify their internal communication mechanism between employees base in China and overseas regarding technology materials;
• Trading FIEs bear more expense to comply with export license requirements;
• Trading FIEs bear more burden to monitor their business partners, suppliers, customers, agents, end-users etc. and check whether they are subject to trade sanction in China;
• FIEs need to streamline the engaged international trade business and spot the compliance duty under PRC ECL for risk management.
We summarize some of the most interesting contents for your reference.
The ECL raises wide concern by international companies due to the lack of predictable and standardized implementing instructions, and Asiallians will track the forthcoming practices and metrics.
On October 17, 2020, the PRC Patent Law (the “PL”) was amended by the fourth amendment and will come into force as of June 1, 2021. We summarize the most interesting amendments for your reference:
1. The term of design patent is extended from 10 years to 15 years.12
2. The scope of protection of design patent is enlarged by embracing part of the product, while previously the scope merely included the whole product.13
3. Maximum statutory compensation for patent infringement is increased to RMB 5 million from previous RMB 1 million.
Specifically, the statutory compensation regime is extended from “RMB 10,000 – RMB 1 million” to “RMB 30,000 – RMB 5 million”. 14
4. For calculating the compensation, the infringer may bear the burden of proof for providing accounting books, etc. to prove the benefit derived by the infringer.
Specifically, if the accounting books, etc. are mainly in the possession of the infringer, the court can order the infringer to provide such accounting books, etc. to further calculate the compensation. If the infringer refused to provide or provide false materials, the infringer shall bear the adverse consequences and the court may determine the amount of compensation with reference to the right holder’s claim and evidence submitted.15
Asiallians will soon issue a comprehensive analysis in the new PRC Patent Law.
On September 21, 2020, the State Council of People’s Republic of China rolled out a policy announcing to establish three new pilot free trade zones (Pilot FTZs) which respectively are the Beijing Pilot FTZ, the Hunan Pilot FTZ, and the Anhui Pilot FTZ, and to expand the Zhejiang Pilot FTZ.
The policy aims to further facilitate trade and investment by promoting diversified and high-level opening-up in China. Generally, the three new Pilot FTZs will implement more robust measures and attempts to effectively cut investment costs and loosen restrictions imposed on trade and investment. Further, the policy is expected to offer more chances for foreign investors.
The policies outline the general plan and are far from practically specific.
We summarize the most catching contents related to three new Pilot FTZs for your reference:
1. Beijing Pilot FTZ
2. Hunan Pilot FTZ
3. Anhui Pilot FTZ
On October 11, 2020, the State Council of People’s Republic of China rolled out a plan on implementing pilot reforms in Shenzhen to build the city into a demonstration area of socialism with Chinese characteristics in the next five years. In short, the plan is understood as a remarkable step to advance Shenzhen’s opening-up.
We summarize the contents might interest foreign investors for your reference:
1. Relaxing restrictions on sectors including energy, telecommunication, public service, transport and education based on the nationwide negative list.
2. Further loosening limits on foreign investment in cutting-edge technologies.
3. Piloting the legal protection of new intellectual property rights, especially, compensation system for IP infringements.
4. Encouraging foreign institutions to set up securities and fund management companies.
5. Helping foreign talent to obtain Chinese permanent residence permits and attend professional qualification examinations.
6. Improving the foreign exchange management system.
Should you have any inquiry about the policies and laws, please contact us at firstname.lastname@example.org. As always, Asiallians remains at your service and our teams are currently mobilized in all our offices in Mainland China, in Hong Kong and in Taipei.
2. Article 2 of ECL
3. “Dual-use items” refer to the items possessing civil and military applications.
4. Article 12, 17, 18, 19, 20 of ECL
5. Article 2, 45 of ECL
6. The State Council, the Central Military Commission and other relevant PRC authorities (the “PRC authorities”) timely issue export control list and adopt temporary control of items not listed. Article 9 of the ECL
7. Article 10 of the ECL
8. Article 12 of the ECL
9. The PRC authorities may issue importer and end-user list to protect national interest or regulate the end use. Article 18 of the ECL
10. Article 12 of the ECL
12. Article 42 of the PL
13. Article 2 of the PL
14. Article 71 paragraph 1 and 2 of the PL
15. Article 71 paragraph 4 of the PL
17. With the increase the total number of Pilot FTZs in China is 21.
Feel free to contact email@example.com for more information.