We recently wrote two posts (Doing Something China Doesn’t Like? Don’t Go There and How To Avoid Getting “Detained” in China and Why Your Odds are Worse than you Think). Whenever we blog about foreign companies getting into trouble in China, and especially when we write about foreign personnel being detained or held hostage in China, we receive angry emails from readers. These readers always insist that we are exaggerating the problem and that China is pretty much perfectly safe.
These angry readers have a point. They have a point because it is a really small percentage of foreign companies doing business in China that get in big trouble in China and that is because it is a very small percentage of foreign companies doing business in China that do anything that will get them in big trouble in China. The big question I always have though is what percentage of those doing those thing that will get them in big trouble in China end up getting into big trouble in China? That is the percentage I think is much higher than people realize. And I say that because it just seems that a large percentage of companies our law firm turns down as clients because of how they intend to operate in China are eventually forced to leave China.
But enough with the negative. This post is going to focus on the positive. A very experienced China businessperson, Ward Chartier, left the following comment on here the other day:
Based on what I’ve read since repatriating from China and what I observed in the seven years I worked there, many Western businesspeople regard doing business in China as a sort of Wild West, anything goes situation. This is exacerbated by Chinese nationals hired as consultants or general managers saying things like, “If you want to be successful, this is how we do things in this district. No, it doesn’t meet the requirements of the law, but this is how we get things done here.” “But what about auditors from Beijing?” the hapless Westerner asks. “The mountains are high, and the emperor is far away (old Chinese maxim).” the consultant replies.
The media doesn’t help by reporting on malfeasance in China, thus encouraging readers to think that money (bribes) and influence will pave the way towards success and riches doing business in China.
What worked for me was scrupulously following both the law and the local regulations, involving the local government bureaus in any legal and regulatory gray area decisions to gain their input before taking action, and treating Chinese employees absolutely correctly. Doing these things fully avoided very unhappy surprises from the government.
Thank you Ward for advertising exactly how my law firms’ China lawyers conduct their legal work in China and exactly how we advise our China clients to conduct their business in China. Yes, scrupulously following the law in China can at times be difficult and expensive, but it is the ONLY way to achieve long term success there. It also is the only way — at least for most people — to sleep soundly at night.
Oh, and just to follow up a bit on what Mr. Chartier says about advice from locals (or in this case ersatz locals) I strongly urge you to read one of my favorite blog posts of all time, Your Chinese-American VP Don’t Know Diddley ‘Bout China Law And I Have Friggin Had It.
Bottom Line: If you want to succeed in China and avoid legal problems, work with the right people and do things the right way. It is that simple. The foreign company doing business in China that operates this way will virtually never get into trouble in China.
We will be discussing the practical aspects of Chinese law and how it impacts business there. We will be telling you what works and what does not and what you as a businessperson can do to use the law to your advantage. Our aim is to assist businesses already in China or planning to go into China, not to break new ground in legal theory or policy.