Attorney C. Peter Theut is president and CEO of China Bridge, a company that specializes in helping U.S. businesses establish operations in China and in helping Chinese businesses invest and enter the U.S. market.
Photo by Steve Thorpe
Attorney addresses economic upside and downside of doing business with China
By Steve Thorpe
Legal News
To law students who might find contemplating a career in international law daunting, C. Peter Theut offers his career as encouragement.
“When asked once why I became an international lawyer, I told the truth,” Theut says. “I set a new low on a medical school aptitude test. I became a lawyer on the rebound, like a lot of people have. I’ve never been sorry. But, as a result of that first ambition, my degrees are in cellular physiology and genetics. Also, I don’t speak a foreign language, much less Chinese. So when I say, ‘If I can do it, you can do it,’ believe me.”
Wayne State Law School’s Program for International Legal Studies presented “Doing Business with China: What Every American Lawyer Needs to Know” on Oct. 2 at the school’s Spencer M. Partrich Auditorium.
Theut, president and chief executive officer of China Bridge, shared his experiences and knowledge with an audience of law students, faculty and guests. His Ann Arbor company specializes in helping U.S. companies establish operations in China and in helping Chinese businesses invest and enter the U.S. market. It also provides legal, financial, operational and government relations guidance for companies competing in the global market.
Theut talked about both the upside and downside of doing business in China or providing legal services to those who do.
On the upside is the fact that China is the place to be for business. It now has the world’s number two economy and is likely to pass the U.S. in this decade. China now consumes twice as much steel as the U.S., Europe and Japan combined. The Pudong financial district in Shanghai is already eight times the size of London’s financial district and almost the size of the city of Chicago. Their base of tech-savvy workers and consumers is soaring, producing, for example, more than 450 million wireless subscribers. Incomes for many citizens have risen dramatically and about 300 million people have emerged from poverty.
On the downside, the infrastructure is groaning under the demands of rapid growth. The rural-to-urban migration has created new tensions and exacerbated old ones and all those new Internet users are being watched by an army of web police estimated at 30,000, who often erase content within minutes of its posting. Increased pollution and decreased water quality have affected quality of life. One of the side effects of these changes is that the country experiences hundreds of protests a day, most carefully hidden from the public eye.
When it’s all balanced, though, China is still indisputably the most exciting — and potentially profitable — place to be for businesses and the attorneys who advise them.
Attorneys hoping to do business in China or advise the companies that do face a challenging, even puzzling legal landscape. The country’s legal and regulatory systems can be opaque and inconsistent and vary by region.
Because so many enterprises are state owned or controlled, politics can never be removed from commercial — and even legal — considerations.
Language also plays a role in the difficulties Americans face when dealing with the Chinese. In addition to the two main languages of Mandarin and Cantonese, the nation has hundreds of very distinct dialects. A skilled, reliable and trustworthy interpreter is essential.
Theut repeatedly stressed the importance of American attorneys educating themselves about China’s business culture.
He suggested that, in addition to being aware of Chinese traits, American attorneys avoid some of our own national characteristics.
Theut advised:
• Don’t talk too much. Avoid the American tendency to fill pauses with words.
• Listen. Another quality Americans occasionally lack.
• Don’t be an “American Cowboy.” Avoid attempts at condescension or intimidation. The Chinese are tougher than you think.
• Above all, respect and attempt to understand the culture.
Chinese businesspeople and government officials can have casual attitudes toward contractual agreements, sometimes ignoring sections on pricing. Seemingly endless negotiations can try the patience of attorneys who are accustomed to swifter resolutions. Theut also pointed out that Chinese courts don’t rely on stare decisis, making it difficult for attorneys to anticipate outcomes.
“It’s a totally inconsistent legal and regulatory system,” Theut says. “For example, there is no stare decisis. So if a Chinese company wants to take you to the woodshed and you still win a big case in Beijing, it doesn’t mean you win in Shanghai. Even if you beat them in Shanghai, they may go down to Guangzhou. It’s a complex, frustrating appeals system, to put it mildly.”
A common misconception is that money, jobs and resources are flowing to China with no return flow. But Theut emphasized that it is now very much a two-way street and that the “inbound” element is growing rapidly. Chinese investment in the U.S., and especially the Midwest, is on the rise. He said that the Chinese are especially drawn to the quality of life and values of the area and are creating facilities in Ann Arbor, Plymouth and Canton. This “Go West” policy is gathering steam and offers even more opportunities for law firms.
“One of the reasons that the Chinese are looking at Michigan is that they erroneously believe that we’re down on our knees,” Theut says. “The recovery in Michigan is shaped like a ‘U’ and we’re coming up the end of the ‘U.’ It’s not a ‘V’ … like down, boom, up. The Chinese like to buy just as you’re rebounding, so they very much see Michigan as a good place to invest.”
China Bridge LLC has a website at www.bridges-intl.com.
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