One Billion Customers - James McGregor [73]
“It’s the free flow of information, not just Reuters’s information, that China finds threatening,” Kann said in a memo quashing Telerate’s suggestion. “Thus, my general view is that we and Reuters are better off hanging together on this issue because the alternative, almost surely, is to hang separately.”
Richard and I made a pact. Our companies were fierce competitors. We admitted that we couldn’t tell each other everything, but we also promised not to lie to each other. We agreed to share information and plot common strategy to fight Xinhua. Within China, we could cooperate only behind the scenes. If foreign companies publicly band together in China to challenge the government, it can quickly trigger paranoia and insecurities left over from the 1800s, when foreign powers carved up China. It is best to work these kinds of issues behind the protection of an industry or trade association. But we had none. Instead, Richard and I would meet late at night in my home or in the quiet corner of a hotel lobby to plot strategy before and after meeting separately with Xinhua.
Within a month of the State Council directive, Dow Jones and Reuters had worked out a list of common principles that would guide our negotiations with the Chinese government. First and foremost, we knew we had to respect China’s sovereignty by acknowledging the government’s right to a “border check” on news. That simply meant that we acknowledged their right to read incoming news stories on our wires. We explicitly denied that they had any right whatsoever to change the stories or to otherwise censor them. The second most important principle, and the one that became our mantra, was that Xinhua could not be both our regulator and our competitor. Unfortunately, that is very often the case in China. What the West routinely views as a conflict of interest, the Chinese simply see as a competitive advantage. As China prepared for entry into the World Trade Organization, however, the government knew that separating regulators from business management was imperative.
Somehow, Xinhua missed that memo.
Beyond that, we stuck to basic business principles: allow the market to set prices, ensure equal market access for all—no restrictions on developing new customers and launching new products—and full protection of our intellectual property.
The Reuters lawyers were very clever. They viewed the Xinhua directive as an opportunity as much as an obstacle. Like many businesses in China at the time, we were operating under undefined legal authority. The legal philosophy in China is opposite of the United States. China has a presumption of government control, so unless something is expressly permitted by law or regulation, you can’t do it legally. In America, the presumption is one of individual freedom, so unless something is expressly restricted, the people have the right to do what they want.
There was nothing in Chinese law that said we could, or couldn’t, conduct this business in China. Operating in such gray areas is quite normal in China, but this isn’t a comfortable place to be when the government decides to target your company. So we made it a goal to get a written clause that explicitly gave us permission to operate as financial news and data providers in China.
Having a set of high principles to guide your negotiations in China is fine. They’re necessary. But it’s also necessary to pursue what our Chinese lawyer, Gong Jun, calls the “iron-ass strategy” when negotiating. The Chinese are very patient negotiators. That isn’t surprising if you know China. The Chinese people grow up enduring nonstop speeches from teachers and lengthy propaganda lectures. They can tolerate endless nonsense. Foreigners, on the other hand, often become impatient, which puts them at a disadvantage. It’s best when negotiating