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Chinese Prostitutes And Government Officials, And Why You Should Listen To The People.

By Dan Harris and Steve Dickinson

A recent survey of more than 3,000 Chinese found that less than 7.9% of them trust their government officials. The media have been reporting on how 7.9% trust prostitutes, which are more trusted than the government. As one would expect, this survey has received considerable blog play: -- Chinese Trust Prostitutes More Than Party Cadres --Chinese Trust Prostitutes More Than Government Officials --Chinese Trust Prostitutes More Than Politicians (The Huffington Post) --Chinese Trust Prostitutes Over Politicians --Prostitutes Better Than Officials In China --Chinese Trust Prostitutes more than Politicians Most of the posts focus on how this Interesting Poll">poll should come as no surprise and how the same results are likely in the United States. I agree, but this post is going to be about business, not politics. I thought of this survey today in the context of a China matter we previously handled. I am going to have to be fairly vague here to avoid revealing anything that could tag anyone, but here goes: US company "buys" building in Chinese second (or third?) tier city with plans to convert it to an office building. Building/land was set up for a very limited use and that use precludes foreign "ownership" and it precludes its use as an office building. But US company bought it anyway based on assurances of the top local officials that it would be okay. In fact, US company went strictly on these assurances and never even conducted its own due diligence on the property. Right before US company is about to start on the conversion, local officials tell it that the "mood" in Beijing has changed and that the US company must sell the property back. US company hires us to assist. We tell them that their office building plans are in clear violation of the law and that their best option is to try to get a full refund on their "purchase." Negotiations ensue and company (very luckily!) gets purchase price back, limiting their loss to their time and travel expenses, etc. This is just one of countless examples of instances where foreign companies have relied on the assurances of Chinese government officials to their detriment. I could detail many that have ended far worse but I like this one for how it illustrates why it is better to rely on a more stable law than on a less stable (and trustworthy) official.

Full post as published by China Law Blog on August 08, 2009 (boomark / email).