Dan Harris has just published a great post on China Law Blog detailing the first inklings of how the global downturn is and will affect the Chinese economy …
He writes:
As I am always saying, lawyers make for excellent canaries in terms of what is happening and what is going to happen. This is because we oftentimes hear of things from our clients before they become public, through either litigation or an announced deal. My law firm has been hearing much more about and/or getting much more work in four areas relating to China. Only one relates to the drywall problem, but all four directly relate to the downturn in the economy.
Here goes.
First, we are hearing of even more incidences (yes that is possible) of China quality control problems. Chinese companies that are strapped for cash are the most likely to skimp on quality and with more Chinese companies strapped for cash….
Second, we are getting an increasing amount of work from foreign companies who want to exit from their Chinese joint ventures.
Third, and paradoxically enough, we are doing a greatly increased business in forming joint ventures in China. We are getting clients who are saying that up to a few months ago, they were planning on going into China on their own, via a Wholly Foreign Owned Entity (WFOE), but now they want to go the joint venture route to "spread the risk."
Fourth, we are getting a ton of work from companies owed money from other companies that are either unable to pay their bills or just choosing not to pay the companies that are calling us.
Read the full post at http://www.chinalawblog.com/2009/01/chinese_drywall_if_you_think_t.html
