One of the themes of this blog for years has been that China is making things tougher for foreign businesses by increasing the strength of its business laws and by stepping up its enforcement of them against foreign companies. We hear that the same thing is happening to Chinese domestic companies, but starting from a much lower base.
But virtually whenever we write about this, someone leaves a comment or emails us to say that we are making this up to scare people.
The American Chamber of Commerce in China recently came out with a survey of its members and hidden and far more publicized fact that 78% of the respondents said they had been hacked was that only 28 percent of respondents view China’s investment environment as improving, down from 43 percent just last year. In other words, China is getting tougher on foreign businesses doing business in China. Running a foreign business in China has never been easy, but it has in the last few years gotten even harder still.
So what can or should you do? One, consider whether it makes sense to move some (or in very rare cases) all of your operations somewhere else. In the last two years, we have experienced an uptick in our clients expanding beyond China (Vietnam and Thailand and returning home have been especially popular lately) or at least considering doing so. Two, consider not entering China at all by way of actually setting up shop to do business there. At least think about how you can profit from China’s growth without having to set up and operate a Joint Venture or a WFOE there. Selling into China via a distributorship relationship or a licensing deal are just two obvious ways that have grown rapidly in popularity over the last couple of years. For more on these two methods of “entering” China, check out the following:
- Via a Distribution Agreement
- Via a Licensing Agreement
What are you seeing out there? Do you think the AmCham results reflect reality?