When Michael Chen discusses doing business in China, people listen. And he held an audience captive Thursday when talking about challenges such as dealing with the Chinese over intellectual property rights.

“Knowledge should be free is a strong cultural belief in China,” said Red Hat’s former top executive in Beijing at a conference about globalization put on by the Council for Entrepreneurial Development.

The belief is so strong that it is a major reason why IP control and software piracy remain problematic. So what are businesses to do?

Find ways to adapt, Chen said.

Such as?

“Expertise should be paid for” is also a strong belief, Chen said, and on that point businesses could work to change their overall value proposition.

Chen related the Red Hat (NYSE: RHT) business situation to “Good to Great,” the book by Michael Collins. Collins listed three basic lessons to ensuring the success of a company, and Red Hat believes in them:

1. Belief and passion – Red Hat is very passionate about Open Source technology

2. Better than anybody else – Chen believes that Red Hat does a great job of collaboration and must to be able to compete. “Collaboration allows Red Hat to compete with software companies that are 40-50 times bigger than Red Hat. There are over two million open source contributors,” he said.

3. Business model for profitability – Subscription is the business model for Red Hat. Chen often talked about the bits and bytes of the software industry. The bits and bytes are just part of the open source solution but Red Hat supplies the certification for the free software with support at the enterprise level.

Chen is an example of globalization himself, having worked at multiple locations. He left his Red Hat post in Beijing to become vice president of corporate marketing for Red Hat. He also earned his MBA at UNC-Chapel Hill’s Kenan-Flagler business school.

After earning an undergraduate degree at Nanjing University in China, Chen came to the U.S. and earned a Masters degree in computer network engineering at North Carolina State. He worked for several Chinese and Hong Kong companies before joining Red Hat in 2003 as a product marketing manager.