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May–June 2009 Vo l u m e 3 6 N u m b e r 3

China Foto Press

China Business
Review
The

Focus: Economy
Economic Recovery in the Works? 18
Economists Pieter Bottelier, David Dollar, Albert Keidel, Nicholas Lardy,
Andy Rothman, and Tao Wang share their views on China’s economy.

Off to the City 24


Mass urbanization in China fuels long-term growth and can raise living
standards further—if local governments choose the right policies.
Shahid Yusuf

China Data: The Slowdown Hits 28

Online Exclusives
■ Complete Interview: Economic Recovery in the Works? With more on stimulus funding, whether
rising unemployment will affect social stability, and private sector’s access to credit.
■ Corporate Responsibiliy in China: Best Practices

chinabusinessreview.com May–June 2009 3


Special Report:
Corporate Social Responsibility
Setting Up International Nonprofit Organizations in China 34
Companies can use international nonprofits to achieve their corporate social
responsibility goals in China, but gaining official approval remains difficult.
18 Matthew Erie, David Livdahl, Jacelyn Khoo, and Henry Li

Ethical Supply Chain Management 38


Last year’s tainted-milk scandal provides useful lessons for companies sourcing in China.
Teresa DeLaurentis

Supporting Rule of Law in China 42


Funded by US businesses, Chinese and US organizations cooperate to nurture rule of law.
US-China Legal Cooperation Fund staff

24 Feature
TRADE
The Gathering Storm: Preparing for Trade Remedy Cases 30
Taking a few precautionary steps before a case is filed can improve the
chance of success in trade remedy cases.
Eric Emerson and Gary Horlick

34 Departments
Letter from the Editor 6
Short Takes 8
USCBC Bulletin 10
China Market Intelligence 12
Electronic Waste Rules

China Conference Calendar 13


46 Letter from Shanghai 16
Navigating the Downturn
Godfrey Firth

Commentary 46
The Role of Foreign Lawyers in CIETAC Arbitration Proceedings
Daniel Arthur Laprès

PRC Government Structure 50


China Deals 52
55
Last Page 55
Cover design by Jesse Marth Beijingers’ Views of Americans
Cover photo: China Foto Press Isaac Stone Fish

The China Business Review welcomes articles from outside contributors. Manuscripts of Columbia. Periodicals postage paid at Washington, DC, and additional mailing offices.
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in the CBR. Articles or artwork published in the CBR may be reprinted or reproduced All rights reserved.
only with the written permission of the US-China Business Council. Articles in the CBR Annual Subscription Rates: $135 US/Canada and $177 international, print only; $156
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4 May–June 2009 chinabusinessreview.com


Letter from the Editor China Business
The

Review
T his year, CBR celebrates its 35th anniversary, and we
look back at the magazine’s first year. Delving into
the May-June 1974 issue, we find that some of the major
Editor Virginia A. Hulme
Associate Editor Paula M. Miller
Assistant Editors Arie Eernisse, Daniel Strouhal
Business Manager Jesse Marth
topics then—food standards and labeling, for example— Administrative Assistant Mattie Steward
still resonate today, although with a slightly different Art Direction & Production Jon Howard/JHDesign, Inc.
emphasis. Research Assistant Nicholas Chu
The lead article of that issue, “Foodstuffs from the Inquiries and Subscriptions: publications@uschina.org
People’s Republic of China,” notes two barriers to Web: www.chinabusinessreview.com
importing food products from China: high tariffs and Reprints: For bulk custom reprints (min. 100),
US Food and Drug Administration and US Department call 1-800-960-1195
Online store: www.uschina.org/store
of Agriculture (USDA) requirements. Although US tariffs on goods made in
China have fallen considerably since 1974, food quality and safety remain a ADVERTISING
major concern. As the CBR pointed out 35 years ago, “The onus and risk are ... North America–Uhry & Associates
firmly on the shoulders of the importer.” Though the importer still bears 1117 East Putnam Avenue, PMB 306, Riverside, CT 06878
responsibility for products it brings into the US market, many Chinese
Northeast: Peter Uhry
suppliers are working more closely with US buyers to ensure their products Tel: 203-637-5478 Fax: 203-698-1725
meet US standards particularly in the wake of the food safety scandals of the E-mail: uhry@sbcglobal.net
last few years (see p.38).
Labeling too was an issue in 1974. In some instances, imports were detained Northeast & Midwest: Ed Winslow
Tel: 203-838-7985 Fax: 203-838-9660
because of “inconspicuous or misleading labels.” US importers also had trouble E-mail: ewinpub@gmail.com
convincing Chinese suppliers to label products in a way that would appeal to
the US market. For instance, US buyers thought many Chinese food products Southeast & Mid-Atlantic: Ned Frey
would be quite successful if sold under US brands. But as the CBR reported, Tel: 757-259-5907 Fax: 757-259-6804
E-mail: nfrey@cox.net
Chinese officials refused, saying they hoped their products would become
famous brands in their own right—foreshadowing today’s drive to create West & Southwest: John McCarthy
Chinese brands with global recognition. Indeed, brands such as Hai’er, Lenovo, Tel: 818-706-8066 Fax: 818-706-8326
and Tsingtao are now fairly well recognized abroad. Few Chinese food products E-mail: johnmccarthy1@sbcglobal.net
are well known abroad, however, and recent problems with food safety suggest
China–Publicitas China
that China must improve quality before its food brands will be widely Beijing: Nancy Sun
accepted. Rm 1108, Derun Tower, No. 3 Yong’an Dongli
The CBR’s 1974 May–June issue carried a sector overview on the fashion and Jianwai Avenue, Chaoyang District
textile industry. Perhaps because so many US importers were new to China Beijing 100022 China
Tel: 86-10-5879-5885 Fax: 86-10-5879-3884
trade, the article covered the basics, including how to negotiate at the Canton E-mail: nancy.sun@publicitas.com.cn
Fair and communicate with Chinese factories. It also covered tariffs, textile
shrinkage, packaging and delivery, and of course, labels. To ensure that the Shanghai: Isabella Hou
labels contained all the information required by US regulations, the CBR Room 701, Wise Logic International Center, No. 66
recommended that “[l]abels ... be printed in the US and sent in sufficient Shanxi Road North
Shanghai 200041 China
quantities to China.” Again, branding was an issue: Tel: 86-21-5116-8877 Fax: 86-21-5116-0678
E-mail: isabella.hou@publicitas.com.cn
“Although the Chinese have been reluctant to sew in individual store
names, some progress is being made in this area. For instance, they did offer South China: Sherry Yuan
to put in the name of an association but not the names of the department Rm 1108, Derun Tower, No. 3 Yong’an Dongli
stores it represents. Another compromise made with an importer was an Jianwai Avenue, Chaoyang District
Beijing 100022 China
agreement to give his firm exclusive rights to a particular brand name. This Tel: 86-10-5879-5885 Fax: 86-10-5879-3884
name can be put on any article the company buys from China’s Textile E-mail: sherry.yuan@publicitas.com.cn
Corporation.”
Hong Kong–Publicitas Hong Kong Ltd.
Rana Rizvi
In the 35 years since these articles were written, standards for most products 25/F & 26/F, Two Chinachem Exchange Square
have risen dramatically on both sides of the Pacific. Moreover, US and Chinese 338 King’s Road
companies, associations, and governments are working together more closely North Point, Hong Kong
than ever to ensure that products made in China and imported to the United Tel: 852-2516-1516 Fax: 852-2528-3260
E-mail: rana.rizvi@publicitas.com
States meet these standards—and are appropriately and correctly labeled.
OFFICE OF THE PUBLISHER
The US-China Business Council
1818 N St., NW, Suite 200
Washington, DC 20036
Tel: 202-429-0340 Fax: 202-833-9027
Virginia Hulme

6 May–June 2009 chinabusinessreview.com