Overview of the U.S. Legal System

If you have doubts about the legal issues of investing in the United States, you may wish to follow the American experts at the China-US Manufacturing Forum to have a close contact with the US legal system and uncover its mysteries. The guests of the China-US Manufacturing Forum and the senior vice president of Sanye Group discussed this topic with everyone. The following is the content of his speech:

At the Sino-US Manufacturing Forum held in Shunde on February 24, the experts discussed the legal issues in the United States as follows:

George (hereinafter referred to as G): Linda, you The company represents Chinese blue-chip companies. What do you think Chinese blue-chip companies are concerned about investing in the United States?

Linda (hereinafter referred to as L): First of all, I would like to talk about the foreign investment trend of Chinese enterprises. At first, they chose to invest in some relatively backward regions such as Africa. Now, the investment has turned to developed countries such as the United States and Europe. In fact, Chinese companies have not yet adapted to the way of doing business by hiring professionals locally to provide assistance. I met a client who asked me how she could find US laws and regulations on the Internet, and if I could send her US laws and regulations. I was very surprised and told her that even if I was a lawyer proficient in English, I would not collect these laws and regulations myself, you should hire a legal professional. The legal system in the United States is very complex, divided into different levels such as federal law and state law. Can you tell the audience about the legal system in the United States?

G: Yes, there are not only federal laws, but also state laws in the United States; in addition, sometimes you see municipal laws. U.S. laws and regulations are transparent, but complex and sometimes even contain contradictory terms. Therefore, you need advisors who know your local clients and legal systems to help you understand the situation. Each state in the United States has a separate set of laws and regulations, some of which are similar, but each state is unique. When you choose where to invest, you may consider the specifics of the target area, such as some states have inventory taxes, some don't; some states have higher energy charges, some lower, etc.

L: We will advise clients to conduct a comprehensive investigation through professionals before investing, otherwise it will be difficult to assess the risks they face. More and more customers are now focusing on estimating risks and looking for solutions, but in the past, many people took it for granted that they could copy the successful model of China to the United States, so they did not do research, and many problems occurred.

G: When investing in the United States, the first consideration is the form of the company. If setting up a company in the United States, consider taxes, which state to choose, whether to form a joint venture or an LLC. Some are tax-related, some can exempt the company from legal liability, and some can reduce the fees you have to pay when you divest to your Chinese parent company.

L: At the end of January, I was interviewed by Shanghai China Business News and talked about Lenovo's acquisition of IBM's server business. In my opinion, this transaction will be rejected by CFIUS. The Huawei and Sany incidents have brought CFIUS audits into the spotlight in China. As a lawyer, how would you rate this?

G: The U.S. government scrutinizes not only investments from China, but also investments from other regions around the world, but only a small percentage of investments require scrutiny. The companies under scrutiny are mostly approved, and only in rare cases have the government imposed restrictions on investment. Therefore, I think most Chinese companies will not encounter a situation similar to the Huawei incident. Even if they are reviewed, they will have a high chance of being approved.

Secondly, all states in the United States welcome foreign investment, not only to increase friendly trade between the two countries, but also to the issue of tax burden. For example, some states will reduce or waive your corporate tax for many years because they want you to invest there and create local jobs.

Some manufacturing costs in the U.S. will be lower, such as energy costs, which are about one-third of those in China.

L: Investment decisions are influenced by many factors, and many companies are very interested in investing in the United States. A few years ago, investing in the distant United States was only a dream for Chinese companies. In our concept, prices are high in the United States, and in addition, there is government intervention. Now everyone has a better understanding of the investment environment in the United States. Our clients are still more concerned about US labor laws and union issues. Labor unions in the United States have enormous influence and sometimes have an impact on business investment.

G: Many companies in the United States are also very concerned about the influence of labor unions. Depending on which region you choose to invest in, some regions have significant union influence, while others are influenced by others. Tennessee businesses held a vote on whether to form a union, and in the end some businesses decided that the existence of a union didn't matter. So unions are not necessarily a big hindrance.

Your clients should focus on the job skills of their employees. Many states in the United States provide high-quality employee training programs. They can even go to China, learn from Chinese companies, and retrain local workers to better use the company's equipment. After the company comes to the United States, there will be a large number of suitable personnel available. for recruitment. America's workforce advantage lies in having these highly skilled people for companies to hire.

L: Sometimes clients ask me, what is the most important piece of advice I can give them when it comes to investing abroad? I told them that when investing overseas, they needed professional assistance due to a lack of understanding of the target country. As an American lawyer, what is the most important advice you can give to Chinese companies investing abroad?

G: First of all, you should think clearly about whether the purpose of investing in the US is to expand the market scope, serve existing customers, manufacture new products, sell products to the US market, or transfer to China for domestic sales. They should work with professionals like you at home to determine the purpose of the investment. In addition, you should cooperate with local consultants in the United States to evaluate your business model in light of the overall situation of the US market, including legal, tax, product distribution and other aspects. There are many experts in this area in the United States who can assist you. Of course, you will always have challenges, but if you can overcome them in partnership with your local team and consultants, your business will be a success. We found that there are many regional government officials who are very enthusiastic to help you, not only government assistance, but also provide you with relevant knowledge to solve business problems. So, engaging with these government officials is very helpful for businesses.