English version translated by XU Xinyuan (Wayne)

In recent years, as the international environment continues to change, Chinese enterprises that seek to invest overseas are faced with a series of opportunities and challenges. How to deal with investment risks and seize opportunities has become the focus of enterprises’ attention.

On Sept.20, 2023, the 2023 training session on the topic of security risk prevention for overseas Chinese-funded enterprises and staff was held successfully on the 5th floor of East Tower, Raffles City in the North Bund. Under the guidance of Shanghai Municipal Commission of Commerce and Shanghai Foreign Affairs Office, the training session was hosted by Shanghai Foreign Rescue Service Center and co-sponsored by LexisNexis. Three senior partners and senior consultant of Shanghai LANDING Law Offices with rich experience in foreign-related affairs acted as the keynote speakers of the training session. Focusing on the topic of risks and opportunities of overseas investment for Chinese enterprises, three LANDING speakers delivered guidance for enterprises to prevent risks in the overseas investment and to participate in international competition better.

Mr. LIU Yixing

Director of LANDING Global Management Committee

Topic: The opportunities and risks in overseas investment —— from the perspective of India

In recent years, Chinese enterprises have come across troubles caused by the anti-globalization trend in the process of making overseas investment, and thus have to move their industries to countries whose certificates of origin are not China, such as Vietnam, Mexico, India, etc. As a result, Chinese enterprises are bound to encounter a huge wave of overseas investment.

On the other hand, overseas investment by Chinese enterprises is also an inevitable wave in the trend of history. There is a simple rule in the global economy that when a country’s per capita GDP exceeds 4,000 USD, the production capacity of traditional industries will unavoidably transfer to countries with a per capita GDP of less than 2,000 USD. In order to achieve the RMB internationalization, it is inevitable for Chinese enterprises to invest overseas. What’s more, since the domestic industry capacity has been excess, which has led to redundant construction projects, the domestic industry must go overseas.

The advantages of overseas investment by Chinese enterprises lie in China’s open-minded society and system, the unique industry chain in the world and powerful execution with spirit of revolution. However, Chinese enterprises also encounter problems in overseas investment, such as inflexible and monotonous path pattern, the cask effect of talent mechanism, the blind spot of regulation and the lack of means of investment.

Enterprises must put emphasis on the fundamental legal issues when investing overseas. Most of the social experience and legal knowledge accumulated domestically cannot fit in the process of overseas investment, and it is necessary to rely on professional opinions issued by professionals, such as lawyers and accountants, and to operate in accordance with standard procedures in the process of overseas investment. At the same time, Chinese enterprises need the guidance by Chinese lawyers overseas, who not only understand Chinese corporate culture but also have national loyalty, which also helps to avoid national security issues.

Ms. YE Juan Celina

Senior Consultant of Shanghai LANDING Law Offices

Topic: The regulation and response to data outbound transfer

Ms. Ye delivered her sharing around three parts, which were the concept of data outbound transfer and common scenarios, the compliance path of data outbound transfer in China and data outbound transfer regulations in other countries.

Data outbound transfer refers to the situation where data processors are to provide important data and personal information produced and collected during operation in China to overseas areas. The common scenarios of data outbound transfer are human resource information of multinational corporations, Customer Relationship Management (CRM), overseas investment by Chinese enterprises such as cross-border e-commerce and China-developed games in overseas, provision of data products and data-based services to overseas areas, etc.

Based on the regulatory principle of China’s laws and regulations on data outbound transfer, the compliance method varies according to the specific data situation. Different data are faced with different compliance requirements, such as state secrets, important data, personal information and other regulated data. From the perspective of the regulator, the main points of data outbound transfer declaration are as follows: why the data go overseas, the scale and type of data outbound, the overseas recipient, and the possible risks.

For enterprises that have provided and are to provide data overseas, Ms. Ye has proposed the following data outbound compliance suggestions. First, sort out the data outbound business scenarios within the enterprise and determine whether they are under the regulation of the Measures of Security Assessment for Data Outbound Transfer. Second, establish the necessary data outbound self-assessment system. Third, clarify the different compliance paths for data outbound. Fourth, draw up legal documents and ensure security measures. Fifth, pay close attention to the follow-up guidelines and FAQs on data outbound transfer security assessment.

Ms. HU Min Carol

Senior Partner of Shanghai LANDING Law Offices

Topic: the legal risk prevention of foreign related contracts regarding Belt & Road – taking international project as an example

Ms. Hu conducted her speech from three parts: the development of international business, legal risks in overseas contracts and elements of overseas engineering contracts. Ms. Hu put emphasis on the control of legal risks in overseas contracts and explained it in detail.

Overseas contract refers to the contract in which the parties to the contract, the object of the contract, or the legal facts giving rise to, modifying or terminating the contractual relationship bear an overseas element.

When dealing with overseas issues, we cannot ignore the political, economic and cultural backgrounds. When it comes to the issues of performance capabilities and fulfillment deadlines, we must take consideration from the perspectives of politics, economics and culture along with the legal perspective.

When entering into an overseas contract, each party shall abide by not only the legal principles but also the international conventions, such as International Rules for the Interpretation of Trade Terms (Incoterms), ICC rules, contractual terms and conventions in international engineering area.

In the process of signing and performing overseas contract, the legal origins may involve domestic laws, laws in the host country and international rules and norms. International rules and norms involve international treaties, such as bilateral investment treaties, and regional multilateral investment treaties and global multilateral investment treaties, as well as UN General Assembly resolutions and international conventions.

In addition to the aforementioned practices and common rules, there are significant differences between different countries in their foreign related laws and regulations, which may result in political, legal, economic, social environment risks, as well as natural risks in overseas contracts. For example, the legal system of Saudi Arabia is generally conservative and differs greatly from China’s law, which bring out the fact that professionals with a detailed understanding of the relevant legal system are required for compliance and risk control, so as to avoid “falling into the trap”.