|Product Liability Practice|
In your opinion, are business leaders demonstrating sufficient awareness of the risks to their company posed by product liability?
In this increasingly competitive industrial environment, business leaders are focusing more of their attention and resources on business expansion than risk management. They are busy with considering reducing manufacturing cost, researching and developing new technologies, marketing, mergers and acquisitions. Generally, I would say there is insufficient awareness of product liability risks among business leaders. This is especially so when product liability risks in most countries are increasing, in particular rising and developing markets, such as China and India. Generally, many believe that these developing countries have low product liability risks as they generally have a low level of technology, undeveloped consumer protection law and low consumer rights awareness. However, this is no longer the case. Things have changed, and product liability is becoming a real issue in many countries.
What key trends have you seen affecting product liability in the market?
I would say the most distinct trend is the rise of consumer protection which is profoundly affecting the development of product liability concepts and laws worldwide. On the one hand, consumers require safe goods and services free from any and all defect, damage and danger. On the other hand, it requires business operators to undertake strict liability for any claim of product defect. In addition, governments are placing more and more controls over manufacturers and production by imposing numerous requirements including technical standards and other safety regulations. Companies are required to comply with prerequisite standards in all stages of the manufacturing and distribution process. Another key armoury of most governments is product recalls which have played an increasingly important role in enforcing product responsibility. In this internet savvy world, most information is readily available on the internet and accessible worldwide. All these aspects mean product liability is becoming one of the most important factors affecting business consideration and operations in the market.
Can you outline any recent high profile cases involving product liability, and their significance?
The Toyota ‘unintended acceleration’ cases which have led to the recall of millions of Toyota auto products worldwide is a good lesson on product liability management to business leaders. Triggered by a series of vehicle accidents in the US and escalated by poor communication and bad risk management, Toyota have experienced the toughest public scrutiny, worldwide recalls, numerous class litigations, government investigations, public confidence crisis, destruction of brand image, etc. Toyota’s crisis is the result of multiple factors, in particular insufficient product liability management, bad crisis management and poor communication. The initial cases and problems were ignored and downplayed without systematic risks evaluation and a defence strategy. When the crisis escalated, there was no coordinated, uniform and simultaneous action, and there is no rapid, coordinated and proactive communication with public and relevant governments, which are essential for any good management of a product liability crisis.
Last Updated (Sunday, 24 February 2013 04:03)
There are three different business incorporation vehicles which can be utilised to do business in China. These are:
Joint Venture (JV)
Joint venture is business where a foreign firm goes into businesses with local Chinese partners. Joint venture is usually established to exploit the market knowledge, preferential market treatment, and manufacturing capability of the Chinese side along with the technology, manufacturing know-how and marketing experience of the foreign partner.
Wholly Foreign Owned Enterprise (WFOE)
These are 100% foreign owned companies, originally developed for the specific purpose of encouraging foreign investment in manufacturing for export in Special Economic Zones (SEZs) in China, and they were prohibited from selling to the Chinese domestic market. Since a recent change in regulations, from 1 December 2004, WFOE's can now trade within China, and can sell wholly foreign manufactured goods in China. The capital requirements for such companies have also been dramatically reduced.
Last Updated (Monday, 06 June 2011 04:39)
In 1998, China established the State Intellectual Property Office (SIPO), with the vision that it would coordinate China’s IP enforcement efforts by merging the patent, trademark and copyright offices under one authority. However, this has yet to occur. Today, SIPO is responsible for granting patents (national office), registering semiconductor layout designs (national office), and enforcing patents (local SIPO offices), as well as coordinating domestic foreign-related IPR issues involving copyrights, trademarks and patents.
Protection of IP in China follows a two-track system. The first and most prevalent is the administrative track, whereby an IP rights holder files a compliant at the local administrative office. The second is the judicial track, whereby complaints are filed through the court system. (China has established specialized IP panels in its civil court system throughout the country.) Determining which IP agency has jurisdiction over an act of infringement can be confusing. Jurisdiction of IP protection is diffused throughout a number of government agencies and offices, with each typically responsible for the protection afforded by one statute or one specific area of IP-related law. There may be geographical limits or conflicts posed by one administrative agency taking a case, involving piracy or counterfeiting that also occurs in another region. (In recognition of these difficulties, some regional IP officials have discussed plans for creating cross-jurisdictional enforcement procedures.) China’s courts also have rules regarding jurisdiction over infringing or counterfeit activities, and the scope of potential orders.
For administrative enforcement actions, the following is a list of the major players. Again this list is not exhaustive, as other agencies, such as State Drug Administration (for pharmaceutical counterfeits) or the Ministry of Culture (for copyright materials and markets) may also play a role in the enforcement process. In most cases, administrative agencies cannot award compensation to a rights holder. They can, however, fine the infringer, seize goods or equipment used in manufacturing products, and/or obtain information about the source of goods being distributed.
Last Updated (Saturday, 04 June 2011 17:27)
employment contract, chinese labor law, china labor law, china employment lawyer
Due to increasing market pressures and other situation-specific factors, employers are often required to terminate employees in China. This article briefly outlines some of the issues that must be addressed by employers before and after employee termination, including matters to consider during the hiring of prospective employees, from the perspective of the employer.
a. Immediate Termination
An employer may terminate an employee without requirement for notice in the following situations:
(1) During the probation period, if the employee is determined to be unfit for the position;
(2) The employee materially breaches the rules and regulations provided by the employer;
(3) The employee is in serious dereliction of duty, graft or corruption causing substantial damage to the employer’s interests;
(4) The employee has established an employment relationship with another employer and that relationship affects the completion of his tasks and he refuses to appropriately remedy the situation after notification from the employer;
(5) The employee was fraudulent in concluding the labour contract; or,
(6)The employee is subject to criminal investigation.
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b. Practical Considerations
As termination during the probationary period is virtually at the will of the employer (an employee is required to give a minimum of 3 days notice to the employer), a prudent employer will, in the employment agreement, select the longest probationary period under the law (labour contracts of less than 3 months: no probation period; 3 months to 1 year: 1 month; 1 year to 3 years: 2 months; and, 3 years or more or open-ended: 6 months).
Employers should clearly (in writing) define the rules and regulations of the workplace and what, both specifically and generally, constitutes a serious or material breach resulting in employer’s option to terminate (this can be accomplished through the distribution of employment handbooks or other more extensive policy guides); and employers should carefully document any breach of the rules and regulations and serve written notice thereof.
An employer must give 30 days’ prior written notice or payment in lieu thereof, if it terminates the labour contract under the following situations:
(1) The employee is unable to perform his original duties or re-assigned duties, after returning from medical leave or non-work-related injury;
(2) The employee is incompetent and remains incompetent after training or adjustment of position; or,
(3) There has been a major change in ‘objective’ circumstances which were relied upon in the signing of the labour contract, and the employee and employer are unable to agree upon the modified terms of the labour contract.
(4) Document any and all performance, particularly when the employee fails to perform or underperforms; and,
(5) Provide training to employees so as to ensure they are updated with the skills required of their position.
2. Severance Compensation
a. Severance compensation is due in a number of situations
(1) The employer terminates the employee under situations requiring 30 days’ prior written notice (as previously mentioned);
(2) The employee is terminated due to restructuring or difficulties in business operations;
(3) Termination of the labour contract is proposed by employer and there is mutual agreement with regards to the termination thereof;
(4) Expiration of a fixed-term labour contract (except where the employee refuses to renew the contract on terms equal to or better than that previously concluded);
(5) Termination of the labour contract is due to the revocation of the employer’s business license; or, bankruptcy.
If the employee earns more than 3 times the average monthly wage of the locality, then the compensation will be capped at 3 times the average monthly wage and up to a maximum of 12 months.
Last Updated (Saturday, 11 June 2011 13:20)
China wasn't on business, but as a tourist. I was apprehensive due to the many preconceived notions I carried, fed by media reports of the physical and social conditions there. I half-expected stomach upsets from badly cooked food and guarding against robberies at every turn. Most of my fears were unfounded, and you can find products and services of international standard.
Last Updated (Friday, 10 June 2011 17:05)