One Billion Customers - James McGregor [67]
As for internal company management, your CFO must be somebody you trust completely, and you should apply transparency to your sales and procurement systems through CRM software and other technology solutions that remove power from individuals. Some of the better-managed Chinese companies shift their procurement managers every six months because they figure that is how long it takes for the sales and procurement people to develop close enough personal relations to arrange kickbacks.
The Little Red Book of Business
If you decide to sell your soul and succumb to China’s corruption, get a good price and focus on charity work in your old age.
China’s modernization is aiming at “rule by law” not the “rule of law,” so relationships and personal power reign supreme.
China is all checks and no balances. Chinese government anticorruption drives are not cynical exercises, but the effect is minimal because the overall system is almost incompatible with honesty.
Your Chinese employees and partners have a confused ethical and moral framework, the result of a society turned upside down by reform in a country led by a party that has shifted from wealth repudiation to wealth creation.
The gold rush of privatizing government industries in China is ending and officials and entrepreneurs are focused on snapping up state assets. Young people, sensing the end to easy money, may be more eager than their elders to “feast on the emperor’s grain.”
China has returned to its traditional symbiotic relationship between the merchants and mandarins. Officials clear the way for business. The businesspeople pave the way for officials to accumulate assets.
Senior party members in China seldom engage in direct corruption, preferring nepotism as the means to building family wealth. For the ruling elite, gathering family assets quietly is quietly accepted.
To help your lawyer sleep at night, adhere to “don’t ask, don’t tell.” Choose legitimate agents and consultants to obtain licenses and approvals, and seek as little information as possible about how they obtain them.
Don’t bribe. Nobody stays bought and the Chinese know it is against American law. Instead, invest in long-term, mutually beneficial relationships with customers including training, travel, and recreation opportunities.
At its core, Chinese society is all about self-interest. It is very strong on competition but very weak on cooperation.
In China, a conflict of interest is viewed as a competitive advantage.
Draw bright lines for your employees. In Chinese culture, there is an indeterminate line between a gift and a bribe.
Pay your employees sufficiently well to warrant their honesty, have them sign a code of conduct, and let them know there are real consequences for violations.
Treat your entire company as if it were the finance department, installing CRM software and other technology solutions to promote data control and transparency, removing power from individuals.
Assume your procurement department is corrupt unless proven innocent. Rotate procurement officials frequently into different products.
Move boldly to confront scandal in your company. Prosecute wrongdoers rather than pay them to go away.
Guanxi, the oft-cited Chinese word for relationships or connections, is overrated, temporary, nontransferable, and resides in the hands of the individual who has it. Never, ever put your business in the position where you are dependent on one individual for access to government officials.
Inform your suppliers that they will be eliminated from consideration if they try to bribe your employees. The suppliers appreciate being let off the hook.
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Dancing with the
Dinosaurs
Powerful bureaucratic opponents can be beat if you have China’s interests at heart. Dow Jones and