This case study provides a comprehensive analysis of the intricate political risks faced by TikTok, the Chinese social media giant, within the complex US political landscape. Beginning with an exploration of the security concerns articulated by the US government, the discussion centers on TikTok’s data collection practices and their perceived impact on US national security. The narrative unfolds by elucidating the multifaceted strategies employed by TikTok and its parent company, ByteDance, to address these challenges, including litigation, endeavors toward Americanization, and technological adaptations. It also examines the evolution in the US government’s stance as well as TikTok’s adaptive strategies aimed at sustaining and expanding its presence in the US market. The study depicts the responses of the Chinese government to US policies, unraveling the broader implications of these developments on the global political-economic landscape, exploring the dynamics involved in US-China relations, and providing a deeper understanding of the complexities inherent in such interactions. Finally, this case study invites readers to engage in contemplation on the broader themes of political risks faced by multinational corporations, the challenges inherent in navigating global legal frontiers, and the intricate nature of US-China relations.

The rule of law, an abstract concept heavily debated among legal scholars and social scientists, has in the past few decades acquired a nearly universal appeal, as democracies, autocracies, and oligarchies all claim to uphold it. Repeatedly, Xi and the leaders of the Chinese Communist Party (CCP) have pledged to build a “rule-of-law country.” But when the ruling elites of a one-party authoritarian state allege commitment to the rule of law, what do they really mean? How is it different from the Western concepts of the rule of law, especially the “thick” version of it that has been closely tied to liberal democratic values? What are the key features of the “rule of law with Chinese characteristics”? And how will it impact the international legal order? Applying a transnational legal ordering framework, this chapter attempts some answers. It traces the development of the Chinese legal system and the evolving rule-of-law debates in China and then explores how China might impact the international legal order.

Most US lawsuits involving Chinese companies are initiated by or against their customers, employees, or business counterparts. However, on occasion, Chinese investors may go to court against a US government entity to resolve a dispute. As US–China relations continue to deteriorate, Chinese companies are increasingly caught in the crossfire of the geopolitical rivalry. Being suspected as agents for the Chinese state, China-headquartered multinational companies, especially those with ties to the Chinese government, have expressed growing frustration over what they perceive as unfair treatment by the US government. This chapter examines the legal reactions of Chinese companies to perceived official bias in the United States in the context of intensifying geopolitical tensions.

The US legal system is notoriously complex. Navigating this labyrinthine structure requires knowledge of legal precedents, procedures, and rules, along with the ability to anticipate and adapt to shifts in the legal landscape. Businesses, therefore, require the guidance of seasoned lawyers. Over the past few decades, US corporations have increasingly turned to in-house lawyers for legal services, leading to their rising prominence in the corporate hierarchy and profound changes in the US legal profession and corporate governance. This could also be true for Chinese companies operating in the United States. Hence, this chapter investigates the Chinese companies’ utilization of full-time internal legal managers within the dual institutional context. For those employing such managers, this chapter scrutinizes two key aspects: (1) whether these legal managers are locally hired or are expatriates and (2) whether they hold licenses to practice law in the United States, which approximates their ability to handle US legal risks and opportunities. Analysis under the dual institutional framework reveals not only effects of both home- and host-state institutions but also substantial intercompany variations associated with other institutional and firm-specific variables of theoretical and policy importance.

After decades of exponential growth, China has transformed from a stagnant, impoverished autarky to the world’s second-largest economy highly integrated into global supply chains, and numerous Chinese firms have embarked on overseas business expansion on an unprecedented scale. Against that backdrop, many Chinese investors have ventured into the highly competitive, strategically important US market. Though the recent geopolitical confrontation between the two countries has hampered the investment flow, many large Chinese investors have been hesitant to withdraw from the US market. How do Chinese investors negotiate the omnipresent and consequential legal risks and opportunities in the United States? This question, which holds great practical, policy, and theoretical importance, has received scant scholarly attention. This chapter lays out the road map of the book that attempts to provide the answers.

With or without professional in-house counsel, Chinese companies must rely heavily on outside lawyers to effectively manage legal risks in the United States. Companies operating in the United States must navigate through an intricate web of legal rights and obligations, which cannot be done without adequate legal assistance. While a vast literature has accumulated on the US legal profession and the legal service market, few scholars have studied the interactions between multinational companies and their US lawyers, leaving important questions open. For instance, do Chinese companies bring their lack of appreciation or even contempt for lawyers and legal services to the United States, or do they adapt to the host-state environment and take legal advice seriously? Moreover, how do Chinese companies choose from the 1.3 million US lawyers? Are Chinese companies becoming a significant revenue source for US law firms, which will give them pricing power in the market and the ability to dictate how legal services are provided? Do their lawyer selection preferences and legal expenditures vary across different Chinese companies, and if so, what institutional and firm-specific factors may explain the variations? This chapter answers these crucial yet unexplored questions within the dual institutional framework.

To litigate or not to litigate, that is the question any Chinese companies operating in the United States long enough must contemplate. For American companies, litigation is nothing but an unavoidable business risk and often a vital competition strategy, routinely dealt with by legal and managerial professionals applying monetarized cost–benefit analysis. Such analysis typically incorporates attorney fees and other litigation expenses, potential reputational damage, time and human resource consumption, and the present value of expected litigation gains or losses. By contrast, litigation in China carries complex social meanings and is often avoided to preserve long-term cooperative relationships or to signal desirable attributes to uninformed third parties. When lawsuits do occur, they are often handled by stakeholders without professional legal assistance. Disputants consider a wide range of material and nonmaterial interests that are shaped by both formal institutions undergoing significant transformation and complex, entrenched social norms governing dispute resolution. Chinese companies immersed in these two disparate institutional environments approach legal disputes in the United States.

In China, corporate management and business transactions often relegate the legal system to a more peripheral role. Chinese companies then encounter formidable institutional obstacles when operating in developed countries with robust, strict, and complex legal systems. Obviously, nowhere else are the hurdles as high as in the United States. How then do Chinese investors negotiate the omnipresent legal risks? This chapter begins with an overview of China’s outbound direct investment in the United States. It then introduces research questions ranging from the role of in-house legal counsel in Chinese companies to their legal responses to unfair treatment by the US government. Next, this chapter selectively summarizes and critically reviews the existing literature pertinent to the interactions between multinational companies and the complex US legal system. From this, I formulate a comprehensive theoretical framework predicated on dual institutional influence, which will be applied consistently throughout the book. The chapter concludes with a description of the research methodology.

Litigation is a complex matter, calling for more sophisticated inquiries than what can be measured by a binary variable, namely, whether or not a Chinese company had experienced US lawsuits. This dichotomy glosses over crucial aspects of Chinese companies’ interactions with the US adjudicatory system. For instance, while prominent Chinese companies such as Huawei have litigated hundreds of lawsuits in the United States, most others were involved in no more than a few cases. However, the coding in Chapter 4 grouped them together in terms of US litigation experience. In fact, those that litigate infrequently may have more in common with Chinese companies that have managed to avoid US lawsuits altogether than prominent repeat players. To unveil important information lost from collecting and coding the data as a binary variable and to ameliorate possible biases in survey data concerning sensitive topics, this chapter explores a hand-collected objective dataset: federal lawsuits involving Chinese companies. It also presents three detailed case studies to demonstrate how Chinese companies with direct investments in the United States navigate the complex host-state legal system. These case studies (i.e., Lenovo, Huawei, and Fuyao Glass) will revisit the hypotheses and findings of prior chapters.