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INTERNATIONAL LAW

as applicable to domestic entities (Art.9 of FIL); Protecting Foreign Investments Chinese local partner who is the majority owner.
(ii) FIEs are entitled to equally participate in the A main factor contributing to FIEs’ complaints However, China has taken efforts to relax limits
formulation of standards and regulations for of forced technology transfer is the Catalogue on foreign ownership since 2018. For example,
purpose of implementing the FIL and oversighting approach, under which the FIE’s establishment, in October, 2018, BMW announced that it would
its enforcement (Arts.10 and 15 of FIL); (iii) FIEs change of corporate structure and change of take control of its joint venture with Brilliance
are entitled to fair and equal treatment while business scope are subject to approval by regulatory China Automotive Holdings Ltd. by increasing its
participating in government procurement with review panels. The regulatory approval process ownership interest from 50% to 75%. China will
regard to both goods and services provided by FIEs has been criticized for its lack of transparency and further ease the ownership restriction through the
(Art.16 of FIL); (iv) local governments shall not being manipulated to force technology transfers. Negative List to be issued by the State Council.
interfere with national foreign investment laws and By replacing the Catalogue approach with Negative Article 22 of the FIL responds directly to
policies to favor their local entities (Art.24 of FIL); List approach, the FIL essentially removes the FIEs’ complaints of forced technology transfer.
(v) FIEs’ establishment, corporate governance approval requirements for many of FIEs’ activities, Specifically, any technology related cooperation
and other internal matters will be governed by easing FIEs’ concerns of forced technology transfer. shall be based on the principle of voluntariness,
the same Company Law and Partnership Law Another reason for FIEs’ complaints of forced fairness and equality, and shall conform
that are applicable to domestic entities (Art.31 technology transfer is the restriction on foreign to negotiated commercial terms. The FIL
of FIL); and (vi) FIEs are allowed to raise capital investors’ ownership percentage in FIEs. For explicitly prohibits forced technology transfer
by issuing stocks, debts and other securities in example, foreign carmakers have long been by administrative measures (Art.22 of FIL). The
China (Art.17 of FIL). required to find a Chinese partner to conduct FIL further bars government employees from
In addition to the National Treatment, the FIL business within China, and they are required to disclosing or unlawfully providing to others trade
gives government the authority to set up special limit their ownership percentage in a Chinese secrets they learn at work and imposes criminal
economic zones or implement experimental joint venture to under 50%. Because of the penalties for doing so (Arts.23 and 39 of FIL).
policies to give FIEs preferential treatments ownership restriction, a foreign investor has often FIEs’ investments made in reliance on local
(Arts.13, 14 and 18 of FIL). been forced to transfer technologies by their governments’ policy commitments will also

Welcome matthew Hilderbrand Denise salerno

Jones day
kari c. samuels
Breanne Lu Hitchen
Jones day
neW members michael r. kamen judith A. santora

susan knight sampsel
Anne schleicher
Atossa maryam Alavi karen j. cameratta
AlphaMicron, Inc. Karen J. Cameratta Co., LPA margaret m. koesel fred P. schwartz
Margaret M. Koesel & Co.
matt Amoroso Wade james coffman
Burke Rosen & Associates PricewaterhouseCoopers, LLP john m. mccarty kenneth D. schwartz
Phillips & Mille Co., L.P.A. Avery dennison Corporation
john f. Ballard, jr. Andrea y. Davis-momon
Brennan, Manna & diamond Chubb Group of Insurance Companies eugene sean medina james D. shorey
hahn Loeser & Parks LLP PRA Global LLC
Brittany Barnes gretchen smith Dutko Daniel g. morris matthew Anthony smartnick
USI Insurance
The Law Offices of Daniel G. Morris
Blair W. Barnhart-Hinkle Audra facinelli john s. mulhollan Allosious snodgrass
Cleveland Clinic
St. Basil the Great Parish
David A. Beal Bonnie susan finley Adam Pajakowski justin D. stevenson
U.S. dept. of health & human Service
Crowe LLP Bower Stevenson LLC
Lon’cherie’ D. Billingsley Alexandra forkosh natalie Paule Helane j. swisher
Cuyahoga County Prosecutor’s Office Calfee, halter & Griswold LLP
Leah Brady natalie frandsen LiLa D. raslan martine Wilson
RaslanPla & Company, LLC Thompson hine LLP
Patricia Ann Brandt Alicia graves john ready, jr.
Law Offices of Alicia N. Graves
Cleveland-Marshall College of Law

May 2019 Cleveland Metropolitan Bar Journal | 27