Potential Perils of Doing Business in China

Jordan Fishman is a man with a problem.

He’s the 73-year-old owner of a company called Alpha Tire Systems, which designs tires used with underground mining equipment. It’s one of these many small businesses that you don’t realize exists, but then, of course, you realize it’s obvious that there’s a need for these tires and that someone has to sell them! (This is what I love about writing for trade magazines, by the way. There are so many people doing really neat things that no one knows about!)

Alpha Tire sells all over the world. In 2005, a former sales rep gave the company’s customer list and blueprints a Dubai tire distributor, Al Dobowi Group, which worked with a Chinese tire manufacturing company, LingLong, to produce and sell tires according to Fishman’s designs. Fishman discovered the intellectual property theft at a trade show in Las Vegas in 2006.

And litigation ensued, in the United States because LingLong has a presence here. Fishman was awarded $26 million, but the defendants are appealing. Their strategy, it seems, is to wait until Fishman dies, betting that it will be sooner rather than later for a man of 73. He doesn’t plan on doing that any time soon. “We are kind of stubborn, I suppose,” he says. “We’re going to follow this thing through.”

I talked to Fishman about the perils of doing business in China. Much of the issue, he says, is that our legal systems have simply not caught up to the amount of trade done across borders.  “Their primary defense is that this is how they have always done business,” he says.

Fishman has long done business overseas, and he says that one problem is that technology is developed in the West and manufactured in the East, creating a lot of incentives for those who don’t own the technology to cheat. And, of course, they are more likely to take it from small businesses than from major corporations, in a better position to defend themselves. “The term “emerging markets” coined by a political someone is a misnomer. They emerged,” he says.

Ultimately, you can’t underestimate human nature. It’s easy to assume that people outside of the U.S., Europe, and Japan are less sophisticated, that they will be so grateful for contact with the developed world that they will be kind and gentle and cooperative. But people are people, everywhere you go. Some people are kind, gentle, and cooperative, even in New York City. And some people are sharpies.

Fishman’s tale is cautionary. It shows the risks to intellectual property in places where the laws don’t respect it, and it shows just how hard it can be for small businesses working overseas. Small businesses drive our economy, but they have fewer defenses.