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Take A Time Out On Foreign Publishing In China

By Dan Harris and Steve Dickinson

Nearly every month some non-Chinese company comes to my law firm seeking our help in navigating the legal issues involved in publishing some sort of magazine or website in China. Their initial questions nearly always focus on WFOEs versus Rep. Offices or about bringing on Chinese staff as part owners of their planned company. Not once have we ever been asked whether it is legal for foreign owned Chinese entities (be it a WFOE or a Representative Office) to own such a business in China. So when we respond to their technical questions by pointing out that the business will be illegal under Chinese law, they are always taken aback. The more savvy among them ask how "so and so" gets away with it and we usually tell them we do not know the specifics of "so and so," but here are some of the things we know about how some companies manage to have their magazines published and distributed in China. We always add the warning that most of these methods put the magazine at risk of being "shut down tomorrow." Just to be clear, foreigners are prohibited from publishing in China. Chinese law could not be any clearer on this. Beijing this week closed down the ubiquitous and popular Time Out Beijing Magazine. In "Time Out magazine banned by China's censors in run up to Olympics," the Times Online blames it on censorship, but I see this as mostly a licensing issue. A bit of factual background:

The English-language edition of the monthly magazine that gives foreign residents and visitors the latest lowdown on the coolest bars, the hippest shops and the hottest shows in the Chinese capital has disappeared. The June issue of Time Out Beijing has been banned from distribution by China's censors, The Times has learnt. But the decision seems to have been taken not because of any racy or politically incorrect content. Time Out Beijing has fallen victim to the accelerating imposition of restrictions on any aspect of life in the capital deemed to pose a potential threat to a smooth Olympics. Tom Pattinson, the editor of the magazine, hinted that the timing ? just two months before Beijing plays host to the Summer Games ? was not coincidence. He told The Times: ?The magazine has been impounded while officials look at licensing issues. But these have not changed in the past three and a half years and it is perhaps a strange time to question an issue that has not been a problem before.?

The Chinese government says the shutdown is due to a lack of "a proper license:"

The ostensible reason given by the General Administration of Press and Publications for pulping the June issue was that the magazine lacked a proper licence. But Time Out Beijing has published ever since its launch without completing the proper paperwork and this had never raised eyebrows among the censors who were well aware of one of the most prominent of the tiny number of English-language publications in the capital. The English edition was at first distributed effectively as an insert to the Chinese-language magazine ? which does possess the proper licence. Gaining a publishing licence in a country where all publications are carefully monitored by cultural commissars is a long and tortuous process. For a foreign title, the procedures are doubly difficult and involve publication under the title of a usually defunct local magazine.

The big question is whether this closure is a permanent condition or just an Olympic related one:

A spokesman for Time Out Beijing, now owned by the Hong Kong-listed advertising agency SEEC Media that is very well connected in China, said he could not explain why the June edition had been pulled even before it hit the shelves. ?It is not convenient to say,? he said, adding that the magazine hoped to resume publication as soon as possible. Editorial content was already being put together for a possible July edition. But magazine insiders said that they thought it unlikely that an edition would be available until after the Olympics as nervous censors move to reassert control over all publications before an expected flood of foreign visitors for the Games opening on August 8. An official at the Press and Publications Administration voiced ignorance of the entire saga in words that bode ill for the future of one of the best-known magazine brands in the Chinese capital. He said: ?If there is such a magazine, it wasn't approved by us in the first place.?

The problem with operating a business illegally in China is that past history is simply not a good indicator of future performance. We know foreign businesses that have operated illegally in China for 15 years without a problem and we know other businesses in the very same industry that have been shut down within six months of beginning operations. And that is the problem with an illegal business: you just never know when the knock on the door is going to come and when it does, saying that you have gotten away with it for x number of years is no defense at all. There is little that can be done when you are on the wrong side of China's law. What we do know though, and what we have been all but screaming on this blog ever since we started it is that China's law enforcement against foreigners is constantly getting stricter and that pace has only accelerated in the last few months:

China is tightening all rules across the board with the approach of the Olympics. It is increasingly difficult to obtain a visa to enter China. Many foreigners are being forced to leave. Security is being stepped up citywide as Beijing tries to ensure that the Games run without a hitch.

Like us, Lost Laowai sees China's crackdown on visa violations and its crackdown on Time Out as part of the same package of China's tightening its law enforcement against foreigners, but he makes an excuse where there probably is none:

And again, there?s nothing wrong with the Chinese government tightening control over what has long been a wishy-washy practice of handing out the ?most convenient? visa, rather than the ?proper? one. But therein lies the frustrating part in all this. As foreigners we come to China and know nothing of the local practices. We largely come from countries that follow the rule of law to an obsessive ?t?, and so are eager to step in line and fill out the forms. But upon arriving here we are faced with a fuzzy collection of rules and regulations that are not so much seen as just ?known?. Rules which force us to rely on locals that have experience navigating this confusing and twisted clusterfuck of undocumented legalities that ebb and flow based largely on who you know, rather than what you know. And before you know it, you?re just as tangled up in the mess as the rest of the country, jumping from relationship after relationship like fast sinking stones in a futile effort to ford a river you had no idea was so cold, deep and murky.

Again, the reality is that Chinese law is clear on foreign publishing: it simply is not permitted and it is a mistake for anyone to rely on "locals" rather for legal interpretation. Just as no Chinese company should rely on some "man in the street" in the United States for interpretations of complicated American laws relating to foreign investment, no foreign company should rely on "some layman or laywomen" in China to interpret its complicated foreign investment laws. Oh, and FYI, our research has found that Chinese laws do NOT distinguish between publishing in print and publishing online. Bottom Line: One of the things about China that has always fascinated me is how little the government tends to care about past illegalities of those going legal. We once registered a company with more than five years in China, a state of the art factory, 100+ employees and more than $300 million in annual turnover and the government did not ask us a single question as to its history before we put it on China's legal grid through registration. So forget the past; if you are operating illegally in China, now is the time to get legal. Tomorrow you may be closed down. But what do you do if your business is inherently illegal under Chinese law? And let us not forget the most obvious question here, which is how can China continue to justify forbidding foreign voices from becoming a part of its publishing landscape? For more on the Time Out closure, check out the following: -- "Media Gossip: Time out on Time Out; That's Beijing repossessed?" at Shanghaiist -- "Tough times for English entertainment mags in Beijing" at ImageThief -- "Magazine madness: that?s Beijing, Time Out, City Weekend" at Beijing Boyce To read about a similar magazine shutdown back in 2006, check out "That's China And It Ain't Always Pretty" and "That's China And It Still Ain't Always Pretty, But Now It's Better Explained."

Full post as published by China Law Blog on June 13, 2008 (boomark / email).