Topics Discussed and Key Points:

●      The Shanghai/Beijing rivalry

●      Companies that are finding success in China

●      The nature of legal risk in China versus North America

●      How Chinese law develop into its current framework

●      Data privacy considerations

●      China’s corporate laws

●      Common mistakes foreign companies make in negotiating and drafting contracts with Chinese companies

Episode Summary:

Today on The Negotiation, we talk with Art Dicker, Director at R&P China Lawyers, a boutique PRC law firm that supports international business in China. He is also Director at Acclime China, which offers a complete suite of premium accounting & tax compliance services in China.

Art has spent the last 14 years working in China to advise technology, manufacturing, and consumer companies on structuring their investments and managing legal risk in their operations. He has a deep understanding of the practical difficulties and cultural gaps faced by international headquarters in managing their legal risk in China, having served as Asia Pacific General Counsel at Cadence Design Systems for 6 years prior to R&P.

Art speaks with us about the differences he has encountered between working in Shanghai and working in Beijing. He refers to Beijing as “the real China” while Shanghai is more of a global city, akin to New York. Shanghai is also the location of choice that many multinationals choose to establish their base in, which means more opportunity.

China has a reputation of being a very difficult country to penetrate as a foreign tech company, particularly due to its complex legal environment. Art talks about the types of businesses that succeed in the country. LinkedIn, for one, has become a mainstay in the China tech ecosystem. He also mentions that foreign enterprise SaaS companies, while often flying under the radar, have been an extremely successful category of business in China simply because they are providing products and services that are not yet widely available locally.

He also explains why foreign companies do not need to fear the complex and often nebulous framework that makes up China’s corporate laws. He says that there is no need to have the “perfect” contract ready upon entering the country to do business with Chinese partners.

In fact, Art says that “in China, the contract is not worth more than the paper it’s written on.” Further, a contract means nothing if the foreign company has no legal representatives or local operators on the ground.

Key Quotes:

“At the end of the day, you have to take risks, and you have to take them eyes wide open. It’s a big market. If you try to cover every risk, you can’t do business—here or anywhere—for that matter. There is more risk here, but you just have to accept it and cover your bases as best as you can.”

“What we’re trying to give clients is a story. Nobody can perfectly comply with these laws because they’re so vague. So, what you’re trying to do is to come up with a story where you have done, as best as possible, to comply with the law, as it’s written, and as you understand it.”