Carmen Chang and Connie Chan are the silk weavers connecting China and Silicon Valley.
Food for thought, “I’ve told U.S. companies, Chinese people have long memories and are the ultimate repeat players, so don’t play any games,”
Negotiating a joint venture is one of the trickiest aspects of working with Chinese investors. In the last three years, Chinese regulations and practices have made it more complicated for U.S. companies to do business there, Chang says.
For that reason, startups usually enter the market in the form of a partnership. Today, these partnerships are often based in the Cayman Islands because China doesn’t allow foreign ownership of companies. In negotiations, for example, Chinese partners often insist that the data of Chinese citizens cannot be stored on U.S. servers and that legal disputes must be settled in Chinese or Hong Kong courts. Previously, arbitration in Santa Clara County was a sticking point for U.S. companies; now that battle has largely been lost, she says.
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Brokers say that sometimes misperceptions arise because business culture in China is so different. In China, where there’s less rule of law and a powerful government relentlessly pushing for growth, brass-knuckled tactics are far more common. Taking ideas from a company you invest in and giving them to another is more acceptable, for example.
Chang says she has been able to be effective, in part, because she makes a point of never questioning anyone’s honesty or integrity; acting suspicious can deeply offend people and escalate conflict. In any deal, she coaches both sides to be aware of the messages they are projecting.
“I’ve told U.S. companies, Chinese people have long memories and are the ultimate repeat players, so don’t play any games,” she says. “And I’ve tried to tell the Chinese investors coming the Valley today that they are making their reputation as they go along, so they should be very thoughtful and careful about what they do.” She also only does business with people she knows well.