The view from China - doing business in the USA

[Randy W]

in the Global Times

 

Chinese companies in US face legal peril

 

Such cases are likely to be a sign of things to come. At the New York event where Cao made the speech, the consulting firm Rhodium Group released a report showing that there were 1,583 Chinese companies in the US with 80,000 American employees, and direct investment from China between 2000 and 2014 had reached $46 billion. Now direct investment from China has jumped above $100 billion. There are 3,200 Chinese-affiliated companies in the US, employing more than 140,000 Americans.

Earlier this month, the China General Chamber of Commerce-USA released a survey of Chinese companies in the US, showing 60 percent of the companies are actively looking for target companies to acquire and 71 percent plan to expand their US workforce. The companies list "cultural differences in management style" as the sixth-biggest challenge they face when conducting business in the US among 21 potential issues.

The most famous legal cases that made Chinese companies plaintiffs in the US so far may have been those against toxic drywall manufacturers a few years ago. But the plaintiffs in those cases only interacted with the American people and authorities via exports, so they were able to avoid a lot of trouble by questioning the jurisdiction of the American court. But when companies establish factories in the US and hire more and more American workers, things quickly become very different.

. . .

Short sellers filed complaints against many Chinese companies for the discrepancies in their financial statements and dragged their stock prices down. Many companies were forced to delist and retreat back to China.

Once you make yourself an easy target, things can quickly get out of control.