Lunch with a Visiting General Counsel: Updating the China Playbook from 2015 to 2026

This afternoon, I sat down for lunch with a General Counsel visiting China.

Every time a global General Counsel makes the trip to China today, I feel genuinely glad they came. Global legal leaders carry an extraordinary workload right now—navigating AI regulation in Europe, high-stakes litigation in the United States, export controls, global M&A, and board governance all at once. It is completely understandable why many General Counsels simply have too many urgent priorities on their desk to carve out a week on the ground in China.

Yet that physical distance has a natural side effect: when you haven’t been able to see the market firsthand for several years, your mental map tends to freeze at the last clear snapshot—around 2015.

Over lunch, as we talked through IP protection, data compliance, the broader business environment, and the tension between global headquarters and local teams, a clear pattern emerged. Many of the issues that headquarters worry about most are technical problems that can be engineered and solved, while the real challenge in 2026 lies in understanding how fundamentally the competitive engine and the institutional rules of the game have changed.

IP Protection Still Matters—It Just Isn’t the Full Picture Anymore

Halfway through lunch, the General Counsel asked a classic question: “How should we think about IP protection in China today?”

First, let’s be clear: we should never pretend that IP is no longer an issue in China. Trade secret leakage, patent disputes, and bad-faith infringement remain real operational risks that every multinational must guard against. Even though China’s statutory IP regime and specialized IP courts have improved steadily over the past decade, no foreign business can afford to take IP protection lightly.

The shift in 2026 is not that IP risk has disappeared; it is that IP protection is no longer the full picture.

The AmCham Shanghai annual surveys over the past fifteen years tell this story clearly. Ten to fifteen years ago, IP protection consistently ranked among the top three concerns for American companies operating in China; over the past few years, geopolitical tension dominated the top spot; and in 2026, when member companies talk about their biggest pressure on the ground, fierce local competition has moved to the very top of the list.

Behind that shift is a reversal in the direction of technology flows.

Ten years ago, cross-border transactions in China were defined almost entirely by "licensing-in"—U.S. and European multinationals licensing technology into China and focusing on defensive legal walls to stop local partners from learning it away. Today, a growing share of market activity is "licensing-out"—Chinese companies licensing domestically developed technology out to global partners. When frontier technology in sector after sector is increasingly originated inside China rather than imported from abroad, viewing China solely through a 2015 lens of defensive IP protection misses the real challenge: no one needs to steal something that you no longer uniquely possess.

A recent conversation I had with the China General Counsel of a major foreign IP and entertainment company brought this home vividly. If any industry should be consumed by piracy and copyright enforcement, it is a traditional studio built on feature films and long-form video. Yet what suffocates their business today has very little to do with copycats stealing their movies—it is that Chinese user attention has migrated massively toward live streaming, micro-dramas, and short-form video.

There is no "copycat" to sue here. The question is no longer who stole your intellectual property, but whether a foreign multinational accustomed to long production cycles can still create content and business models that young Chinese audiences actually want to watch.

Data Compliance and Sovereignty: There Is Always a Way Out

The second issue that surfaces in almost every headquarters briefing is data compliance.

Here again, we should acknowledge the friction honestly: data sovereignty is a real issue, and some of the local rules around data classification, cross-border transfer, and security assessments still need further refinement in practice. Looking at these regulations from across the Pacific, it is completely natural for headquarters legal teams to feel anxious.

Yet at bottom, data compliance remains a problem that can be solved through technical and legal engineering. There is always a way out if you are willing to sit down and run the exercise all the way through.

Too often, data issues appear insoluble because companies treat them as abstract political roadblocks. When you actually bring the four key groups to the same table—technical architects, legal counsel, the local China team, and the global privacy team—and unpack the data flows layer by layer to separate what must stay local, what can move after de-identification, and which interfaces need redesigning, a workable solution almost always emerges.

More importantly, going through that rigorous exercise does more than satisfy Chinese regulators. The data minimization, access isolation, and security audit mechanisms you build along the way strengthen your global data compliance infrastructure and better protect user data worldwide.

Three Realities That Make a U.S. General Counsel Uncomfortable

Once you move past technical challenges like IP protection and data compliance, what truly makes the China market difficult for a U.S.-trained General Counsel?

Over lunch, I highlighted three realities. And I emphasized that for the first two, there is no reason to sugarcoat them—because from the standpoint of legal predictability, they are genuinely not good things:

First, in the United States, political conflicts are ultimately legalized; in China, sensitive legal issues are ultimately politicized.

In the U.S. institutional environment, even the most explosive political conflict—such as a contested presidential election—eventually enters the courtroom to be resolved by judges, lawyers, and legal procedure. In China, once a legal dispute touches industrial policy, social stability, or broader political priorities, it can rarely remain on the level of statutory text alone. That means that on genuinely sensitive matters, the courtroom litigation and precedent toolkit a U.S. General Counsel knows best often loses its leverage.

Second, formal procedure carries far less weight in China than in the United States.

Lawyers trained in the Anglo-American tradition place immense weight on procedural due process. In the system they know, procedure is the protective shell of substantive rights: follow the right process, and the rules protect you. In Chinese practice, substantive outcomes and macro-direction frequently outweigh procedural form—a reality that naturally creates unease for multinational legal teams accustomed to managing risk through procedural predictability.

Third, treat China as a genuinely different place—and do not say "no" to every opportunity simply because it feels unfamiliar.

That third point naturally invites a pushback: If sensitive issues can become politicized and procedural protections are weaker—and if a General Counsel’s whole job is to keep the company out of trouble—why should I let my company get into a fast car whose brakes feel unfamiliar? Wouldn’t it be safer to stay parked in the garage?

It is a fair question, and answering it requires separating three layers of logic:

First, politicization happens along specific sensitive boundaries, not across the entire commercial road.

Saying that sensitive issues can become politicized does not mean everyday commercial rules fail to function in China. Across the vast majority of ordinary commercial transactions—supply chain procurement, product sales, routine contract performance, and standard commercial disputes—China’s civil and commercial statutes and court system operate efficiently and predictably every day. Procedural friction occurs along sensitive policy fault lines. The value of a mature legal team is not refusing to drive because cliffs exist, but mapping the cliffs in advance so the business stays in safe lanes.

Second, the two systems are structured differently: in China, the government is inherently part of the market.

In the American commercial imagination, companies are the players on the field and the government should stay on the sidelines as a referee. In China’s economic structure, the government has always been an active participant on the field—shaping industrial direction, resource allocation, and market ecosystems. Finding predictability here cannot rely solely on suing regulators on procedural grounds after the fact; it requires reading policy signals and industry guidance early. The rules are not unreadable—they simply run on a different logic.

Third, procedures are the brakes, not the engine.

Even in Western markets, when procedure grows so elaborate that every department holds a veto, procedure itself ceases to be an unqualified good. More fundamentally, as I discussed in Democracy Is Not the Engine, legal procedures and institutional checks are the steering wheel and brakes of a car: they prevent a crash, but they do not generate the forward propulsion of a market.

Today, the commercial engine of the China market—its supply-chain responsiveness, engineering iteration speed, and rapid consumer evolution—continues to run at remarkably high RPM. If you lock the car in the garage simply because the braking mechanism differs from the United States, you may avoid immediate friction, but you hand the world’s toughest training ground to your local competitors. When companies forged in China’s cost and technology crucible expand into Europe, Southeast Asia, Latin America, and your home market, the company that stayed in the garage will find itself unable to compete.

Headquarters vs. The Local Team: Lock In the Bottom Line, Leave Room Above It

Since you cannot rely solely on external procedures to cushion every risk, a multinational that wants to move forward safely in China must build a better balancing mechanism inside the company itself.

That brings us back to the power dynamic between global headquarters and the local China team. Because the China market shifts so rapidly, local teams constantly need localized innovation to keep pace with competitors, while headquarters across the Pacific instinctively worries about compliance and reputational spillover.

Breaking that deadlock requires movement from both sides:

For the local China team, you cannot simply ask headquarters for trust—you must proactively provide visible guardrails. When proposing a new initiative, strictly ring-fence its scope to the local China market, structure it as a pilot project with a clear timeframe and capped risk exposure, and invest heavily in upfront explanation and communication. Only when headquarters sees that risk is contained in a cage will it feel comfortable letting go of the wheel.

For multinational headquarters, the right posture is to grant the China team more room to innovate—on the condition that the bottom line is held with absolute resolve. What the company will never do, and which red lines cannot be crossed under any circumstances, must be stated with crystal clarity and zero compromise. Once that iron floor is locked in and local pilot guardrails are in place, headquarters should give the local team greater tolerance and decision-making authority in the commercial space above that line to adapt, test, and compete.

A Closing Note

Whenever a global General Counsel flies to China in 2026, I always value the chance to sit down for a candid meal together. No memo or briefing deck across the Pacific can replace what happens when global leadership and local counsel compare notes face to face.

IP still requires vigilance, data compliance still requires careful engineering, and institutional differences in law and procedure should never be glossed over. Yet once we solve technical problems with technical tools, lock in an uncompromising bottom line, and build clear guardrails for local innovation, unfamiliarity no longer has to mean paralysis.

The road has changed since 2015—and the companies that will navigate the next decade best are the ones whose leaders still make the trip to see it for themselves.