Well not really. But hear me out.
A few years ago, my law firm represented a hugely successful Russian-owned technology company. The company was owned by mostly local Seattle Russians and its CEO was (and still is) worth many millions. This CEO borrowed two or three million dollars (I don’t remember the exact amount because it was not my case) from a fairly small local bank to finance the purchase of land and the building of a house. The bank found itself in deep trouble for having made loans to a bunch of Seattle Russians and it ended up going under.
Now here is where the above story gets interesting. Some new executives (this was before the FDIC took over, I believe) were brought in to save the bank and they decided to stop making payments on its loans to all (or nearly all) of its Russian clients, including to our client. The thing is that our client (unlike so many of the other local Russians) had more than enough income and assets to justify his loan, but the bank pulled it anyway and it did so for one reason: he was Russian and so they just assumed his loan was a fraud. But it was not, and when we sued the bank and proved this to them, we also were able to extract a nice little settlement.
Let me repeat. The bank’s sole basis for stopping payments to our clients was that he was Russian; they made little or no effort to discern the differences between their Russian clients. For all I know — and I don’t know — our client was the only qualified Russian in the bunch, or maybe there were others. Was the bank justified in simply playing the statistics? I don’t think so. Did the bank end up paying a price for simply playing the statistics? I think so.
I thought of this bank the other day when I was sent a Forbes article, entitled, In Rare Move, SEC Reverses Nasdaq’s Delisting Of Chinese Company. The article was about a recent ”landmark” US SEC decision reversing a Nasdaq decision to delist CleanTech Innovations, a Chinese alternative energy company, after finding that “the record does not show that the specific grounds on which Nasdaq based its delisting decision exist in fact.” The article describes this reversal as the first “in recent memory.” Word on the street (or at least what I have heard) is that Nasdaq’s actions against CleanTech may have been driven, at least in part, by problems endemic with other Chinese companies.
But what really drove my writing this story was the headline of an article I just saw on MSNBC.com: “Chinese firm paid insider ‘to kill my company,’ American CEO says.” The article is about Sinovel’s alleged cybertheft from American Semiconductor. What strikes me about the article is the emphasis on the fact that the alleged thief is a Chinese company. I give a talk on how to protect your IP from China in which I start out saying something along the lines of the following:
Big Chinese companies are out to steal your IP. Small Chinese companies are out to steal your IP. Privately held Chinese companies are out to steal your IP. Chinese State owned companies are out to steal your IP. And despite what some of our clients seem to believe, that Chinese company whose owner invites you to his (or her) son’s or daughter’s wedding, he (or she) too is out to steal your IP. You can dispute me on this, but it still behooves you to at least act as though this is the case.
I then talk about how often my firm has seen/been involved with countless instances of IP theft not involving China and of how companies need to be on their guard against IP theft everywhere in the world, including from their own employees in the United States. So not really defending China corporate espionage here, but I am saying that if you think it is only Chinese companies that engage in such tactics, you are wrong and your mistake may end up costing you.
Not trying to be politically correct here and certainly not trying to be profound, but my overarching point is that it is usually a mistake to generalize, or at least too much. Cultures are different and business cultures are different as well and statistics can and should influence how you act. But when all is said and done, in the end, the best way to determine how to proceed is to do your utmost to know as much as you can about the individuals and the individual companies with whom you are dealing, be they Russians, Chinese, Americans or anything else. Stereotyping may just create more problems than it solves.
What do you think?