Page 8 - THE SOUTH CHINA BUSINESS JOURNAL
P. 8
PTH technologies that might be rendered (almost) useless,
if not supported by the transfer of a specific know-how,
The imposed restrictions, as previously mentioned, patent rights, or technical services.
essentially means that the identified technologies
cannot be exported from China without a license. In Timing behind China’s latest tech export
other words, the PRC government’s approval for the controls.
export of such items, and therefore the issuance of the
relevant license, is a precondition for the effectiveness China has amended the Catalogue several times in the
of the contract for technologies export. past, though the last time it did so was back in 2008.
With the rapid development of science and technology
The licensing procedure and China’s own continuous improvement and rising
industrial competitiveness, it was felt important that
The licensing procedure is articulated mainly into two China adjust its Catalogue in keeping with international
phases that can be summarized as follows: practice.
Phase 1 The newest changes, however, come at a different
• Filing: The applicant shall file the application before time. With the ratcheting up of US-China trade
the competent foreign trade department under the tensions, the amendments to the Catalogue is believed
State Council. to be part of China’s fight back in response to the US
• Examination: The competent foreign trade blocking its access to sensitive technology imports as
department in conjunction with the science and well as introducing barriers for China to access its tech
technology administrative department under the market.
State Council shall examine the application and,
within 30 working days from the date of receipt of the The timing of the Announcement itself may be
application shall approve or disapprove it. pertinent – just two weeks prior, on August 14,
• Issuance of a letter of intent: In case of approval, the the US President Donald Trump gave the Chinese
competent foreign trade department under the State multinational internet technology giant, ByteDance,
Council shall issue a letter of intent for licensing the 90 days to divest of its control of the short-format
technology export. video sharing social media giant, TikTok, in the
• Negotiation and signature of the contract: American market or risk a ban. That put the deadline
After obtaining the letter of intent for licensing at September 20. While this was initially a matter
the technology export, the applicant may begin between the US entity and Washington DC, Beijing
substantive negotiation and conclude a contract for now appears to be invested and is expected to have a
the technology export. say on how the sale will be managed; in light of US-
China back and forth, any technology controversy
Phase 2 now gets framed in terms of national interest and
• Application for the license for technology export: The intellectual property rights.
applicant shall submit to the competent foreign trade
department under the State Council the letter of intent Just today alone, word got out that ByteDance was
previously obtained, a copy of the technology export considering a sale to Oracle Corporation to manage its
contract, a list of technical information relating to the US operations of TikTok and that Microsoft, a leading
export, and any regulatory document certifying the contender up till now, was effectively out of the
legal status of the two parties to the contract. picture – only to be followed up with media reports
that China’s latest tech export rules “could block the
• Examination: The competent foreign trade transfer or sale of ByteDance’s artificial intelligence
department under the State Council examines the technologies”. As of writing this article, ByteDance
authenticity of the technology export contract and had not commented on the market rumors. However,
decides, within 15 working days from the date of it was reported Sunday by the Washington Post that
receipt of the documents provided, on approval or ByteDance had made it clear to Microsoft that its
disapproval of the technology export. proprietary algorithm, which powers TikTok, would
not be for sale. What is for sale is thus only TikTok’s
• License issuance: In case of approval, the competent American operations.
foreign trade department under the State Council issues
the technology export license. The bottom line here is that foreign companies now
have to carefully evaluate any operation or investment
Based on the current legal framework, foreign that involves the restricted technologies as identified
companies should be prudent in dealing with Chinese by China and be aware of the risk that the Chinese
companies engaging in activities related to restricted government could have legal grounds to intervene.
technologies – not only when it comes to purchasing
tech products, but also, for example, when they buy
5 AMCHAM SOUTH CHINA
if not supported by the transfer of a specific know-how,
The imposed restrictions, as previously mentioned, patent rights, or technical services.
essentially means that the identified technologies
cannot be exported from China without a license. In Timing behind China’s latest tech export
other words, the PRC government’s approval for the controls.
export of such items, and therefore the issuance of the
relevant license, is a precondition for the effectiveness China has amended the Catalogue several times in the
of the contract for technologies export. past, though the last time it did so was back in 2008.
With the rapid development of science and technology
The licensing procedure and China’s own continuous improvement and rising
industrial competitiveness, it was felt important that
The licensing procedure is articulated mainly into two China adjust its Catalogue in keeping with international
phases that can be summarized as follows: practice.
Phase 1 The newest changes, however, come at a different
• Filing: The applicant shall file the application before time. With the ratcheting up of US-China trade
the competent foreign trade department under the tensions, the amendments to the Catalogue is believed
State Council. to be part of China’s fight back in response to the US
• Examination: The competent foreign trade blocking its access to sensitive technology imports as
department in conjunction with the science and well as introducing barriers for China to access its tech
technology administrative department under the market.
State Council shall examine the application and,
within 30 working days from the date of receipt of the The timing of the Announcement itself may be
application shall approve or disapprove it. pertinent – just two weeks prior, on August 14,
• Issuance of a letter of intent: In case of approval, the the US President Donald Trump gave the Chinese
competent foreign trade department under the State multinational internet technology giant, ByteDance,
Council shall issue a letter of intent for licensing the 90 days to divest of its control of the short-format
technology export. video sharing social media giant, TikTok, in the
• Negotiation and signature of the contract: American market or risk a ban. That put the deadline
After obtaining the letter of intent for licensing at September 20. While this was initially a matter
the technology export, the applicant may begin between the US entity and Washington DC, Beijing
substantive negotiation and conclude a contract for now appears to be invested and is expected to have a
the technology export. say on how the sale will be managed; in light of US-
China back and forth, any technology controversy
Phase 2 now gets framed in terms of national interest and
• Application for the license for technology export: The intellectual property rights.
applicant shall submit to the competent foreign trade
department under the State Council the letter of intent Just today alone, word got out that ByteDance was
previously obtained, a copy of the technology export considering a sale to Oracle Corporation to manage its
contract, a list of technical information relating to the US operations of TikTok and that Microsoft, a leading
export, and any regulatory document certifying the contender up till now, was effectively out of the
legal status of the two parties to the contract. picture – only to be followed up with media reports
that China’s latest tech export rules “could block the
• Examination: The competent foreign trade transfer or sale of ByteDance’s artificial intelligence
department under the State Council examines the technologies”. As of writing this article, ByteDance
authenticity of the technology export contract and had not commented on the market rumors. However,
decides, within 15 working days from the date of it was reported Sunday by the Washington Post that
receipt of the documents provided, on approval or ByteDance had made it clear to Microsoft that its
disapproval of the technology export. proprietary algorithm, which powers TikTok, would
not be for sale. What is for sale is thus only TikTok’s
• License issuance: In case of approval, the competent American operations.
foreign trade department under the State Council issues
the technology export license. The bottom line here is that foreign companies now
have to carefully evaluate any operation or investment
Based on the current legal framework, foreign that involves the restricted technologies as identified
companies should be prudent in dealing with Chinese by China and be aware of the risk that the Chinese
companies engaging in activities related to restricted government could have legal grounds to intervene.
technologies – not only when it comes to purchasing
tech products, but also, for example, when they buy
5 AMCHAM SOUTH CHINA
