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Mexico’s business culture is more risk averse and less open to newcomers, according to a recent podcast with international lawyer Dan Harris and supply chain expert Andrew Hupert. They emphasized that companies can succeed in Mexico, but finding suppliers and negotiating agreements will be more challenging than in China. The number of potential suppliers will be smaller, in addition to them being harder to find.
The revised legislation expands protected information to include all “documents, data, materials or items related to national security” from simply “state secrets and intelligence” beforehand. It didn’t elaborate on what sort of materials would fall within the scope of these revised provisions.
“The key terms are not defined and are so vague,” said Dan Harris, partner at Harris Sliwoski, a law firm that advises on investments in China. “The old law basically covered state secrets and now it covers national interests.”
“People are terrified of three things with China,” adds Dan Harris, attorney at law firm Harris Sliwoski: tensions between the country and Taiwan, its Covid-19 response, and rising prices and shipping costs. “And those three together have caused people to say, I’ve got to diversify. I’ve got to get out, and they’re willing to pay more to be in Mexico.”
Harris says: “People are finally waking up to the idea of Latin America. Even in the last six months, people are saying, I want to go into Mexico because I want to be selling more into Latin America. Or I want to go into Colombia, or Peru. People are starting to look at Latin America as a market.”
Some foreign lawyers in China, who by definition are forbidden from practicing law in the country, have been open about this gaping hole in China’s legal protections. American attorney Fred Rocafort in 2019 wrote in a blog for law firm Harris Sliwoski that “China does not have an attorney-client privilege.”
Rocafort cites another American lawyer, Brad Luo, who had several years prior written that “China’s ethical rules for lawyers have a ‘bright line’ rule forbidding them from representing both sides in the same conflict, but go little beyond that.” Luo explained that China does not require lawyers to remain loyal to former clients, therefore allowing them to turn on them “without offending any ethical duty of confidentiality” to either the old client or the new client. Rocafort offers some examples: “Perhaps your Chinese lawyer has another client who would just love to take a look at that new patent application of yours. Perhaps your Chinese law firm stands to benefit by tipping off your competitor before it files your trademark application – we have many times heard of this happening.”
Both Luo and Rocafort come to the conclusion that “if I were a client, I’d hesitate talking about certain things with my Chinese lawyer.”
To be clear, there are certain downsides to leaving China that experts Dan Harris and Andrew Hupert of the international law firm Harris Sliwoski detailed in a Feb. 23 webinar titled, “Moving Your Manufacturing from China to Mexico.”
Chief among those dangers is the very real possibility of losing access to your company’s assets and intellectual property (IP) if you announce plans to leave China before moving all molds, tooling, and personnel out of the country, Harris cautioned.
“I’m here to dispel the notion that leaving China involves basically pushing a button — it’s a lot more than that. There are risks involved in leaving China. To quote one of my clients: ‘Hell hath no fury like a Chinese factory spurned.’”
International business law expert Jonathan Bench told The Epoch Times the deal signals that meeting its growth needs is the Indian government’s primary concern.
“Clearly the Indian government’s number one priority is continuing to provide comprehensive infrastructure to support its explosive growth in the coming decade,” said Bench.
The current deal has obvious geo-political ramifications. Bench said Asia watchers will continue to study how closely India aligns with the United States, Russia, and China on several fronts.
“From a geo-political standpoint, India cannot really afford to do without any of these countries in the near-term. It is not yet clear how much India will be willing to distance itself from Russian energy and weapons and Chinese manufacturing,” said Bench.
