Consider local courts and IP protection when deciding where to set up

With a growing focus on technology components, the efficiency of the local court system and intellectual property protection should be key factors investors consider when determining where to locate their operations, say counsel.

Despite rising labour costs on the Mainland, industrial relocations from the eastern shore to neighbouring provinces or countries are not likely to occur. It was recently reported that China's southeastern coastal region remains a preferred destination for foreign direct investment (FDI).

Factors such as the quality of the local court system and intellectual property protection are becoming more important for foreign investors, says Weiheng Chen, the co-head of Wilson Sonsini Goodrich & Rosati's China practice. He has noticed a clear trend of transition from the traditional labour intensive model to the “engineer” intensive model, which contains an “increasingly important technology component in FDI and joint venture transactions”.