Chapter One - Chinese Companies in the US Legal System

Summary

In China, corporate management and business transactions often relegate the legal system to a more peripheral role. Chinese companies then encounter formidable institutional obstacles when operating in developed countries with robust, strict, and complex legal systems. Obviously, nowhere else are the hurdles as high as in the United States. How then do Chinese investors negotiate the omnipresent legal risks? This chapter begins with an overview of China’s outbound direct investment in the United States. It then introduces research questions ranging from the role of in-house legal counsel in Chinese companies to their legal responses to unfair treatment by the US government. Next, this chapter selectively summarizes and critically reviews the existing literature pertinent to the interactions between multinational companies and the complex US legal system. From this, I formulate a comprehensive theoretical framework predicated on dual institutional influence, which will be applied consistently throughout the book. The chapter concludes with a description of the research methodology.