In this section:
› Protecting your intellectual property
› Taxes
› Banking and getting paid
› Getting legal advice and resolving disputes
› Corruption and corporate social responsibility
› Due diligence and avoiding scams
Protecting your intellectual property
Don't avoid the issue
"Recognise that your Chinese partners have similar concerns regarding IP protection. Raise these concerns frankly and openly at the outset to ensure you understand each other's position and resolve concerns to the satisfaction of both parties." - Dennis Murray, CEO, Intuto
Be pragmatic
"We take a pragmatic approach to IP. As much software only has a six, nine or 12 month time scale before someone may be successful in copying it, by which time it is already overtaken by newer software anyway, we don't patent our software. Our IP is around relationships and service delivery (coupled with quality software products) which we are building. We cannot afford to protect our IP as intelligent software is developing so rapidly that we have to keep on changing ourselves to stay ahead. We can get somewhere towards protecting our software physically by high levels of encryption." - David Ritchie, CEO, Provenco
Assume the same protection you'd get in New Zealand
"Many people fear about intellectual property and the protection of intellectual property here in China. We had an example where our trademark was being used in a semi-illegal way and we were able to quickly put a stop to that. So I think that if you're on to it and you have the right connections, then you will be as fully protected here as you would be in New Zealand. I don't think that people should fear that their property is going to go west. It's about having the right structures and the right way of protecting your intellectual property." - Garth Smith, Managing Director, BioVittoria
Back to top
Taxes
Consider development zone incentives
Airport baggage handling system maker Glidepath established a Wholly Foreign Owned Enterprise in the Kunshan Economic and Technology Development Zone (KETD) in Jiangsu province, 80 kilometres west of Shanghai.
KETD was set up to encourage IT and the production of computers and electrical components. A number of incentives are offered to qualifying companies including no requirement for an import/export quota or export licence; and an import duty; exemption on raw materials, parts, components, packaging and machines imported for production and infrastructure. The incentives are conditional on half or more of the production being manufactured for export.
Back to top
Banking and getting paid
Accept that recovering debt can be tricky
Don Johnson, Marketing Manager for Pan Pac, says all the commercial risks - credit, getting paid, understanding the costs and compliance - are the same in China as in New Zealand.
"Where they tend to be a little tricky here [in China] is that the system of recovering debt is a lot more complicated and less robust than in New Zealand, so that makes us a little more wary up front."
Back to top
Getting legal advice and resolving disputes
Keep evidence from day one
"One of the things that New Zealand companies can do to help themselves around the problems of evidence is to make sure that from the very first day they set foot in China they have a system for collecting and getting in place evidence in a form that is going to be acceptable to the Chinese Courts. It's very difficult to do that two years later." - Luke Minford, head of China operations for global IP consultancy Rouse and Co. International
"The procedural question almost always decides the case. Have you introduced documentary evidence that actually satisfies the very complex procedural requirements of that Court? That is where having good local advice to help you through those hurdles is very important."
Back to top
Corruption and corporate social responsibility
Leave some salt on the table
"It's very important when you are doing business in China to 'leave some salt on the table'. I think that is the Chinese way. We are in their country so getting accustomed to their way of doing things is very important. In my case, I saw a real opportunity in the very early stages of the business that we set up here. I supported three students to go through school and actually paid for their schooling because their families had had some natural disasters. We supported them because they couldn't afford to go to school. These were very bright students who would have had to drop out, now they've gone on to university and I feel great about that." - Dr Garth Smith, founder Biovittoria
Back to top
Corruption and corporate social responsibility
Leave some salt on the table
"It's very important when you are doing business in China to 'leave some salt on the table'. I think that is the Chinese way. We are in their country so getting accustomed to their way of doing things is very important. In my case, I saw a real opportunity in the very early stages of the business that we set up here. I supported three students to go through school and actually paid for their schooling because their families had had some natural disasters. We supported them because they couldn't afford to go to school. These were very bright students who would have had to drop out, now they've gone on to university and I feel great about that." - Dr Garth Smith, founder Biovittoria
Back to top
Due diligence and avoiding scams
Take a holistic view
Jude Hooson, Director of The Providence Group, says due diligence is not just about numbers. It's also about understanding the Chinese culture.
Minimise risk
"Allow time to validate and verify what is being sought." - Doug Ducker, Managing Director, Pan Pac Forest Products
"Choose partners carefully and have an unhitching strategy in case things go wrong." - Bruce Heesterman, General Manager International, Airways Corporation
Make sure you get the right partner
"The advice I have for New Zealand businesses seeking to enter China, above all else, is to emphasise patience and due diligence. Talk to a lot of people, do plenty of reference checks up stream and down stream, get credit reports on those shortlisted companies before making your decision.
"I think one of the frustrating things for exporters to China is that the number of genuinely capable companies who operate with integrity and that can reach the broad market; is very limited.
"If you can't find a partner to work with that fulfils the criteria that you are seeking then don't be frightened to hold off. Sometimes it's better to wait than to enter too soon to work with the wrong partner and have a set of problems to recover from and repair that could potentially take you several years to get over." - Brendan O'Toole, Managing Partner, Summergate International
Back to top
