Silk Road International Blog

No matter how long I’m here, this will always be one of the things that I just can’t stand. Maybe I’m just too American. Maybe it’s just that I hate negotiating the same thing over and over again, but I just hate this part of doing business in China.

Latest example is the landlord of one of our offices—she has decided that “everything in the office is hers since she rented the office to us at “such a low price.” Yea right. Never mind the fact that we have a contract that clearly states that the office was rented “empty” and that all “decorations and furnishings” are the tenant’s (my) responsibility. She wants to start negotiations from the point of “it’s all mine” and “I won’t give you your deposit back” unless we give her all the furnishings. I’m at a loss for words. It’s flat out extortion but it’s also business as usual in China.

So what to do?

Well, we hired a lawyer–Dan, I wish you guys were in Shenzhen. Then we completely stopped talking with her. Now she’s scared and giving us concessions like they were candy.

But I’m just amazed that she’s even got the guts to try to pull off something like this. She treats us, as do many factories, like we don’t know about contracts, legal proceedings and have no recourse buy to work with her on her terms—classic Chinese power play. Most threats are a show. The show is half the battle—if you can win the stage show you’ve got a great chance of getting what you want, or at least more than what you originally contracted for.

If you are ever in a situation where you are scared that you could lose what you’ve already contracted for, remember you have a contract (and it better be in English or you’re probably already dead) and China’s fledgling legal system does give you some rights and you can pursue those to their legal ends. It not too expensive to hire legal representation in China and if you have some representation chances are you will turn the tables on whomever is pressuring you—they’ll claim to have hired a lawyer, but probably have not.

In China most negotiations are never written down so it’s up to you to record everything. And I mean everything! *Side Note—Text messages can be used in court but faxes can’t.* Notes from meetings should be detailed, translated and sent to all parties—if you’re the instigator of these records then you’ve got the upper hand because you know that your Chinese antagonist will most likely not do it. Phone calls to your secretary, to the factory or whomever else, people that phone to tell you that they’ll be late or are changing something in the contract; these are the killer—you’ve got to keep track of all these changes. In addition to conversations, record that you’ve agreed to post-contract as well as what they’ve offered that you didn’t agree to. More often than not what they end up pushing in the end will turn out to be something they asked for but didn’t get in the beginning.

Make sure that you are following the law to the letter. Don’t cheat, lie or sneak you way into the country. Don’t double cross your Chinese partners and don’t play them for fools. If you expect the law to be on your side you had better be on the right side of the law yourself. It is the best feeling in the world to go into a negotiations session knowing that you have been completely honest and have the records to support your position. I’m sure its tons easier for your lawyer too.

NEVER NEVER NEVER change you contract—it’s like opening Pandora’s Box and once it’s open you’ll never get it closed again.

Lastly, wait out those putting pressure on you. Usually demands or changes are made when some party thinks they are in a position of power or thinks that you don’t have time to accommodate changes. If you are in a rush, you may be in trouble. If you are not in rush you can call their bluff.

Tags: Business by david
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This book was a great magazine—literally. This is a collection of all the articles from Business Week Magazine about Chindia from the past two years. They’ve collected the articles, added some filler to link them all together and called it a new book.

The info in the articles is interesting and the stories of individuals is just as riveting now as it was when it was first printed as semi-factual human interest stories in Business Week. But, it’s not new. It’s not in-depth coverage of any one particular aspect of Chindia and it’s frustratingly simplistic in it’s analysis and has no bibliography.

If you’ve been on the moon for the last three years, this will be a great review of popular US sentiment regarding Chindia. But I’m sure that it’s not of much value to anyone that is already in Chindia or doing research on how to best come over.

I do like the term “Chindia” though. It’s like everyone at Business Week doesn’t really know enough or care enough to distinguish between the two for the US masses. They both have a ton of people. They’re really big land masses. They’re “stealing” jobs from good honest US citizens. They’re all “foreigners.” Yup, same same. Convenient.

But of course there are differences and issues that those in the US ought to be aware of. I think that some current (2007) analysis added to the last few years of hyperbole would be nice. For example, the “large sucking south to the East is not as loud as many, including Business Week are making it out to be. Some of the latest scuttlebutt in IT in the US is that India is running low on people that can actually do what all the hype claims. China, while more prepared infrastructurally, is not only running low on people power but quality issues are hurting their rep as well. While a large number of companies are certainly moving both projects and operations to Chindia, almost as many are readjusting how much and what they send. Poor quality product, difficult communications and missed deadlines are clearly showing Chindia to be a cheaper, but not necessarily better option for everyone.

Buy this book if you want to get really excited about Chindia or if you’re a magazine aficionado and just happened to miss the least three years of Business Week. Otherwise, skip it.

Tags: Book Reviews by david
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China CEO—BOOK REVIEW

This book is for anyone that is going to a new post in China and has never been here before. It is quite broad in its coverage of issues but maybe a bit shallow in its analysis. I like the idea behind this book—talk with people in the know (CEO’s in China) and take into account the culture, the government and the logistical difficulties that are China But it also makes a couple of assumptions which I do not think are absolutely true.

First (misleading) assumption is that running a business in China is different from anywhere else in the world. China certainly has some different cultural issues that you have to get used to, but at the end of the day if you are good at what you do and you’ve hired good people and have a good process/product there is going to be only minor changes to the corporate organization from any other country.

For example a summary of the Chapter “Managing Chinese Employees summarizes the following points as keys to success: Right Compensation, Smart Recruiting, Train to Retain, Promotional Opportunities, Loss of Face, and Building Employee Relationships. How are any of these (including Loss of Face) different from the US, Brazil or Europe? There not. Some of nuances are indeed different but I continually found myself asking “how is this different than the US.” Sure they throw the word “Guanxi” around likes it’s the secret of life on the planet. But outside of mentioning the significantly different personal relationships, I found little that was detailed enough to be of real value.

Second, anyone coming to China is going to be working in a high level position in a Global Fortune 500 Company in Shanghai. I don’t know the numbers here, but I would have to guess that the bulk of foreigners in China are NOT working for huge multinationals. While a good percentage are, I’d be willing to bet less than 20% of foreigners in China work for Global Fortune 500 company—that means that the target audience for this book very very small (and the applicability to others equally discriminatory). So why aren’t the mid-sized companies and the educators and others included—why only high level CEO’s? Can the lessons from the CEO’s be extrapolated to apply to others? Sure, to some degree, but so can the lessons learned from the movie Hoosiers. This is a book that is supposed to be specifically about China and how to work here and how it’s different from anywhere else.

Despite what I see as pretty shallow look into the specifics that actually do make China different China CEO is quite a good introduction to working in China. It has on-the-ground foreign businesspeople talking about what their actual experiences in various situations have been—this is great and varied experience that can really be helpful—I just wish we got the full stories behind all the one line quotes.

I would love to have seen see a book series written on each of the ten chapters—that amount of depth would really allow for personal adaptation and application of the high-level general advice from the current volume. Hopefully more details/information are forth coming.

I agreed with most of the book, but didn’t find anything that was as practical or applicable as I had hoped as a mid-sized business owner. I would suggest that you read this book and Mr. China at the same time to really understand what a non-Chinese speaking CEO of a large company and what a mid-sized, on the ground manager have in common in China—outside of chopsticks, not much.

Tags: Book Reviews by david
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James Lilly’s book, China Hands, is a Foreigner-in-China Adventure Story to rival the spy stories of James Bond (and these stories are true!).

While there are a number of exciting stories this book isn’t just a list of adventurous jaunts, it has the real life feelings of a family living, for generations, abroad in China. And this generational storyline gives the reader insights into life in China from early in the last century, through the wars, the political turmoil, the pre-Socialism with Chinese Characteristics days and even life on both sides of the Taiwan straight. It also is written by a family man and includes the perspectives of both a businessman/government official and the accompanying family. The specifics about life in Taiwan vs. China and the details about family, rather than just professional life in China are what make this book unique.

Not many people in the world can claim the experiences that James Lilly has had—from meetings with the Presidents of both the Republic of and the People’s Republic of China to being a CIA officer in China before it was open and then a diplomat after normalizing of relations. And as much as this is a story about the life of “spy” in China this is the story of American and Chinese relations for almost all of the last 100 years. As a history of China, it’s written from an on-the-ground perspective—the real life of individual families and the surreal life of international politics at the same time.

In addition to the meetings with Deng, Reagan, and others are the dinner parties at the Lilly home, the personal issues of a foreign family living in a Chinese fishbowl, school, constant surveillance and the effects of international political decision on real life people.

This is a quick read, a captivating spy-novel with a personal touch. Only real problem is that it’s still only available in hard-cover—kind of a pain to lug around China.

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I first came to China in 1995 and spent a year in Chongqing (then in Sichuan Province) teaching English. It was probably the most interesting and difficult year in my life. I taught at a little college of about 3000 students. I’ve since been in China (and Taiwan) for most all of the last 12 years and have managed to keep in touch with only 3 students from 900 that were in my classes that year. I also read this book while traveling through Zhejiang and Jiangsu province visiting factories this past week.

With that background you can see that I was a sucker for Peter Hessler’s book “River Town.” Set in a small college just down the river from Chongqing in 1997, Peter describes exactly what I had felt, seen and recorded in my journal and on film while I was in Chongqing. The sights, the struggles, the successes, the friends, the misunderstandings, the smells, the food, the politics, the weather—he nailed it. I laughed, I cried, I remembered. I loved it. Perter Hessler not only knows about China, he knows how to write.

Now this isn’t a book about China today or a book about how great China will become in the future. It’s about living in a glass box—that’s what China was for foreigners as recently as 10 years ago. If you are doing business in the coastal cities this book will bear little resemblance to the China that you know today. But if you want to know what it was like “back in the day” this is the book for you.

This is a very romantic look at 1997 China and my experience of talking with people about China is that they typically can’t relate to the past while looking at the current development. I think that most people who read this book will probably think one of two things: either that China is still like this (people that have never been here) or that he’s off his rocker (people that only visit Shenzhen and Shanghai in the last few years). In that light, my only issue with Peter’s book is that he doesn’t balance what he experienced then with what he knows now—but maybe that wasn’t his point.

Read this book if you want to know what it was really like to experience China before it was used to the West. Great job, Peter. Thanks.

Tags: Book Reviews, Culture by david
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