Live Blogging From The Doing Business In China Seminar In Seattle (I)

I am at the 2nd Annual Doing Business in China and Other Asian Nations seminar (sending this out via my Cingular wireless modem). I am live blogging to increase my standing with my blog-geek friends, Josh Hallet, Kevin O'Keefe (of LexBlog), and Buzz Brugeman, all of whom know more about blogging than I ever will.

I am not going to be blogging on all of the speakers during the next two days, just those I find relevant to China Law Blog.

Charles Payne of Chi-square Technologies, LLC, which he describes as a "biotech company with 6,000 employees and $300 million in yearly business," is the first speaker I will cover. Mr. Payne has been involved with China for 25 years. He is rabidly positive about doing business in China and seeking to sell to its "1.4 billion consumers." He sees "unlimited opportunities" in China. His company's main product line is self-testing kits for infectious diseases.

Mr. Payne mentioned at least three times that "Chinese love Americans." I disagree with this as a blanket statement, since I personally know many Chinese of whom I would not say this is true. However, I do believe the Chinese generally like working for, doing business with, and buying products from American businesses.

I very much like Mr. Payne's position on graft in China: neither he nor his company will have any part in it. Mr. Payne says that from the very beginning of any business relationship, "I make it very very clear, there will be no under the table payments. I am very clear in stating that Americans go to jail for doing that."

Mr. Payne then set forth the following "four keys" to investing in China

1. Companies going into China must have clear and explicit leadership that is kept informed of what is going on in China. Lots of travel to and within China is required.

2. Brainstorm with someone who has done it before. Not with a consultant, but with someone who has actually done it.

3. Never assume anything. China is a big, diverse country.

4. "WFOE (wholly foreign owned entity) is the way to go. Stay away from joint ventures (JV) if you can. But sometimes you cannot help it." Go in with money, patience and staying power.

All good advice.

Update: Had a nice conversation with Mr. Payne at the end of the day reception where he reiterated the importance of a company having people it can trust on the ground in China. His company has such people and Mr. Payne (quite rightfully I think) believes this has been made possible because of his company's willingness to reward its good people in China by paying them well, giving them good benefits, and giving them opportunities for advancement.

More good advice.

Comments

Dan,

I have to agree with you that there is certainly a caviat to the "Chinese love Americans" blanket statement. But my issues differ slightly from yours.

First, I think that in general Chinese do really like Americans. At least they have less hisorical hate for us than other Westerners. They love the idealized freedoms of the American West too.

Second, I think that what the Chinese generally don't like is the American government. I've found that most Chinese are perplexed that the American Government is so offensive when most Americans are agreeable. But I also think that if China were the world's only superpower the situation would be exactly the same (China would be the most offensive govt.) and I've not found any Chinese that would honestly disagree with this either.

Third, given the choice, Chinese that go to the US for school more often than not change their nationality or at least their residence. The stats in the 90's were somehere around 85%. America is more convenient, cleaner, safer and many chinese goods are available there (much more than the quantitiy of American goods in China--yes, i'm serious. I'm talking consumer items like foodstuffs not chain stores).

Fourth, I think that China and America have some striking similarities. Both are dominant powers but have fragile national egos. Both see themselves as the savior and moral leader of others. Both are are very ethnocentric and don't know nearly as much about the rest of the world as they think they do.

Last, I've had many Chinese factories tell me they would rather work with Westerners than Chinese--Westerns, they say, are generally more honest, pay on time, follow contracts and are easier to predict and negotiate with.

Just some thoughts. Thanks for the great blog!

Posted by: David Dayton | October 23, 2006 5:51 PM

hi, David,
I agree your points fully. but when i saw many chinese so called white collar/sea turtle suck up to the westerners, i feel uncomfortable, disappointed and worried.

Posted by: keanu zhang | October 24, 2006 12:48 AM

Mr. Dayton --

Thanks for checking in and thanks for the compliment. I agree with all that you say. I have heard countless times that they like working for Americans best of all (more than the Germans, French, etc.). I have also been told this by Chinese lawyer friends of mine that American companies are considered the best for whom to work.

Posted by: China Law Blog | October 24, 2006 1:09 AM

Mr. Zhang --

Thanks for checking in. I know what you are saying, yet at the same time, since Westerners sometimes fall for this and start believing they have made a new friend in one day, about whom should we be worried?

Posted by: China Law Blog | October 24, 2006 1:10 AM

China Law Blog

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