Businesses both large and small are researching the idea of expanding or opening businesses in the People’s Republic of China (China) due to the tremendous potential to reach a market of over 1 billion people.
Miller Kaplan has established a China Desk to assist our clients who are considering investing in businesses in China or licensing their patents, trademarks or other intellectual property to companies in China. Our professionals have more than 10 years of experience dealing with companies in China who have agreements with our clients, and clients who are considering entering into joint ventures or buying China-based companies.
Opportunity with Caution
The Chinese government and businesses in China do not view intellectual property with the same legal reverence as the majority of the world. Courts in China do not always side with rights-holders and customs agencies rarely enforce trademarks. Additionally, existing businesses in China often maintain multiple sets of books, making financial results difficult to determine. These challenges, combined with recent political and legal changes, mean that businesses have multiple risks when doing business in China.
The US is attractive to Chinese Companies
Chinese companies also have an eye on the US market for investment and expansion. Like companies looking to invest in the China, Chinese companies have business risks and challenges they should address prior to investing or expanding abroad. Chinese companies may not be familiar with the business governance practices required outside of China. They may not be aware of the challenge of getting Yuan in and out of China. Challenges also exist in the areas of foreign tax expertise and obtaining visas for key employees to leave China, as well as gaining a visa to the US where the Chinese company is looking to invest or expand.
Miller Kaplan Can Provide Guidance
Miller Kaplan provides services in the following areas:
i) Due Diligence Services
If your company is looking to invest in an existing business in China, we can provide due diligence services in order to determine whether internal controls are in place or financial balances are supported by valid documentation, among other important due diligence procedures we provide.
ii) Licensing Advisory Services
We have been providing licensing services to our clients for more than 20 years. These services include contract reviews, royalty reporting forms, due diligence with respect to potential licensees, customs enforcement and audits of licensee reporting. During the last ten years, these services have taken us to China on numerous occasions. Our clients have licensing agreements with Chinese companies and seek our assistance to determine that royalties have been properly paid by their Chinese licensees. Our professionals speak, read and write Mandarin and Cantonese, and have the experience and knowledge necessary to identify underreported royalties and contractual breaches.
In addition to Miller Kaplan professionals who provide these specialized services, we work closely with Baker Tilly China, our network affiliate, when we are confronted with unique issues regarding business in China. Baker Tilly China has offices throughout the PRC. We also have direct contacts with local law firms in China.
For China Desk assistance please contact Michael Quackenbush at 415.402.5610 or Yu-Ju Wu at 415.402.5604.