Recent success of China’s middle class means that there is a pool of customers in that country that is too large for most businesses to ignore. Still, while domestic firms in China are thriving, foreign companies continue to struggle for a foothold.
The reason such businesses struggle is due to difficulties dealing with Chinese regulations. Entering the Chinese market is challenging as any business will have to meet a large number of demands.
The attitudes of entrepreneurs already doing business in China
A recent survey and report shows that business executives from the U.S. are both optimistic as well as wary about doing business in China. While many believe relations will improve between the two countries, a large number of others believe that relations will remain basically the same. Perhaps not surprisingly, this is an actual improvement in attitudes from just a few years ago.
But 75 percent of those responding to the survey did not feel as welcome doing business in China as in the past. They feel threatened by a “quid pro quo” arrangement favoring Chinese companies.
There is still a suspicion that Chinese companies receive preferential treatment from their government over foreign companies. This is especially true in the technological sector regarding businesses in research and development.
IP concerns of foreign companies
Most importantly, there is a feeling that the Chinese government is not sympathetic towards foreign business concerns regarding the theft of intellectual property. Some American entrepreneurs blame a laxity of IP protection measures for stifling innovation.
China recently enacted a cybersecurity law requiring foreign businesses to domestically store sensitive data. Even a company as large as Apple bowed to Chinese demands. And when joining with a local partner, this usually means the foreign business must turn over all IP information.
Despite all of this, many companies make it a priority to perform business in China. Again, it is hard to resist a market of over one-billion people. Yet companies doing business in China will require guidance concerning protection of intellectual property and trademarks. It’s important to have legal counsel on your side who understands how to license products and ideas in both the U.S. and China.