China Law Blog’s own China Lawyer, Steve Dickinson, was one of the featured speakers at the recently completed Doing Business in China seminar in Chicago. Steve’s talk was entitled, “China: The New Paradigm for Market Entry” and it focused on the idea that China today is not the China of ten years ago.
Steve discussed the following five paradigms:
- Company Formation. Going into China as a wholly foreign owned entity (WFOE) is almost always preferable to going in as part of a joint venture (JV).
- Management. Foreign companies doing business in China should use international best practices. This means responsible, ethical leadership and, above all else, this means following both China law and US law (for example, the FCPA).
- Sound Business Practices. Steve told of a client who set up his business in a particular city in China only because that was where the son of a purported Chinese general with whom the company was connected lived. Steve emphasized that businesses going into China must make their China decisions based on their “own business economics, internationally accepted business practices, and the law.” Steve described guanxi as overrated and no substitute for good business.
- Branding/Trademarking. Do not to wait until you are successful in China to establish your brand in China. Due to China’s first to file trademark laws, you must be first to trademark your brand in China and if you are not, someone else will get it. Steve told of our law firm receiving calls from companies seeking our help in prosecuting trademark cases in China even though they do NOT own a Chinese trademark because they never registered anything there. Steve also emphasized the need for foreign companies to create and trademark a Mandarin brand name because that is the name by which virtually all companies in China (including such biggies as Coca Cola and Dell Computer) are known.
- Intellectual Property. IP enforcement in China is improving and if a foreign company is going to take advantage of this, it must register its intellectual property (i.e., its trademarks and patents) in China. Foreign companies also must protect their IP (including their copyrights which need not be registered, but which often should be) by prosecuting IP violators.
The overall theme of Steve’s talk was that China’s legal system has advanced to the point where it now makes sense to conduct business in China pursuant to international best practices.