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Beyond Wrecking Chinese Drywall: Considerations and Prospects of Law and Practices of Sourcing from China

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Document pages: 57 pages

Abstract: The development of global-sourcing practice and the evolution of global product value chains are in a critical stage with unprecedented issues posed by global segmentation of manufacturing and intra-group services within multinational corporations. China has gradually solidified a dominant position as the largest mass-production country and eventually seeks to expand its engagement to higher-end and more value-added services. It, therefore, is an essential partner for companies engaging in global-sourcing and product-value-chain planning. On one hand, global-sourcing development needs a soft landing by compromising interests and conflicts of all sources, which demand a modern sourcing regime. On the other hand, after two decades of development, product-value-chain creation and evolvements have entered into a new stage that requires rechecking and regrouping of all business functions, while original initiatives of strengthening fixed stereotypes will likely not properly serve the global need for capital mobility and cross-border infrastructure renovation. China s ambition to expand overseas investment and to improve its international position from a passive norm-taker to being a driver of the discourse in various international arenas encourages more forceful reforms in many fields to better serve legal solutions of new issues in global sourcing. These reforms include transfer-pricing arrangements, China s anticorruption efforts, due diligence review, intellectual property protection, technology transfer, and workplace safety and labor protection. Such efforts in discovering and resolving new legal issues again continue to be one of the focal areas for multinational corporations and Chinese legislators. Indeed, the international framework of global-sourcing coordination and multi-jurisdictional cooperation create further layers of incentives and necessity for China to fine-tune its domestic sourcing-related legal framework, ranging from promotion of free-trade zones, renegotiation of outdated tax treaty articles, more active participation in consequential overseas investments, and acknowledging international dispute resolution.

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