Home -> Law Blog Directory -> International Law Blogs -> China Law Blog

International Law

: China Law Blog

How To Get Chinese Clients. Be Patient.

By Dan Harris and Steve Dickinson

Just did my first post for the excellent Forbes China Tracker, a new Forbes blog, painstakingly put together by the indefatigable Hana Alberts, a Hong Kong based Forbes reporter. My post is entitled, "Patience Required As Chinese Companies Go Overseas," and I am honored to have been asked to be a regular contributor to the blog, joining such luminaries as Stan Abrams, G.E. Anderson, Joel Backaler, Bill Bishop, Janet Carmosky, Paul Denlinger, Gady Epstein, Ray Kwong, and Jeff Wasserstrom, who have already posted to it. The blog's tag-line is "What a Superpower Wants," and without going too deeply into what constitutes a superpower and whether China meets that definition (if you want that, I suggest you join this discussion over at the China Law Blog Linkedin Group), to me, the term superpower implies extending one's power outward and in her post introducing and explaining the blog, Ms. Alberts said it would "aim to cover" China's "overseas investment." So it was with that in mind that I chose my first post for the blog to be on my law firm's experience in dealing with Chinese companies seeking to invest in the United States. Because I am of the view that China businesses going overseas has already and will continue to track that of other emerging countries, I borrow heavily from my experiences representing incoming Russian and Korean companies. To grossly summarize my post, Russian and Korean companies used to be terrible clients and used to be clueless about investing and doing business in the United States, but through trial and error, they learned. I see the same thing happening with Chinese companies. Though my article necessarily comes from the focus of a law firm, I have no doubt that anyone who has dealt with Chinese companies seeking to go overseas could have written this same article and that this article applies to any business hoping to profit from China's overseas business expansion. Here's a brief pull-out from the Forbes post, which I urge you go read in full:

Now let's talk about the current state of Chinese companies, generally: 1. Their lawyers earn less in one week than our lawyers charge for one hour. 2. They expect us to have ready answers to virtually all of their legal questions without any research. 3. They wait until they are facing a significant problem before they ask for our assistance. 4. Many Chinese companies say they want to hire us for one thing (let's say, to form a U.S. company), but they really have another goal in mind (like getting visas for their families). 4. Once they hire us, they want to tell us exactly how we should do our jobs. For example, we were retained by a Chinese company to sue a U.S. company that owed the Chinese company millions of dollars. We sent our Chinese client a memorandum explaining our proposed course of action and we took a few of the initial steps. We soon received a memorandum back from our non-lawyer client setting forth the steps we should follow--steps that made absolutely no sense at all in the U.S. We told our client they had to trust our competency as lawyers or let us go and we would return what they had already paid us. They let us go. Just as our dealings with Russian and Korean companies slowly evolved, we are starting to see movement with Chinese companies, too. We are starting to get hired by Chinese companies that have been doing business in the U.S. for a few years and realize just how helpful good attorneys can be. They are reticent to use American lawyers for cost reasons, but they do not have crazy expectations, either. Like all smart companies, they simply do not want to get involved in situations where their costs could spin out of control. We understand their concerns. When possible, we work on a flat-fee basis and, when not, we charge by the hour, with a cap. We also tell them how important it is that we stay in constant contact and to stress this, we often tell them we will not bill for client-attorney communications. One of the things we have not done with these companies, however, is charge them less than we charge our other clients. I am aware of many law firms that took on projects for Chinese companies at loss-leader prices while planning to raise their rates as the client relationship matured. Instead of building long-term relationships, however, the Chinese companies pressed for even lower prices and then ended their relationships when the law firms refused.

What do you think?

Full post as published by China Law Blog on May 05, 2010 (boomark / email).