With the US Commerce Secretary Don Evans' visit to China to smooth over Sino-US business ties, potential trade discords were once again thrust into the spotlight last week.

And with more business expansion pushing influence across the national boundary, Chinese firms should attach greater importance to legal issues while doing business overseas, no matter if it involves trade, mergers and acquisitions (M&As) or international listings, US legal experts advised.

"Chinese enterprises will definitely encounter more trade disputes with their foreign counterparts before 2005," Patrick Norton, partner and head of O'Melveny & Myers Beijing Office, told China Business Weekly.

Take the US as an example, its economy is still facing severe difficulties, such as a high unemployment rate.

"Under such circumstance, they surely need a scapegoat, since it is more natural and easier for a nation to blame its current economic problems on another country than admitting its own mistakes," Norton said.

The US legal expert suggested, under such condition, that Chinese firms should be more alert and respond more actively to anti-dumping charges.

Within the last 10 years, there have been 500 anti-dumping cases against Chinese companies, most of which have ended badly for Chinese.

The reason is very simple - in many cases, local firms just did not respond to such allegations, Norton added.

"Many local firms were simply not used to taking on such allegations. They were reluctant to spend money because they were afraid of losing it," he said.

"The results of five recent anti-dumping cases against Chinese producers prove they are wrong."

The US-based law firm won three anti-dumping charges for Chinese manufacturers and two other cases O'Melveny & Myers took part in were regarded by the World Trade Organization (WTO) as "not big enough to meet the anti-dumping standard."

As an international law firm, O'Melveny & Myers does a lot of work for foreign companies, which are subject to Chinese anti-dumping investigations, and it also represents many Chinese firms which are being investigated by the United States.

"When trade opens, it is good for all countries in the long run. But in the short run, some domestic industries are hurt. They cannot compete and jobs are threatened," Norton said.

The industries being hurt in this way try to protect themselves. One limited way within the WTO framework is to adopt dumping safeguard measures.

"There are some dumping cases, that is without question," Norton said.

"But there are many cases where the industry is just looking for help - any kind of help that will give protection. I am quite sure that some of the cases in the United States are not well-founded. We argue these cases and we have won some of them for our Chinese clients.

"The same has been true here in China, since some of China's anti-dumping and safeguard cases were not well-founded."

The best example for both countries can be found in last year's saga over steel, he suggested.

"The US case is ridiculous. It is in violation of WTO rules. And China's response is equally unfounded."

According to Peng Jiang, a lawyer with O'Melveny & Myers, it is often the case that local producers do not set out to dump their products.

Instead, importers demand a certain amount of goods and therefore want a favourable price.

"So as preparation before taking on anti-dumping charges, Chinese producers can adjust their price policies and pricing systems," Jiang advised.

Nowadays, Chinese flagship businesses are going international by not only exporting labour-intensified commodities, but also by seeking higher-level expansion chances, such as setting up brand ventures, getting involved in M&As and listing overseas.

For these ambitious enterprises, they face even more complicated legal problems than local exporters, and should act more prudently, Norton said.

"Different to China's case, lawyers play a larger role in doing business in foreign countries," he said.

"Many Chinese firms are not familiar with the legal systems of other countries. But if they want to do business in other countries, they have to follow the local rules.

"For those Chinese companies who plan to list on overseas stock exchanges, they have no choice but to follow a very strict and detailed legal and accounting process.

"It is also very expensive, since the fee of millions of dollars does not include money for bankers and accountants."

However, Chinese firms will benefit by being involved in the process, which will force them to act in line with international rules, he stressed.

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