On Monday February 17th, CSCC had the pleasure of welcoming Professor Ji Li, John S. and Marilyn Long Chair of US-China Business and Law at UC Irvine, to speak about his most recent book “Negotiating Legality, Chinese Companies in the US Legal System.” Dr. Li worked with the China’s General Chamber of Commerce from 2014-2022 to conduct a total of 176 interviews used as a basis for this novel. Within the book and his presentation, Dr. Li explores the friction between the United States government and Chinese companies due to China’s unprecedented economic growth.
Chinese entrance into the WTO in 2001 marked the start of the “honeymoon” period in United States and Chinese economic relations, where Chinese investment was welcomed into the U.S. Only 10 years after, Chinese FDI outflows began to surge at a rate that scared United States leaders, leading to a large shift in American approach. Chinese companies like Huawei and Lenovo received few lawsuits at the beginning of this period and more lawsuits as it progressed. Dr. Li specifically notes that companies with larger market presence and revenue are more frequently targeted with lawsuits. State-owned Chinese companies are especially targeted due to their high profile image, which tends to escalate conflict.
Li analyzes the different legal responses of Chinese companies and evaluates the reasoning behind each. Li classifies these strategies into two main categories: market and non-market strategies. Using market approaches, Chinese companies can exit the U.S. markets, downsize their business efforts in the U.S., reorganize their company to join a different sector, and more. Non-market methods include lobbying the U.S. government, creating media campaigns, asking for diplomatic assistance, etc. Dr. Li points out that there has been a shift away from diplomatic approaches from both governments due to the geopolitical rivalry brewing between them. Professor Li also highlights how the cultural and structural differences between the two countries can explain the contrasting approaches in each. For example, many companies are more likely to settle than while in China because litigating in the U.S. is much more costly. Because of these cultural intricacies, Li shares how Chinese companies battling U.S. lawsuits have found being represented by American lawyers to be more valuable than Chinese lawyers. American lawyers that work for the company are especially desirable because of their familiarity with both the complex United States government as well as the foreign company in question. However, state-owned Chinese companies are usually targeted due to their high profile image, which tends to escalate conflict.
The TikTok lawsuits are some of the most popular and heated interactions between the United States government and Chinese companies. TikTok is viewed as a “weapon” by some in the CCP because of its inherent widespread and addictive nature. TikTok has faced more than 1,700 cases since their launch–only a few of them that were initiated by their parent company ByteDance. Basis for the legal cases include product liability issues, national security concerns, data security breaches, and more. This strong government response has prompted the federal government along with 30+ states to place bans on the app. In the future, Dr. Li predicts more laws will be passed to increase oversight on Chinese companies while reducing America's dependence. Will we be able to mend these Chinese-America relations for the better or harm them beyond repair? Only time will tell.