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In the Chinese business environment, it is necessary for American companies to have a well-planned strategy. The following list of tips for doing business in China is not comprehensive, but a guideline for an initial market evaluation. Companies entering the China market should consider the following: 1. Have Clear Contract Terms 2. Make Certain Your Project is Economically Viable 3. Know Your Partner 4. Know the Rules 5. Search for Problems Before They Materialize 6. Do a Thorough Risk Analysis 7. Mind the Store 8. Expect Virulent Competition, Pricing Pressure 9. Get Paid 10. Watch Your Intellectual Property Rights PLUS Establishing a Presence in China (Representative Office, Wholly Foreign Owed Enterprise, or Joint Venture) 1. Have Clear Contract Terms Everything in China is constantly changing. China's consistent 8 percent economic growth leads to continuous rapid transformations in the domestic economy. Nothing is fixed. Thus, when entering into a contract with a Chinese partner you must be careful to plan for all reasonable contingencies. Do not attempt to enter into an agreement without sound legal advice. Have your own legal counsel. Pay your lawyer a little to ensure a clear contract; or pay your lawyer a lot more later when you have a dispute. In your contracts, specify exact terms of payment, and performance standards. Set time lines. Pay careful attention to details, such as initialing pages of contracts and signing properly. Scrupulously follow the contract yourself - or expect to pay a high price. Do not rely on the legal advice from your Chinese partner. Beware of claims that the Chinese law requires specific covenants in your contract. Verify this with your own counsel. Do not agree to provisions in a contract that are not under your control. For example, if your client or partner wants you to specify in the contract that they must visit your production facilities in the United States, remember that you cannot guarantee that they will receive a visa. A visa denial could invalidate your contract. Do not assume that local or provincial officials actually have the authority to give you permits and permissions. Verify their claims of authority from independent sources. Question ALL such claims. 2. Make Certain Your Project is Economically Viable Profitability of a project or the sale of goods and services should be based on sound economic criteria. Do not rely on promises of subsidies, incentives, special considerations, or non-market related sources of income to create a profit. If incentives are offered, they should be used to augment profit, not create it. Make certain your partner has the authority to offer incentives and assure yourself from independent sources that the incentives will actually be paid. Look for examples of companies which have actually received such benefits. Viability may look very different over the short, medium and longer term. Many Chinese partners will insisit you look at the longer term potential of the market and sacrifice your profit in the early stages. This is treacherous. Your floor becomes their ceiling.

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