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By Root 5522 0

with Xinhua, and Yip’s reputation for hyping CIC as he talked to different potential partners, made it difficult to get any traction. When CIC purchased equipment, company press releases called the supplier a CIC “partner.” Multinational executives who answered letters from Yip found themselves listed on brochures as “advisers.” Everybody was told a different story. He would tell Reuters that he had a deal with Dow Jones. He would tell Dow Jones that he had a deal with Reed Elsevier. He would tell the Financial Times that he had a deal with The Wall Street Journal. It didn’t work. The big media companies were all talking to one another about the Xinhua situation and Yip’s reputation preceded him. He became a comic figure. Some of us used “yip” as a verb that loosely equated with lying, as in “Are you yipping me?”

But Yip was nothing if not persistent. He quickly changed strategy again and purchased the URLs for china.com, hongkong.com, and taiwan.com and promoted himself as China’s Internet king. He renamed the company Chinadotcom and talked his way into public listings in New York and Hong Kong at the peak of the Internet bubble. He continued to hype the China dream to raise nearly three-quarters of a billion U.S. dollars from public listings for Chinadotcom and affiliates in eight months in 1999 and 2000.

In the next four years, Chinadotcom, with Yip at the helm, blew through about $500 million. When he wasn’t tending to his race-horses or socializing with fellow tycoons, Yip bounced around the world, from one idea to another, from one deal to another. In the year 2000 alone, Chinadotcom spent $190 million to purchase some fifty companies. Almost all imploded. Chinadotcom never became a serious player in the Chinese Internet, but Xinhua finally got its hands on some cash. During the initial share offerings, some $90 million were directly pocketed by Yip, Xinhua, and other shareholders. Subsequent share sales earned Xinhua another $35 million, according to an agency official. Xinhua still holds a 7 percent stake in the company.

What This Means for You

There are some aspects of our prolonged fight with Xinhua that were unusual. For example, there was no room for any real compromise between the two sides. The financial news and data business simply cannot exist if it is being censored or used to peddle propaganda. Xinhua couldn’t accept a role as a silent partner in a business that often published information that angered or upset China’s leaders. So we had a fight to the finish. If Xinhua had come to us with proposals similar to deals forced on us years earlier by the governments of Malaysia and Indonesia—state news agencies in those countries got a 5 percent revenue share from Dow Jones and Reuters—we likely would have gone along.

If a Chinese bureaucracy makes a move on your business, the best thing to do at the outset is ask yourself if there is a deal that can be done. Put yourself in the shoes of your new potential competitor. Is there a way to give them what they are seeking and still maintain a reasonable and independent business in China? If there isn’t a reasonable compromise that appears obvious—and be prepared to accept only an absolutely reasonable compromise—then prepare for battle.

The key to winning a fight with the bureaucrats is to appeal to the more confident and reasonable side of China. Carry the struggle over the heads of your bureaucratic adversaries. If your business spans the entire nation, that means to the president, premier, and other politburo members and ministers. But don’t go there for anything less than a world-class dispute. At the senior levels, the Chinese government is very focused on the larger issues, not petty pick-pocketing or the maintenance of inefficient monopolies. If you do take the fight to the highest levels, tread very carefully around issues of sovereignty or foreign domination. China is paranoid on those subjects and its extensive network of military and security forces is a formidable foe. If your problem involves a provincial or municipal agency, the local governors,