One Billion Customers - James McGregor [68]
THIS MEANS WAR!
To be honest, my initial reaction to the new decree from the Chinese propaganda agency Xinhua wasn’t that violent. The first paragraph merely indicated that Xinhua would “supervise foreign wire services…to safeguard state sovereignty.”
No problem, I thought. We can work around that. All foreign businesses in China fall under the nominal supervision of one or another Chinese government entity.
But the next paragraph was more ominous. “Government departments at all levels, enterprises, and institutions…are not allowed to purchase economic information directly from foreign wire services…”
That can’t be right. That would mean we would lose all of our customers.
Then it got worse. Xinhua “will examine and approve…economic information to be released in China.”
That’s censorship! What sense does that make for financial and business information used by financial market traders?
“Xinhua will determine subscription rates.”
Wait. They’re setting prices? No way!
Then the final straw: Foreign news organizations had three months to register with Xinhua or “be punished in accordance with the law.”
I threw the directive onto my desk and looked out the window of my Beijing office at the cracked and filthy cement wall fifteen feet away that was my only view. It was January 16, 1996.
“This is going to be a real shitty year,” I told the wall.
Xinhua was pulling a classic Chinese government power grab. It wanted to force news agencies—specifically financial information providers, such as my company, Dow Jones, and our biggest competitor, the British news agency Reuters—to teach Xinhua our business, hand over our customers and technology, and then stand aside as it pocketed the profits from the $35 million financial news and data businesses that we had created from scratch.
I had seen similar situations when I was The Wall Street Journal’s China bureau chief. Every so often a Chinese bureaucratic dinosaur would emerge from its regulatory swamp to stomp on a successful foreign or private Chinese enterprise and claim the business territory for itself. As a reporter, I enjoyed the drama of these battles. They were grist for great stories about what made China tick. But now I was the chief executive of Dow Jones’s businesses in China. It was my head under the fossil’s foot and my company’s business in China was in mortal danger. This would be a fight for life.
Overview
China can be a scary place to do business. The legal concepts that govern Western business practices—the sanctity of contracts, the separation of regulators and competitors, and the protection of intellectual property, for example—simply don’t exist in any dependable way in China. Despite significant economic reforms that have partially opened China’s economy to foreign companies, the government and the Communist party remain all-powerful. Confronted by an order from the Chinese government, the normal businessperson’s instinct is to accommodate and avoid conflict. It’s difficult not to. The directives of the Chinese Communist government today still often carry the same forbidding tenor as the edicts of the Chinese emperors, whose orders ended with the phrase “tremble and obey.”
Yet conditions for doing business in China are improving as the nation becomes more exposed to global business practices. Senior government officials, many of whom are well-versed in global economics and politics, continue to order the necessary adjustments for China to become an increasingly powerful and important player in the world economy.
I learned a lot of lessons in our two-year pitched battle against the Xinhua news agency and its shadowy ally, the powerful Communist Party Propaganda Department. I learned that if your business is doing what is right for China, you can win a battle against the most entrenched and ruthless government foes. You have to be extremely tough, persistent, and patient—and very creative in working both the Chinese and Western political systems. I and my collaborators from Dow