Today Dan Harris of the China Law Blog wrote an interesting guest post for Shanghaiist in which he describes the top 5 trends he sees in China business law for next year. The trends he focuses on are ones that mainly involve foreigners or foreign businesses. A short version of his top 5:

1. Visa rules will be further tightened

2. Continued trend to shut down illegal and unregistered foreign businesses

3. Tax collection efforts will increase, with more focus on transfer pricing

4. Increased monitoring of M&A transactions

5. Employee law suits will increase and more will be resolved in the employees favor

It’s increasingly more difficult for foreign companies to set up a business in China. Not only because the number of regulations keeps going up, but more important because the existing rules are enforced more strictly. In his post Dan Harris describes why he thinks the government is making it more difficult for foreigners to become active here:

The Chinese government wants to satisfy its own citizens so as to maintain its own legitimacy and one of the best ways to do that is to show a desire to protect the citizenry against foreigners. China’s current economic strength is leading many in its government to believe China has little to no need for foreign investment and so I see law enforcement against foreigners continuing to increase.

I think China realizes that its role in the world’s political arena has changed. More and more China can set the rules, instead of the US. Look at what happened in Copenhagen two weeks ago for example. I read lots of comments online of people blaming China for the failure of the Copenhagen summit, and criticizing the country for not being green enough. But then look at the news from last weekend: China announced a law that forces its energy companies to buy up all green electricity in China. Totally unexpected China shows it is interested in the environment, but that it wants to improve the situation on its own.

I am sure there will be more protectionist measures next year to help China’s domestic industries. But that doesn’t mean foreign companies can’t do business here, they just have to make sure that they know which rules to play by (and follow these rules!). In my experience it’s important to have a good legal counsel and focus more on government relations, especially if you want to be active in a sector like games and game development. In that way you can anticipate changes and make sure you don’t miss any announcements.

For existing companies in China it may be even beneficial, because the (real or perceived) barrier of entry is higher for new foreign entrants, meaning less future foreign competition. China is still a country full of business opportunities, but it’s certainly not easy to run a business here. You need a commitment in both time and money, but if you persist I think most companies will eventually reap the benefits. China is not a place for short-term profits, but it’s a country where a long term investment can pay off big time. And that’s a trend that won’t change in 2010!

A couple of days ago Krispy Kreme opened its first restaurant in Shanghai on Wujiang Lu, opposite Marks & Spencers. It took them almost 1.5 years to open the first store, giving Dunkin’ Donuts the opportunity to beat them in entering the Shanghai market first.

Being a big donut fan (or doughnut as it’s spelled in at Krispy Kreme’s), I needed to try out their products of course. So today at lunch time I drove over to their store to try their donuts. And… they were great!

Like in other Krispy Kreme stores you can see the donuts coming off a belt and the staff can serve them warm for you if you like. The original glazed donut is my favorite, when it’s still warm it literally melts in your mouth. Prices are decent, from RMB 7 for a original glazed donut to RMB 9 for the most expensive ones, such as the cookie crunch cheese cake donut or the powdered raspberry filled. You get a discount if you buy 6 or 12 donuts. Of course you need to drink coffee with your donuts, a medium sized cup is RMB 12 and a large one RMB 15.

Is Krispy Kreme better than Dunkin’ Donuts? I like both chains, but the warm glazed donut can’t be beaten by Dunkin’. Some of Dunkin’ Donuts varieties are not available at Krispy Kreme, so I will likely keep being a customer at both stores in the future.

Krispy Kreme, 169 Wujiang Lu, close to Taixing Lu, ???169?? ????, Metro Nanjing Xi Lu

So far Spil Games has mainly been active with casual online gaming portals, but last week our first iPhone game was launched in the App Store. The game is Beauty Resort 2, a spa-themed time management game that can also be played on our online portals (here for example) and that was very successful with a total of 25 million game plays for Beauty Resort 1 + 2 so far.

In Beauty Resort 2 you are the manager of a spa that you need to build out into a beauty empire. You start off with a spa on Easter island with 8 different levels, after that there are 4 other worlds that you need to manage (New Zealand, Japan, Nepal and Iceland), also each with 8 levels for a total of 40 levels. Your tasks are to keep your customers happy, to upgrade your resort with items and make sure you keep it clean, all by using the drag-and-drop functionality on the iPod Touch/iPhone’s touch screen.

There is both a FREE lite version of the game and a paid full version. The lite version has only the Easter Island world with 4 different levels, the full one has all 5 worlds and 40 levels and is priced at just EUR 0.79 / USD 0.99. Click on the links to download the version you would like to try. Spil plans to launch some more iPhone titles soon, I’ll announce them here on my blog once the games are available in the App Store. Enjoy the game!

When I ordered lunch from Sherpa’s last week I received an invitation for the Christmas market at Wending Lu. The invitation looked promising, so tonight we decided to check it out with Scott. However, it turned out to be a big disappointment.

First of all there were hardly any people when we were there around 6:30 PM. There were a couple of Christmas houses at the entrance and inside the furniture mall, but there were no customers at all and they were too far spread out. The only people we saw were at the (very) small ice skating at the side of the market. Even though it was too small to really skate around and the music was not particularly Christmas like (dance/house music…) , I still wanted to give skating a try for a few minutes to show it to Scott. But I could only rent skates for RMB 150 for two hours, which was both a bit too long and too expensive for this small area.

But Scott did not care, because he found some snow next to the ice skating place and he loved playing in it. He was laughing loudly when he could throw snow at me and my dad. We also found a Santa Claus walking around, but when I wanted to take a picture of him he wanted me to pay him! I could not believe it, a Santa at a Christmas market who wants to be paid if people take a picture of him? China is really getting too commercial. Or maybe the Santa Claus wanted to keep the money himself (he wanted only RMB 5)?

If you plan to visit the market (which will remain open until Thursday), I would not really advise you to go. It’s rather boring and it lacks a Christmas atmosphere. The idea is great, but as often in China the implementation failed. No Christmas music, the Christmas houses too far spread out, too commercial and not enough marketing so hardly anybody showed up. A missed opportunity.

It’s Christmas Eve in China, so it seems the right time to wish everybody a Merry Christmas!

This year Spil Games made a fun Christmas animation that I would like to share with you (click on the link below the picture)

Tudou designed several Christmas cards, the one I liked most is embedded below

Most of the Christmas cards that I receive are digital ones. But one of the few real ones came from… a branch of the Shanghai government. Interestingly, it also contains a ‘friendly’ reminder of the obligations that employers of foreigners and foreigners themselves have. Big Brother is watching you? Or did everybody get a card like this?

I almost threw away the envelope when I realized there was a number on the back. I read the text, and guess what? It’s a lottery number! In a country where gambling is not allowed and lotteries are very strictly regulated I can now participate in a free lottery for foreigners. Too bad it does not state what I can win. Maybe a free one-year extension of my work permit?

Last month I finished the Shanghai Half Marathon with an almost recovered sprained right ankle. During the race I had probably tried to protect my right foot too much, because the day after the race part of the sole of my left foot was suddenly hurting a lot. It got so bad that I could hardly walk for a few days. I had no idea what it was exactly, and decided to give it some rest. That did not work fast enough, so I started to look online for what my injury could be. It turned out that it might be something called plantar fasciitis, an inflammation under the foot. Nothing serious, but a nuisance because it stops me from running.

I also found out something else: my foot only hurts when I wear shoes. If I walk barefoot or wear slippers I do not feel the pain anymore. That’s kind of strange I thought at first, but later I realized that the soles of my shoes are likely pushing some of the nerves. Certain shoes turned out to be more painful than others, and in one pair of shoes with only a thin sole (a kind of summer shoe) I hardly felt anything. That led me to ask the question whether the injury could have been caused by my running shoes? I remembered that I read an article in Runners World a couple of months ago about the benefits of running barefoot and that studies showed that it may actually reduce injuries. I looked up the article online and found one (not sure if it was the one that I had read actually, because this one is from 2004 already) saying that soles and padding in running shoes may actually deceive your body: you might not feel certain things until it’s too late.

Because walking barefoot did not hurt I decided to jump on the treadmill and give running without shoes a try. If it would hurt I would stop right away. And guess what? No pain at all! I had not run for 3 weeks and suddenly I was back on the treadmill without any problems. I could not believe it. Last night I ran 5 kilometers without any trouble and this morning I did another 3, both times without shoes. No muscle ache (yet), my feet feel fine and best of all no injury. When I walked to brunch this afternoon the pain was back while wearing my normal shoes, but while running I felt great. I am very happy with this and will keep on running barefoot on the treadmill for a couple of weeks until (hopefully) my injury will be a bit better.

I did some more research on the Internet and quickly learned that quite some people are throwing out their running shoes and start to run barefoot (some just every now and then, others always). It may seem strange, but if you think about it, running with shoes is actually strange. People ran without without socks, shoes, soles, midsoles and inserts for thousands of years. Only during the past 40 years running shoes started to appear on the shelves and they may be deceiving runners. They may actually cause injuries instead of preventing them. At least for me that seems to be the case right now. Running without shoes certainly feels more natural, you feel exactly how you land and you automatically change your running style.

There is not much scientific research yet, but one groundbreaking paper by Michael Warburton (2001) is often cited. He summarizes his research as follows:
Running barefoot is associated with a substantially lower prevalence of acute injuries of the ankle and chronic injuries of the lower leg in developing countries, but well-designed studies of the effects of barefoot and shod running on injury are lacking. Laboratory studies show that the energy cost of running is reduced by about 4% when the feet are not shod. In spite of these apparent benefits, barefoot running is rare in competition, and there are no published controlled trials of the effects of running barefoot on simulated or real competitive performance.

Shoes provide support, so your foot does not strengthen and support itself. Furthermore, shoes add mass, which slows down the runner. It’s not just the weight of the shoe, which is not much compared to the total athlete’s weight, but the fact that the feet are lifted up and down all the time, lifting exactly this particular extra weight. If the energy cost of running is reduced by 4% and top runners would run without shoes, many records could theoretically be broken (a marathon within 2 hours should be possible). An interesting thought.   

The downside of running without shoes is of course that you miss the protection that they offer. Running on stones can be very uncomfortable without shoes, let alone running on hot asphalt or in icy conditions. But luckily there are solutions for that as well. A couple of companies have started to develop shoes that come close to the barefoot running experience. They offer protection but no real support, and you are supposed to run exactly like you would when you run barefoot. The one that I like most are the Fivefinger shoes. They may look very strange, but many people who tried them love them. 

Will barefoot running become a trend? I think it’s a small chance because most people don’t get injuries so will not see a reason to switch. People who see you running will not understand why you run barefoot and will look at you strangely (just like they did 30-40 years ago when the first joggers appeared on the streets). Also the big running shoe companies will make sure that they don’t lose a profitable line of business. Nike, the company that invented the running shoe, already developed a line of Nike Free shoes that come closer to barefoot running, but they will make sure that not everybody will switch. But there is a small possibility that companies like Fivefingers can start a niche trend that will slowly grow into a bigger trend. The fact that I have an injury forces me to try running in shoes with less support, but if running in them really feels as good as running barefoot I might keep wearing them regularly also after my injury will be gone.


Interested in this subject? Also read the Wikipedia entry about barefoot running and this article in Wired titled ‘To run better, start by ditching your Nikes’.

CNNIC, the China Internet Network Information Center, announced yesterday that individuals can no longer apply for a .cn website (.cn is the official Chinese Internet country code extension). The official reason is that many of these sites are used for pornographic content and people were often using fake names when registering.

The .cn extension is very popular in China, with currently over 13 million websites using it. The direct effect is that a lot less people will use the .cn domain names from now on, because you need to have a business license when applying for a domain name. Likely people will start using .com or other countries domain extensions instead, even though that’s more difficult (you will need to find a way to pay in a foreign currency, the RMB is a non-convertible currency). Or they would register their domains under a company, although most companies may not be too eager to do that: if the website turns out to have a content problem the company itself may get in trouble.

At first I was afraid my blog might be in trouble as well. I have been using www.marc.cn for years and I bought it under my own name, not under that of a Chinese company. But today’s Shanghai Daily mentioned that existing domain names won’t be affected, the new regulation is only valid for new domain registrations. But it certainly makes me think whether I should not move my blog to a different domain in the future.