BENESCH Attorneys at Law Ohio Foreign Commerce Association clevelandcolumbusphiladelphiawilmingtonshanghai benesch, friedlander, coplan & aronoff llp DOING BUSINESS IN CHINA March 2, 2009

BENESCH Attorneys at Law BENESCH Guest Speaker: Allan Goldner Partner Co-Chair, China Group Co-Chair, Polymer Group

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BENESCH With more than 1.3 billion people.

BENESCH Attorneys at Law In the midst of the largest population migration in the history of the world.BENESCH Attorneys at Law

BENESCH The Chinese government’s management of this migration is the key to maintaining social stability in China…

BENESCH Attorneys at Law (Population in Millions) KnownForecast National Population URBAN Urban Population Urban % RURAL Rural Population Rural %

BENESCH Attorneys at Law …and creating jobs (more about this later) is the key to this management.

BENESCH Attorneys at Law China is divided into distinct regions...

BENESCH Attorneys at Law …consisting of rural farmland,

BENESCH Attorneys at Law …large cities

BENESCH Attorneys at Law …and everything in-between.

BENESCH Attorneys at Law China is divided into distinct regions and large cities.

BENESCH Attorneys at Law Why have U.S. companies been doing business in and with China?  Because China “opened” to the West (and East) in 1978, and opened some more in  To buy goods cheaply from Chinese companies and resell them in the U.S.  To manufacture goods in China and sell them in the U.S. and around the world.  To sell goods and services into China. Deng Xiaoping

BENESCH Attorneys at Law How do U.S. companies do business in China?  Direct purchases from Chinese factories or intermediaries.  Representative offices.  Wholly Foreign-Owned Enterprises (WFOEs) or Foreign Invested Commercial Enterprises (FICEs).  Joint ventures of varying kinds.  Through varying kinds of holding company structures.

BENESCH Attorneys at Law Why does China welcome U.S. and other foreign investment?  To attract technology and innovation.  To attract capital to build all manner of infrastructure.  To create wealth and prosperity.  To create jobs.

BENESCH Attorneys at Law What are some of the most important considerations / risks in establishing a business in China?  Picking the right Chinese partner / key employee(s).  Due Diligence.  Market (customers / suppliers).  Operational (facilities, processes, work force, management).  Financial and accounting.  Legal and regulatory. ●Labor. ●Land Use Rights (including leasing, construction and environmental). ●IP (Intellectual Property). ●Everything else.  Cultural considerations (in connection with courtship, negotiation and everything else)

BENESCH Attorneys at Law Picking the right Chinese partner / key employee(s).

BENESCH Attorneys at Law Due Diligence.  Market (customers / suppliers).  Operational (facilities, processes, work force, management).  Financial and accounting.  Legal and regulatory.

BENESCH Attorneys at Law Legal and regulatory. ●L●Labor. ●L●Land Use Rights (including leasing, construction and environmental). ●I●IP (Intellectual Property). ●E●Everything else.

BENESCH Cultural considerations (in connection with courtship, negotiation and everything else).

BENESCH Attorneys at Law What are some of the most important considerations for success? ●Continuing to pay attention – hands-on. ●Ongoing competent training. ●Communication at multiple levels. ●Appreciation and respect for, and immersion in, each other’s cultures and business environments. ●Competent accounting, legal and other professional advice.

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BENESCH Questions, please

BENESCH Attorneys at Law Thank you for attending!

BENESCH Attorneys at Law Cleveland:200 Public Square Suite Columbus:41 S. High Street 26th Floor Philadelphia:One Liberty Place 1650 Market Street 36th Floor Wilmington:222 Delaware Avenue Suite Shanghai:Kerry Centre, Suite W. Nanjing Road Shanghai, P.R. China BENESCH Attorneys at Law