But there is a comfort zone. For example, trading with the States is not the same as trading with Russia. For most, Russia is too risky. Only mavericks go into areas that do not offer reasonable protection against disaster.

That protection is closely tied up with legal systems.

Recognition and enforcement of rights is key to your investment. But this is true wherever you go. To some, even familiar markets are a little alien (eg USA). The further afield you venture, the more you need to know about how the legal system supports the commercial one.

You would not go into America without speaking to a US lawyer (and you may find his answers pretty odd).

So is China outside your comfort zone or are you being too cautious?

To find out, I asked George Xia, Beijing native and director of China Business, to answer some ‘legal’ questions for clients who might dip their toes in oriental water –

Q: Copying is a problem for manufacturers. How do I protect my IPR?

A: One of the major concerns of UK companies doing business in China is that the products they bring into China may be copied by others. However, UK businesses should be aware that copying others’ products is not always illegal in China although in most cases, it is. In order to prevent others from copying your product, sufficient intellectual property should subsist in the product.

Naturally, before bringing your product and relevant technology into China, it is wise to check your technology and have a clear picture about intellectual property rights (IPRs) subsisting therein. Then, a wellbalanced strategy should be made for establishing a sufficient IP portfolio in order to prevent your technology from being copied. The best way to protect your IPR effectively is prevention:

1. filing for protection as soon as possible in China
2. filing for as many types of protection as you can for your products: patents for invention, for utility model, for design, trademarks etc in China;
3. filing via Chinese qualified patent agent;
4. taking administrative measures and legal action for IPR infringement;

Q: If I want to enforce commercial contracts in China, can I resort to the Courts. Do they work?

A: Yes. Any UK business intending to do business in China will enter into a contract with its business partner. The basic principles of Chinese contract law are codified in the PRC Contract Law. They include equality, freedom to enter into a contract without duress or interference, fairness and good faith. Under Chinese law, courts or arbitration institutions have the power to modify or revoke a contract which was obviously unfair at the time it was made. Chinese business people appear to consider a contract merely as a starting point for developing a relationship. They prefer to solve problems in enforcing contracts via friendly re-negotiation to obtain the mutual agreement. To resolve any disputes from enforcing contracts, resorting to the courts is the final solution.

Q: I am interested in selling my products to the new Chinese consumers. Should I use my UK company there or what other route is available?

A: There are a number of options available to UK companies planning to carry out trading and distribution activities in China:

1. finding an import/export agent
2. setting up a trading company
3. setting up a manufacturing company
4. setting up a joint venture company

Q: I need an exit strategy, for example by company trade sale to a Chinese concern. Is there a market and is it allowed?

A: Yes. Freely selling or buying your shares in your company to Chinese partners or outsiders is allowed by Chinese law. More and more foreign companies have started to enter Chinese market via merger and acquisition.

Q: Is it correct that there is a huge bureaucracy, biased against foreign companies? If so, how do I get around it?

A: Not really. Chinese governments from central to local level have played a great role in Chinese economy activities. Developing a good relationship with Chinese governments is key to your business success in China. Chinese officials welcome and encourage foreign companies to invest and trade in China. They set up "green channels" for foreign companies to avoid bureaucracy. There are Chinese professional service agencies to help you do business in China.

In other words, there is protection available if you know how to get it. You can stay within your comfort zone.

Godloves and China Business work together to advise and assist both UK and Chinese businesses involved in UK-China trade. Contact Michael Morse on 0113 225 8811 (mmorse@godloves.co.uk) or George Xia on george.xia@china-business.co.uk for an initial discussion.