Cisco interview: Adopting the right mindset

What is your role within Cisco and what is the size and structure of your legal team

I have been with the company for about 16 years and during the six years I have been in China for Cisco I have built up the country's legal team. I oversee the legal issues for Cisco in China. We currently have about eight people distributed among Beijing, Shanghai and Hong Kong.

What are some daily challenges faced by your legal team

One daily challenge is that China is a complex pit place for a company to operate. We abide by several compliance requirements as we are a US company, but conducting business is very different in China, from FCPA matters to daily practice. Deals are less documented; the perception of documenting deals is different here than in the US. The US mindset is spelling out every aspect of the deal in the contract, whereas the local practice is different.

I do some work for the American Chamber of Commerce in Shanghai as vice chair. My observation is that challenges very much depend on the industry you're in. It is particularly challenging for industries the government is interested in promoting for local companies. Foreign companies are subject to many requirements from a regulatory perspective, though they aren't always clear. But even from a non-regulatory perspective, there are challenges to how we sell that may not be so obvious, so it is important to understand what the constraints are.

How do you deal with the scrutiny of antitrust authorities and what do you recommend to large companies in China with similar experiences

There have been a number of industries under specific attention of the antitrust authorities, like infant formula. At this point, the telecommunications and life space hasn't been subject to that, but there could obviously be potential. The way we analyse the Anti-monopoly Law (AML) is, since it is still developing, to look to EU antitrust laws as the most likely direction the Chinese antitrust laws will head.

One thing that makes our lives easier is that there are very big Chinese competitors in our market so we are less burdened from an antitrust perspective. Regardless, we view our marketing programmes from an antitrust perspective and have lawyers sit in on the meetings. We remain mindful to do the right things.

What developments in antitrust regulations over the past year have affected your work

Like many companies, we have been paying a lot of attention to merger control. You have to file a lot of transactions for merger control review and the challenge has been that the process has been slower than what companies would like. So the Ministry of Commerce (MOFCOM) has introduced an expedited set of rules for deals with minimal competitive impact in China. But companies still have two main questions: how quickly will merger control be done and what will the standards used for review be

What are some competition trends you are witnessing

The most obvious trend is increasing sophistication and attention. The increasingly grave enforcement by the State Administration for Industry and Commerce and the National Development and Reform Commission is reflected by their rising activity and resources allocated to them. The same applies to MOFCOM, which is also gaining expertise. It has a greater degree of expertise in merger control than the other two agencies have and it is continuing to become more sophisticated in handling issues.

How do you feel about the AML in China relative to other jurisdictions

One thing different about the AML is that China has explicitly said MOFCOM should consider external factors other than a straightforward antitrust analysis. The AML provisions indicate economic security and national security as such factors of the review process. Also, the law is written to provide for consultation with other ministries or agencies in China. Putting the two together gives you certain decisions with components that get factored in which wouldn't in other jurisdictions.

What qualities do you look for when working with external counsel

We tend to engage them for two reasons. Firstly, when we need additional resources, and, secondly, when they bring specific expertise. What I look for is someone who is business savvy, in other words, someone who can give me business recommendations on how we proceed – the risks and solutions. I also look for China-specific guidance. What we need is a law firm that understands both Chinese and international practice. If you only understand half, it is difficult to give savvy advice. You have to understand the local practice and norms and at the same time international standards as you're dealing with companies' headquarters and so on. They have to be competent lawyers and good drafters as well.