China’s Message to Foreign Businesses

International IP lawyers

Newsweek recently ran a story, It’s China’s World. We’re Just Living in It. The middle kingdom is rewriting the rules on trade, technology, currency, climate–you name it.

The article is good, but what struck me about it was the following quote at the bottom of the last page of the hard copy, but not in the internet copy:

The message from Beijing is clear: “No matter what we do, we know you’ll still line up to invest with us.”

I love this quote not only because it is completely true, but also because it sums up what has been going on in China during the last six months in terms of getting necessary government approvals for foreign businesses.

China is getting tougher on foreign companies and it is doing so from the position that it cares a lot less now about foreign investment than it did ten, five, or even two years ago. There was a time when China believed it needed foreign businesses to help Chinese companies innovate. Rightly or wrongly, that no longer seems to be the prevailing view these days in Beijing and the strong sense our China lawyers (especially those based in China) are getting from both Beijing and the provinces is that China is now neutral on foreign investment. It accepts foreign investment as a price it must pay to keep selling Chinese goods overseas, but woe to the foreign company that does not comply with every single China legal and tax requirement.

What are you seeing out there?

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