If you're looking to China for software development expertise, you'll want to read, “The Passage to Outsourcing in China,” by Peter A. Neumann, an attorney for Faegre & Benson LLP in Shanghai. As a lawyer who specializes in consulting with companies doing outsourcing work, he has a vested interest in pushing the idea that legal issues are truly complex in China.
But the article persuaded me: Unless you're with a large entity with deep pockets and an in-depth understanding of Chinese business and legal dealings, look elsewhere for your technical talent for now.
The presumption, of course, is that you care about your intellectual property and that you'll defend it should the need arise. It's setting up your defense that's so darned complicated.