One Billion Customers - James McGregor [82]
Don’t rely exclusively on the law in China. You will lose. Use laws and regulations to enhance political and business arguments in favor of your position.
Understand and use the fact that most Chinese government officials live in fear of being criticized for not upholding China’s interests.
Enlist your home government, relevant international organizations, and trade associations to fight for your cause. Show your adversaries who you are by who you know.
Never go toe-to-toe with the cops. They have immense power and you will always lose. Instead, go around them and find ways to disarm their arguments.
If you decide to purchase Chinese listed company stocks, beware of “hype and list” businesses.
5
Caught in the Crossfire
Government lobbying must be a key part of your China business plan, especially for technology companies that might be squeezed between hot competition and the Cold War.
AS THE WHINE OF Air Force One’s jet engines died, nearly all eyes in the crowd gathered at Beijing’s airport were on the doorway through which Richard M. Nixon would step. The president of the United States had come to Beijing on this chilly February day in 1972 on a “journey for peace,” seeking rapprochement with America’s die-hard Cold War enemy. It was an historic occasion. But one group of spectators was far more focused on the Boeing 707 that had brought Nixon to China than they were on the president himself. They were some of the top officials in China’s struggling aircraft industry and they had been invited to examine the jet while it was parked on the tarmac. They were impatient. The sooner Nixon came down the stairs to shake hands with Premier Zhou Enlai and get in the limousine, the sooner they could get aboard the sleek white aircraft.
For years China’s aviation industry had been stuck in a time warp, using primitive machinery to build rickety aircraft based on outmoded Russian technology. That was all that was available because of the West’s Cold War restrictions on technology transfer. The only break they had gotten over the years was when a Pakistan Airlines Boeing 707 crashed in western China in 1971. Chinese government engineers carefully dismantled it. Using reverse engineering techniques, they built two copies of the design that they called the Yun-10. Alas, primitive manufacturing techniques, lax quality controls, and a lack of advanced avionics resulted in a plane just as shoddy as the Russian planes China had been building for two decades.
Now they had a chance to examine the best commercial airliner that money could buy and technology could build. After all, this Boeing 707 had just brought the American president to China. He wouldn’t travel in anything less than the best. The Chinese aviation officials were impressed by the workmanship and technology. The plane’s interior was comfortable but not luxurious. But the cockpit, that was almost overwhelming! It had everything an aviator could dream of: radios, navigational equipment, and gauges that measured any parameter you could think of were all laid out in orderly clusters for the pilot, copilot, and flight engineer. Outside, the plane’s smooth skin and almost seamless fairings were evidence of the tight tolerances and precision machining that went into its construction.
Nixon’s trip was a huge success. Years of hostility were put to rest, diplomatic relations began to thaw, and trade ties were encouraged. Within weeks of the trip, China’s top leaders, acting on recommendations of their aviation engineers, ordered ten 707 airliners from Boeing, promising to pay for them with U.S. dollars, despite the country’s dearth of foreign currency reserves.
Overview
That initial order for ten aircraft set in motion a complex series of events. It marked the beginning of China’s desperate and relentless effort to repair and renew its technological and industrial base with advanced Western technology. It touched off a commercial race among the world’s aircraft manufacturers to dominate a potentially huge market. Immediately behind them