“Sizing up the Chinese market: How to go about doing business in—and with—China”

October 2012
Smart Business Los Angeles

Julia Zhu, senior counsel in Dykema’s Los Angeles office was interviewed by Smart Business Los Angeles for the publication’s October 2012 article, “Sizing up the Chinese market: How to go about doing business in—and with—China.” About investments abroad, Zhu, a corporate finance attorney with extensive experience representing businesses in cross-border corporate matters (particularly in Hong Kong and China), comments that “[t]here is a demand and need by so many Chinese companies that have capital and want to expand their business but don’t have the technology a lot of U.S. companies have…”

When asked about what business leaders need to know about doing business in and with China, Zhu explains that first, “it’s about the business structure you want to set up.” She goes on to discuss two of the most popular choices—wholly foreign-owned enterprises and joint ventures. Zhu suggests that the type of structure will depend on the businesses goals. For example, she comments that a wholly foreign-owned enterprise takes less time to establish and may offer more control over such areas as operations, recruitment and training; but that it also means the business has “sole responsibility for profits and losses.” Conversely, one might consider a joint venture if “a company needs a partner to share its capital burden.”

Zhu goes on to comment about other considerations when investing in Chinese markets, such as location, intellectual property (IP) and compliance. She says that companies “need to look at the nature of their business, as well as incentives offered by the local government…” among other things, when considering location. To manage China’s risky IP environment, Zhu recommends a “strategic approach rather than a purely legal approach…” Finally, about compliance, Zhu comments that it should be viewed “as a key driver of project completion and investment returns” rather than a “standalone legal requirement.”

Click here to read “Sizing up the Chinese market: How to go about doing business in—and with—China.”

Reprinted with permission. ©Smart Business Network Inc. Reprinted from the October 2012 issue of Smart Business Los Angeles.