In Shenyang, to the northeast, an American boiler maker fights with its Chinese partner over copyrights. In Zhuhai, another American company has no luck going after a local joint-venture partner, which it claims has stolen millions of dollars. The foreign firm is a minority partner and no laws exist to allow a minority stockholder to sue the majority shareholder. Most conflicts in China are dealt with behind closed doors. The lawlessness that underlies the way business works in China has stymied the country's ability to develop all sorts of industry, including areas crucial to economic development such as biotechnology and information technology.
Money rules most in China today.
There are massive transgressions of the law, and it is increasingly clear that there is no resort to law to sort them out. Both strategic investors and financial investors have discovered that when things go wrong, they cannot count on the courts to help. The treasurer of one major international bank in Hong Kong says recent instances of Chinese companies in trouble have led him to draw a number of conclusions that suggest there are far more disputes to come. Secondly, there has been a lot of mismanagement in China. And third, there is just so much fraud.