Rule 1: Delegate authority along with responsibility.

Western executives tend to see China as a country that was formerly primitive, then Communist, and now a growing market for Western goods. By contrast, the Chinese see China as the world's greatest civilization, with a millennia-long history of innovators, merchants, and empire builders. Under the circumstances, it's not surprising that Chinese executives are acutely sensitive to anything that smacks of Western paternalism, especially now that China is a major player in the electronics segment.

Rule 2: Cultivate the network (not just the hub).
China has excelled at ensuring that infrastructure in these megacomplexes is planned and adequately provided for, and this type of support is very attractive to foreign companies that are conglomerates or need multiple and linked processing of raw materials,” says Diana Matthias, a Shanghai-based senior consultant with Rouse & Co. International, a company that consults on international intellectual property rights

Rule 3: Emphasize your long-range plans.
With the rapid growth of the consumer electronics segment, electronics firms face ever-shorter market windows and rapidly changing market requirements. To remain flexible, U.S.-based firms tend to focus on short-term planning, giving less thought to anything that might take place more than a year in the future. That attitude influences the way U.S. firms build alliances and supply chains, encouraging many electronics executives to view long-term commitments as inherently risky.

Rule 4: Never criticize the Chinese government.
In the U.S. , corporate executives (especially those that make big campaign contributions) frequently complain heartily about government regulation, waste, and inefficiency. However, although there's no question that threading through the byzantine labyrinth of Chinese bureaucracy can be incredibly frustrating for Western executives, you must <<never>> criticize the Chinese government in the presence of Chinese executives. The reason is both cultural and legal.

Rule 5: Protect your IP—but plan to lose some of it.
IP theft in China remains a major problem for the electronics industry, according to Erin Ennis, vice president of the U.S.-China Business Council, a nonprofit trade group.

“ Things are slowly getting better, but the battle is far from over,” she says.

The problem is that Chinese culture tends to treat IP as if it were publicly owned rather than private property, which means that you must approach your China deployment with great caution. “We always stress that protecting your IP is a fundamental first step before embarking on China entry—many think about this when they are there, but then it's too late,” says Ben Goodger, a director at Rouse.

“ For IP protection, you should manufacture pieces of the whole item in different locations, so that no one sees the whole picture, and do final assembly in the United States,” Goodger recommends.