4/24/2006

Be in the Now to Succeed In China

"The following are the four most frequent mistakes I see western businesspeople making in their China business by basing their decisions on what was rather than on what is:

1. Going into China as a Joint Venture...China's laws and ways of doing business have changed markedly in the last few years and even just since January 1, 2006, when many new business laws were enacted. Joint ventures are no longer required in most instances and they seldom make sense...

2. Wanting to form a Hong Kong Company to go into China...in most cases, doing so does nothing more than increase your legal fees.

3. Being enamored with the Chinese government...If you want to do business with a hard charging, dynamic, forward thinking business in China, your chances of finding that within the private sector are better than finding it within the government...China's growth is coming from its private sector. Its state owned companies are in a state of steady decline...

4. The law in China is irrelevant...China does enforce well drafted contracts written in Chinese...[and] the best contracts with Chinese companies have an arbitration provision that makes sure your dispute will be resolved outside the Chinese court system...
China also is becoming better at enforcing intellectual property rights, particularly trademarks...

Knowledge of Chinese history and culture is an asset for doing business in China. However, because circumstances in China change so quickly, staying abreast of China's current situation is far more important than knowing its past. The most successful businesses in China usually emphasize knowing their own businesses inside and out first, understanding China today second, and China's history and culture third..."

Read more in this China Law Blog post.