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Unclear laws a major concern when investing in China

On Behalf of | Mar 6, 2019 | Uncategorized

While there’s been discussion regarding intellectual property and forced technology transfers in China, these may not be American businesses primary concern. The most important concern may be more basic than that.

According to a recent Forbes article, the main issue is “cumbersome regulations.” They came to this conclusion due to the results of a survey of businesses by the American Chamber of Commerce in Beijing.

The survey barely highlighted concerns regarding state-owned enterprises in China receiving favors. Most American businesses only looked at these enterprises as competition. Also, only a small portion of American businesses stated that forced technology sharing factored into their not investing in Chinese ventures.

IP concerns and China

A surprising result in the Chamber of Commerce survey was the number of businesses who saw improvements concerning rules pertaining to intellectual property in China. Almost all businesses felt China was making strides to improve on this matter, and over half said the current IP rules are currently better.

China is now increasing penalties on companies charged with stealing intellectual property. This may be in part because China now understands that improving protections in the long run will benefit their own nation. But while the instances of IP theft have decreased, there is still a small amount of such activities going on.

Dealing with unclear rules and regulations

It appears that foreign businesses are less likely to move out of China than they did in the past. However, businesses did share concerns about regulations not always being transparent or predictable. They feel that China’s current regulatory environment is resulting in greater costs. This is due inconsistent interpretation of laws. Also, the laws are not always clearly written to begin with. This especially applies to unclear regulations concerning intellectual property.

Despite improvements, investing wisely in China will continue to be complex. The need for specific legal advice and guidance regarding China’s regulations and culture is essential.