The China Blog

A while back, a relocation industry colleague and I were chatting and he observed that doing business in China seemed to be getting more difficult, that penetrating the market was increasingly complex and that there seemed to be more news in the papers about difficulties western companies were having doing business here.  A few weeks ago, a colleague in a different industry who’s lived in Asia for going on 20 years despaired of his several years’ efforts to build his business, citing regulatory blockages.

Last evening, a visiting American friend and I were eating at a local restaurant and one of the waiters, upon learning my friend had only been in China for 36 hours, gave a great welcome speech but also compared some of the issues extant in government-to-government relations with people-to-people relationships.  The issue in all three cases revolved around how business people from these different cultures work together… and whether they really want to.

The last year has seen trade disputes, Google’s departure, conviction of foreign executives on bribery charges, currency disputes and discussion of whether there’s favoritism shown to the Chinese export industry among other issues.  So it’s a fair question.

A few observations:  We’re seeing China shift a bit from being purely the recipient of foreign direct investment to playing a larger role in the world economy and focusing more on design and innovation and less on low-value manufacturing.  China has invested substantial sums in and made some efforts to reform and modernize its education system, employment laws, and financial systems.   And there’s even some movement toward a first-ever immigration law.

There have been changes for business people.  We’ve spent some time talking about the new Labor Contract Law.  Expatriates went through a period when obtaining business visas was challenging.  China issues rules without notice that affect issues of major importance to foreign companies.  And major Chinese companies (Huawei, ZTE, Lenovo, and Haier, among others) have started to expand outside China’s borders and will eventually become more commonly recognized in the world marketplace. 

So has there been change in China’s attitude toward foreigners?  Yes and no depending on your perspective.  Or is this a tempest in a teapot because short-term profits are affected as the country grows and develops?  On a person-to-person level foreigners, while certainly less a novelty than before, are still the beneficiaries of wonderful hospitality.  The question really should not be whether the attitude has changed or whether we (or they) are “liked.”  Changes in society here are too dynamic for something quite that simple.

To me, it all boils down to this:  At the same time China is having to ‘up its game’ if it expects to make progress in the international business sphere, foreign companies and managers are also having to ‘up their game,’ whether that means being aware of new laws, figuring out how to build the relationships to appropriately influence regulators, or how to build strong employee relationships.  More than ever, managers need to move beyond being technical specialists and toward comprehensively understanding behavior, motivation, and the relationships that make everything here work.

Worldwide ERC® President Mike Washburn made an excellent observation at the February Board of Directors meeting to the effect that companies are often confronted with windows of opportunity that open, shut, and shift, and that having the organizational capability to recognize and utilize those windows is key to an organization’s success.  The window with respect to China has definitely shifted over the years, but those who are fleet of foot, have a tough spirit and the resources to persist, can adapt to constant change, and are capable and willing to ‘up’ their management competencies will likely still be able to make it … even amidst the jaw-dropping downturns and obstacles which can appear out of nowhere.

An aside:  Summer is here with a vengeance and so I’m going to take some time off.  In my stead will be some essays from some of my graduate students which I’m sure will provide some interesting thoughts and perspectives.  See you in the fall!