China Law Blog

Paul Denlinger (of China Vortex) just did a guest review of the book, Managing the Dragon, on Lost Loawai, which book I glowingly reviewed last week, in my post, "Managing The Dragon. The Best, Jerry. The Best." Paul provides some excellent insights on the book that are very much applicable to doing business in China today.

Paul sets out the following list of things that "come through in the book":

● He [the book's author, Jack Perkowski] was keenly aware that there were different ways to do things in China, and he did not try to force down only one vision “because that’s the way that it’s done in America”

● He did not try to negotiate from a superior position, but instead negotiated as an equal partner committed to China’s long-term growth.

● He has a curious mind and is always willing to learn.

● He and his family now live happily in China, which in the eyes of the Chinese government and many Chinese, shows his commitment to the country’s development.

● He was keenly aware that there were different ways to do things in China, and he did not try to force down only one vision “because that’s the way that it’s done in America.”

Yes, yes, yes, yes, and yes. One of the things I have learned in my many years of international law practice is that those who succeed internationally typically have a certain mentality. If I had to pick one word to describe those who succeed (as opposed to those who do not), that word would be curiosity. Those who succeed are more curious than judgmental. They want to know how things are done in the foreign country and they want to fully understand it. Only then do they start analyzing and judging. The unsuccessful businessperson instantly deems the foreign way inferior before really taking it all in.

Paul rightly states that "Perkowski shows that China is really not that mysterious, but it takes time to learn and understand how it works. If one is willing to make that investment, then one day, you will get a good return on your investment." Paul then issues a few relevant caveats against expropriating Perkowski's strategies wholesale:

If there is only one warning I would make, it is that many of the strategies and scenarios Perkowski outlines work well with highly capitalized manufacturing businesses. He had an advantage in dealing with Chinese officials because he had $150 million to invest. For smaller investors say, in the service sector, it would be quite different. Also, after joining the WTO in 2001, Chinese regulations have opened up considerably for non-Chinese investors. As for joint ventures, very few companies consider them anymore, so they are mostly off the table.

Yes again. Paul is right to note how Perkowski had enough capital to garner the assistance of Chinese officials and many small companies going into China simply do not. Paul is also right to note how very few companies consider joint venturing today, simply because WTO has made it so that entity structure is required much less often. However, I will note that Perkowski himself counseled against joint ventures in most situations.

UPDATE: ThinkChina just came out with a very positive review of the book as well.