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On Wednesday, December 11th, Seyfarth attorneys Steve Kmieciak and Sara Beiro Farabow will present the third installment of a series of micro-webinars focused on key legal perspectives and considerations for those operating in the hospitality industry. This session will address key considerations for adapting construction forms for international hospitality renovations, including whether to modify or draft new contracts, navigating local laws and practices, working with local counsel, and crafting effective dispute resolution provisions.

Click here for more information and to register.

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Perhaps you represent a U.S. company that is entering into a contract with an overseas entity, or vice versa.  You are contemplating whether the contract should provide for arbitration or litigation in the event of a dispute.  In deciding that question, you may ask: if your client wins in the proceeding against the other party, is it easier to enforce a non-U.S. court judgment or a non-U.S. arbitration award in the United States?

As it turns out, each scenario presents unique challenges.  There is no uniform U.S. law governing the recognition of non-U.S. judgments, but rather a patchwork of varying state laws, which can make recognition more complicated.  Confirmation of non-U.S. arbitration awards, on the other hand, is governed by a single, uniform federal statute in the United States.  Even so, U.S. proceedings to confirm an arbitration award have to be made on a shorter timetable than proceedings to recognize a non-U.S. judgment, and confirmation of arbitration awards can raise other, complicated issues. 

Dispute resolution provisions in contracts are often treated as “boilerplate,” but the choice between arbitration and litigation can be an important one.  Lawyers drafting contracts involving both U.S. and non-U.S. parties should think carefully about the differences between enforcing judgments and arbitration awards in the United States to decide whether court or arbitration proceedings are the right choice for their clients.

Continue Reading Judgment Gymnastics: Enforcing Overseas Judgments and Arbitration Awards in the U.S.
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We’re excited to announce that Sara Beiro Farabow, Chair of Seyfarth Shaw’s International Dispute Resolution Group (IDRG), and Seyfarth partner Will Prickett, an IDRG member and head of International Litigation, will be guest lecturers at the Polytechnic University of Milan on October 22nd. Their lecture will cover critical topics in international dispute resolution and contracts.

With extensive experience in managing cross-border disputes and complex international commercial contracts, Sara and Will will offer valuable insights to the students at one of Italy’s premier academic institutions. Their session will explore global legal strategies, focusing on the nuances of contract drafting and the challenges of international arbitration and litigation.

This event highlights Seyfarth’s broad experience and dedication to excellence in international law and its ongoing commitment to fostering the academic development of future leaders in engineering, architecture, and design.

Stay tuned for more details on this exciting event.

This was originally posted as a Legal Update on Seyfarth’s website.

Seyfarth Synopsis:

The California Supreme Court reaffirmed that arbitration agreements are on equal footing with other types of contracts. Therefore, a court should apply the same principles that apply to other contracts to determine whether the party seeking to enforce an arbitration agreement has waived its right to do so. Quach v. California Commerce Club, Inc.

The Facts

In 2018, following his termination, Peter Quach sued his former employer, California Commerce Club, Inc., for discrimination, harassment, and retaliation, among other things. Commerce Club’s answer asserted an “affirmative defense” that Quach should be compelled to arbitrate his claims. Initially, Commerce Club was not able to locate a fully-executed copy of Quach’s 2015 arbitration agreement—it only found the signature page. Therefore, rather than filing a motion to compel arbitration based on the 2015 arbitration agreement, Commerce Club actively participated in discovery, including taking Quach’s deposition, and it indicated on a case management conference statement that it desired a jury trial.

Thirteen months after Quach filed his lawsuit, Commerce Club filed a motion to compel arbitration under the Federal Arbitration Act (FAA). In addressing its delay in filing the motion, Commerce Club asserted that it had only recently located the entire arbitration agreement. Quach opposed the motion, arguing that Commerce Club had waived its contractual right to compel arbitration.

The Trial Court’s Decision

The trial court denied Commerce Club’s motion. The court concluded that Commerce Club knew of its right to compel arbitration but, instead of moving to compel, it propounded written discovery and took Quach’s deposition, thereby demonstrating a position inconsistent with the intent to arbitrate and prejudicing Quach.

The Court of Appeal’s Decision

A divided Court of Appeal reversed the trial court’s decision, holding that Commerce Club did not waive its right to compel arbitration. The Court of Appeal reasoned that the trial court’s finding that Quach had shown prejudice was not supported by substantial evidence. Two weeks after the Court of Appeal published its decision, the United States Supreme Court issued its ruling in Morgan v. Sundance, Inc., 596 U.S. 411 (2022), holding that the FAA does not require a showing of prejudice to establish waiver of the right to arbitrate.

The California Supreme Court’s Decision

California courts have, for decades, applied a framework grounded in a “strong policy favoring arbitration” over litigation. Consequently, California courts have noted that parties seeking to establish waiver of the right to arbitrate must satisfy a “heavy burden of proof” in order to show prejudice. This has required the party opposing arbitration to show prejudice that goes beyond the loss of time and expenses normally associated with litigating a dispute, and the courts have resolved any doubts in favor of arbitration.

In its opinion, the California Supreme Court made clear that, in order to establish waiver under generally applicable contract law, the party opposing enforcement of a contractual agreement must prove, by clear and convincing evidence, that the waiving party knew of the contractual right and intentionally relinquished or abandoned it. The waiver inquiry is exclusively focused on the waiving party’s words or conduct; neither the effect of that conduct on the party seeking to avoid arbitration, nor that party’s subjective evaluation of the allegedly waiving party’s intent is relevant.

Relying on this analytical framework, the California Supreme Court concluded that there was  clear and convincing evidence that Commerce Club had waived its right to arbitrate. This conclusion was based on the facts that Commerce Club was aware of its right to compel arbitration (despite its inability to find a complete copy of Quach’s arbitration agreement sooner), and Commerce Club’s words and conduct demonstrated its intentional abandonment of the right to arbitrate.

What Quach Means for Employers

The lower standard of evidence for establishing waiver allowed by this ruling may result in more frequent claims of waiver in opposition to a party’s attempt to enforce an arbitration agreement. Therefore, employers should immediately investigate whether an employment dispute may be subject to an arbitration agreement and, if it is, take appropriate steps.

This post has been cross-posted from Seyfarth’s Employment Law Lookout blog.

Welcome to Decoding Appeals, where Seyfarth’s Appellate Team brings to in-house counsel our insights and expertise from the front lines of the appellate courts. Throughout this short video series, we break down the nuances of appellate advocacy, sharing tips and lessons we’ve learned to help companies’ in-house legal teams understand the complexities of the appeals process.

In this first episode, host Owen Wolfe is joined by Amanda Williams and Cat Johns, two former judicial law clerks who offer their unique perspectives on the appeals process, drawing from their firsthand experiences and behind-the-scenes knowledge of how it all works.

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On Tuesday, May 14, James Newland, partner in Seyfarth’s Construction practice and co-chair of the International Dispute Resolution group, will speak in a panel discussion on “Becoming an Owner, Designer, or Contractor of Choice” at the 2024 ACI-NA/ACC/AGC Airport Construction Strategy Summit in Chicago.

The panel will discuss the key characteristics of successful airport capital project partners. The summit features other panel discussions on topics such as airport project delivery systems and construction, and provides attendees networking opportunities and a tour of recent capital projects at Chicago-O’Hare International Airport.

Panel Participants

Linda Konrath, HKA

James Newland, Seyfarth Shaw

Chris George, San Diego County Regional Airport Authority

Dwight H. Pullen, Jr., AECOM

Iana Tassada Stuard, JE Dunn Construction

For more information and to register, click here.

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This blog has been cross-posted to Seyfarth’s Gadgets, Gigabytes & Goodwill site.

A whole host of creators have filed suit in the U.S. alleging that AI companies improperly used the creators’ content to train AI programs (if you need to catch up on these lawsuits, we recommend our video blog here).  In most cases, the creators don’t know for sure whether the AI companies copied their works, although they allege that copying can be inferred based on the AI programs’ outputs.  But a new law in the EU may soon provide creators with a mechanism to find out if their works have been copied, and may provide those creators with greater protections than those afforded to creators in the U.S.

On March 13, 2024, the European Parliament approved the Artificial Intelligence Act, known as the AI Act.  Formal adoption of the AI Act is expected in early Summer 2024, with implementation spearheaded by the newly-formed European AI Office.  The AI Act is the one of the first major legislative frameworks in the world to emerge in response to the spread and seeming ubiquity of the relatively new generative AI technologies. The Act aims to ensure safety and compliance with certain individual and property rights, including IP rights.

The AI Act will regulate AI programs based on the level of risk they present.  Generative AI programs that are capable of generating text, images, and other content, and may perform any number of functions with general or specific purposes, are classified as “high risk.”  The AI Act refers to these programs as “General Purpose AI” or GPAI.  The AI Act places the most stringent obligations on developers and deployers of high-risk AI systems that are put to use in the EU, even if the developer or deployer is not actually based in the EU.  This partly because the EU believes that application to non-EU companies whose programs will be used in the EU is “necessary to ensure a level playing field among providers of [GPAI] models where no provider should be able to gain a competitive advantage in the EU market by applying lower copyright standards than those provided in the [EU].”   

Under the AI Act, GPAI model providers must:

  1. provide technical documentation, including training, testing processes, and results of evaluations;
  2. provide information and documentation to supply to end providers that intend to integrate the GPAI model into their own AI system so that the latter understands the capabilities and limitations thereto and is able to comply with the AI Act’s requirements;
  3. establish a policy to abide by the EU Copyright Directive; and
  4. publish a detailed summary about the content used for training the GPAI model.

One goal of these provisions to ensure that AI developers are disclosing whether the used material subject to copyright protection to train their AI programs.  There are some exceptions, however, including for “open license” AI models, which only have to provide disclosures if their AI programs present a “systemic risk.”

For those companies required to make disclosures, they must prepare sufficiently technical summaries to encourage IP rightsholders or others with legitimate interests to exercise and enforce their rights in the EU.  The EU AI Office will not be conducting a “work-by-work” assessment to ensure that GPAI providers are abiding by copyright laws.  Instead, the Office has passed the onus on to GPAI providers to satisfactorily educate rightsholders about their enforcement rights and responsibilities vis-à-vis the use and incorporation of their content by GPAI.

Companies must also “establish a policy to abide by the EU Copyright Directive,” that “requires the authorization of the rightholder concerned” before using any copyright protected content “unless relevant copyright exceptions and limitations apply.” The Directive does have some exceptions to this requirement, such as allowing reproductions of works for the purposes of text and data mining in certain limited scenarios.  Unless that text/data mining is for scientific purposes, however, the rightsholder can opt out. 

If a rightsholder opts out, then under the terms of the Copyright Directive and the AI Act, companies must “identify and respect the reservations of rights expressed by rightsholders pursuant to Article 4(3) of Directive (EU) 2019/790.”  Accordingly, GPAI providers would have to obtain special permission from the rightsholder that opted out in order to proceed with text/data mining activities that would access or utilize their protected content.

The AI Act includes a carve-out for small GPAI providers, such as start-ups, to promote innovation even for those with fewer resources than large corporations.  The carve-out provides “simplified ways” for smaller providers to comply with the AI Act.  The idea is that compliance with the AI Act should not “represent an excessive cost” or “discourage the use of [GPAI] models.”

It remains to be seen what will happen once the AI Act is officially enacted, but we expect an uptick in copyright litigation and related counseling (as well as costs) in the EU brought by copyright owners and other rightsholders.  We also expect that the number of potential stakeholders will increase by virtue of the ubiquity of GPAI and the ease and accessibility of content via the Internet and connected devices.  With this may come niche legal practices and novel legal issues, which will likely result in changes to the AI Act or its interpretation.  It will be crucial for owners of IP and AI companies to understand their respective rights and obligations under the AI Act; otherwise, IP holders risk unfettered and unauthorized use of their creative content, while AI companies run the risk of being sued.

About the Program

Wednesday, 10 April 2024
5:45 p.m. – 6:00 p.m.   Registration
6:00 p.m. – 7:00 p.m.   Panel Program
7:00 p.m. – 8:00 p.m.   Networking and Apertivo

Magna Pars L’ Hotel À Parfum
via Forcella, 6
20144 Milano, Italy
Meeting room: Ambrosia Hall

In an era of rapid change and increasingly complex global workplace issues, staying ahead of the curve is not just an advantage—it’s a necessity. Seyfarth is pleased to offer this opportunity to hear from our distinguished panel from Brembo S.p.A., Fava & Partners, Pentair, and Seyfarth Shaw on their experiences and insights in navigating organizations’ most pressing issues. The panelists will explore the problems keeping legal and business leaders up at night, sharing effective strategies and best practices.

Following the panel presentation, the event will conclude with a networking reception, providing a relaxed environment for further discussion. This promises to be a unique opportunity to gain invaluable insights from our panelists, and to connect with legal industry peers.

Click this link to register your attendance at this exclusive event before 1 April. We look forward to an evening of knowledge sharing and networking.

Please note that the panel discussion will be conducted in English.

Panelists

  • Laura Colamartino, HR Director, EMEA Water Solutions & Pool, Pentair
  • Domenico Fava, Founder, Fava & Partners – Studio Internazionale Tributario
  • Umberto Simonelli, General Counsel, Brembo S.p.A.
  • Peter Talibart, Partner and International Department Co-Chair, Seyfarth Shaw (UK) LLP

Moderator

  • Sofia Bargellini, Partner, Seyfarth Shaw S.t.A S.r.l

Wednesday, November 15, 2023
11:00 a.m. to 12:00 p.m. Eastern
10:00 a.m. to 11:00 a.m. Central
9:00 a.m. to 10:00 a.m. Mountain
8:00 a.m. to 9:00 a.m. Pacific

About the Program

On Wednesday, November 15, from 11 am to 12 pm Eastern, Seyfarth and Lexology will host a Masterclass webinar titled, “AI Gone Awry: Lessons from an AI Fiasco,” and presented by Seyfarth attorneys Owen Wolfe, Eddy Salcedo, and Jamie Anderson.

With the recent New York federal court case involving the use of ChatGPT and the AI-generated court decision citations, it is important that lawyers learn how to use AI properly as part of a legal practice and understand its strengths and weaknesses. During this webinar, the attorneys will discuss the court case and the impact of AI on the legal practice, including:

  • What went wrong for the attorneys involved in the New York case
  • Non-AI related lessons from the New York case
  • Impact of the New York case on other court cases and court rules
  • What leading AI programs currently can and cannot do as it relates to legal practice
  • Best practices for use of AI in both litigation and non-litigation settings
  • The future of AI in the legal practice

REGISTER HERE

中美贸易：敏感技术的对外投资管制制度

Executive Order on Outbound Investment 有关对外投资的行政令

A new executive order signed by President Biden in August 2023 restricts outbound investment to China in several critical cutting-edge technologies with military, surveillance, and cyber-enabled capabilities, deemed critical to US national security interests. Citing an “unusual and extraordinary threat” to the national security of the US, Biden declared a national emergency alongside the executive order.

美国总统拜登于2023年8月签发一项新的行政令，在一些被认为对美国国家安全利益至关重要的、具有军事、监控和网络功能的关键尖端技术方面，限制对中国的对外投资。拜登以美国国家安全面临“非常规和特殊的威胁”为由，在发布行政令的同时宣布全国进入紧急状态。

The latest move in a series of US policies aimed at limiting the sharing of advanced technology with, the executive order is apparently designed to initiate the process of enacting restrictions on US investment in China in three “sensitive” technology sectors, focusing on specific end uses of these emerging technologies,  and restricting military applications of (1) semiconductors and microelectronics, (2) quantum information technologies and (3) artificial intelligence systems (“AI”).

作为美国一系列旨在限制与中国分享先进技术的政策中的最新举措，该行政令显然旨在启动对美国在三大“敏感”技术领域对华投资的限制程序，重点关注这些新兴技术的特殊终端用途，并限制（1）半导体和微电子、（2）量子信息技术、以及（3）人工智能系统（“AI”）的军事应用。

US Investor Restrictions 对美国投资者的限制

Under the executive order, US investors, including private equity, venture capital and joint venture firms, will be restricted from new investments in Chinese semiconductor and quantum computer companies. In this regard, it is noted that certain US investors have already taken actions, such as Sequoia Capital sawing off its Chinese branch[1]. Furthermore, Americans doing business in China must notify the US government of any direct investment in AI and the semiconductor field. Investment in technology destined for military or surveillance is banned while investment in less sensitive areas are permitted with government notification.

根据该行政令，包括私募股权、风险投资和合资公司在内的美国投资者将被限制对中国半导体和量子计算机公司进行新的投资。在这方面，我们注意到某些美国投资者已经采取了行动，如红杉资本（Sequoia Capital）已裁撤其中国分支机构。此外，在中国经商的美国人必须向美国政府通报任何在人工智能和半导体领域的直接投资。禁止投资用于军事或监控的技术，而允许投资较为不敏感的领域，但必须向政府通报。

Narrowly Limited Scope of Investment Controls 投资管制的范围受到严格限制

The program of outbound investment restrictions proposed by the executive order follows on other regulatory regimes such as traditional US trade export controls, US sanctions programs and inbound foreign direct investment controls yet creates another level of controls. The proposed rules focus on limiting access to US capital flows and intangible benefits such as know-how, market access, investment and talent networks, and other managerial expertise.

行政令提出的对外投资限制计划是在传统的美国贸易出口管制、美国制裁计划和外商直接投资管制等其他监管制度的基础上提出的，但它形成了另一个层面的管制。拟议规定主要集中在限制对美国的流动资本以及无形利益的获取，如技术秘诀、市场准入、投资和人才网络，以及其他管理能力。

The executive order states that it intends to narrowly limit the scope of the proposed investment restrictions to preventing China’s military advancement and reduce the US national security risk, rather than causing China economic harm. Also, heated lobbying efforts from the private sector has also limited the scope of the proposed investment controls.

该行政令指出，它打算将拟议的投资限制范围严格限制在防止中国军事进步和降低美国国家安全风险上，而不是对中国造成经济损害。此外，私营部门的激烈游说也限制了拟议投资管制的范围。

Investors who violate those rules may face civil penalties (with criminal penalties being referred to the US Justice Department) and fines, and be compelled to divest their stakes. The rules do not target less involved investment in publicly traded securities such as Chinese stocks and bonds.

违反这些规定的投资者可能面临民事处罚（刑事处罚将提交美国司法部处理）和罚款，以及被迫撤资。这些规定并不针对涉及面较小的公开交易证券投资，如中国股票和债券。

Timing – Public Notice Before Implementation 时间安排-实施前的公示

Tasked with implementation of the executive order, Treasury has issued an advance public notice with details on the proposed rules and solicited public comment. The outward investment program will be implemented after this public notice and feedback period (ending September 28, 2023). No date has been set yet for the actual rules to take effect and it may take months before the final rules are implemented.

负责执行该行政令的财政部已经发布了关于拟议规则详细的事先通知，并征求了公众意见。对外投资计划将在公示和反馈期（截至2023年9月28日）后实施。实际规则的生效日期尚未确定，最终规则的实施可能仍需要几个月的时间。 

Proposed Executive Order Outbound Investment Controls 拟议的对外投资管制行政令：

  1. Semiconductors 半导体

With respect to investment bans in the semiconductor industry, the US Treasury is considering banning US investment in the same areas covered by the Commerce Department’s October 2022 semiconductor export controls.

在半导体领域的投资限制方面，美国财政部考虑对商务部2022年10月发布的半导体出口管制所涉及的相同领域设置投资禁止。

Specifically, Treasury is planning to prohibit US entities from investing in Chinese technology related to the design and manufacture of advanced logic and memory chips, the installation of supercomputers powered by advanced chips, and the manufacture of these advanced chips.

具体而言，财政部计划禁止美国实体投资涉及先进逻辑芯片和存储芯片的设计和制造、先进芯片驱动的超级计算机的安装，以及有关上述先进芯片制造的中国技术。

  1. Artificial Intelligence 人工智能

The executive order’s restrictions on AI investment are significant not so much for its denial of US capital to Chinese AI startups, as much as they foreshadow the likelihood of further US investment restrictions and export controls on AI for China.

该行政令对人工智能投资的限制影响重大，不仅因其阻止了美国资本对中国人工智能初创企业的投入，更因其预示着美国将对中国人工智能的进一步投资限制和出口管制。

The scope of these likely AI export controls will be in part determined by the comments which the Treasury receives on its advance notice. As they formulate the executive order, the Biden Administration is trying to determine how to differentiate AI end uses that pose a national security risk from AI used for everyday business reasons.

拟议的人工智能出口管制范围将部分取决于财政部就其事先通知收集的意见。在制定行政令时，拜登政府试图明确如何区分终端用途中存在国家安全风险的人工智能和基于日常商业原因使用的人工智能。

  1. Quantum Information Technologies 量子信息技术

Outbound investment controls on quantum information technologies likely foreshadow complementary quantum export controls on China.

对量子信息技术的对外投资管制预示着对中国量子信息技术出口的补充性管制措施。

Otherwise, restrictions on quantum may be less significant than restrictions on semiconductor and AI investment in China given the current lack of US investment in Chinese companies developing quantum and practical applications of quantum computers are very rare.

在其他方面，鉴于目前美国对研发量子信息技术的中国公司缺乏投资，且量子计算机的实际应用非常罕见，对量子信息技术的限制可能不及对中国半导体和人工智能的投资限制重要。

More Restrictions to Come? 未来会有更多限制吗？

When it comes to protecting advanced technologies critical to US national security, the Biden administration speaks of maintaining a “small yard with a high fence”. Even so, US lawmakers are demonstrating an interest in expanding the restrictions and broadening the outbound investment screen to include key sectors identified by the Biden administration including semiconductors, AI, robotics, biotechnology, autonomous vehicles, advanced aviation, and energy, and to additional countries, including Cuba, Iran, North Korea, Russia, and Venezuela.

在保护对美国国家安全至关重要的先进技术方面，拜登政府提出保持“小院高墙”策略。但即便如此，美国立法者仍表现出对加强限制措施和扩大对外投资监管范围的兴趣，以纳入拜登政府确定的包括半导体、人工智能、机器人、生物技术、自动驾驶汽车、先进航空和能源等在内的关键领域，以及古巴、伊朗、朝鲜、俄罗斯和委内瑞拉等更多国家。

These expanded export controls will likely lead to increased and focused enforcement actions targeting Chinese entities and further accelerate the greater separation of the US and Chinese economies or “decoupling”.

这些被扩展的出口管制措施可能导致针对中国实体的大量且密集的执法行动，进一步加速中美经济的分离或“脱钩”。

While some lawmakers seek a more complete “decoupling”, others argue that when access to foreign technology know-how is eliminated, these controls could just contribute to Chinese growth and self-sufficiency.

虽然部分立法者寻求更彻底的“脱钩”，但有观点认为，若外国专有技术的获取途径被切断，这些管制措施反而将促进中国的经济增长和独立自足。

Suggested Risk Mitigation Measures: 风险缓释措施建议：

Given these recent measures, sensitive technology companies in the US involved in outbound investments should consider the risk factors and undertake risk mitigating steps including:

鉴于美方近期采取的这些措施，美国的敏感技术领域公司参与对外投资时应考虑风险因素，并采取以下风险缓释措施：

a. Clarify company’s current and potential investments status and US persons involvement in China

说明公司目前和潜在的投资状况，以及美国主体在中国的参与情况

b. Identify company’s investments that may fall within the  proposed executive order regime’s outward investment regime’s ambit

识别公司的投资可能属于拟议行政令对外投资限制的范围

c. Apply risk mitigation measures in company’s investments in the sensitive technology sectors and areas

对公司在敏感技术领域的投资采取风险缓释措施

On the flip side of the same coin, Chinese companies that fall into those restricted categories may want to review their shareholders base and future financing plans to evaluate the potential impacts. There may be opportunities for non-US investors to gain access to investment into those Chinese companies from which the US investors are withdrawing. It is advisable for non-US investors to engage legal counsel to investigate and conduct due diligence before such investment, in light of the fast-changing CFIUS and other relevant rule and regulation.

换言之，属于受限投资范围的中国公司可能需要重新审视其股东基础和未来融资计划，以评估潜在影响。对非美国投资者而言，他们将获得对美国投资者撤资的中国公司的投资机会。鉴于美国外国投资委员会及其他相关规则在迅速变化，我们建议非美国投资者在进行此类投资前先聘请法律顾问开展尽职调查。

[1] https://www.economist.com/business/2023/06/08/why-sequoia-capital-is-sawing-off-its-chinese-branch