To understand why Todd Bissett is among the first people you’ll reach out to if you’re the CEO of a Waterloo Region tech company looking to enter the Chinese market, you need to understand something about eating the brains of ducks – and yes, you read that correctly.
See, roast duck brain is a delicacy in China, something to be served with pride, with the duck’s head split open and placed on top of its meat, the better to display all the brain’s yummy goodness.
Would you do the same in Canada? Well, likely not so much.
It was a cultural and culinary insight that Bissett first corralled as a Waterloo 13-year-old working as a dishwasher at a Chinese restaurant called Kam Yin, in the Zehrs plaza at Erb Street and Fischer-Hallman Road. The restaurant still exists.
“In a Chinese restaurant here [in Canada], they would save the brains because they wouldn't serve it to the customers, and then [the staff] would eat it later,” Bissett, 44, explains, sitting comfortably in jeans on an autumn afternoon in the downtown Kitchener offices Gowling WLG, the law firm Bissett recently joined as a partner, where he specializes in emerging growth, tech and Chinese affairs.
It was four years spent working at that Chinese restaurant – “I started at $4.65 an hour,” he says – that sparked an interest and a comfort in Chinese language, culture and history, one that ultimately led to him becoming a rarity in legal circles – a go-to expert for tech companies looking to enter the Chinese market.
Bissett’s is something of a Canadian multicultural story in reverse. His restaurant experience would lead him to enroll in Chinese and East Asian studies at McGill, and then, after deciding that he wanted to pursue a degree in law specializing in Chinese affairs, it was off to Georgetown University in Washington, D.C. He then joined a U.S. law firm in Silicon Valley for two years, immersing himself in the sub-specialty of emerging growth and technology company law, and that was followed by a residency in Shanghai and Beijing for eight-plus years – China being one of the world’s most important tech hotspots.
By 2010 Bissett was managing partner of a large U.S. firm’s China practice, but a growing family and concerns about air pollution led to a return to Canada – and Waterloo Region.
“The Region proved to have grown and become far more cosmopolitan than I’d expected,” Bissett said. “We moved to Laurelwood as it seemed to have a strong Asian population, but hadn’t expected that a quarter of the kids in our son’s kindergarten class would be first-language Mandarin speakers. I don’t think more than a couple of months has gone by in the last eight years in which I haven’t been offered or advised to move to Toronto, but this is the best place I can think of to both raise a family and do high-level startup and cross-border work.”
So, Bissett is now a local lawyer who speaks Mandarin. And yes, happily eats duck brain.
“I have this memory of not just my classmates but my teachers looking at me almost in awe, because I was comfortable sort of munching away on the duck brain,” he says, recalling a school trip he made to China in 1993.
That Bissett was raised in Waterloo Region makes him all the better-placed to advise this region’s tech firms when it comes to doing business in China.
“It was a series of fortuitous events,” he says. “My home base, to the extent that I have one, is Waterloo, Ontario, which in 2010 had this nascent technology startup scene. I was a Silicon Valley lawyer who specialized in non-U.S. tech startups, and I’d gone to WCI (Waterloo Collegiate Institute). The ability to bring the international experience and the local connection to a community that values both became my own version of a startup.”
Gowling has shown itself to be a determined participant in the local innovation ecosystem, and embraces change in the legal profession itself. For instance, it has partnered with Thomson Reuters and Communitech on a program called “Tipping the Scales,” a six-day immersion for startups looking for support in the legal, tax and regulatory fields.
It was that commitment to innovation that, in large part, led Bissett to join the firm.
“My practice is primarily in two parts – one piece is representing emerging growth/technology companies and the folk who invest in, partner or acquire them – read Communitech and everyone it touches.
“The second piece is complex cross-border transactions with a particular focus on China. Of course, the intersection – local tech companies doing business in China or with Chinese parties – is my sweetest spot.
“Both of those practice areas, but the second in particular, mean that I am best suited to a large, ideally international, law firm.
“Roughly three years ago, Gowling entered into a combination with a U.K. based firm to become Gowling WLG and is now an international firm, with offices in Canada, the U.K., Europe, the Middle East, South America and, crucially, Asia and in particular China. Gowling already had a great group of tech industry professionals, but this international presence also gives me access to offices and personnel that should allow me to better serve the clients in that second piece of my practice.”
The timing is serendipitous, not only for Bissett, but for those looking for advice on doing business in China. The country has been much in the news in recent weeks and months, in stories that have highlighted the immense challenges associated with doing business there, as companies and their personnel attempt to navigate the differences in laws, civil rights and freedoms and simultaneously gain access to a market of nearly 1.5 billion people.
Tech companies looking to expand to China are taking on an endeavour
fraught with risk – and opportunity, says Gowling WLG lawyer Todd Bissett.
(Communitech photo: Sara Jalali)
Nearly a year ago, two Canadians were detained in China on alleged national security offences. Their detention began shortly after the arrest by Canada of Huawei executive Meng Wanzhou, made at the request of the U.S.; China then began restricting imports of Canadian canola, pork and beef.
More recently, the NBA ran afoul of China’s determination to resist encroachment into its political affairs. Houston Rockets general manager Daryl Morey tweeted support for Hong Kong protestors, and China responded by cancelling NBA exhibition games and demanding Morey’s firing; the contretemps has cost the NBA untold millions, league commissioner Adam Silver admitted recently. It also exacerbated, and unfolded in the midst of, an ongoing U.S.-China trade dispute.
Bissett has followed both stories closely. He says even in the face of those relatively recent events, the challenges of doing business in China are not necessarily political ones. That said, hesitating to travel to, or work in, China for fear of arrest or detention is “just not something that I think is a rational concern for anyone who doesn't have a really unique set of circumstances,” he says.
The risk, he says, is strictly about whether a business plan is sound enough to work in China, and that risk is substantial, so much so that when a company first approaches him about moving into China he suggests they be “brutally honest” in evaluating whether doing so makes sense. He also often recommends partnering with a local company rather than setting up shop themselves.
“The cost and complexity of operating in China is way higher than in Canada,” he says. “And that's before you get into the fact that you need to hire local lawyers and translators, pay for travel and logistics, etc.
“Forming a company in China can take several months and $10,000 or more; forming one in Canada takes three hours and $400. It's that kind of distinction.”
And many tech companies, he says, face unique problems insofar as they are often public-facing and trading in information in a country that restricts what its population sees, hears and reads.
“[You’re dealing with] a country that historically is sensitive to foreigners speaking to its population, and everything you see about the Great Firewall is just an underscoring of that.
“Most of the big, fast-growth tech companies in the world are speaking to people. They're not selling widgets,” meaning scrutiny of content is almost certain to be generated from regulators, partners and even Chinese customers.
And the overall risk, he says, doesn’t necessarily decline as a company gains traction and sees success. It often increases, as existing Chinese companies bring their scale to bear.
“Most people assume as they get bigger their business risk goes down. In China, that might be the case, but it might also go up because it might draw the attention of local Chinese companies to your business model. And if an Alibaba or a Tencent decide to become your competitor, you are in a losing resources battle against a seasoned operator on their home turf.”
And if that isn’t enough to give caution about entering the Chinese market, Bissett says there now is a predisposition in China to do business with Chinese companies, due both to national pride and the certainty that quality will be just as good or better than it is from overseas. It’s a reversal of a bygone era when Chinese customers “bought American, bought Canadian, bought European, because of the quality advantage,” Bissett says.
“There was an assumed prestige advantage in buying foreign. That’s not true anymore.
“A competitor may look at you and say, ‘Oh, look, there's a business model that can make money. I can emulate that. I can do that. And all my people already speak Chinese, and we're already based here, and I don't have any of those costs or constraints. And I [can] say [my product is] Made in China, which now is a positive.”
As the NBA discovered, a North American entrant to the Chinese market has to be mindful of the real-world consequences when sharing sensitive opinions in public forum. Bissett is straightforward about the advice he offers to companies.
“I always tell my clients, ‘Look, if you want to tweet about politics and human rights, that’s your choice, of course. But if you think you can do that and operate on the ground in China without business consequences, you aren’t being honest. You have to make a choice.”
That all said, there are substantial rewards available in China, he says, to the right company with the right business model.
“The intellectual property laws in China are actually very good. The authorities are very sophisticated. The local incentives are good because the [government] wants companies to bring their technology into China, and the best way to do that is to protect it.
“It’s not corruption or rejection of the rule of law that is the concern, just the question of whether you will be able to compete in a tough market for foreigners to navigate and against sophisticated local competition. If you can tell a story that makes sense as to how you're going to meet those challenges and make money in the Chinese market, then go for it – it’s a huge market with a ton of opportunity.”
And one offering the opportunity for some exotic – by North American standards – dinner options. Roast duck brain among them.