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China Distribution Agreement

As a China contract lawyer, although I enjoy the day-to-day challenges of China litigation, I’m often called upon to structure international business deals, including drafting China distribution agreement. These are fun too, as I get an inside look at the business side of many different kinds of industries.

Lately, I’ve seen a considerable increase in the number of distribution deals being forged. Distribution agreements are simply contracts to distribute a product made by Company X to the dealers and remarketers of the product.

The distributor assures Company X that it has the facilities, personnel, and technical expertise necessary to market the specified product in a given territory.

At minimum, an international distribution agreement should contain the following terms:

1. This clause sets the duration of the agreement and should specify whether it’s automatically renewed after the term expires or whether the parties intend to re-negotiate terms after the term expires. Duration can vary widely depending on your industry.
2. Products: You should specifically describe and identify the product developed or owned by a company along with all options to the products; all future versions of the products; and all enhancements, revisions, or modifications made to the products by company.
3.Territory: Be sure to always indicate the specific geographic areas where the product(s) will be distributed. Also be sure to include terms of exclusivity to keep your channel clear of competitors.
4. End-User: Identify all persons or entities that will obtain the product(s).
5. Intellectual Property Rights: This provision is immensely important. Always identify the intangible legal rights or interests that cover any idea, design, concept, technique, invention, discovery, or improvement. This extends to any work of authorship and any other similar rights. I’ll be covering international intellectual property protection in a future post.
6. Quota: Be sure to specify minimum quantities of the products. The quota will consist of an initial purchase order and a continual minimum monthly volume commitment.
7. Termination: All good things come to an end. Be sure to carefully articulate the terminating conditions of the agreement. The more thorough you make it, the better off you’ll be.


China franchise agreement overview

The China franchise agreement underscores and outlines the working relationship between the franchisor and franchisee and is a legally binding document on both parties. The document needs to stipulate all the details of the agreement and can vary quite a lot depending on the type of franchise opportunity, the industry of operation and the general terms and conditions that were mutually discussed before the signing of the document. If you are looking to franchise your business, this is the most important document that will help you legally for any case in the future with your franchisee.

Bigger franchisors have a standard document for all franchisees to ensure that they are all treated equally and the franchise agreement contains all that the franchisor expects from the franchisees. However, there is no standard procedure that needs to be followed by all industries and franchisors and there is no standard format for this document.

Different from Franchise Disclosure Document

A quick note is due here. The franchise agreement should not be confused with the franchise disclosure document (known as the FDD). The franchise agreement is a legally binding document that is signed by both the franchisor and franchisee to indicate the start of their business partnership. On the other hand, the franchise disclosure document doesn’t signal the start of the business relationship.


The China law firm's commericial and business litigation practice

The china law firm's attorneys practicing in the Business and Commercial Litigation Department have devised and executed litigation strategies that are not only cost effective and designed to achieve a favorable result, but most importantly, are fully compatible with the business objectives of our clients. The various types of litigation handled through the department include the following diverse areas:

Antitrust and Trade Regulations: We enjoy a nationwide reputation as one of the premier firms in antitrust litigation. Among the major antitrust actions in which this firm has been involved for nearly twenty years, the firm was counsel in the defense of a major consumer electronics manufacturer in the alleged conspiracy to "dump" Japanese electronics equipment into the American market. This case was litigated in several forums and was ultimately decided in favor of our client in the landmark lawsuit. At the same time, we have also provided extensive antitrust and trade regulation counseling to clients involving their trade practices in a variety of industries in order to prevent problems from occurring. These efforts are reflective of the firm's role in many of the major antitrust cases litigated in China and in other forums during the past quarter century.

Class Action Defense: We have defended various class actions including antitrust and securities class actions, nationwide class actions for false advertising and other consumer fraud claims, product related claims including medical devices, consumer electronics, printers, lead in cosmetics, distribution of counterfeit pharmaceutical products, vehicle service contracts, rent-to-own contracts, and class actions brought under various laws, antitrust class actions, and securities class actions.


China Drug Crime Defense Lawyer's Introduction to Drug Crime Law

As China drug crime defense lawyer, we understand that knowing the history of China drug law, drug history and policy is very helpful to our criminal defense.

The present globalization of the drug issue has posed a grave menace to human well-being and development. According to data published by the United Nations in 1998, 21 million people worldwide suffered from cocaine or heroin addiction, and another 30 million from the abuse of amphetamine-type stimulants.

On her southwestern border China is adjacent to the "Golden Triangle,"one of the main sources of drugs in the world. Since the late 1970s, the illicit international narcotics tide has constantly invaded China, and criminal drug-related activities touched off by transit drug trafficking have re-emerged. The number of drug addicts has kept rising, drug-related cases have constantly increased, the drug scourge is becoming more serious with each passing day, and the situation is grim for the anti-drug struggle. In 1999, China cracked down 65,000 drug-related criminal cases, and confiscated 5.364 tons of heroin, 1.193 tons of opium, 16.059 tons of crystal methamphetamine (commonly known as "ice''), and some cocaine, MDMA and marijuana.

In 1999, the number of drug-related cases cracked and the total amount of drugs confiscated increased by 2.4 percent and 33.6 percent, respectively, over 1998. The number of drug addicts registered with the public security organs in 1999 was 148,000, a figure which rose to 520,000 in 1995, and to 681,000 in 1999. Now drug addicts account for 0.054 percent of China's total population. Of the drug addicts, those taking heroin make up 71.5 percent, and those under the age of 35 amount to 79.2 percent. By the end of 1999, of a total of 17,316 reported cases of AIDS virus infection, those infected by intravenous injections of drugs made up 72.4 percent. At present, each province, autonomous region, and municipality directly under the Central Government in China suffers from illegal drug-related activities to a certain extent, and China has been turned from a victim of the transit drug trade into a victim of both drug transit and consumption.


China Anti-drug and Narcotine law and policy

Understand China anti-drug and nacotiine law and policy is essential for our China criminal defense lawyer to defend drug crime and narcotine crime.

I. Summary

The People’s Republic of China (PRC) continues to face problems of drug production and trafficking, which contribute to its status as an important drug transit country in the international drug trafficking arena. China is a major manufacturer of “dual use” chemicals, primarily used for licit products, but also used for illicit drugs like methamphetamine. Organized crime diverts legitimately manufactured chemicals, especially ephedrine and pseudoephedrine, from large chemical industries throughout China to produce illicit drugs. In addition to domestic drug production problems, China’s proximity to the Golden Triangle, North Korea, and the Golden Crescent facilitates the trafficking of drugs such as heroin and opium. PRC authorities view drug trafficking and abuse as a major threat to China’s national security, economy, and stability. The PRC’s National Narcotics Control Commission (NNCC) conducted a new round of the “People’s War against Drugs” in 2009 to maintain an “in-depth and continuous improvement” of controlling drug production and trafficking. The absolute number of seizures of illicit drugs increased over recent years. However, corruption in drug-producing and drug transit regions of China limits what dedicated enforcement officials can accomplish. PRC authorities continue to take steps to integrate China into regional and global counternarcotics efforts, and cooperation with U.S. counternarcotics officials improved over the past year. The PRC is a party to the 1988 United Nations (UN) Drug Convention.

II. Status of Country

The NNCC leads the efforts of narcotics control in China and is responsible for the national coordination of drug control activities. The NNCC includes representatives from a range of government ministries. The Ministry of Public Security (MPS), through the Narcotics Control Bureau (NCB), enforces narcotics control measures. The NCB operates from central headquarters in Beijing and from provincial offices. China Customs Anti Smuggling Bureau also has significant involvement in narcotics control. A signatory to the 1988 UN Drug Convention, the 1961 Single Convention on Narcotic Drugs, and the 1971 Convention on Psychotropic Substances, the PRC takes strong measures against the use and trafficking of narcotics and dangerous drugs.

The PRC government subscribes to “the Four Prohibitions,” which include: 1) disruption of trafficking organizations by attacking the source and stemming the flow of drugs entering China, 2) strict enforcement of all relevant laws and regulations, 3) treatment of drug users by determining root causes of drug use and empowering communities to address their particular drug problems, and 4) actively cooperating with other countries and international drug control organizations. China’s location, geographical size, population, and current economic condition pose obstacles to its ability to adhere to these “Four Prohibitions.” The PRC’s physical proximity to major narcotics producing areas in Asia—Southeast Asia’s Golden Triangle, and Southwest Asia’s Golden Crescent—exacerbates its drug trafficking problem. PRC officials recognize the Golden Crescent is a source of increasing amounts of heroin trafficked into western China, particularly into Xinjiang province.


China Criminal Procedure Overview

Mainland China has a single criminal procedure legal system. As China criminal defense lawyers, we now introduce China criminal procedure for you.

Chinese criminal procedure is divided into three stages, all of which are exclusively separate from each other. These stages are the investigation, the prosecution, and the trial. The investigation stage of criminal cases is conducted by the police, who at this time detain suspects, direct interrogations, gather evidence, and interview witnesses. During the investigation stage lawyers roles are severely limited, but Criminal Procedure Law states that lawyers are entitled to provide their clients with legal consultation, lodge petitions and complaints, and apply for bail on their clients behalf.

After the investigation stage has been completed, the prosecution procedure begins. At this time, the investigators submit to the Procuratorate the evidence that they have gathered in order for the Procuratorate to decide whether the circumstances of the crime are clear and the evidence reliable. During this stage, the defendant is entitled to legal counsel. However, few lawyers are assigned to the cases of indigent persons and often do not see the point in accessing their clients at such an early stage.

Beginning with the 1996 reforms to the Chinese Criminal Procedure Law, Chinese trials have become increasingly adversarial in nature. These reforms guarantee greater rights to legal representation and include other measures intended to protect the right to a fair trial and to strengthen the role of lawyers. Despite these improvements, Chinese lawyers still are not active players in trials.


Enforcing and Implementing Patent Protections in China:

Chinese cultures and legal systems are very different from those in other counties.  The rule of law has never been the dominant philosophy in China; instead, the Chinese relies mostly on mediation or other sources outside of the court system to resolve their disputes.  Although the Chinese government has engaged in significant efforts to enact IP protection, the lack of effective enforcement of these laws in China has been a long-standing problem.

The first essential issue for the lack of enforcement of IP laws is the education and cultural issue.  For centuries, Chinese believe that inventions and creative works belong to society, and should be freely shared or owned by the Chinese Government.  Therefore, as traditional Chinese culture does not consider IP rights as private rights, the entire concept of IP protection is quite new.  Many Chinese and business entities are not aware of their IP rights and the need to seek protection; and many infringers do not know that their activities infringe other’s private rights.

Second, since IP rights and protections are a new concept in the Chinese legal system, most Chinese lawyers and judges have no experience in this field.  Currently, China is short of lawyers specialized in patent and other IP law, and the judges who are dealing with patent and other IP disputes are mostly inexperienced law school graduates.  There are no clear judicial tests to determine infringement, and disparate treatment and inconsistent results would be obtained from different courts.


Licensing Intellectual Property in China

A well-written licensing agreement can make a big difference to a business. That's why we advise you to retain our China intellectual property lawyer to draft an IP licenesing agreement for you. There are various advantages to licensing a product, technology or a trademark. A business licensing a product can retain control over the product, including how and when the licensee uses the product. For example, the business licensing the product can specify how many parties can use the product and the payments that must be made for every use. Further, a license for a product typically has a set term wherein the product reverts back to the licensor when the term runs out. This is beneficial for many companies that desire to be dynamic and have the freedom to change vendors and business partners periodically. Likewise, a business licensing a trademark can retain control over the quality of the products sold under the trademark.

I have vast experience in drafting and negotiating well-written licensing agreements that protect the intellectual property being licensed and allows for greater revenue. I am adept at working with my clients to develop strategies for exploiting their technologies and for navigating the myriad legal and technological issues that arise in drafting and negotiating licensing agreements involving technology transfer.

As a Board Certified Specialist in the area of Intellectual Property Law, I can assist you with your intellectual property licensing needs.

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I am a licensed China lawyer. Most clients are foreign nationals and companies. China Lawyer Blog have associates in Beijing, Shanghai, Tianjin, Guangzhou, Suzhou, Nanjing, Qingdao, Fuzhou, Hainan, Hefei, Wuhan, Xian, Changsha, Xiamen and Hangzhou. Learn More

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This China Lawyer Blog is aiming at providing better knowledge and understanding of Chinese law for foreigners. Should you have any legal issue in China, do not hesitate to contact China Lawyer Blog for consultation. Preliminary consultation is free. Further legal service, however, will be charged in due rate and in due course.

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China Lawyer BLog AuthorPeter Zhu, an experienced China attorney licensed to practice law for more than ten years, the author of this China Lawyer blog, welcomes any enquiry or consultation related to Chinese law.