China Lawyers

Commercial real estate company Jones Lang Lasalle (JLL) has come out with a ranking of cities worldwide by “momentum.” JLL researchers use 42 factors to evaluate world cities on the move and their rankings do at least somewhat jibe with the sense I have regarding the cities I know. Their ranking of the top 30 cities is as follows:

1 Bangalore
2 Ho Chi Minh City
3 Silicon Valley
4 Shanghai
5 Hyderabad
6 London
7 Austin
8 Hanoi
9 Boston
10 Nairobi
11 Dubai
12 Melbourne
13 Pune
14 New York
15 Beijing
16 Sydney
17 Paris
18 Chennai
19 Manila
20 Seattle
21 San Francisco
22 Shenzhen
23 Delhi
24 Raleigh-Durham
25 Mumbai
26 Hangzhou
27 Los Angeles
28 Dublin
29 Nanjing
30 Stockholm

So as you can see, Shanghai comes out on top among China cities at #4, Beijing clocks in at #15, Shenzhen at #22 and Nanjing at 29. I was a bit surprised not to see Shenzhen at the top of the China list, because without a doubt, our China lawyers have been seeing a greater increase of work from there than from any other city in China. See Shenzhen, China, 24/7, and the Internet of Things. But who are we to quibble.

What most struck me (but did not surprise me one bit) is how well Vietnam’s two largest cities did in this ranking, with both Ho Chi Minh and Hanoi in the top ten. Beyond China and Vietnam, India and the United States do best in the rankings overall, with India contributing two cities in the top ten (Bangalore at #1 and Hyderabad at #5) and four more cities ranked between 10 and 30. The United States has three cities in the top ten and an additional eight cities ranked between 10 and 30.

What are your thoughts regarding the above ranking?

Chinese CultureI just finished reading and heartily enjoying the book, Etiquette Guide to China: Know the rules that make th difference, by Boye Lafayette De Mente and Patrick Wallace. I read most of it on a flight back from Barcelona, Spain, my law firm’s European headquarters, and a city in which I have spent a fair amount of time and in a country where I have spent considerable time. Yet even on this only two day trip, I learned tons about both Catalonan/Barcelona personal and business culture.

In Barcelona, I gave a speech to an overwhelmingly European (mostly Catalan with some attendees from elsewhere in Spain) on how to protect your IP from China without any notes and on at least 3-4 occasions I realized that my descriptions of how foreign companies typically act in China was overly based mostly on how American companies act in China and only later did it become clear to me that some of what had said was less true of Catalan (and Spanish) companies. In other words, I would have benefitted from having known more about Catalan culture.

Though the book obviously calls itself an etiquette guide, I view it as more a cultural guide and becuase so much of it dealt with China business culture, I found it very helpful. This is a great book (indeed, an almost necessary book) for anyone new or relatively new to doing business in China. It also makes for an excellent refresher for China veterans.

Let me start by saying that I am not terribly good with etiquette anywhere. It’s not that I don’t think etiquette matters; it’s just that I’ve always believed that being respectful and polite and not condescending and not snarky go a long way. Etiquette, whatever that means, is, to me, more like icing on the cake.

Does this hold true for China? I think it does. I was in Shenzhen last month and while there I actually had a discussion with a China lawyer regarding the importance of etiquette in China versus the importance of etiquette in Korea. We both then had great fun in telling (and in listening) to our various business etiquette faux pas stories involving doing business in Korea and then we concurred that etiquette matters a lot less for doing business in China than it does in Korea. So even though both of us have had many more business  dealings with China in our careers, neither of us had any great China faux pas stories to tell.

Below is my favorite Korean faux pas story, which just seems to get better every year.

Many many years ago, I was representing a very large Korean company in a settlement negotiation with a very large American company. On the first day, the talks were tough, but going fairly well and at lunch time, the lead in-house lawyer for the Korean company invited the American side to join us for lunch. The Americans declined. We went to lunch (the Korean company representatives and me) and then negotiated the rest of the afternoon.

The next day, we made tremendous progress and a full settlement was completely in the bag when the lead in-house lawyer for the Korean company again invited the American side to join us for lunch. Again, however, the American side stressed the need to work through lunch.

So again, I went to lunch with my Korean client, but this lunch was very different from the previous day. My usually very light-hearted and sober client had a number of drinks during lunch and made clear early on that he was not in a joking mood. After lunch, we returned to negotiate and one of the more junior lawyers on the American side made some completely innocuous suggestion. I do not remember the suggestion, but for effect when I tell this story, I say that he suggested the agreement be signed in blue, not black — it really was nearly that inconsequential.

In response to the young lawyer’s comment, the lead in-house lawyer for the Korean company slammed his notebook shut and proclaimed that we were “done here” and instructed all of us to walk out. The Americans looked at me for an explanation and I had none.

Only a few weeks later did my client tell me what had transpired.

On the first day, he had invited the American company to lunch and they had turned him down in front of “his people.” The next day, the American company should have invited all of us to lunch but they didn’t. So in an incredibly magnanimous act, the lead in-house lawyer for the Korean company had invited them. Again though they declined, which made him lose tremendous face in front of “his people.”

in the end, we did eventually settle, but it took another month and a lot of lawyer time and a highly choreographed trip to Korea by the CEO of the big American company and all because of a declined invitation for lunch.

Something like this is a lot less likely to happen in China. Despite the importance of face, business practicalities tend to win out in China and had this same thing happened in China, I doubt it would have slowed down the settlement talks at all.

Though not knowing China’s etiquette rules are unlikely to destroy your business chances, it can hardly be disputed that knowing those rules can aid it. Knowing the etiquette rules on how to conduct business will  help you in doing business in China. And if you want to know the rules, you should buy and read Etiquette in China.

The parts and chapter titles of the book will tell you better about its content than I could so here you go:

Part I. The Middle Kingdom

  • The Origins of Chinese Etiquette
  • The New China
  • Cultural Influences on Chinese Etiquette

Part II. Minding Your Manners in China

  • Personal Etiquette in China
  • Chinese Meal and Celebrations

Part III. Doing Business in China

  • Foreigners and the Chinese Way of Doing Business
  • Cultural Influences in Chinese Business

Part IV. Negotiating In China

  • The Chinese Way of Negotiating
  • Preparing to Negotiate in China
  • What to Expect While Negotiating
  • Business Entertainment
  • When You Are Host in Your Own Country (this was my favorite chapter

Read the book, and no matter what your level of China cultural knowledge, I assure you that you will walk away with a better understanding of China after having done so.

Negotiating with Chinese companiesIn this series of posts I have been looking at themes explored by Lucian Pye in his work Chinese Commercial Negotiating Style. Pye concludes that the way most Sino-Foreign negotiations are conducted helps the Chinese side apply its preferred strategies and tactics. My first post looked at how Chinese companies tend to control the preliminaries during what I call the “courtship” phase. The second post considered what Pye says about the Chinese tendency to prefer agreements on generalities. In my third post I examined Pye on  specific Chinese negotiating tactics. In this final post I summarize Pye’s tips for negotiating with Chinese companies.

Take general principles seriously. According to Pye, the Chinese usually prefer to begin with agreement about general principles before moving to concrete items, while foreigners like to begin with specifics and avoid generalities. Agreement on generalities allows the Chinese to make headway by drawing subsequent negotiations back to the “spirit” of the agreement. If you follow the Chinese route it is imperative you decide ahead of time the precise general principles you are prepared to accept.

Avoid the indebtedness trap. Chinese negotiators often seek to put foreigners in a position where they will feel obligated or indebted. Pye says that foreign negotiators need to be aware of the obligations they may be accruing. They should be skeptical in the face of the “effusion of personal friendship” often used to elicit an acknowledgement of the indebtedness. See How NOT To Choose Your China Business Partner. And Why I Take Cabs.

Prevent exaggerated expectations. Exuberant Western sales techniques are often read to mean the foreigner is prepared to do more than they intend. Once the Chinese assume a relationship has been established they will genuinely count on generosity and flexibility from their partners. If the Chinese decline an offer of generosity in one instance, they may consider themselves entitled to ask for the same kind of generosity in future. Chinese “face-saving” can involve turning down initial offers but there is no loss of face in asking for help later.

Handle the shaming. When disappointed, Pye says, Chinese negotiators tend not to search for appropriate counter moves but attempt to shame the foreign party with moralistic appeals and denunciation. They believe that if the other party can be shamed into doing the “right” thing they will be grateful and not resentful. You can often satisfy the shaming tactic with symbolic responses.

Master the record. A Chinese negotiator will normally be completely knowledgeable about the deal history and will test the other side’s memory to advantage. What was previously discussed or settled may be contradicted in an attempt to take advantage of new negotiators or changed circumstances. There is a belief that foreigners are careless and deserve to be penalized if they make mistakes. Pye’s tip is that you keep an exact record of your negotiation history.

Control the damage. It will inevitably be necessary, at times, to adopt positions the Chinese may find offensive or that may violate their beliefs about how people with mutual interests should behave. Pye’s tip is to concentrate on limiting the damage and not engage in mutual recriminations, which will only convince the Chinese side that the foreign side is insecure. According to Pye, the Chinese have a strong need to publicize what they perceive as mistreatment. Avoid an aggressive defense at all cost. Better to pass something off as an unavoidable misunderstanding about which the Chinese side has the right to be upset.

Pye’s report was commissioned by the US Air Force in the early 1980s. As I said at the start of this series, though some of his political and economic observations are somewhat dated, I was nonetheless struck by his report’s enduring relevance and I now recommend it to anyone interested in doing business with China.

How to negotiate with Chinese companiesIn this series of posts I am looking at themes explored by Lucian Pye in his work Chinese Commercial Negotiating Style. Pye concludes that the way most Sino-Foreign negotiations are conducted helps the Chinese side apply its preferred strategies and tactics. My first post looked at how Chinese companies tend to control the preliminaries during what I have called the “courtship” phase. The second post considered what Pye has to say about the Chinese tendency to prefer agreements on generalities. In this third post I examine what he has to say about specific Chinese negotiating tactics.

According to Pye, Chinese negotiators tend to use the following tactics:

Open with flattery — In response to flattering remarks the foreigner feels compelled to give an enthusiastic affirmation. The foreigner is then called on to give an emphatic denial of a feigned, self-deprecating remark. This puts the foreigner on the back foot from the outset.

Operate on two levels — There is the manifest level of bargaining about the concrete and there is also the latent level at which attempts are made to strike emotional bargains based on dependency. Chinese negotiators seek relations in which the foreigner will feel solicitous toward China, thus implicitly becoming a protector and more a superior than an equal.

Focus on mutual interests — Westerners like to think of themselves as conciliators. The Chinese tend to reject the principle of compromise and prefer instead to stress mutual interests. When mutual interests have been established it is easier to ask the foreign party to bear a heavier burden without protest.

Use meetings as seminars — Negotiations are seen partly as information-gathering operations. Foreign competitors are played off against against one another to extract maximum technical intelligence from presentations. Negotiating sessions are used frequently for training purposes. The foreigner is encouraged to perform so as to impress the passive Chinese host. The obliging guest entertains in repayment for hospitality and brings “gifts of knowledge”. Put simply, Chinese companies often claim to want to do a deal with you when all they really want is to get access to your technology or know-how. I cannot stress enough how often our China lawyers see this sort of situation.

Blur the lines of authority — You can’t tell who reports to whom or where the apparent leader fits in the hierarchy of the Chinese company. Negotiating teams tend to be large but the lines of authority are diffuse and vague. Chinese negotiators are often unsure of their mandates and of the probable decisions of their superiors. They therefore tend to give inaccurate signals about the state of negotiations. Foreigners persist in trying to find a particular person who has command authority at each level. In China it cannot be assumed that power is tied to responsibility. Proof of a person’s importance often lies precisely in their being shielded from accountability.

Never say “no” — Chinese negotiators will frequently seem to be agreeing when they say something is “possible” but often this is an ambiguous way of saying “no”. They will often respond with silence to a proposal and then at a much later date suddenly return with interest.

Never telegraph their next move — Chinese negotiators don’t telegraph their next moves through displays of emotion. The level of friendliness or impersonality remains the same whether negotiations are heading for success or failure. This brings surprises. Warm and progressively friendly meetings can lead to disappointing outcomes. Chinese negotiators are quite prepared to end meetings or negotiations on a negative note. As negotiators often have little authority they often find it prudent to maintain a negative attitude. At the same time, apparently disinterested negotiators can suddenly announce that a positive agreement is possible.

Exploit Chinese members of the foreign team — Ethnic Chinese associated with the foreign team will be sought out in the belief that they are naturally sympathetic to China. Our China attorneys have also seen many instances where an Ethnic Chinese person on the foreign side is accused of disloyalty for not siding with the Chinese side in the negotiations — always in Chinese, of course.

Use “shaming” — Chinese negotiators may be quick to point out “mistakes” in an effort to put the foreign party on the defensive. There is a deep belief that people will be shattered by the shame of their faults so there is a tendency to make an issue over trivial slip-ups and misstatements.

Make big asks — Chinese negotiators often have no hesitation in presenting what they must understand are unacceptable demands. These demands are often accompanied by a hint that they will be withdrawn in return for only modest or symbolic concessions. Extreme language is often used to obtain symbolic victories.

Stall — Chinese negotiators are masters of creative use of fatigue. They have, according to Pye, great staying power and almost no capacity for boredom. These traits keep foreigners’ hopes alive. This approach may also reflect lack of experience, bureaucratic problems or a subordinate’s fear of criticism from above. Conversely, when agreement reached it is often the Chinese who become impatient for deliveries by the foreigners. For more on this tactic, see Doing Business In China Requires Patience. Don’t Just Be Leaving On That China Jet Plane.

As I have said before, Pye never moralizes or suggests there is anything wrong with the Chinese approach. He merely points out how different it is from the typical Western approach, leaving readers to conclude that foreigners ignore or disregard Chinese negotiating tactics at their own peril. This is certainly consistent with our view that one should not rush to blame the Chinese when things go wrong.

In my final post in this series I will outline Pye’s tips for foreigners when negotiating with Chinese companies.

Doing business with China
Leaders of the TPP countries. What no China?

Far too many on Facebook and Twitter keep describing the Trans-Pacific Partnership as a “secret” document and then use that as a reason for opposing it. Go ahead and oppose TPP — that’s your right — but it is factually wrong to claim it is a secret document as you can find its full text right here on the Office of the United States Trade Representative’s website.

And if the straight text is not enough for you, or if you are interested in how the TPP (if it passes, which is looking increasingly unlikely) will impact China businesses and foreign companies doing business in China or with China, check out the following:

Negotiating with Chinese CompaniesIn this series of posts I am looking at themes explored by Lucian Pye in his work Chinese Commercial Negotiating Style and how they relate to negotiating with Chinese companies. Pye concludes that most Sino-American negotiations are initiated in a way that helps the Chinese side achieve its preferred strategies and tactics. My first post, Contract Preliminaries and Courtship Rituals, looked at how Chinese companies tend to control the preliminaries during what I have called the “courtship” phase. In this post we will see what Pye has to say about the Chinese tendency to prefer agreements on generalities.

Pye observes that Chinese culture traditionally shuns legal considerations and instead stresses ethical and moralistic principles. By contrast, Westerners are thought to be highly legalistic. The Chinese tend to reject the typical Western notion that agreement is best sought by focusing on specific details and concrete matters while avoiding discussions of generalities or rhetoric. The Chinese prefer to agree on general principles before dealing with details. They can, Pye says, be tenacious in holding to their principles but surprisingly flexible about details. The Chinese focus is on the “spirit” of the deal. Agreement on principles usually takes the form of letters of intent or protocols, the purpose of which often mystifies the Westerner. The Chinese attach great importance to symbols and symbolic matters. Symbols such as the spirit of the agreement have a reality for the Chinese and there is a distinct Chinese bias in favor of the publicity or “face” these symbols can generate.

The Chinese, Pye says, conceive of their business relationships in longer and more continuous terms than Westerners. They expect an agreement to set the stage for a growing relationship in which it will be proper for the Chinese to make increasing demands. A proclivity for seemingly unending negotiations can even make the Chinese insensitive to the possibility that “canceling” contracts may cause trouble in the relationship with the foreign party. From the Chinese perspective, nothing about a contract is ever final. Westerners usually think a contract will provide for a given period of fixed and predictable behavior but the Chinese look for continuous bargaining and regard this bargaining itself as suggesting an enduring relationship. For Westerners there can be a great deal of give and take before agreement is reached, but afterwards the expectation is that neither party should lean on the other to seek further advantages. For the Chinese, the very achievement of a formalized agreement, like the initial agreement on principles, means that the parties now understand one other well enough that each can expect further favors. They will therefore not hesitate to suggest changes immediately on the heels of an agreement. They tend not to treat the signing of a contract as signaling a completed agreement.

Pye advances several explanations for the Chinese tendency to seek early agreement on general principles. First, he says, it is easier to extract concessions when details are to be worked out later on. Second, agreement on principles can easily be turned into agreement on goals. This can in turn support a later insistence that all discussion of concrete issues must support these goals. Finally, Pye says, agreement on general principles can be used later to substantiate tactical claims of bad faith.

More on tactics in the next post in this series.

One final point: Pye never moralizes or suggests there is anything wrong with the Chinese approach. He merely points out how different it is from the typical Western approach, leaving readers to conclude that foreigners ignore or disregard the Chinese negotiating tactics at their own peril. This is certainly consistent with our view that one should not rush to blame the Chinese when things go wrong.

Negotiating with Chinese CompaniesIn the early 1980s the US Air Force commissioned Lucian Pye, an eminent sinologist, to write a report on how Chinese negotiate with foreigners. Published in 1982, it was called Chinese Commercial Negotiating Style.

A friend of mine recommended Pye’s work to me recently, saying he wished he had read it twenty years ago when he first started working in China. Based on extensive interviews with Americans engaged in China trade, Pye’s paper analyzes the negotiating style the Chinese use with American businesspeople. To control for American cultural bias, Japanese traders were also interviewed. Pye’s overall conclusion was that the way most Sino-American negotiations are initiated usually sets in motion a process that helps the Chinese side achieve its preferred strategies and tactics.

Though some of Pye’s political and economic observations are, quite understandably, now rather dated, I was nonetheless struck by his report’s enduring relevance and, like my friend, I now recommend it to anyone interested in doing business with China. To merely summarize his work would be to do it a disservice so I have attempted to draw out some of his major themes and look at them in a series of posts. A recurring theme is Chinese mastery of contractual preliminaries.

In Pye’s view, foreigners often follow the historical practice of coming as guests seeking permission to do business in China. This naturally casts them in the role of supplicants asking for Chinese beneficence. They are visitors from afar and their hosts call the tune on the procedures and the timing of meetings. Problems associated with visas, invitations and access to officials or business leaders contribute to foreign anxiety about “doing the wrong thing” when doing business in China. So when problems arise, the foreigners are prone to suspect they are somehow at fault. In this way, the Chinese hosts gain the advantages of surprise and uncertainty in agenda arrangements.

According to Pye, the Chinese tend to limit preliminary exchanges to generalities so as to size up the foreign party and to determine its vulnerabilities, especially any lack of patience. At the same time, foreign business leaders tend to jump straight in. The novelty and status associated with visiting China frequently compel foreign CEOs to be the first to engage in talks with the Chinese, without waiting for subordinates to prepare the ground. The graciousness and bountifulness of Chinese hospitality can make the foreign visitor feel awkward about being too businesslike. Consequently, foreign CEOs tend to be very obliging in following the Chinese practice of seeking initial agreement on very general principles, without clarification on the specific details. Much of what occurs at the preliminary stage has a tacit quality and foreigners frequently misjudge their progress. In taking this approach, Pye says, foreigners violate one of the first principles of negotiations and diplomacy — summit meetings should never take place without extensive preliminary spadework by subordinates.

When mid level executives are later sent in to work out the details of a contract they usually discover that the Chinese want to rely on the agreed “principles” that were put in place by the CEO. Such principles were often taken by the foreigners to be no more than ritual statements but the Chinese tend to use them to practical advantage by suggesting the other party has not lived up to their “spirit.” See China LOI and MOU: Don’t Let Them Happen to You. Instant authorities on China, these CEOs returned from their initial visits to report success, saying they found the Chinese to be cooperative and gracious. The mid level executives and others tasked with working out details then come under great pressure. They are constrained to avoid acting in ways that might irritate the Chinese and spoil relationships established by the boss. So, when the big guns are sent in first the foreigners lose the advantage of dispatching their highest people for critical negations at the consummation of the deal. Their second appearances must now be limited to generalities where civilities prevail.

I found Pye’s observations both persuasive and broadly consistent with my own experience. Having said that, he is clearly more concerned with the affairs of government and large corporations than he is with SMEs or creatives who may not have support available from a middle level of management or administration. The pitfalls Pye identifies can be minimized, he says, if foreigners recognize that in the initial stages of negotiations, the Chinese usually only want highly generalized in-principle agreement to the effect that a relationship is possible.

In my next post I will look at what Pye has to say about Chinese attitudes to contract formation.

Owed money by Hanjin Shipping?

We received the book, Conflict of Laws in the People’s Republic of China, a few weeks ago, and our China attorneys have been using it ever since. It is that good. We find ourselves using it both as a “first look” at various aspects of China conflict of laws and also for its 25+ pages of cases and legislation. This is a really good, really serious, really well written, really comprehensive book on China conflict of laws.

It describes itself as follows, 100% accurately:

This timely book is an invaluable resource for academics and practitioners in private international law, conflict of laws, international law, international litigation, Chinese law and international civil and commercial law matters involving China.

You got that right, and I’ll raise it one by noting how we have used it to reinforce for our own clients why we use the particular choice of law (usually China) and choice of jurisdiction (usually China courts or China arbitration) we do.

The thing about conflict of laws is that international lawyers have to deal with it far more than most realize. Just yesterday, it came up twice in just my work. The first time involved a case regarding ownership of real property by a dissolved foreign corporation and the question was whether to apply the law of the jurisdiction of the real property or that of the dissolved foreign corporation. Our firm is involved in helping creditors owed money by Hanjin Shipping and shippers concerned about what will happen with their cargo on board Hanjin vessels. This matter has already and will involve simply massive amounts of conflict of law analysis, including for China, where a number of Hanjin vessels are under arrest. So yeah, conflict of laws is highly relevant.

The book is made up of the following fourteen chapters:

  1. Conflict of Laws in China — A Historical Perspective
  2. Concepts and Preliminary Questions
  3. Jurisdictions in Chinese Courts
  4. Declining Jurisdiction in Chinese Courts
  5. Selected Procedural Issues in Foreign-Related Litigation in China
  6. Recognition and Enforcement of Foreign Judgments in Chinese Courts
  7. Recognition and Enforcement of Arbitral Awards in Chinese Courts
  8. Choice of Law in Contract
  9. Choice of Law in Tort
  10. Choice of Law in Unjust Enrichment
  11. Choice of Law in Property
  12. Choice of Law in Intellectual Property
  13. Interregional Conflicts and Cooperation Between Mainland, Hong Kong, Macau and Taiwan
  14. Chinese Conflict of Laws: Past, Present and Future

If you are an English speaking lawyer involved with China, you should get this book, read the most relevant parts for your practice. I read the chapters on Recognition and Enforcement of Foreign Judgments in Chinese Courts, Recognition and Enforcement of Arbitral Awards in Chinese Courts, Choice of Law in Contract Choice of Law in Intellectual Property for this review and I plan to read a few more chapters during my next long airplane flight.

If you are a China lawyer, get this book. And if you are an international lawyer, consider getting this book. There is nothing that even comes close to it in English (though there are a number of tomes in Chinese). You won’t regret it.

Best China Business BooksClub China (KLM Airline’s China focused website) came out today with a list of the four best books on China business. It describes its list as follows:

Are you planning your China business venture? Or have you been in China for years, and find yourself still hungry for knowledge? Our Club China editors have compiled their list of best business books about China. Some have been published fairly recently, others are classic but still immensely popular. Please enjoy our ‘Must-reads about China’.

Its list consists of only four books, all but one of which (the One Hour China Book being the exception) I have read and recommend very highly. I am writing this post on an airplane (heading to New York to speak on China tomorrow at Cardozo Law School and having someone on the ground fill in the links) with marginal internet, but I have a nagging feeling, actually a certainty, that though my list would most emphatically include the three books I have read, it would also most emphatically include some more. So to me this list is not necessarily THE four books you must read or even the best four books for those looking for more information on doing business in China or with China, but rather, four great books for that purpose (I have heard nothing but good things regarding the One Hour China Book).

So without further ado, I give you the KLM list, with my own comments following the quote.

China CEO. By Juan Antonio Fernandez and Laurie Underwood. KLM has this to say about China CEO:

There is nothing like learning about business successes and failures from the very people that experienced them….Twenty top executives and eight experienced consultants based in China offer their first-hand, front-line advice….China CEO is full of such sound advice about subjects like managing Chinese employees, leaderships styles and negotiating with the Chinese Government.

Way back in 2009, in a short article I wrote for Forbes Magazine, entitled Best 10 Books on China, I listed China CEO and had this to say about it: China CEO is a technical collection of interviews with CEOs on how to conduct business in China.

One Billion Customers, by James McGregor, of which KLM has this to say:

The author is a former Wall Street Journal China bureau chief who became a successful corporate executive. One Billion Customers … offers compelling narratives of personalities, business deals, and lessons learned….The book offers a great number of interesting case studies, including a rocky joint venture between Morgan Stanley and a Chinese bank; the rise and fall of a Chinese peasant turned billionaire smuggler; Rupert Murdoch’s travails in bringing a satellite TV network to China; and a muck-raking Chinese financial journalist’s battles with both government censorship and the private media’s cozy relationships with advertisers.

I also listed this book in my Forbes article with this to say about it: “How big business gets done in China.”

China’s Super Consumers, by Savio Chan and Michael Zakkour, of which KLM has this to say:

The subtitle of the book Chan and Zakkour wrote says it all: What 1 Billion Customers Want and How to Sell it to Them. It explores the birth of consumerism in China and explains who these super consumers are. The authors explain what’s inside the minds of Chinese consumers, what they buy, where they buy, how they buy, and most importantly why they buy….The authors offer real stories of the kind that entrepreneurs can never get enough of: how was it done, why did it work, where did it fail….The book takes its readers inside the boardrooms of the people who understand Chinese consumers and have had success in the Chinese market.

I reviewed this book when it came out in 2014, and if you will forgive me a bit of bias because it quotes me a couple times on the legal side of doing business in China, I think this book makes for a superb primer on how to do business in China. Back then I described it as “a great book and I highly recommend it for anyone with a product or a service that is being sold or could be sold to China’s consumers. It is also a very good book for any foreign company doing business in China or looking to do so.” I certainly stand by that review now.

The One Hour China Book, by Jonathan Woetzel and Jeffrey Towson, about which KLM has this to say:

If you are more a doer than a reader, this one is for you. In just 132 pages, two Beijing university professors take you on a quick tour of China business life. There are just six stories in this book and they happen to be pretty good. This “quick-read” offers the distilled knowledge of two Beijing university business professors with over 30 years of experience on the ground in China and emerging markets….Each chapter is condensed into a handful of key points/statements which help the reader to understand and remember the underlying mega trend.

That’s it. Those of you on the ground who wish to add additional books to this list, please do so via the comments below. I am still working on a massive “best reading materials on China” list and I continue to welcome suggestions for that as well.

Since we took down our blogroll last year, I feel it is more incumbent upon us than ever to highlight other blogs and other sites and other writings we see as being helpful to our readers. Towards that end I emphatically recommend the US-China Trade War Blog.

Though nominally written by a BigLaw firm, this blog is really is the brainchild and the baby of William Perry (a partner at Dorsey), a leading trade law and customs lawyer. Bill has the nearly unique distinction of having been both an attorney with the Office of General Counsel, U.S. International Trade Commission (“ITC”) and with the Office of Chief Counsel and Office of Antidumping Investigations, U.S. Department of Commerce. I am not aware of a single other attorney in private practice who has been an attorney with both of these key international trade agencies and this dual background/knowledge infuses his practice. Full Disclosure: Bill is based in Seattle and I know and greatly respect him and he is my firm’s go-to lawyer for trade and customs matters.

Anyway, about Bill’s blog, which describes itself as follows:

This blog is the outgrowth of a newsletter that I have created to monitor US trade and other litigation against US and Chinese companies. I am an international trade lawyer. Before representing US and Chinese companies in international trade cases for more than 20 years, I used to work at the US International Trade Commission (“ITC”) and Commerce Department on various trade cases in Washington DC.

Based on my experience, I can categorically state that there is now an ongoing trade war between the United States and China. This Trade War became evident in the recent Solar Cells antidumping and countervailing cases against China, which target approximately $4 billion in US imports of solar cells from China. In retaliation for this trade case, the Chinese government has initiated a countervailing duty and antidumping case against $2 billion of US exports of polysilicon, which go into the solar cells being imported from China.

Upon investigation, this trade war has now expanded into a number of other litigation areas against Chinese companies, including intellectual property/section 337 cases, false claims act/customs fraud, antitrust, securities and products liability litigation.

The best kept secret, however, is that the real targets of these US cases are not Chinese companies, but US companies that import products into the United States. US importers are the companies liable for antidumping and countervailing duties in cases against China. US import companies are also liable in intellectual property/337 cases, False Claims Act/Customs Fraud and Products Liability cases. The primary target of this trade war is the US companies involved in trade with China, not the Chinese companies. This is truly a brave new world.

As you can tell just from the above, Bill does not pull punches and his blog doesn’t either. The blog focuses on the various trade disputes swirling between the United States and China, with a dollop of ominous warnings about how China-US trade disputes just keep on escalating to the detriment of both countries. I had lunch with Bill not that long ago and he was even more ominous in person, pointing out how anti-trade rhetoric in the U.S. presidential election scares other countries around the world and could foretell a new period of beggar thy neighbor policies that will further escalate trade tensions between the United States and China. Bill’s big issue is how US companies that import products are getting hit with massive fines for having imported products from that are subsequently determined to warrant anti-dumping duties. Bill is the person who taught me that the United States is the only country in the world that applies such sanctions against importers retroactively. Did you know that you as a US company can import a product from China and then years later be hit with a massive fine for having imported that product? Based on the phone calls we get from companies to which this has happened, my strong sense is that too few U.S. companies are aware of this.

If you import anything into the United States or you are contemplating doing so (especially if your imports come from China), I recommend you add the US-China Trade War Blog to your reading list. If you are merely interested in international trade, I make the same recommendation. I warn you in advance though that it is not for the faint of heart or of intellect.