> > Employees will attempt to steal IP and copy the business.

> This sounds a lot like the unfounded "don't tell anyone your idea, it might be stolen!" fear in Silicon Valley. If you are relying on security through obscurity to protect your business' viability, you're doing it wrong.

This is completely different. An idea itself doesn't have a lot of value without the business plan and capital to make it happen. The SV narrative is ridiculous because it has people asking for NDAs to tell you about their idea that hasn't even been incorporated yet.

What this person is referring to is the fact that employees and partner companies will take source code, blueprints and other confidential documents and attempt to sell it off or directly start competition. Your secret server sauce could show up at another company with source code, documentation, comments and everything. Many times they'll even use your logos and deliver a lesser product based on your brand name.

Flash memory is a good indicator of this - many chinese manufacturing companies have staff running off-hours manufacturing or pocketing wares that didn't pass QA for later sales. Microcontrollers also deal with this - there are several popular chips (like the FTDI usb<->serial interface chips) that have cheap clones made. Same with basic electronics - think back to all the replacement cables and laptop adapters you've seen with shortcuts taken in the components. There is simply no legal protection against this, and no legal recourse when it's a full company or a former staff member that does it. Especially if your partner is the nephew of a local government official. You wouldn't think it was possible, but corruption is actually worse over there.

This sort of thing happened a lot earlier in US history before corporate and industrial espionage became a thing you could legally sue over. There's actually a sort of industry built around sharing NDA'd spec sheets and documentation over there. Stealing IP is a fact of life. And you can nearly guarantee that the person who does it has a better stable of local contacts than you do.

We're also ignoring the fact that you can't even promise that the work from partner companies meets contractual obligations. Many western companies had manufacturing deals with Chinese electronics manufacturers who delivered inferior (or virus-infected) products. The Chinese milk scandal of 2008 is another sobering story of corruption covering multiple levels. Despite hundreds of thousands of victims, they just tried to ignore it and then buy their way out of it, initially.

> > You need locals to handle staff. You're just a foreigner to be taken advantage of.

> In my experience if you speak basic Chinese, personally hire and manage employees and pay and treat them fairly and offer income security, they will see you working hard and personally work hard and be extremely loyal to you, especially if you offer new skills and challenges.

With some industries, yes. Others no. There's some cultural differences that can cause a lot of friction. Public reputation (face) means a lot to people. But it's more important that others think you're honest than actually being honest. If a person with a strong reputation starts moving against you, in many cases locals and officials will side with them against you in order to curry favor. Favor trading is actually very important when doing major business over there.

It's a market that has a lot of opportunities, but the environment is so different that most attempts at an entrance just end up being swallowed up. Any attempts at redress can easily die an insignificant death mired in bureaucracy.