Header graphic for print
China Law Blog China Law for Business

Doing Business In China. The Policy Matters.

Posted in China Business

I spoke last year at a doing business in China conference where the keynote speaker stressed the need for companies doing business with China to adjust their China business plans to China’s Five-Year Plan. If you want to know where China is going over the next five years, read its Five-Year plan, as China has and will continue to hew closely to it. If your China business plan coincides with China’s Five-Year Plan, your likelihood of success will be considerably greater than if it does not.

The other day my friend Greg Anderson, who also just happens to be one of the most knowledgeable people around on China’s auto industry and the author of the highly acclaimed book, Designated Drivers: How China Plans to Dominate the Global Auto Industry, left the following Facebook post:

If Tesla understood the purpose of China’s green car incentives, they wouldn’t be wasting time on this futile quest. It’s all about pushing Chinese automakers to develop their own proprietary green technology. Reduction of auto emissions is only secondary.

I do not know if Greg is right about Tesla in China, but I do know that I instantly saw in that small post what has happened with so many of my law firm’s environmental clients in their quest to sell into China. When we first started this blog way back in 2006, we were really gung-ho about American companies profiting off China’s proclaimed desire to clean up the environment.  We believed that our clients that possessed the best and the cheapest clean-up products and services would thrive in China, but few of them did.

We attributed their failure to thrive mostly to the various governments in China favoring local companies due to payoffs. After seeing Greg’s post, I have to think China’s technology goals might also have been a factor, cause when doing business in China, the policy matters.

What do you think?

  • shah8

    Sooo…You Can’t Make a Good Deal With a Bad Chinese Government?

  • innerscorecard

    This dynamic is true…to an extent. If your product is good enough, and your strategy is sophisticated, you can still succeed even with some headwinds.

    The Chinese government would love to have Huawei, ZTE, and other Chinese manufacturers dominate the smartphone market. Yet Apple and Samsung continue to dominate the market and most importantly the profit share of the market, in China. Their product is just so much better than the competition that it doesn’t matter.

    It matters more at the margin.