Legal system needs more transparency

An increasing number of court proceedings are also visible on the country’s growing social media outlets. National and even some provincial courts are publishing live transcripts of cases and rulings on Sina Weibo, the Chinese equivalent of Twitter.

However, a skeptic might point out that it has taken four years for the Jordan case to get as far as it has – and a verdict is yet to be delivered. Certainly, for international companies in China, litigation remains a minefield despite the ongoing reforms.

Civil disputes such as IP infringement and contract disagreements are still not usually a priority for Chinese courts, which prefer the parties to reach a negotiated settlement. As a result, foreign companies can face negative coverage fanned by Chinese opponents trying to win in the court of public opinion.

To do business in China, foreign companies must be prepared for these conflicting pressures: on the one hand, the newer culture that emphasizes transparency and the rule of law; and on the other, the still-active older culture that those reforms are designed to change. A base of relationships with relevant officials and media is critical. Once a dispute becomes public, a business entangled in litigation will find it hard to make friends or explain its case.

A company in China can control the effects on its reputation only by having a plan in place to tell its own story – as it would almost anywhere else. A foreign business must consider how its litigation, including a settlement, will be perceived and how that could be used by its opponent.

Ultimately, these preparations could decide if and how the company has to settle with its opponent, or whether it can appeal to a higher court and ultimately pursue the case to victory.

Tim Danaher is a Partner in Brunswick advising on corporate and financial communications. Le Shen is an Associate specializing in public affairs and crisis. Both are based in the firm’s Beijing office.

The opinions expressed here are those of the writer and don't represent views of China Daily website.