Yes openly breaking Chinese law in a manner that is in breach of international convention or otherwise has wider consequences (breaking rules about keeping information from the party doesn't count unless I'm there: our privacy laws override) would make us sketchy. Can you name a company that has done that, or are you pulling an idea out of your hat because your argument otherwise lacks supporting facts/evidence?

What makes them particularly sketchy is the hypocracy: they fully understand the concept of IP and they are using/abusing it to try defend their semi-walled garden.