Navigating the opportunities and challenges that foreign companies face in China

Navigating the opportunities and challenges that foreign companies face in China

Press releases | 19 July 2023

On 6 July, the U.S.-China Business Council (USCBC) hosted a webinar on Selling to China: Stories of success, failure, and constant change, which focused on “in the trenches” experience of foreign businesspeople who have run significant business operations in China, with particular emphasis on the opportunities and challenges foreign companies face in China.

The webinar was moderated by Craig Allen, President of the USCBC. The webinar included Ker Gibbs, editor and former president of the American Chamber of Commerce in Shanghai; Don Williams, partner at Hogan Lovells; and Daniel M. Krassenstein, Global Supply Chain Director at Procon Pacific, who provided thoughtful analysis of the book and brought unique perspectives on business operations in China, as well as addressing the challenges companies face in light of the current U.S.-China friction over technology and trade war.

Don drew on his 20 years of practice as a technology lawyer in China to provide an overview of the trends in both rapidly evolving legal services and TMT sectors. Despite restrictions limiting foreign law firms’ practice in China, they can still operate with greater flexibility in the Shanghai Free Trade Zone. Law firms such as Hogan Lovells are among the few pioneers that can bring together international and Chinese legal capabilities to support both Chinese and international clients, by leveraging its associated operation with a PRC law firm.

The technology sector in China has grown tremendously over the last two decades, becoming one of the world’s most innovative. A number of factors, including top-down government involvement, industrial subsidies and venture capital funds, many from Silicon Valley, have accelerated the growth and success of many Chinese tech companies. Today, whether it is access to capital in the Chinese market or advanced intellectual property rights (IPR), sophisticated Chinese technology investors have much to offer when considering potential U.S. technology investments. However, with the sweeping CFIUS rule changes in 2018, Chinese venture capital investments in all U.S. sectors has declined, and the expansion of Chinese outbound technology investment into ASEAN countries and elsewhere demonstrates China is now shifting its investment priorities.

As an innovation powerhouse and the world’s leading source of new patents globally, China’s law, enforcement and dispute resolution relating to IP have improved substantially. This follows a historical trend common to Japan, South Korea and (long ago) the US, among others, as countries that have significant IP of their own tend to implement measures to protect it. To prevent the U.S.-China technology war and other conflicts of interest between the two countries from spiraling out of control, Don suggested that a new ‘code of conduct’ defining the relationship between the two countries is urgently needed. He believes they share numerous values including the importance of hard work, education, family and success for the people of both countries. Whether in the technology sector or other fields, we can overcome the differences, engage in cordial competition and learn from each other.

Daniel summarized the goal of supply chain management and explained his view on shifts in the supply chain and how to mitigate risks, reduce variance and balance cost, time and quality. The webinar filled in some gaps in the understanding of two major themes, including the relationship between business and local government in China, and the competition between foreign businesses and their local competitors. Some signposts, indicators, advice and update on the key issues in today’s U.S.-China relations were highlighted during the book talk. Click here to view the full event.