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The song lyric “If I can make it there, I’ll make it anywhere” has always referred to New York City, but for a growing number of Chinese companies, it may as well be about Silicon Valley. Attracted by the region’s talent, entrepreneurial history and venture capital, a new crop of Chinese-owned companies is beginning to set down roots here, say attorneys who serve these clients. “They’re very intrigued by Silicon Valley,” said Nixon Peabody partner James Chapman, of the firm’s recently opened Palo Alto office. “Over there, Silicon Valley really has a lot of cachet, being the center of high technology. Their high-tech companies believe this is the place to be if they’re going to come to the U.S.” To be sure, Chinese entrepreneurs have been building companies in the Valley for decades. But over the last couple of years, healthy growth in several Chinese industries has allowed companies there to expand globally into the U.S. market, as well as into Europe and the Middle East, attorneys said. “We see this beginning, but this is not a flood yet by any means,” said Squire, Sanders & Dempsey partner Nicholas Unkovic, of the firm’s Palo Alto office. “Most of what we’re seeing so far is relatively smaller presences here or smaller acquisitions. We do think this is a beginning of a likely wave of Chinese investment here.” O’Melveny & Myers partner Howard Chao, who leads the firm’s Asia practice from Silicon Valley, agreed. “Chinese companies are getting bigger,” he said. “They’re reaching a certain scale and competing more and more directly with international competitors and trying to go neck-and-neck with the big boys.” The new stream of expansions has given local firms work on employment issues, financing and intellectual property � as well as on partnerships, initial public offerings and mergers, attorneys said. Wilson Sonsini Goodrich & Rosati partner Carmen Chang said the delicate political motivations here and in China always make the legal work complex and sensitive.
‘When Chinese companies start coming here � it’s an extremely positive development. It’s a trade relationship, and one that has bilateral benefits.’

NICHOLAS UNKOVIC Squire, Sanders


This is especially the case when Chinese companies want to acquire well-known American companies. Chinese firms’ efforts to buy washing machine-maker Maytag and oil company Unocal in 2005 both failed, after sparking concerns among politicians and the business world about China’s growing economic power. Chang said she spends “a lot of time” advising clients on these sensitivities. In Silicon Valley, extra legal work is often created around intellectual property, Chang said. If a Chinese company wants to buy a tech firm, federal laws forbid them from buying certain technologies. “There is certain IP they can’t purchase � such as very, very advanced semiconductor technology,” Chang said. Chinese companies that want to buy startups in the Valley must often seek special export licenses to use intellectual property that was created in the United States, and licenses are granted only when Washington defense and commerce officials give the OK. “There’s always a political component,” she said. “[Clients] routinely hire a lobbyist in Washington. � We usually work closely with a lobbyist.” About 15 percent of Chang’s Asia practice is spent with clients who want to expand into the United States, she said, adding that this kind of work has been steadily growing. ALL HAIL THOMAS FRIEDMAN The prevailing China-U.S. business story over the last couple of years has been about the billions in investment money pouring into China, with a significant amount coming from Silicon Valley venture capitalists. This week, for instance, the Chinese government reported that foreign investment for the first quarter of the year alone had reached $15.9 billion, according to Bloomberg. But local lawyers point to a reciprocal, rising-tide-raises-all-boats effect happening in the Valley, where Chinese companies doing well are able to contribute to the local economy.
The Rush into China

Read our latest coverage on the scramble to get American law firms � and lawyers � into China.

“When Chinese companies start coming here � it’s an extremely positive development,” Unkovic said. “It’s a trade relationship, and one that has bilateral benefits.” And despite the high cost of doing business in the United States, there are distinct advantages to locating here, attorneys say. “China is a huge market,” Unkovic said, “but the Chinese middle class, while growing, is not that large. Ours is a market that is not to be ignored. Ours is a much more mature and developed market.” Last year, Atherton’s Menlo College held a $9,800-per-person executive training seminar aimed at established Chinese companies as well as entrepreneurs. Among the topics were understanding U.S. business culture, learning to network with venture capitalists and striking partnerships with American companies. And on May 20, the state-run human resources giant China International Intellectech Corp. will be bringing a host of companies to the Valley to better understand how business works here, Nixon Peabody’s Chapman said. “They’re coming here on a scouting mission to be able to understand Silicon Valley with the objective of opening an office here,” he said. START ‘EM UP Nixon Peabody hosted a conference last May that brought business leaders from China’s Xian province to the Valley to learn about the U.S. IPO market, mergers and how to raise money in the United States. Most of the companies that have opened offices in the Valley are in the semiconductor, wireless or telecommunications business because those sectors are doing so well in China, Chapman said. Although it’s much more difficult than during the Valley’s boom days to raise venture financing, a number of Chinese-born technologists have managed to get their startups funded in recent years. Chapman points to the job recruiting Web site Liuxuejob.com as an example of this. The site, which translates to GreatWalljob.com, is based in San Jose but helps recruit workers in both the Valley and China. Local serial entrepreneur Jing Liu started his current company, MINO Wireless, in 2004, but has noticed a pattern among younger Chinese entrepreneurs who also hope to start their own companies. Many who finished their advanced degrees in the Valley went back to China during the Internet boom hoping to make it big there, he said. And now they’re returning to the region with more experience and wisdom about what it takes to make their dreams come true. “These guys are coming back to Silicon Valley and refocusing their energy into really settling down and taking it one step at a time,” Liu said.

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