Went to dinner with a Shanghai friend the other night.  This is someone who has been living in China nearly twenty years and speaks fluent Mandarin and Shanghainese.  This is a “China guy” who really knows China.

A couple of his stories resonated.  One was about how his best client fired him.  Here’s that story.  My friend was tasked with making sure that his client’s product was made right and  delivered on time. To a large extent, this meant that his role was antagonistic to that of the Chinese manufacturer.  My friend constantly had to make sure that the Chinese manufacturer did things a certain way, and especially that no bad product pass through. To put it more bluntly and relevantly, my friend was costing the Chinese manufacturer money.

The Chinese manufacturer didn’t like that and so it mounted a campaign to get him fired.

For months, the Chinese manufacturer would tell my friend’s client of how my friend didn’t know China, didn’t know the product, and wasn’t doing a good job. These comments were the softening blows.

Then one day, the Chinese manufacturer intentionally did whatever it could to anger my friend.  It worked and he got angry.  The Chinese manufacturer secretly taped my friend yelling and swearing at them and they sent that video to my friend’s client, explaining how this was what they constantly were having to face from my friend.  The client fired my friend.

My friend also talked of how when he visits Chinese factories, it is fairly common for someone to run ahead of him, screaming that he speaks Shanghainese so as to be sure that nobody reveals anything to him that he should not know. He talked of how the Chinese manufacturers are always trying to undercut him because he knows what he is doing and knows how to keep them on the strait and narrow.

Before Shanghai, I had breakfast in Beijing with another very experienced China guy — a European who has spent the last 13 years in Beijing assisting European companies who also.  This person also speaks fluent Mandarin. He had two great “China stories” for me, both very similar. In both, he had, simply by being “a white guy who speaks Mandarin” been able to hear about large scale bribery taking place.  And in both cases, when he reported what he had heard to the European companies, they both got angry at him and ceased to have anything more to do with him.

I know it may be stretching things a bit, but I see a commonality running through all three incidents, and I also see something with which we as China lawyers often must deal. Oftentimes, when we are trying to help our clients better their negotiating position vis a vis their Chinese counter-party, the Chinese company tells our client that we are not licensed Chinese lawyers and therefore we don’t know Chinese law.  We typically deal with this by pre-empting it; we tell our clients early in the process to expect the Chinese counter-party to say things like this and we describe how dividing and conquering is one of the oldest and most used tricks in the book.  Then when it happens, our clients usually just take it in stride.

I don’t want to get all nationalistic here, but the reality is that the person you hire to assist you in China is a lot more likely to be looking out for your interests than the Chinese company with whom you are doing business or seeking to do business.

That just makes sense, doesn’t it?

What do you think?

We wrote on China domain name scams last year, but since we are seeing an increase in these from our clients and readers, we are going to write on it again.  Just about everyone doing business in China or doing business with China gets or will get one or more of the following:

1.  Preventing someone in China from registering your domain name;

2. Registering your domain name in China, “just in time” to prevent someone from beating you to it;

3.  Making sure that your domain name registration in China does not expire.

DO NOT RESPOND.

Near as we can tell, every single one of these that we have seen (and we have seen at least one hundred of these (because clients and readers are always sending them to us to review) are a scam. Number 3 above may not be a scam if you actually have a Chinese domain name, but if you do not, it is.

You also may get emails from someone claiming to have already registered some iteration of your company name (or one of your product names) and seeking to sell it to you. For example, if your company is called “xyz” and you already own the xyz.com domain name, your email may come from someone who has purchased and now wants to sell you the xyz.cn domain.

STRATFOR did a China Security Memo on how these emails would increase when ICANN ( Corporation for Assigned Names and Number) started accepting applications for domain names with non-Latin characters (i.e., Chinese) and that appears to have been the case now that ICANN has done that.

So what should you do when you receive an email offering to protect you from “others” who are seeking to register a Chinese translation or variant of your name or product or someone seeking to sell you an already registered translation or variant.

First off, as soon as possible, register whatever domains you need to protect your company or brand. Determine now what domain names you care about so you do not need to make this determination with a gun to your head. Right now is the time to think about Chinese character domain names.

Secondly, if someone has already actually registered a domain name that is important to you and they are now offering to sell it to you, you essentially have three choices. One, let the domain name go. Two, buy it from the company that “took” it from you. Or three, pursue legal action against the company that took it from you.

Preemption by registration is your best and least expensive protection. In other words, if you do not want someone taking your company name or one of your product names (or some variant of these) and using them for a domain name, register those as domain names right now. You should also figure out whether it makes sense for you to register your trademark in China or wherever else you do business.

What are you seeing out there?