This post was written by Matthew Dresden. Matthew handles China matters out of our U.S. office and this is his first post for the blog. Matthew speaks and reads Mandarin and has lived in both Beijing and in Shanghai (but is too politic to tell us which he prefers).

Here’s Matthew’s post:

There has been a spate of recent stories in the media about the large numbers of Chinese students applying to U.S. colleges who have doctored their records. A paragraph from an article in the New York Times neatly sums up the issue:

Colleges, eager to bolster their diversity and expand their international appeal, have rushed to recruit in China, where fierce competition for seats at Chinese universities and an aggressive admissions-agent industry feed a frenzy to land spots on American campuses. College officials and consultants say they are seeing widespread fabrication on applications, whether that means a personal essay written by an agent or an English proficiency score that doesn’t jibe with a student’s speaking ability. American colleges, new to the Chinese market, struggle to distinguish between good applicants and those who are too good to be true.

What’s fascinating is how Americans who never deal with China are shocked by the extent of the cheating: more than 90 percent of applications contain some kind of fabrication, according to education consultancy Zinch China. Meanwhile, Americans who regularly do business with China simply say that the other 10 percent are merely the ones who haven’t been caught.

How is this relevant to your business?

If you’re starting a business relationship in China, you should assume that 90 percent of what your Chinese counter-party tells you is false. This is not to say that 90 percent of people in China are liars, or even that 90 percent of what your Chinese counter-party tells you is actually false, but rather that you should proceed as if that is the case. It’s a simple matter of incentives. There is an extremely high probability that your Chinese partner will try to cheat you, because the chance they will get caught before you pay them is small, and even when you do find out, the chance you can do anything about it (legally or otherwise) is even smaller.

This is why we stress repeatedly on this blog that if you do business in China, you need a contract written in Chinese that is enforceable in a Chinese court. Ask yourself this: how many American companies would cheat, if there was a really, really good chance they could get away with it? A lot more than most of us might like to admit. Americans commonly use the Wild West as a metaphor for modern China; we might also do well to remember how many hucksters, swindlers, charlatans, and mountebanks roamed the American West.

The director of the international division of Beijing’s high-profile Peking University High School writes in the Chronicle of Higher Education about how U.S. colleges should interview Chinese high school students to accurately gauge their abilities:

[The interview] ought to be focused, detailed, and deliberate. Here are some examples of good interview questions that look for empathy, imagination, and resilience:

Pick a novel or a movie, and discuss the characters. Which character did you identify with? Why? Which part of the book or movie made you sad? Made you angry? Why? What experiences have you had that remind you of events in the book or movie?

Pick a memorable experience, and explain why it was so memorable. Tell the story. Explain your feelings during the experience. Why did you have these feelings? Do you know anyone either real or fictional who has had a similar experience? Did they behave the same as you did? Do you think their feelings were the same as yours?

When was the last time you were angry or sad?

What made you angry or sad? How did you get over your anger or sadness? What do you think will happen the next time you encounter the same situation?

Persist in asking “why?” Look for sincerity, for logic, and for clarity of thought.

What Jiang describes is due diligence, pure and simple and tailored to the specific situation, just as it should be. And it is precisely what many American universities have not done. As a recent report on American Public Media’s Marketplace made clear, many American universities, desperate for students who will pay full tuition, have been contracting with Chinese placement agencies to deliver students. If a student gets admitted to an American school, the placement agencies get paid the equivalent of $6,000, usually by the students’ parents; the American universities pocket the hefty tuition. Needless to say, the American universities have been shocked – shocked! – to discover that the Chinese agencies were falsifying students’ applications on a massive scale.

Employers ought to be similarly skeptical when hiring employees from China. Don’t take resumes or transcripts for granted; check references and confirm employment histories. This means contacting schools and employers in China. Most of all, it means conducting a meaningful interview.

Let’s be clear: the truth about cheating in China is considerably more complex than anything captured by a single statistic. Some bloggers (either more cynical or more realistic, depending on your perspective) take these stories as an example that “lying” simply doesn’t mean the same thing in China as it does in America, or that Chinese are amoral and have no common values. I like sweeping generalizations as much as the next guy, but this seems a bit harsh, to say the least. My personal view is that these stories have less to do with China and more to do with human nature. When the rewards are high and the consequences of getting caught are minimal, people will cheat. Heck, people will cheat even when the risks are high, as evidenced by recent front-page stories about cheating right here in America, both by students and by schools.

The admissions departments of American universities are learning a lesson that businesses dealing with China have already learned the hard way – or will soon enough. If a deal (or a person) sounds too good to be true, it (or he or she) probably is.