In this era of economic globalization, American companies are
increasingly looking to overseas markets for manufacturing and
export opportunities. One of the largest of these markets is China.
While China provides rich expansion opportunities for American
companies, the regulatory landscape – particularly in the
environmental arena – creates pitfalls for the unwary.
China's myriad environmental regulations coupled with
enforcement uncertainty present further challenges. Take, for
example, an American car manufacturer (ACM) of solar powered cars
seeking to open a new plant in China. ACM must comply with Chinese
environmental laws on renewable energy, energy conservation, and
clean production. Depending on where the plant is located within
China, the degree to which these laws are enforced, and the level
of risk associated with non-compliance, will vary. Once built,
suppose ACM's Chinese plant accidentally releases hazardous
substances into a nearby river. If the river
