Over the past month, we spent a lot of time supporting a
European company to regain control over its subsidiary in
Guangzhou. The case: a local employee was the company's legal
representative, controlled its stamps and licenses, was the
company's contact person for the Administration of Market
Regulation (AMR, China's company registry), the tax office and
the company's social insurance / housing fund accounts, and had
sole access to the company's bank accounts. He was now refusing
every instruction of the shareholders, including payment of
salaries and supplier invoices, and a handover of his duties to
another employee or the shareholder's delegate.
We are often asked about the ideal corporate set-up for a
Chinese subsidiary. We usually recommend a good balance between the
client's usual approach to these things and ensuring continued
control in the face of the potential hazards that so often occur in
China.
