China Business Issues

In China there is always a story behind the story. There’s a person behind the person. It’s never what you see on the front end. It’s partially related to cultural issues. For 5,000 years, there’s been this inside outside orientation to much of Chinese cultures, and as an outsider, you’re showing a certain view. And as an insider, you’re showing an insider view. There are various levels to being an insider and an outsider.

When you’re trying to do business with someone. Do business with a company or person, it’s important to find out where this person is from. Where a certain company is from. What is their history. How did they become who they are today. How do they get their money. Who is behind them. There’s always someone sitting behind someone, and not in a nefarious way. It’s not some talking puppet thing or shadow thing. It just is a level of complexity to Chinese business and Chinese society that is important to take into account.

So, we advise companies to never asking questions. The fourth challenge to foreign investors in China is understanding the role of the government. Obviously, Chinese government is very involved in business. It’s very interested in business, and for the past, you know, 40 years, or 30 years, has been in the process of divesting themselves to a certain extent of business.

About 15 years ago, the Chinese government made a statement that they were going to get out of the business of being in business, and they started to release a lot of state-owned firms, and you saw this wave of privitization of Chinese state-owned entities. Then a number of years later, the government came out and said, well, yes we want to divest, but we also want to maintain some control here, and we want to maintain some influence in key sectors. In the oil and gas sector. In transportation. In railway transportation. In media. And they stopped the opening of some of those.