China Entrepreneur《Songs of experience》

EARLY on in Juan Antonio Fernandez and Laurie Underwood's book one of the “international business pioneers” of the title recalls an incident during his first visit to China in 1976. At Beijing's Friendship Hotel—“Russian-designed drab grim grey—like a prison”—the managers had kindly laid on a disco for their distinguished guests. The festivities prove as dour as the venue not least because of a complete absence of women. But shortly after one guest—a South American—has complained the doors burst open and ten uniformed female troopers of the People's Liberation Army march in. “Hello my name is Mei Lin. Do you wish to dance with me?” barks their leader. Soon the guests and the duty-bound ladies are doing the Conga and hearts (so our teller claims) are “melting”.

This distant recollection is a poignant reminder of how much China has opened up in the intervening years. Yet despite the country's remarkable transformation it can still baffle foreign investors. For an entrepreneur planning a venture in China an excellent first step would be to read this book. Juan Antonio Fernandez a professor at the China Europe International Business School in Shanghai and Laurie Underwood (interviewed here) a journalist and China specialist have distilled the combined wisdom of 40 foreign entrepreneurs who have succeeded in China selected from a variety of industries and countries in the developed and developing world. The chapters cover starting up choosing partners getting paid hiring staff corruption negotiations daily living and much more.

The material is well-organised and clear with summaries case studies call-outs and key rules providing effective aids for the impatient reader. Particularly illuminating are the insights into the importance of guanxi—the vital network of social and business connections that help in a crisis. Common risks such as local staff stealing company secrets or moonlighting with competing businesses are effectively explained as are how to avoid bribery in a “gift-giving” culture wear down obstructive bureaucrats and deal with dodgy police. The familiar issues of expatriate life in emerging markets—increased purchasing power transient friendships and relationships and language problems—are all duly noted.

Also valuable is the material that deals with the pitfalls of business negotiations. Interviewees explain that the typically “inefficient and meandering” discussions at meetings serve an important purpose—they are aimed at building trust rather than hammering out terms. Substantive issues are often covered during breaks (one interviewee declares he took up smoking so as not to miss these vital exchanges). Chinese interlocutors do not always express their disagreement openly in order to avoid giving offence yet emotional outbursts as a negotiating ploy are common. And even when signed the contract may be seen as a mere step towards closer understanding rather than a binding deal according to frustrated operators.

Throughout the book the interviewees spice things up with lively personal anecdotes which tend to underline the “wild east” nature of the Chinese business environment at small-operator level. One particularly colourful one comes from Eric Rongley an American entrepreneur who recalls how in the process of acquiring a licence for his business he was forced to steal his computers from his own office after it had been closed by the police through the tittle-tattle of a rival and found himself racing down the street computer in hand with his trousers falling down and a security guard clinging to his arm while he screamed “this is mine!” in broken Mandarin to astonished onlookers. Such are the perils apparently of weak guanxi.

Any weaknesses in the book come not from what it contains but from what it leaves out. The heavy reliance on the experiences and opinions of its interviewees means there is a failure to deal with more complex questions such as the impact of social upheaval nationalism or consumerism on business life. Input from an economist or social scientist would have been welcome as would the perspective of Chinese themselves who after all are the main object of the book's commentary. The authors (although undoubtedly qualified to pronounce) proffer no “China theory” of their own nor derive any special insight about the country's place in the world which seems like an unnecessary limitation.

Ultimately however “China Entrepreneur” succeeds in its primary purpose—as an operational handbook for the newcomer to China. It will surely save its intended users time money and many of the frustrations suffered by those who went before them.

Source:

http://www.economist.com/business/management/displaystory.cfm?story_id=13356222&Fsrc=mgttkgnwl