Though most of my law firm's practice involves helping American and European companies go overseas, at least ten percent of our business involves helping foreign companies enter the United States. This number always fluctuates, depending on how things are going economically in the United States versus the rest of the world and on how the US dollar is doing on currency markets.

During the dot.com boom, I was getting a ton of work from Korean and Japanese and Russian and other companies seeking US venture capital funding or just seeking to make their mark on the US market. During the height of the US real estate boom, we were handling a fair number of matters for Russian and Korean and a few Chinese clients seeking to own a piece of the American real estate pie. We are starting to see a few inklings of incoming work by foreign (mostly European) investors looking at the United States companies again, now that prices have fallen so much.

And then we have always and somewhat consistently had the bizarre practice of setting up US companies for companies from mostly less developed countries (Vietnam is the prime example) who want a US company so that they can go back to their home country as a US company. This tactic is known as a "round-tripper." Let me explain.

Just by way of a hypothetical example, you have a large Vietnamese or Russian company and you are getting squeezed by the authorities for whatever and for whatever reason. Maybe the government knows you are doing well and wants a piece of your action. Or maybe you are tired of the local bureaucrats always hitting your company up for a bit o' the baksheesh and you believe that this sort of thing will be less likely to happen to a foreign company (see the Sopranos episode involving how the mob was unable to collect from a new "Starbucks-like" cafe in the neighborhood" for one explanation of why this might be the case). So you form a US company and you take that company and return (hence the name round-tripping) to your native country with it. These round-tripper companies were very common for China back in the day when China's tax structure greatly favored foreign companies as an incentive to get them to invest in China.

Or let's suppose you are a large Ukrainian construction company and you are bidding on a large airport project in Poland. Let's face it, being an American company is going to give you more credibility and trust than being a Ukrainian one. The reasons for wanting a US company are endless, especially since US tax laws are (or should I be saying were) not that oppressive as compared to many other countries.

The other day, my firm got its first China WFOE (Wholly Foreign Owned Entity) that wants to form a US company. Now when you think about that, it is not so strange and, if anything, it is maybe a bit strange that we had not gotten such a matter until now. But I do think this is really noteworthy. What we have here is a Chinese company owned by a European company in a country with very high taxes and this company now wants to go into the United States to sell the product it has been manufacturing in China and selling in Europe. And rather than come into the United States with a company owned by their European company, they want their US company to be owned by their China WFOE. We have just begun looking into the legal aspects of this deal from all perspectives.

But I thought of this new client this morning when I started reading more on how the China Joint Venture (JV) between General Motors (GM) and Shanghai Automotive Industry Corporation (SAIC) will be moving into India.

This all makes sense. Foreign companies, be they in China independently as WFOEs or be they there as part of a joint venture, are going to be looking to expand worldwide as their China operations become stable.

I think we are looking at a trend.

What do you think?