There are several challenges to doing business in China, but a consumer base of more than 1 billion people has more and more companies looking into tapping its huge market.
“As a law firm, we think China is a place we need to be,” said Scott M. Turner, managing partner at Nixon Peabody LLP, which hosted a seminar Thursday at its Rochester office, in conjunction with JPMorgan Chase & Co., The Bonadio Group and the International Business Council of Greater Rochester.
Turner got the idea a couple of months ago to bring together people experienced with doing business in China to help those considering such a venture on the other side of the globe.
Topics discussed included government regulations in China and the U.S., a cheap labor force that is increasingly demanding more rights, taxes, protecting intellectual property, capital transfers to and from China and working within the Foreign Corrupt Practices Act.
“We see a lot of opportunities in China,” said David K. Cheng, a native of Hong Kong who chairs Nixon Peabody’s China & Asia Pacific Practice Group which has offices in Shanghai and Hong Kong. “There is a lot of activity from Chinese companies into the U.S., Europe and Latin America.”
He gave a brief overview of what is happening in China today, touching on several topics, including labor and employment, the culture and expectations of Chinese business leaders, and emerging Chinese companies such as Great Wall Motors, which he said would like to be the next Kia or Hyundai.
Cheng said even though the U.S. economy is having problems, China still sees the U.S. market as very important and wants to have a presence in America.
Joseph Bach, a partner in Nixon Peabody’s Intellectual Property Practice Group, talked about being in a factory of air conditioners that were all the same, built by the same people, but had different company labels placed on them.
He discussed the needs of American companies to protect their patents, using examples of products that were copied and advanced in China. Many of the replicas looked almost identical to the original.
Bach said Nissan lost a suit in China after the Great Wall car company copied the design of a Nissan pickup because Great Wall patented its version in China and Nissan had not.
He said recently, things have been shifting. Traditionally, Bach said, foreign companies sued Chinese companies, but now more Chinese companies are suing foreigners and winning. The number of Chinese patents is also growing worldwide.
American firms doing business in China also need to be aware of American laws. Edward C. O’Callaghan, a former assistant U.S. attorney who is a co-practice leader of the firm’s Government Investigations and White Collar Defense Practice Group, reviewed the Foreign Corrupt Practices Act, penalties for violations and how to successfully do business in China without breaking American laws.
“We don’t want to discourage investment in China, but you want to do it right,” he said, noting the Department of Justice and Securities and Exchange Commission will be watching.
Among the things to watch for are proper accounting and assuring subsidiaries comply with the laws, as well. O’Callaghan said many countries have joined the international Organisation for Economic Cooperation and Development, which helps governments navigate through a global economy.
The ways to get started doing business in China — including a representative office or a wholly owned foreign enterprise — were discussed during a panel discussion led by Cheng who noted the activities of a representative office are much more restricted.
“We advise clients to go with a WOFE,” said David C. Uhazie, finance director for Eastman Kodak’s Graphic Communications Group and the Film, Photofinishing and Entertainment Group. “You will probably change your RO to a WOFE. There are a lot of restrictions on an RO.”
Other panelists included Laura G. Quatela, chief intellectual property officer at Kodak; Paul Henry, a Bonadio partner; and Marty Lawlor, a lecturer in marketing, management and international business in the Rochester Institute of Technology Saunders College of Business.
More than 60 people, from Syracuse to Buffalo, attended the seminar.
“We had been noticing more and more companies have been expanding into China or understand that they need to be in China,” said David Kaufman, Nixon Peabody business development manager who emceed the program. “We wanted to showcase some of the resources that could help.”