To avoid legal risks and tap the potential of China-Japan economic and trade cooperation

Recently, economic and trade cooperation between China and Japan has been further heating up. A relevant official of the Ministry of Commerce said that the economic and trade cooperation between China and Japan has shown strong resilience in the face of the epidemic. China's investment in Japan has been developing steadily and its investment fields have been expanding. The industries of China and Japan are highly complementary, with huge potential and broad prospects for cooperation. At present, China's economy is stable on the whole, the scale of consumption is expanding and the trend of consumption upgrading is accelerating, which provides favorable conditions for China and Japan to expand the scale of trade and investment.

Imports and exports between China and Japan totaled $315 billion in 2019, according to Chinese customs. Japan remains China's fourth largest trading partner after the European Union, Asean and the United States. China has been Japan's largest trading partner for 12 consecutive years.

According to China's Ministry of Commerce, the cumulative amount of China's direct investment in Japan was us $3.73 billion by the end of 2019, and us $250 million in 2019 alone.

Chen Xin, a lawyer from Qiyuan Law Firm, said in an interview that the rise of trade protectionism has had a great impact on economic globalization. If Chinese companies invest in Japan, they need to conduct in-depth analysis of their economic and trade policies to avoid legal risks and reduce transaction costs.

"For example, Japan's Anti-monopoly laws prohibit mergers, acquisitions and other specific activities from outside the country that cause serious obstacles to competition, and suspected antitrust activities must be notified to the Japan Fair Trade Commission in advance. In addition, investment and national security, public policy, and related sensitive industries, where the government reserves the right to limit, also need to fulfill reporting obligations." Chen Xin said.

Japan's new Foreign Exchange and Foreign Trade Law came into force on May 8, said Zhang Zhenan, vice President of the Shanghai Chamber of Commerce for Importers and Exporters and a senior partner at The Shanghai Cooperation Law Firm. The bill increases restrictions on foreign investment in Listed Japanese companies and lowers the threshold for foreign companies to invest in core industries from 10 per cent to 1 per cent. The revision covers 12 industries, including aviation, telecommunications and electricity, and 518 companies, including Toyota Motor Corp and SONY Corp and Mitsubishi Heavy Industries Corp. The major revision of Japan's foreign direct investment policy will bring great uncertainty to global enterprises' investment in Japan.

Zhang Zhenan said that Japan's new prime minister has brought some new developments since he took office. For example, the wto reform in the field of multilateral trade and the formulation of rules detailing the principle of "free flow of data under conditions of trust" proposed by Abe in 2019. At the regional level, the completion of the Regional Comprehensive Economic Partnership and the expansion of the Trans-Pacific Partnership Comprehensive Progress Agreement are also high on the agenda of the new Japanese government.

"Chinese enterprises' investment in Japan mainly involves new forms of business such as manufacturing, financial services, the Internet, electricity, communications and software, while new economic models such as cross-border e-commerce, mobile payment and sharing economy are developing rapidly." Zhang Zhenan said, on the Japanese market and r&d environment at the same time, many Chinese enterprises operators and manufacturers to carry out mutually beneficial cooperation with Japan, including huawei, zte, haier, baidu, suning, jingdong, huawei technologies also set up r&d centers in Japan, such as alibaba, tencent increased pay outlets in Japan.

Yao Zhonghua, founder of Shanghai Jili Law Firm, said Chinese companies must make clear local laws and investment environment when they go to Japan to implement investment plans. In addition, enterprises should attach importance to compliance and social responsibility, be more professional and open in mentality, strengthen cultural exchanges, and introduce high-end talents.