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China Business. An Open Forum. Our First And Probably Last.

Posted in China Business

Two things you have never seen during the five+ year existence of this blog. One, anyone saying how busy we are as an explanation for our not having posted. My father is a retired college professor and one of the things I remember him saying was that no professor really cares how busy a student is in his or her other classes. The same is true in the practice of law. I cannot tell one client, sorry we missed your filing deadline because we were just so busy with our more important clients. Two, an open forum where we just throw out one or more things to our readers as a stop-gap for our not writing a real post.

Well, that is about to change. I got an email the other day from an undergraduate at Indiana University and I have been feeling rather bad about my somewhat flippant response ever since. Here’s the email:

Dan,

I enjoy your blog a great deal. it’s fun learning. I am a West Coaster and finished my schooling at IU-Bloomington. I’m getting a bit of the China bug…

My questions to you:

1. If one has an idea that they want to further explore, what criteria would  you use to decide whether to manufacture (in China) vs. attempting to license an idea to a company?

2. Since you have dealt with so many smart and not-so-smart businessmen, what are the 3 biggest mistakes most business people make and 3 biggest reasons that have led to their success?

3. If you were a recent graduate and interested in China business, what areas would you delve into?

Jeff

And here was my less than enlighting response:

Jeff,

Thanks for writing.  As much as I would love to answer your excellent questions, I just do not have the time to give them the attention they deserve.  I’m not even sure I’d be that good at answering the last two and I think the answer to the first would mostly depend on what the US business wants to achieve and what capabilities it has.

Dan

So how would you have responded?

I truly do think all three of these make for excellent questions but I also think they are better suited to a businessperson rather than a lawyer, especially the last two. The legal answer to the first one is the classic, it depends. Surely someone out there can do better than I did and by doing so help poor Jeff.

Have at it, in this our first, and probably last, open forum. 

  • Marcelo

    Excelent, I’m looking forward to the replies for this post.
    By chance, I’m starting a research on this subject.

  • http://www.boundarydisputelaw.com Robert Zierman

    I would suggest that Jeff figure out exactly what products he wants to manufacture without any consideration of China initially. Then, he should plot a course to gain the additional education and technical skills surrounding those products.
    Although he might think it beneath him, a start in retail near a university that facilitates this goal might actually be a great first job. In short order, he will likely be able to demonstrate his degree of concentration and be promoted or laterally transfer to a position which would further his understanding of that product. At that time, he should approach his employer about paying for studying Chinese in the evening.
    After a couple of years, Jeff should then seek to go to China. If it works and he loves it … fantastic! If not, he still is in a position to return to the States and likely find work surrounding a product for which he has interest.
    In China, there are too many teachers who sooner or later determine to return without any marketable skills because knowing the language is simply not enough. And woe onto them upon their return, they need to start at the very bottom. Need proof? Who is going to do better (initially)? (A) An accounting major. (B) An English major. And don’t you think that most employers are going to pass over a resume that includes 2 to 5 or more years in China teaching (which is essentially code for “finding oneself”) for someone that is fresh out of school with either of those two majors?
    On the other extreme, there are plenty of non-Chinese folks in China that have great technical skills, but don’t understand the language and culture. So someone that does have both and is paid to continue to gain both is really doing well … and will do well in the future.
    It will likely be then that the opportunity to set up one’s own manufacturing base, with known and trusted Chinese partners will arise.
    Good Luck Jeff. Hope it helps!

  • Richard

    1) Like Robert Zierman said, it’s not about China. Come up with a business plan for the product first. If you can produce it China, that’s fine, but don’t limit yourself to China just because “China business” or “China manufacturing” sounds like a good idea. For many businesses and products, production in China doesn’t make sense at all.
    2) I don’t think it’s possible to answer that. The biggest mistake for one company may have been a remarkable success at another company.
    3) The current economic moment is one of vast global uncertainty. I wouldn’t put all your eggs in one basket, ie: “China business.” Perhaps consider a focus on emerging markets that combines academic study of developing economies with a strong skill-based focus in some specific aspect of business. Dan is a good example: he’s a lawyer at an international firm with a strong China practice, but the firm is not a “China law firm.”

  • Kyle Smith

    I don’t have the background to answer questions one and two, but as a fresh American graduate working in Shanghai and planning for a business career in China, I can definitely address number three. The answer to that question is a Yoda-like follow up question – what areas are you passionate about? China offers all kinds of opportunities, you need to clarify what you are interested in and then see how you can integrate that into a career in China. I definitely wouldn’t advise you to take the approach, “I want a business career in China, what area should I enter?” You should ask yourself, “I want a career in X, how can I focus that field on China?” People who take jobs over here in professions that they really don’t care about are setting themselves up for failure. Of course, recent graduates (myself included) don’t always know what we want to do for the rest of our lives, but you should have a general focus (i.e. communications / media, finance, law, government etc). Once you have that idea you can look for entry level jobs or internships, which are abundant over here.
    The most common entry level / internship positions I encountered during my job search were in the communications, media, editorial and PR fields. Unless you have a technical skill, these areas will be the easiest to access. A few of the things employers typical emphasize for candidates in these positions:
    1) A clear passion for China, which if you are reading China Law Blog you probably already have.
    2) At least some basic language skills. You don’t have to be the next Da Shan but if you can show that you have taken a language class or studied abroad here, it will go a long way toward making them think you’re committed to being in China and thus worth the investment. If your Mandarin abilities are at the professional level, all the better.
    3) Some basic background in the field for which you are applying. Things are changing over here and it’s not enough to just be a native-English speaker and know some Chinese to get a good job. Especially in the big cities on the East Coast like Shanghai and Beijing, companies can find Chinese graduates with excellent English skills who are willing to do the work for a fraction of the price and understand the local market, language and culture. You can still get entry level jobs but you have to be able to draw a connection between the requirements of the position and what you’ve done in the past.
    If you want some more specific advice on places to search for jobs in China or good companies and industries to get into at the entry level, feel free to send me an email (kylesmith12988@gmail.com). Best of luck starting your career!

  • Wendy Zhang

    I think you’re too busy and are having your readers answer the questions for you!

  • http://www.curtsms.com Natalie Curts

    Jeff’s questions are on the minds of a lot of recent graduates-especially those with a business background-but there are no easy answers; perhaps they lack a context which can lead them in a practical direction on how to apply their newly acquired knowledge in emerging markets like China.
    That being the case, I believe the single most important criteria for an educated young man or woman with questions and a curiosity like Jeff’s is to throw him or herself into the fire. If you really want to know more about doing business in China, then figure out a way to come and start doing business in China.
    You will learn the most from being here; there is no shortage of opinions on how to do business in China from businessmen who live in China. Whatever the reasons are that determine a business’s success or failure, the point is that there are more business opportunities available in China than in any developed country. Any bright young person who is willing to work hard will surely find a way to make the most of those opportunities.

  • Not an English Teacher in China

    Mr. Z – Just wondering if you have first hand knowledge that 2-5 years teaching English in China is code for “finding oneself” because you in fact did the very same thing?
    “He (Robert W. Zierman) studied two years of Mandarin Chinese at the University of Washington and continued to study Chinese full-time while he taught ESL (English as a Second Language) for a year each during the mid-90s in Taipei and Guangzhou (Canton) respectively.”
    There are a hundred ways to be lost and not even working on finding your self in China. There’s also no merit to staying home and doing what everyone else thinks is reasonable.
    Note: There are 100 very smart things you can do while at home to work with and toward China without making a 100% commitment right away. I just don’t think that demeaning answer and positioning of English teachers is worth letting stand, especially from someone who actually did the same thing!

  • http://www.foarp.blogspot.com FOARP

    I actually found my career of choice whilst I was in China, and had no idea what I was going to there before I went beyond “learn the language and find something to do”. If you want to live and work in China, do it – there will be no better time than now.
    However, please, please, please don’t be under the impression that:
    1) Speaking Chinese is a killer skill that will make you rich. N. O. My company hired me in part because I can speak Chinese, but in a much bigger part because I know how to do what they want to have done.
    2) Experience of living abroard is something that most companies are looking for. Some recruiters will like it, but my experience is that very few people think it is important, and they’re right to think so.
    3) You can (in the words of Leroy from “Curb Your Enthusiasm”) “hit it and then quit it”. Please understand that learning a language and becoming interested in a country is somewhat meaningless if it does not become a lasting commitment. This does not mean that you have to live there, but at the very least you should have some lasting interest beyond short-term economic gain.
    Anways, to the questions:
    1) Depends what you want to do.
    2) Mistakes:
    - Being unlucky.
    - Not having a decent plan.
    - Not having enough money to do what they wanted to do.
    Sucess stories:
    - Being lucky (no, really).
    - Having a good plan.
    - Budgetting to lose money during at least the first year or so.
    3) Recent graduate? Well, depends firstly what you graduated in, and secondly what you want to do. I was a physics graduate and wanted to do something involving writing – so I ended up in patenting. My best advice is to look what’s there and keep an open mind.
    However, if you really pushed me to give an answer, I’d say just one word: “Plastics”.

  • Expat In Excelcious Deo

    I think China is largely done. Its bars are full of expat managers, it’s schools full of English teachers and it’s companies full of foreign interns and marketing personnel. China, in a word, has become acceptable and isn’t the challenge it once was. That was 20 years ago. If you want challenge, opportunity and to be on the cutting edge and have a real chance of making it, you’ll need to go to a tougher emerging market like Vietnam, Indonesia, Mongolia, or India. Those are all on the way up, the only question being – as it was in China 20 years ago – can you hack it? Folk want it too easy and China is now an expat pussy destination consequently full of career competition. You want an long term expat career where you can make it, you need to go somewhere tough, and that isn’t China.

  • Expat In Excelcious Deo

    @FOARP – Some good ideas. Thanks.

  • http://www.asiahealthcareblog.com Damjan Denoble

    In 2007 when I became a freshly minted college graduate I also harbored some interest in China business. I remember asking Dan and others the same question, “What do I need to do to make it?”
    Four years later I’m still asking Dan questions and wondering what I can do to make it. The main difference is a shift in perspective brought on by the the natural evolution I’ve gone through living and sometimes struggling in the world. My spectrum of interests has narrowed from all of China to just the legal aspect of transferring healthcare and medical technology in China to American markets and vice versa.
    Even though I spend two-plus years living in Beijing, most of my increased focus has nothing to do with China, and little of it is unique to me. Instead it all comes from the typical sort of coming of age lessons that young adults are forced to learn when they are released into the wilderness, away from families and school institutions: the biggest of these for me being that you have to pick a thing to do and stick with it as early as possible, otherwise you just end up being middling to average at a few things which adds no value to anyone. By contrast, the fact that I spent a part of my post-college life in China is only important insofar as the type of questions I continue to ask still involve China.
    Therefore, if you’re interested in China business my advice is the following:
    1) Go there if you want but don’t feel you have to. If you stay active in the US over the next 1-3 years you will learn as much as you can hope to learn about being a businessman as you would if you went to Shanghai. Just make sure you’re doing something. Doing nothing will make it more likely that you end up doing nothing with your interest;
    2) Take time to honestly evaluate yourself at every step. Being an English teacher in Kunming is great, IF the experience is helping you build some sort of foundation for reaching the main goals you’ve set out for yourself, just like working at Starbucks is great for the same reasons (and better since you get health benefits). If, however, you look at your situation and see that you’re only teaching English because it makes for an easy buck to fuel your beer-laden, KTV-fueled lifestyle, then think about changing course. You won’t always be on the straight and narrow, but the goal is to keep moving in the general direction of where you want to be; and,
    3) Building a skill-set and a talent takes much longer than you probably think. Plan your goals out in increments of five-year chunks and expect your work to take a decade, rather than looking for home-runs to make you a millionaire overnight. If you had that kind of ability at this point in your life you wouldn’t be asking anyone for advice because they (we) would all be asking you.

  • DaMn

    My advice is to definitely NOT listen to “Expat In Excelcious Deo.”
    There are tremendous opportunities in China, its just getting started with innovation, its thrilling, and entire industries are being born. It’s the perfect place for intelligent people who also want to become part of something beyond business and it is certainly no walk in the park. What a joke.
    Sure…you may want to give Vietnam, Indonesia, Mongolia, or India a try. They may be the excitement you are looking for.

  • http://www.foarp.blogspot.com FOARP

    @DaMn – Like most things you can say about China, what Expat etc. say is both right and wrong – yes, China is getting a little tame, especially in cities like Shanghai and Beijing, but definitely not Gansu, Inner Mongolia, or even the remote areas of provinces like Sichuan. Each province of China is as large as a fair-sized country, and there are opportunities to be had in each and every one of them.
    I’ve met some of the guys who were in China 20 years ago and made it big – perhaps you have also. Whilst some of them are hard-core types, others were just pure charlatans taking advantage of a country in which anyone who could speak English properly was so rare that they could land sweet jobs, and some were just plain crooks. Actually, there’s plenty of these three groups around even nowadays, but the charlatans and crooks mostly (but not always) get found out before they do too much harm.
    I haven’t ever been to Mongolia, Vietnam, or India, but I’m guessing things there aren’t too different, and that there are also plenty of opportunities up for grabs there. It’s just that when I say “plenty” I mean the average grad (or even the high-flying graduate) may have to spend years looking for them, and even then may come away without any great success.

  • http://psschina.com Whit

    I realize this is a China forum, but taking the questions more generally:
    1) Whenever launching a new product, finish the planning – complete design database, patents applied for, market plan drawn up, etc. – before evaluating where/how to get it made. This should be the rule for any project, even if you were going to make it in your own factory. More ventures fail for lack of a written plan than people want to acknowledge.
    2) I’ve seen too many companies stumble because they got too comfortable and complacent. The same applies to individual careers. As far as success, the clients who really love what they do and understand their markets/clients are the ones who are most successful. They always keep innovating and learning. Also, you have to be able to do your own accounting. Even if you have a whole Accounting Department, you have to be able to crunch the numbers on your own or you are at the mercy of the green eyeshades.
    3) Given that China’s strength is manufacturing, learning how things are made can’t hurt. I am amazed by how many college graduates have no grasp of even the most basic manufacturing technologies. One area I would avoid is anything branded “green” or “sustainable”. I don’t see this consulting fad lasting long. Offering a service that results in a tangible product or concrete result will always be in demand.
    Thanks to Dan for keeping it interesting!

  • Piotr

    I know its a cliche, but do what you love and the profits will follow.

  • http://www.boundarydisputelaw.com Robert Zierman

    I stand by my comments, yet am willing to entertain an answer by ‘Not an English Teacher in China’ if presented openly and cogently.

  • http://www.santaclaritacriminalattorneys.com Joe

    Once I got over the shock of a college graduate with such poor letter-writing skills, I might encourage him to look for business models to guide him. He should research some companies that have actually thrived in their dealings with China and learn all he can about them. Other than that, maybe he should take a look at older posts. To me, the running themes of your posts seem to be being highly specific in your contracts so that there is no room for your Chinese affiliates to not deliver, making sure you abide by every technicality in Chinese law so as not to leave any part of your enterprise exposed, and make sure that all your contracts are translated into Chinese so that nobody can claim to have not understood the contract since it was in English. In short, assume that your Chinese affiliates will try and shortchange you somehow and prevent it by backing them into as tight a corner as you legally can.

  • http://www.curtsms.com Natalie Curts

    @Piotr: True

  • Ray

    These questions sound more like a research questionnaire than anything really tangible. Perhaps a Law student hard at work….
    Interesting reading however.
    Cheers,

  • James G

    @Expat In Excelcious Deo,
    People have been saying China is “done” and that there are already too many expat managers, ESL Teachers and recent graduates in China for close to a decade. They were saying that when I got off the plane 8 years ago, and yet I was still able to find a niche in China, and when I returned to the states, I was able to parlay my experience – both as a teacher and a low-level worker in the Chinese business environment – into real results beyond singing the “alphabet song” with children. There may be some jaded and “been there, done that” people who are already onto the next new thing, but most people are still impressed by those willing to try their luck in China.
    My advice: read as much of the advice as you care too, use it to make (what you believe to be) a workable plan, and follow your heart. Most young people are going to do this anyway. :-)
    New York isn’t dried up and old, despite it being “hot” for decades now, it still continues to draw them in droves. I don’t know why so many people see China as a novelty, like a nightclub everyone goes to and then in a few months they’ve moved onto the next hip place. It’s a functioning heavy-hitter with real and actionable plans for continued growth, especially in the west. If I were a recent graduate I’d definitely want to get in on the action. That’s the “foodie” approach applied to countries, always trying to find the next new thing and discovering it… it might work for restaurants but I am hesitant to recommend it for countries

  • Not an English Teacher in China

    Dear Mr. Zierman,
    Bottom line is I feel, and believe I know, self exploration is important and indeed fundamental both to life and innovation, when done properly. I have a friend and associate who has been designing a program to comprehensively meet and leverage the competing needs of self exploration and practical business development to deliver value to the market and his clients. It is a program specifically designed to run on the China platform although the principles are universal. I have asked him to give Jeff a reply here on the blog to address the issues and give Jeff a path to discovering the right solutions for him.
    In the mean time I will tell you this:
    1. I respect the effort you made to explore your self at a young age, when career is at the forefront of our life experience, while at the same time simultaneously learning and making a living. That is dignified in itself even if it is not considered career optimization.
    2. I understand the practicality of your advice with regard to the marketability of a China experience based on language and culture. The depth of these experiences for most, if not all, English teachers is not to a professional level and generally not something most companies can leverage.
    3. I agree it takes time to develop functionality in China.