Yea, but I'm not a Billion Dollar Global Giant

While the Google controversy is truly fascinating, unless it’s directly impacting your ability to do business it really doesn’t matter exactly why Google says they might be leaving China.  For most people it doesn’t even matter if they leave China or not.  (For the rest of us in China, the new uber-slow, ultra-filtered internet is almost worthless, and probably not getting better any time soon—time to move the Shenzhen office to Shangshui.)One thing that most people should take from the Google mess is this: no matter how big you are, no matter how much money you throw at China, no matter how many other countries you’ve been successful in already, no matter if you hire local or foreign or both, the bottom line is that China is still a different beast. My friend from Wal-Mart and I have sat around and told the same stories about working with factories in China. Exact same problems, just different dollar amounts.  Your size doesn't matter when dealing with China--no matter who you are.  The pool is just so big here that most foreign companies are nothing here.China ranks first in the world in exports, first in car sales, third in GDP, first in people, first in internet users and the list goes on and on (and will continue to grow--better get used to it).  But it ranks 140 out of 183 in terms of freedom. Even if you don’t like this particular survey or the rankings (certainly a very hawkish source), the fact is that China is wildly different than what most westerners are used to.  It’s much more like the ASEAN countries—just lots bigger (than all of them put together).And that’s the real trouble.  If you’re coming from Vietnam to China, or vise versa, you’ve probably got some experience that crosses over very well.  If you’re coming from Perth or Detroit or Liverpool, probably no so much.The fact that HK, Singapore, Japan, Macao, Taiwan, South Korea, Malaysia and Thailand are ahead of China in the rankings is not all that surprising—they all had a 30 year head start and more international exposure.  But that Cambodia and Lao are also ahead and openly repressive and corrupt Vietnam is about the same says clearly that economic development and engagement do NOT mean more freedom—business or otherwise.Imagethief, in his discussion on Google last week, highlights the fact that there are specifically predetermined ways companies are expected to work with China.  Though speaking specifically to public communications the analysis is applicable to other areas of work in China as well.

Google has taken the China corporate communications playbook, wrapped it in oily rags, doused it in gasoline and dropped a lit match on it. In China, foreign companies tend to be deferential to the authorities to the point of obsequiousness, in a way that you would almost certainly never encounter in the United States or Europe. Scan any foreign company's China press releases and count the number of times you see the phrase, "commitment to China". Demonstrating "alignment with the Chinese government's agenda" is an accepted tenet of corporate positioning and corporate social responsibility work in China. This is testament to the degree of direct power that the Chinese authorities wield over the fortunes of foreign businesses in China. Even when foreign companies are in dispute with the Chinese government they tend to offer criticism obliquely as long as they have a business stake or operations in the country. Note, for example, the scrupulous diplomacy of Rio Tinto's communications concerning the detention of its employees last summer, a far more serious situation than anything Google has encountered (although also with far more money at stake).

To me the key part for small business owners here is that there is a play book at all--and the people spending big dollars all know it.  This is something that small companies typically learn the hard way, over years of (painful) involvement on the ground.Further to that end is an article from the Guardian UK.  The Chinese internet (and country in general), it says, is more like its own intranet than a hub in the global community.  Despite how “small” the world is today, China is still very much an island unto itself.  Like the (legitimate) criticisms aimed at the US for being too culturally insulated (physically isolated), China is the same, only with more people, less overall education, fewer if any emigrants and a more restrictive government.I’ve been saying this for years—China is unique.  Business is business, I know.  But the context within which business is conducted, personal relationships and communications here are all different from anything most have ever worked with in the West before.But "different" doesn't mean threat, although it may be threatening.  In the larger picture, there are generally two theories bantered about by China watchers, the China threat and the engagement philosophy.  James Mann’s book discusses why both have failed and if there is a third path.Anyone you talk to in China thinks that the rest of the world (especially many politicians the US and the popular media) sees China as a threat.  I agree that this is the most popular approach for many in the US (media)—they need a villain in their myopic, simplistic, sound-bite driven world of ratings.  “China is good” doesn’t have nearly the impact as "Red Hoard" or "Chicoms" does.But even in the midst of this Google mess, I don’t think that China is an inherent threat.   I do believe that China, for purely short-term domestic political goals thinks that the rest of the world is a threat to China (or at least wants the Chinese populace to think that the rest of the world see China as a threat).  Because the Chinese Government is scared (of the rest of the world or of losing domestic power) it then acts like a threat—a threat because it’s actions are based on an aggressive fearful position that it’s being attacked.China thinks that the rest of the world acts just like they do—the specifics in the response to Google and the attacks on the Whitehouse, for example, are exactly what is going on here.  China assumes that Govt communication issues/companies in the US are tied to and part of the US national interests and that the corporations actions are directed by the govt—just like they are in China.  Of course they see everyone else acting like they act.  We all do this. (And just because they are paranoid doesn't mean they aren't right.)But like the strict law defense that we’ve heard from China over the years (“Our laws are more strict than those in the US!”  Yea, but you have no enforcement, so the laws are often meaningless.), just because China is honestly acting in their own best interest does not mean that they are not, at the same time and by those very same actions, threatening others.  Just because you’re not an overt threat does not mean that you are not threatening.For precisely this reason, China is not a global partner or good neighbor.  Could they be?  Yes.  Will they?  I doubt it; only because they’ve determined that it’s not in their best interests to do so.

Side Note: And for those who are offended at this, this blog isn’t about “yea, well the US sucks too!”  I really don’t care what you think about the US.  This is about the question “will China act like the super power that it wants to be” (and claims internally that it already is).  You want to complain about the US?  Go get in line somewhere else.And I'm convinced that foreigners are trying to use some kind of reverse psychology on China--convince them that by our mass stupidity they really are the best in the world.  These, for example, are defenses of China's GFW: "We have a very controlling govt in Australia too."  "I guess that the people of China really do want to decide their own direction with the internet."  So by this same logic, if we have human rights violations in Australia, then it's OK to have them in China too?  How about other crimes?  How about just crappy quality?  That OK too?  And which part of "the people of China" do you think are "deciding" anything about "their" internet or anything else for that matter?  Sorry.  I'm finished.

This Google mess bring to light specifically how “business” can very quickly become nationalized and politicized.  Just like Rio Tinto last year.  What is considered “State’s interests” is up to anyone’s guess.  Like so much of the content that is blocked on the Chinese internet or the people that are stopped at the border crossings—it’s random, political, emotional and event (rather than policy) driven.If you don’t think that this affects you, Mr-I’m-here-doing-business-on-a-tourist-visa, then you just wait for the combination of the tightening economy and this year’s census.One of the best lines that I’ve ever read about doing business is form Jame McGregor’s One Billion Customers: “Most business people come to China with way too much trust.”I strongly suggest that you read James Mann’s book, The China Fantasy.  Excerpts from my review:

“But if you wonder why economic change in China hasn’t lead to political change or why no one seems to mind that every US president has taken a hard line on China to get elected but then reversed course in office then you should read James Mann's The China Fantasy: Why Capitalism will not bring Democracy to China.”“This is not a rah-rah China book and it’s not a China disaster book either—it’s a middle ground, a third path.  Mann says that it’s far more likely for China to continue to grow economically and remain repressive politically than any other option.  The question is: can businesspeople and politicians and consumers in the west live with that.”