China’s Legal System Fosters Trust in Relationships at the possible expense of innovation

One consequence of China’s strong Trust in Relationships Orientation and accompanying lack of trust in institutions may be its seeming lack of corporate innovation.

A strong Trust in Relationship orientation is often accompanied by an ineffective legal system, which is the case in China, and some China consultants believe, a key problem for Chinese businesses is a comparative lack of legal protection.

"If you're going to innovate, if you're going to be entrepreneurial, if you're going to invent things, you need a legal system that can protect your invention," says Paul French, a consultant who has lived in China for nearly 20 years.

"The government should take the lead on that, an independent legal system needs to be able to do that, and to respect the rights of entrepreneurs and innovators," he says. "At the moment, that is simply not the case here."

Intellectual property rights need to be dealt with if China is going to move up to the next level.