The Big Mac attack suggests how difficult it can be to do business in Beijing. Other U.S. companies are feeling a bit vulnerable of late, thanks to the way Chinese authorities have set up the rules of commerce. ““If you want complete legal protection, you shouldn’t be investing in China,’’ says Dean Lee, president of Hercules China Ltd., which is negotiating a large chemicals joint venture in Shanghai. After a year of talks on power-generation deals, General Electric suddenly discovered it wouldn’t be allowed a majority interest. Lehman Brothers backed two state companies that lost nearly $100 million in foreign-exchange speculation. But when it tried to collect, the firms said they weren’t responsible because their traders were unauthorized. Lehman is suing, and the firms have agreed to accept U.S. jurisdiction over the disputes.
McDonald’s probably won’t have much of a case if it sues. China only passed a law on land-use rights in 1992 – after the company negotiated its deal. Under those circumstances, ““approval for 20 years is not a contract’’ and can be revoked at any time, says Nicholas Howson, a Beijing-based lawyer. ““The ball is in Beijing’s court; we’re awaiting a response,’’ says a McDonald’s official. But a settlement, involving a new location within the completed development, seems likely – particularly because everything else on site has been demolished. Besides, the company doesn’t want to wreck its plan to add 10 Beijing restaurants next year to the seven it already operates. ““When McDonald’s thinks about compensation, it’s thinking about the earning potential over 20 years,’’ says an insider. You can see it now: trillions and trillions served.
