One Billion Customers - James McGregor [49]
Trying to negotiate and run a business through translators exacerbated an already bad situation. Both Wadsworth and Wang mostly relied on operating employees from CICC who spoke both English and Chinese. These people had their own agendas and reasons to filter the information received by their bosses. Don’t repeat that mistake. Hire and use well-trained translators whose only job is to provide clear communications.
Jack Wadsworth retired from Morgan Stanley in 2001 and now lives in San Francisco. He views the CICC partnership as a valuable learning experience for Morgan Stanley, albeit a frustrating one. Morgan Stanley emerged with nearly a 50 percent market share for Chinese international IPO business. That made it all worthwhile.
“In hindsight, it’s miraculous that we were able to tough it out and succeed,” Wadsworth told me. “Going into this joint venture, our assessment was that it would be time-consuming and difficult, but we believed that the scale of the opportunity in the long-term would justify the commitment. And I think that judgment was absolutely spot-on. We thought China was unique at the time. The size of the market justified the commitment. The single most important factor for success is that both sides had a real interest in making it work. The Chinese wanted a template, and they wanted capital into their country. Morgan Stanley wanted access to China.”
Wang Qishan is a leading candidate to be a future Chinese premier. When the SARS epidemic broke out in 2003, the Chinese government was caught lying to the world about it. Wang was appointed mayor of Beijing, which was hardest hit, and told to clean up the mess. Once that was done, he turned his attention to organizing the 2008 Beijing Olympics.
Creating CICC was a very important career milestone for Wang. Zhu Rongji and other senior leaders considered CICC to be a significant step in Chinese economic reforms. Morgan Stanley probably would have acted differently if it had viewed Wang more as a politician with political needs and less as an intransigent business partner. Morgan Stanley could have framed initiatives and operating plans for the joint venture in terms of what China needed for economic reform and what Wang needed to further his career.
Levin Zhu is a generation younger and Western-educated, but like Wang he illustrates the political fears that guide the behavior of Chinese officials and their families. In many ways, it is a curse to be the son or daughter of a senior Chinese leader. Levin was taught from childhood to be wary of others. Before Levin was in elementary school, his father was purged as a “rightist” in Mao’s campaign to persecute liberal thinkers. The elder Zhu spent most of the next two decades in political disgrace. He didn’t emerge until the end of the Cultural Revolution in the late 1970s. In the 1980s, as economic reforms took hold, and his father moved up fast, Levin seemed extremely wary of people befriending him in order to get favors from his father. Now that he is wealthy and successful, such fears still define Levin.
He and his colleagues in the senior management of CICC have the modern version of Levin’s father’s fears. They work as hard as any investment bankers in the West and they’re well paid, but they constantly worry that if the political winds change in Beijing, they could be targeted in a political campaign that would characterize them as making millions of dollars from what is essentially privatizing state assets. “They worry about being exposed, ending up in jail for doing honest work, so they are all very secretive,” said one CICC insider to explain why CICC rejected my requests to interview Levin and other current senior CICC executives.
Wang and Levin both display the typical Chinese government viewpoint of Sino-foreign joint ventures. The Chinese government often isn’t really interested in forging genuine partnerships.