Some Quick Numbers in China

Following on the last post, here are some more interesting numbers coming out of China.Unless Madoff-style or Enron-style accounting is taught in school, I believe that “Accounting in China” should probably be taught as at least as an anthropology class in International MBA schools: this is just the way numbers are run over here—from SOE’s to NGO’s, to local govts, to private companies.Item 1.  NGO’s are not. Meaning your donation to the Sichuan earthquake victims actually went to the CCP.  Highlights here, and the original article here (h/t to China Esquire)Item 2. SOE’s are making a comeback. Contrary to popular belief, SOE’s are not a diminishing part of the Chinese economy, but rather a ever-growing presence.  In the book Capitalism with Chinese Characteristics, Huang discusses this as a mater of policy since the early ‘90’s.  In his (always good) blog Bill Dodson discusses how the tax laws, investments in strategic resources and the stimulus package in China is accelerating it too.Finally the One Child Policy. The numbers from private groups, again different than the propaganda that the central government is putting out, show that China is going to have a very different set of demographics in just 20 to 30 years.  And, as the comments point out, there are significant questions about the accuracy of the numbers as the census takers are motivated by politics and countervailing job performance standards than by collecting accurate numbers.  But even if the numbers (120-100 girl-boy ratio) are less than that (I’ve read more like 112-104) the result will be the same, just a decade later. Brubaker’s blog is another that I recommend should be regular reading—always good stuff.The reason for pointing these out is not to make China look bad but to make foreigners coming here for business for the first time (the majority of my clients) look twice (or three or four times).  My intent isn’t to bash China, but rather to point out that just because people work in glass an steel office buildings, wear (pant) suits and use cell phones and computers does not mean that they do business the same way.  I just think that it’s often times a shock for non-Chinese speaking Westerners to see McDonald’s and Starbucks and then find out that account rules are not the same and might just as well be written in cuneiform.I find the excitement about China to be significantly reduced when the rubber actually hits the road for most people.  More often than not China ventures are not as financially successful as they could be (or were expected to be), often because many coming to China don't know what they don't know about Chinese business.  Admittedly, I’m in the fixing-problems business so I only hear the horror stories, but I have to think that many problems that foreigners have in China could be managed if not avoided if more education and DD were added into the pre-order processes.Good luck.