Ideas@TheCentre
Should foreign companies in China 'do a google'?
John Lee |
01 April 2010
First, be very worried if any civil or legal disputes arise. Courts are explicitly under the authority of Chinese Communist Party (CCP) officials, and all decisions have to be approved by a committee of political officials. Any lawyer in China who has represented a private client against a serious civil or criminal charge brought by a state- or CCP-controlled organisation will tell you that if the matter goes to court, their primary strategy is almost always about damages or sentence mitigation.
Second, whenever negotiations involve state-controlled entities (and this is almost always the case in China’s state-dominated economy), assume that you are ultimately dealing with the state. After all, Beijing is quite upfront about the fact that state-owned-enterprises exist to enhance China’s comprehensive national power.
Operationally, state-owned enterprises behave like normal companies 99% of the time. But it’s the 1% exception that we should worry about. State companies and agencies have become a primary method by which officials cut their teeth and prove themselves while climbing up the political ladder. If they do not get their way, political interests and personal aspirations are damaged.
Finally, much of China’s state-dominated system resembles a messy decentralised mafia-style structure within which unaccountable CCP officials compete to control much of the country’s resources, access to markets, land, and labour, in addition to influence over the police and courts. The rivalry between Chinese political officials and insiders is fierce. Gaining the favour of local officials is essential to doing business in the country. But befriending one usually means alienating another. Therefore, choose your political friends – and your enemies – carefully.Dr John Lee is a foreign policy Research Fellow at the Centre and a Visiting Fellow at the Hudson Institute in Washington, D.C.
