The seminar moderator, Franklin L. Dennis and R. Craig Holman, in-house legal counsel at Boeing, spoke on “Social Norms in Doing Business in Asia:  China; Japan; Vietnam; Malaysia; Thailand and Korea.” I am generally not a big fan of these sorts of talks, particularly when given by attorneys. On top of that, I am inherently suspicious of someone purporting to be an expert on the social norms of six disparate countries.

Mr. Holman was fine. He spoke very little on “social norms.” Instead, he spoke on “Communications Opportunities in Asia,” which was scheduled to follow the “Social Norms” talk. He obviously knows his stuff, but because it was on large scale communications throughout Asia, I did not keep notes.

I take issue with Mr. Dennis’s assessment of the various countries of which he spoke, including China. He talked about Acer Computers as evidencing China’s development of high end technology. Acer is a Taiwanese company. He talked about how if you want to sell a product in China, the smart thing to do is to go to one of the big Chinese law firms for assistance. Generally, I view this as a bad idea. My experience with the China lawyers with whom I have worked is that they are first and foremost China attorney, not China businesspeople. Some of them are good businesspeople, most of them are not. The China maritime lawyers with whom I have worked in Qingdao and Dalian would be an excellent source of preliminary information regarding local maritime companies and would also be a good source for introductions to them. But I would only consider going to them or to any other law firm for assistance in finding manufacturers or distributors of a particular product if I had nowhere else to turn. But there are places to turn. There are countless good China consultants that assist foreign companies in getting into China. They are much better set up to do this than any law firm and this means they are likely to be both better and cheaper.

His view of China reeked of an enamored outsider. “Those guys are my friends.” “We talked of going to Tibet together.”  “My Chinese friends tell me that communism in China was just an eleven year flirtation but I have never figured out what eleven years they are talking about.” Even China boosters like me cannot ignore that China was communist for a very long time and still is, at least politically.

He went on to state, definitively, that the Chinese are “better merchants, better traders, and better manufacturers” than Americans.  I disagree.  If selling products cheaply is the sign of a better merchant, then yes. But when it comes to merchandising, I think Apple Computers, Wal-Mart, Home Depot, Office Depot, Microsoft, Caterpillar, Coca Cola, Pepsico, Yum, Gillette, Harley Davidson, and Colgate are all far better merchants than any Chinese company. If the Chinese are such great merchants, why are they completely absent from every credible list of the world’s top brands?

The same holds true of China’s manufacturing acumen. Yes, Chinese factories have an amazing ability to produce products cheaply, but if China were tops in manufacturing, why have high-end manufacturers been so slow to set up factories or outsource there? Would you rather fly on a Boeing airplane (yes I know its parts are made all over the world, including China) or a Chinese airplane?

He also stated unequivocally that there will be Chinese cars in the United States within two years. Anyone wanna bet?

I bring these things up not to go after anyone, but to highlight the different views people have about China and to highlight the need for each company to develop its own knowledge base regarding the information information important to it.

One of the earlier seminar speakers talked of China having 1.4 billion consumers. That is somewhat true, but completely irrelevant. The important question for a company planning to sell into China is, how many consumers does China have that might buy my product? If the product is a necessity costing a dollar, then there may well be 1.4 billion consumers (ignoring, of course, that babies, toddlers, and prisoners rarely buy anything), but if it is a $2,000 luxury item, the number of consumers might be maybe 150,000,000 at most. Doing business in China is not easy and it is always a mistake to make it seem like it is.

  • Bart Motes

    Your comments make me think of what Cheng Li wrote in Rediscovering China: “If you visit China for two weeks, you want to write a book; if you stay in China for two months, you want to write an article; if you live in China for two years, you don’t want to write anything.” In other words, the more superficial your familarity with China is, the more confident and self-assured you will be in your pronouncements and the less nuance you will see. It’s quite analogous to the self-confident pronouncements of 1Ls.

  • Bart —
    Thanks for checking in. Or, as my parents would say to me and as I am now saying to my 16 year old daughter: I cannot wait until you return from your first year of college because I figure that year ought to teach you that you, in fact, do not know everything.

  • Confucius famously said, to know that you know what you know and that you don’t know what you don’t know, is to know.
    (I’m sure a disciple raised his hand and promptly asked: Will this be on the exam?)
    But the point is: I’m actually kind of shocked at the continued unblinking acceptance of old, worn out tropes by Westerners in China and the “everything’s fine now” warm and fuzzies of Chinese business partners. 25 years now into the reform era (and 210 years since Lord Macartney’s ill-fated trip), it seems the well of “Pollyanna-ism” will not be dry any time soon. I remain quite bullish on China, but this is no longer unexplored ground and the substitution of tropes for research becomes increasingly inexcusable. We’ve been reading this stuff since Jim Mann published “Beijing Jeep” nearly two decades ago.
    I half expected you to report that a textile manufacturer exclaimed, “If every Chinese lengthened his shirt tail just one inch than the looms of England would run for 1000 years…”*
    Excellent live blogging. It’s been fascinating checking in each day.
    *Early 19th century

  • Granite Studio —
    Thanks for checking in. I actually half expected to hear the shirt line myself. BTW, I am half-way through the so-far excellent book, China Shakes the World, and in it I learned that the London Times Beijing bureau chief, Jane McCartney, is a direct descendant of Lord George McCartney. She is of the view that it is “pointless for Europe or the United States to resist Chinese exports [of textiles] if China had the comparitive advantage. What was Europe doing still making textiles anyway? she asked.” So much for the shirts.

  • Ben

    I too am bullish on China but shocked at how the China Dream (terminology courtesy of Joe Studwell’s book “The China Dream”) completely eviscerates the normal business thinking of otherwise-sane individuals. The Boeing counsel need look no further than former competitor McDonnell Douglas to see how the China Dream can ruin a company.

  • Ben —
    Thanks for checking in. It was NOT the Boeing counsel who was dreaming on China, it was others, but you are right to use M-D as a good example. In fact, one of the issues I have with McGregor’s book, One Billion Customers, is that it really only deals with mega-companies coming into China (M-D was a chapter in it, right?). But what happened to M-D is exactly the kind of thing that still happens to companies in China, large, medium, and small.

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