How Foreign Entrepreneurs Can Protect Their Rights in China

Legal insights from Vicky, a cross-border lawyer bridging China and the world

When foreign entrepreneurs or investors come to China, whether to source products, build a startup, or invest in local ventures, they often face one shared challenge: understanding how to protect their rights in a completely different legal environment.

To shed light on this topic, I sat down with Vicky, a Shenzhen-based lawyer specializing in cross-border legal services at Yingke Law Firm, world’s largest law networks. Her team is capable of providing end-to-end legal support for foreign clients conducting business in China.

Her journey from Shanghai’s top law firms to helping international clients in Shenzhen reflects both expertise and empathy, two things foreign entrepreneurs truly need when navigating China’s complex system.

Vicky’s Background

Vicky studied law at the prestigious Wuhan University, then earned her master’s degree in Civil and Commercial Law (Intellectual Property  Law) from Shanghai Jiao Tong University’s Koguan Law School, and also studied at Duke Kunshan University.

She started her career as an IP specialist at iQIYI, leading anti-piracy and copyright protection efforts in China and abroad. Later, she joined King & Wood Mallesons , one of China’s “Red Circle” law firms, where she handled IP and civil litigation cases for leading domestic and international clients.

Her clientele includes Alibaba, Louis Vuitton, LYCRA, Unilever, Discovery, ASSA ABLOY, FLUKE, and more, spanning industries such as technology, culture and entertainment, consumer goods, and manufacturing.

Now based in Shenzhen, her team is capable of providing end-to-end legal services for foreign clients conducting business in China, including corporate compliance, IP protection, civil and commercial litigation, arbitration, criminal risk control and defense, helping foreign companies and startups operate safely and effectively in the Chinese market.

Common Legal Risks for Foreign Businesses

According to Vicky, foreign entrepreneurs often face the following risks or challenges in China.

1. No due diligence

Before signing with a supplier or local partner, foreign businesses often skip background checks. It is essential to verify business licenses, litigation records, and ownership structures.

2. Unclear or missing contracts

Many companies begin cooperation without signing a clear, enforceable agreement. “Handshake deals” or verbal promises may feel efficient, but once disputes arise, they have no sufficient evidence to support their claims in court.

3. Inadequate protection of intellectual property rights

“Many foreign brands fail to recognize that trademark rights are territorial,” Vicky noted. “Registering a trademark in one’s home country does not mean that the brand naturally enjoys trademark rights in China, nor does it mean there is no possibility of infringing on others’ rights.”

She recalled cases where foreign brands encountered significant troubles upon entering a country’s market, only to discover that their trademarks had been preemptively registered and used locally by local distributors or other entities.

4. Weak evidence awareness

After a dispute arises, whether resolved through litigation or arbitration, to assert one’s rights, it is essential to actively present evidence. In civil and commercial disputes, without keeping signed contracts, email trails, and payment records, you may lose the case even if you are right.

Understanding the Legal System

China follows a civil law system, which differs from the common law traditions of the US or UK. “In China, court decisions are based on current law, not old judgments,” Vicky explains.

When it comes to recognition and enforcement, judgments rendered by courts of different countries are not automatically recognized and enforced in another country, unless there is a bilateral or multilateral treaty. For example, the Chinese mainland has established dedicated mechanisms (such as judicial assistance arrangements) with the Hong Kong and the Macau for this purpose, but it has not concluded such treaties with all other countries or jurisdictions.

What to Do When Disputes Arise

“The most common mistake,” Vicky says, “is waiting too long before contacting a lawyer.”

Once a dispute happens, time is critical. A competent lawyer team can help determine the optimal timing and course of action to safeguard rights.

Dispute resolution options in China include:

• Negotiation or mediation: best for ongoing partnerships.
• Arbitration: if an arbitration clause was included in the contract.
• Litigation: direct filing in court if no arbitration agreement exists.

Vicky adds, “China’s courts are fair to foreign parties. Drawing on her practical experience, she further noted that in her past experiences, she has never encountered a situation where courts treated a party unfairly due to their foreign nationality.” 

Real Case Example

Vicky once represented a British materials company in a trademark infringement dispute, where its Chinese partner had unauthorizedly used the company’s registered brand logo due to ambiguous clauses in their contract regarding intellectual property (IP) ownership and licensing rights. To substantiate the claim, her team systematically collected digital evidence, filed a lawsuit, and won, forcing the local company to cease the infringement and pay damages.

“The lesson,” she says, “is simple but crucial: explicitly define IP ownership and usage scope in the agreement before you start cooperating.” 

Advice for Foreign Entrepreneurs

1. Invest in legal due diligence and compliance legal opinion before entering China.

2. Lay out intellectual property protection as early as possible and attach great importance to it.

3. Engage experienced bilingual lawyers.

“Legal awareness isn’t about fear, it’s about confidence,” Vicky emphasizes.

“With the right preparation, foreign entrepreneurs can thrive in China.”

Closing Thoughts

Vicky’s story is not only about law but also about building bridges between China and the world.

For her, helping foreign entrepreneurs navigate China’s legal landscape is both a profession and a mission.

“I want them to feel safe, respected, and empowered to grow their business here.”

Learn more

To learn more about cross-border business law in China or connect with Vicky, ASK ROBIN