China corporate lawyersWay back in 2011, co-blogger Steve Dickinson and I spoke at the Foreign Correspondents Club in Beijing on Chinese companies going abroad. Our general theme was that they were terrible at it and we were not seeing even a hint of improvement. We talked about how they sought to buy foreign companies and foreign technology for pennies on the dollar and how they were rarely successful because few companies are that desperate. We also talked about how Chinese companies — for the most part — had no clue how to operate in the United States or in Europe. We compared Chinese companies to what we had seen over the years from representing Korean and Russian companies in the United States and in Western Europe and  how companies from those two countries seemed to improve year by year, but we had yet to see signs of that from Chinese companies.

Then maybe three or four years later, we were asked to speak again before the same Club on the same topic and I demurred, explaining how there would be no need for us to come back because the only thing we’d have to say is that “nothing has changed.”

Well guess what. Things have changed and we are not the only ones seeing this and talking about it. Starting about a year ago and accelerating even over the last six months, Chinese companies seem to be getting very serious about going international and they are starting to do what they need to do to do so. Over the last year we’ve seen/heard about and/or done the following:

  1. A ton of deals where the Chinese side wants to do a joint venture with our American or European client to take advantage of something our client has that can be monetized in China. We’ve done these deals where the “something” is technology, internet content, brand recognition, and knowledge. The big difference we are seeing is that the Chinese companies are serious about these deals and they are serious about putting in real money and real effort to advance them. Most importantly, the Chinese companies are not just interested in structuring these deals so they can easily dump our client once they’ve been milked for the “something.” A China consultant I know who works in the software sector put it best when he described the difference he is seeing in deals lately is that the Chinese side is focusing on the financial aspects of their deals and not just trying to grab and go with the technology. He talked of how the financial people are way more sophisticated now than five years ago and they are the ones running these deals as much as the tech people. I completely agree.
  2. A ton of deals where Chinese companies want to invest in U.S. and European companies for long term benefits.
  3. Many of China’s largest companies have become more international and more sophisticated. Companies like Tencent, Baidu, Alibaba, JD.com and Shanghai Auto are doing all sorts of international deals and they clearly realize they need to operate at an international level to make these come to fruition. Smaller Chinese companies seem to be realizing the same thing in much greater numbers as well.
  4. What’s hot? Internet retail, autonomous cars, agriculture tech, factory tech, robotics. No surprises, right.

I’ve talked with all sorts of people in all sorts of places and in all sorts of industries and nearly without exception they are saying that they are seeing the same things. These changes manifest themselves in various ways, but one of the most salient is how Chinese companies are now willing to forsake the short term for long term serious gains.

What are you seeing out there?

 

 

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Photo of Dan Harris Dan Harris

Dan is a founder of Harris Bricken, an international law firm with lawyers in Los Angeles, Portland, San Francisco, Seattle, China and Spain.

He primarily represents companies doing business in emerging market countries, having spent years building and maintaining a global, professional network. 

Dan is a founder of Harris Bricken, an international law firm with lawyers in Los Angeles, Portland, San Francisco, Seattle, China and Spain.

He primarily represents companies doing business in emerging market countries, having spent years building and maintaining a global, professional network.  His work has been as varied as securing the release of two improperly held helicopters in Papua New Guinea, setting up a legal framework to move slag from Canada to Poland’s interior, overseeing hundreds of litigation and arbitration matters in Korea, helping someone avoid terrorism charges in Japan, and seizing fish product in China to collect on a debt.

He was named as one of only three Washington State Amazing Lawyers in International Law, is AV rated by Martindale-Hubbell Law Directory (its highest rating), is rated 10.0 by AVVO.com (also its highest rating), and is a recognized SuperLawyer.

Dan is a frequent writer and public speaker on doing business in Asia and constantly travels between the United States and Asia. He most commonly speaks on China law issues and is the lead writer of the award winning China Law Blog. Forbes Magazine, Fortune Magazine, the Wall Street Journal, Investors Business Daily, Business Week, The National Law Journal, The Washington Post, The ABA Journal, The Economist, Newsweek, NPR, The New York Times and Inside Counsel have all interviewed Dan regarding various aspects of his international law practice.

Dan is licensed in Washington, Illinois, and Alaska.

In tandem with the international law team at his firm, Dan focuses on setting up/registering companies overseas (via WFOEs, Rep Offices or Joint Ventures), drafting international contracts (NDAs, OEM Agreements, licensing, distribution, etc.), protecting IP (trademarks, trade secrets, copyrights and patents), and overseeing M&A transactions.