One of our China lawyers recently got an email from a friend/former client who spent more than a decade as the China point person for his company. The email asked whether it still makes sense for American companies even to try to do business in China:
Former Client. I would guess that my China company experience is limited compared to your experience but for us maybe 25-40% of the companies we attempted to work with in China were “good.” The rest were simply working to take advantage of us and once they figured out we were not just going to roll over in ignorance they just stopped engaging. So though they did not have the opportunity to completely rip us off like some of the companies you describe in your blog, we wasted large chunks of our time and effort on them. And even after we figured out the companies it made sense to work with, we usually had to spend large amounts of time and money to get them to agree to the sort of contracts that would work for us.
This is why I wonder if small US based companies can successfully do business in China. Does it still make sense for them even to try when so much time is required to eliminate the large number of bad/dishonest companies?
My Answer. Typical lawyers response: It depends. But it does, right? It depends on how important China is or can be to your business. What is interesting and telling about this person’s email is that his complaint is not that his company got ripped off or that the contracts did not work, but that they took so long and cost so much. I think that is the key point here and to a certain extent it means the risks of doing business with China are not as great as so many believe. If you spend the time and the money, your risks go way down. So to grossly oversimplify, all you need to do is compare the cost of being safe against the benefits of doing business in China to get to your answer as to whether it makes sense to do business in China.