China Law Blog

Bizcult has a post up, entitled, "Old China Hands Face Off in Knowledge Duel", highlighting the following nuggets from a podcast of James McGregor (One Billion Customers) and Tim Clissold (Mr. China):

Read the Five Year Plan. The government gives you “a diagram every five years on what they care about,” Mr. McGregor said. “This five years we’re going to develop energy and do it this way, that five years we’re going to do that. Figure out how the argument for your business at least pretends to follow that [plan].”

The joint venture is fundamentally flawed, Mr. Clissold said. If Daimler and Chrysler, and even Morgan Stanley and Dean Witter have a hard time merging, you can be sure you’ll have problems with a China partner.

Don’t be an evangelical jackass. “The thing that is tremendously important about being successful in china is accepting it for what it is,” Mr. Clissold said.

Chinese are not so mysterious, Mr. McGregor said. Ask yourself, who really is the person you’re negotiating with and what motivates them? It could be politics. It could be very personal. It’s all related to human nature.

Making money isn’t a good enough reason to be here, Mr. McGregor said. You have to contribute to the development of China if you really want to succeed.

Think small and medium-sized enterprise has it bad? Multinationals learn the hardest lessons. They often go through “three brick walls and have to start over again,” Mr. McGregor said.

I agree with all of these, but I particularly like the first three.

I don't know how many times I have heard business people complain about being treated a certain way in China by saying something along the lines of, "I just don't understand it, China seems not to want my business. Why can't I get a subsidy/break like my friend's software business?" Answer: Read the five year plan, dude. It will break out what industries China wants to encourage and what industries China wants to discourage, and and guess what, it usually means it.

My views on joint ventures are well known. For more on this, check out my posts, "China -- Damn The Joint Venture," "Beware The China Joint Venture," "Beware The China Joint Venture, But Do Not Ignore It Completely," and my Wall Street Journal article, "Joint Venture Jeopardy." Joint Ventures are a mostly dying breed when not required by Chinese law and you should be suspicious of the business consultants still pushing them as though China today is no different from China ten years ago.

"Accepting China for what it is" is critical. You can complain all you want, but you are not going to change it. If you want a successful China business, go with the flow.