The Shanghai Lawyer
Vol. 2 , No. 5 - May 15, 2003
Shanghai is one of the most dynamic and fastest growing mega-cities in the world. It is quickly establishing itself as the leading financial and economic center of the Far East, on par with the likes of Paris and New York. The Shanghai Lawyer is a bi-weekly publication providing up-to-date newsworthy articles and legal information to professional and business persons around the world. We hope you enjoy the newsletter and welcome your comments and feedback.
Letters from Shanghai
The situation with SARS is still of central concern to persons living in Shanghai. However, it is apparent that in a fairly short time, the matter will likely pass and people's lives will return to normal. Interestingly, a fairly clear pattern is establishing regarding how the SARS scenario has been, and will, play out in China that is not dissimilar to the manner other similar threats or perceived threats to the nation are dealt with - danger > ignore / cover up > panic > understanding > acceptance.
A new danger pops up, it's ignored, either because it's importance is underestimated, or because of embarrassment, or to protect specific interests; then word gets out, people are uninformed and so rumours proliferate, an overreaction takes place, panic sets in - the matter gets talked about, speculated on, editorialized, deep pronouncements made on the true terrible meaning of it all, then - the panic subsides, the facts come out, time helps put the matter into perspective, cooler heads prevail, thoughts emerge that perhaps, compared to the dangers we all face everyday, it's not so bad, we've been through worse, we've survived far worse - maybe the panic is causing more harm than the danger, maybe we should face the danger by understanding it in order to transcend and mitigate it, maybe we need to get on with the business of living the best we can in an inherently dangerous world.
Right now with SARS, we are in between the panic and understanding stage. Soon fears of the virus will begin to subside. Generally, the nature of the real threat will become more apparent and important than the perceived threat that has until recently been running rampant in the media. We are already beginning to see a return of travelers and businesspersons to Shanghai. People are beginning to realize the threat did not live up to the media hype and life must go on. Even though Shanghai has escaped the worst of SARS, with only a half dozen cases, because of how big the scare was, it might be a couple months before things are as they were.
By - Blaine Turnacliff You may contact Blaine directly at bturnacliff@lehmanlaw.com | |
LEHMAN, LEE & XU Opens Shenzhen Off
Lehman, Lee & Xu is pleased to announce the opening of its new office in Shenzhen, Guangdong Province. Please direct all inquiries to attorney Zdravko Jelic at | |
SARS Hurts Holiday Sales
The May Day holiday was a mixed bag for local businesses, with many retailers posting better sales than the same period last year, while bars, restaurants and movie theaters continued to struggle due to SARS. Shanghai's 233 major retailers posted 789 million Yuan (US$95 million) in sales from May 1 to 5, an increase of 1.5 percent from a year ago, according to the Shanghai Commercial Commission.
Entertainment companies, however, had a miserable week. The Paradise Cinema in the Grand Gateway Plaza said its box-office receipts dropped 67.4 percent from last year. Restaurants also reported poor business. Eighty restaurants surveyed by the commission reported sales were down 44.6 percent from a year ago.
The 45 department stores surveyed reported that sales dropped 26.4 percent during the May Day holiday. However, sales at the city's 34 major supermarkets and convenience stores were up 34.2 percent to 454 million Yuan during the five days. Thirteen drugstore chains surveyed said sales rose 26 percent to 3.75 million Yuan.
(Source: Shanghai Daily)
Did you know?
In spite of SARS, Shanghai's economy is projected to grow in the double-digits, for the 10th year in a row. |
Shanghai Government may put Brakes on Shanghai Real Estate Market
The director of the Shanghai Statistics Bureau was reported to have said the city's retail market, which reached 72 billion Yuan or half of the city's fixed assets, had not bubbled, apparently without credible evidence: Real estate prices rose by 14.5 percent in 2002 compared to 10.9 percent for the city's GDP. The city government has gotten a whiff of this and in the past month has begun taking measures to cool off the market. Their effects and that of SARS are yet to be fully seen.
Supply is projected to increase this year, but the change is not expected to affect prices, which, according to Shanghai ZhougYuan Real Estate, will continue to rise along with the city's 10 percent annual GDP growth.
Another factor is increased demand from foreign buyers from Wenzhou, Hong Kong, Taiwan and Macau, who made up 53.6 percent of high-end and 29 percent of mid-range residential apartments, much of this as investments to be rented out. Hong Kong developers recently decided to increase real estate investment from the already massive 25 billion Yuan.
Analysts predict that prices will keep this trend up as Shanghai modernizes and beautifies itself in preparation for the 2010 World Expo. The market has been hot for some time now, stoked among other things by income tax refunds to local homebuyers. The government is however taking measures to prevent bubbles from inflating. The title deed tax when buying a house has been doubled from 0.75 percent to 1.5 percent and the income tax incentives to local buyers will end for good in May.
(Source: Friedlnet.com)
Shanghai Essentials
In a bid to control the spread of SARS, new regulations have been passed that subject travelers arriving in Shanghai from affected areas to temperature checking, completion of health declaration and contact information forms. The regulations set out penalties, including jail terms, for anyone who does not cooperate with medical authorities during the SARS outbreak including the withholding of information about where they have traveled or who they have had contact with. |
Measures To Help Business Cope With Impact Of SARS
Shanghai government recently announced urgent measures to help some of the city's industries and corporations brace for the impact from SARS and in the long run, to maintain economic growth and social stability. The measures include income tax exemptions, government subsidies and awards. Some examples of such measures include:
- Income taxes will be exempted on special subsidies offered to medical workers directly handling the SARS epidemic.
- No income taxes will be levied for cash donations from corporations and individuals to help the research, prevention and control of SARS.
- In case a business suffers economic losses by producing products for fighting the SARS as instructed by the government, it will be compensated by the city treasury.
- The government will be also be paying subsidies, out of its special SARS-fighting fund, to taxi companies that suffer losses due to drastic drop of passengers owing to the fear of the disease.
(Source: Shanghai Daily)
Shanghai legal problem? Tell us about it. . . Mergers & Acquisitions * Incorporations * Commercial Contracts Contact Blaine Turnacliff at bturnacliff@lehmanlaw.com |
Crime and Traffic Deaths Decline
Shanghai Public Security Bureau has recently announced that Shanghai was a safer place as both serious crimes and traffic accidents decreased in the first quarter of this year. Serious crimes such as murder and kidnap declined by 10 percent compared to the same period last year, and traffic deaths dropped 1.8 percent year-on-year.
According to the bureau, between January and March, police solved more than 7,000 crime cases and apprehended 3,800 suspects. In the first quarter of this year, 332 people died in 13,394 traffic accidents, six, or 1.8 percent, less than in the same period last year. Meanwhile, traffic injuries saw a drop of 30.1 percent from a year earlier, with 2,771 people injured in accidents in the first quarter.
(Source: Shanghai Daily)
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Shanghai to have 7-Eleven
The world's No. 1 convenience store chain, 7-Eleven, is planning to enter the Shanghai market in 2005 by setting up a 100 foreign owned company. The news quashed earlier speculation that 7-Eleven is likely to team up with local partners to operate round-the-clock stores in Shanghai.
The convenience store is predicted to be the fastest growing retail business in Shanghai over the coming years, according to a survey released by China Chain store & Franchise Association. Foreign giants, including US-based 7-Eleven and Japanese brand Family Mart, have long eyed the Shanghai market with the latter opening its first city store earlier this month in Xuhui District in cooperation with Hymall Shopping Mall Co Ltd, a Taiwan-invested hypermarket operator that already has nine stores in the city.
China now allows foreign partners to hold a maximum stake of 65 percent in the retail sector. But the cap will be lifted in 2005 in line with the country's commitment as part of its entry into the World Trade Organization.
(Source: Shanghai Daily)
Construction Finished on Ring Road Tunnel
Major construction on Shanghai's Outer-Ring-Road Tunnel was completed on April 28, 2003, with the link across the Huangpu River expected to open for traffic in late June. The 2,800-meter-long tunnel, which took three years and 1.7 billion Yuan (US$204 million) to build, runs from Sancha Port in Pudong to Wusong Park in Puxi.
The project is a milestone in Shanghai's construction history as the project represents the city's maiden use of submersion technology. It also adopted many new techniques such as noise reduction-resolution and escape design. Situated along the northern stretches of the city's Outer-Ring Road, the tunnel, which includes a 736-meter-long submerged section, is comprised of three parallel tubes with eight traffic lanes. Both of the outer tubes house three fixed single-direction lanes while the middle tube has two lanes that can be adjusted to travel in either direction.
There are two emergency corridors for passengers in between the three tubes in case of danger. Currently, across the Huangpu-River traffic in northern parts of the city remains slow, particularly on the Yangpu River.
(Source: Shanghai Daily)
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