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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 there, according to lawyers who represent them. “They’re very intrigued by Silicon Valley,” says James Chapman, a partner in Nixon Peabody’s recently opened office in Palo Alto. “Silicon Valley really has a lot of cachet [in China], 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 Silicon Valley for decades. But over the last couple of years, healthy growth in several Chinese industries has allowed companies in China to expand into the U.S. market as well as into Europe and the Middle East. “We see this beginning but this is not a flood yet by any means,” says Nicholas Unkovic, a Palo Alto-based partner at Squire, Sanders & Dempsey. “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.” The increased Chinese presence has provided more work for Silicon Valley law firms on employment issues, financing and intellectual property, along with partnerships, initial public offerings and mergers. Carmen Chang, a partner at Wilson Sonsini Goodrich & Rosati, says that delicate political motivations on both sides of the Pacific combine to make the legal work complex and sensitive. This is especially the case when Chinese companies want to acquire well-known American companies. Chinese firms’ efforts to buy Maytag, the washing machine company, and oil producer Unocal in 2005 both failed after sparking concerns among politicians and the business world about China’s growing economic power. In Silicon Valley, extra legal work is often created around intellectual property, says Chang. If a Chinese company wants to buy a technology firm, federal laws forbid them from buying certain kinds of technologies. “There is certain IP they can’t purchase�such as very, very advanced semiconductor technology,” says Chang. Chinese companies that want to acquire startups in Silicon Valley often must seek special export licenses to use intellectual property that was created in the United States; licenses are granted only when Washington defense and commerce officials give their okay. “There’s always a political component,” says Chang. “[Clients] routinely hire a lobbyist in Washington.” 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. The Chinese government reported that foreign investment for the first quarter of 2007 had reached $15.9 billion. But lawyers in Silicon Valley also point to a reciprocal effect taking place locally, where successful Chinese companies are contributing to the local economy. “When Chinese companies start coming here�it’s an extremely positive development,” says Unkovic. “It’s a trade relationship that has bilateral benefits.” Last year, Menlo College in Atherton held a $9,800-per-person executive training seminar aimed at established Chinese companies as well as entrepreneurs. The topics included understanding U.S. business culture, learning to network with venture capitalists and striking partnerships with American companies. Nixon Peabody hosted a conference last year that brought business leaders from China’s Xian province to Silicon Valley to learn about the American IPO market, mergers and how to raise money in the United States. Most of the companies that have opened offices in Silicon Valley are in the semiconductor, wireless or telecommunications business because those sectors are doing so well in China, says Chapman. Although it has become more difficult to raise venture financing compared to Silicon Valley’s earlier boom days, a number of Chinese-born technologists have managed to get their startups funded in recent years. Chapman points to Liuxuejob.com, a job-recruting Web site, as an example. The site � its name translates to Great Wall job � is based in San Jose but helps recruit workers in both Silicon Valley and China. Jing Liu, a Silicon Valley entrepreneur who started his current company, MINO Wireless, in 2004, has noticed a pattern among younger Chinese entrepreneurs who also hope to start their own companies. Many who received advanced academic degrees in California, returned to China during the Internet boom in hopes of making it big back home. Now they are coming back to California with more experience and wisdom about what it takes to make their dreams come true. “These guys are coming back to Silicon Valley,” says Liu, “and refocusing their energy into settling down and taking it one step at a time.” Jessie Seyfer is a reporter at The Recorder who covers developments in IP law and among those who practice it.

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