Got an email today from a reader who wanted to let us know how much a particular blog post that we did way back in 2006 had helped his company. The post this emailer was extolling was James McGregor’s China Tips and he wanted to know whether I thought all of McGregor’s advice was still relevant.
Boy do I.
The post listed out the following six tips for doing business in China:
- The Chinese will ask you for anything because you just may be stupid enough to agree to it. Many are.
- Avoid joint ventures with government entities unless you have no choice. Then understand that the partnership is about the Chinese obtaining your technology, know-how and capital, while maintaining Chinese control.
- If you decide to sell your soul and succumb to Chinese corruption, get a good price and focus on charity work in your old age.
- Government officials can lie to you, but you must never lie to them. Exclude information, but never provide false information.
- Any tech company doing business in China should assume that its designs and products are being copied. When forced to share your technology in China, isolate the pieces from each other so that your partner doesn’t have the whole picture.
- If your boss wants to come to China to do a quick deal, lose his or her passport.
Let’s go through these tips for doing business in China one by one.
- The Chinese will ask you for anything because you just may be stupid enough to agree to it. This is completely true. I remember a few years ago when one of our clients was seeking to buy its product supplier. The product supplier started out asking for some absolutely absurd amount and when pressed, admitted to one of our China lawyers that the only basis he had for that amount was that he had heard that American companies “get so excited about doing business in China they will agree to anything.”
- Avoid joint ventures with government entities unless you have no choice. Absolutely true, but it generally makes sense to avoid all joint ventures with anyone. For more on the problems inherent in China joint ventures, check out the following:
- China Joint Ventures That Work
- Chinese Joint Ventures — The Information The Chinese Government Does Not Want You To Know
- Avoiding Mistakes in Chinese Joint Ventures
- Love The One You’re With. When China Joint Ventures Make Sense.
- China Joint Ventures. Who’s Your Partner?
- Joint Venture Jeopardy
- How Not To Write A Joint Venture Agreement
- If you decide to sell your soul and succumb to Chinese corruption, get a good price and focus on charity work in your old age. Completely agree, and you need to know only two things on this. First, GSK. Second, it is no accident that my firm’s China attorneys are seeing more growth in anti-corruption compliance requests than in any other practice area.
- Government officials can lie to you, but you must never lie to them. Very true, and we wrote on this in the context of China customs in title China Customs Problem? Keep Your Mouth Shut!
- Any tech company doing business in China should assume that its designs and products are being copied. When forced to share your technology in China, isolate the pieces from each other so that your partner doesn’t have the whole picture. Absolutely the case, but this holds true for just about all foreign companies doing business in China, not just tech companies. For more on the dangers of IP theft in China and on how to protect your IP from China, check out How To Protect Your IP From China. Part 1.
- If your boss wants to come to China, hide his passport. There are actually two schools of thought on this. One school says you do not want your boss to come to China because he will make big mistakes, but the other school says that you do want your boss to come to China because he will make big mistakes and then realize that he’s better off leaving China to his company’s China experts.
What do you think?
