One Billion Customers - James McGregor [98]
Executives from Hughes and McDonnell Douglas told me that one lesson they learned was that technology companies doing business in China require significant investments in proactive government relations in Washington. The mission isn’t only to make friends, but to educate officials. The American bureaucracy from top to bottom—and lawmakers who rely on business support—must understand that blocking U.S. technology that is freely available from Europe or Asia undermines the global competitiveness of U.S. companies because China is such a huge market.
American technology companies operating in China must realize the vulnerability of Chinese American employees. Openly discuss the issue and how to deal with it within the company. Only through such discussions can companies develop corporate policies and contingency plans to protect their employees from political assault in the United States or manipulation by Chinese officials.
There is no doubt that Gareth Chang and tens of thousands of people like him have made great contributions to China’s development. They do so partly out of emotional ties to their homeland. They want to make China a better place, but they mostly do it to make a buck. China is one market where they feel they have a competitive advantage. The many hundreds of Chinese Americans whom I have known working in China are among the most patriotic Americans I have ever met. The attitude of new Chinese immigrants in the United States isn’t much different. They leave China for America because they believe it is a better place to learn and live and prosper. But, like overseas Chinese, when they return to China, they are often not completely trusted because they are considered tainted by their time in the West.
A final lesson is that basing your business on special deals from the Chinese government is foolhardy. The Chinese government offers special deals because you have something they want, not because they want to help build your business. Unless there are clear and competitive commercial underpinnings, you will lose, no matter what the government has promised. Cultivating relationships with Chinese officials is very important, but basing your business on those relationships is a formula for disaster. The market will always win in China. Kiss the cadres, but embrace the customer, as Boeing did.
The Little Red Book of Business
Trying to “contain” China as a national or corporate strategy is nonsense.
Technology companies that don’t make government relations and education a key component of their China business plans could find their business short-circuited by political storms.
China is moving fast and changing faster, an environment in which few Western companies are structured to compete. Your China business model must be configured for constant changes in every aspect of business and politics.
Never use the Chinese market as a last resort to save your business. The Chinese can smell desperation and will take advantage of your weakness.
Exploit your advantage in China. A country that practices information and thought control stifles innovation. Transfer what knowledge you must, but hold back the rest.
If the Chinese have a strategic objective to obtain a certain technology, they will get it from somewhere. The only solution is to innovate rapidly when Chinese companies use your technology to compete against you.
Cultivate relationships with Chinese officials, but don’t base your business on those relationships or special deals from the government. Kiss the cadres, but embrace the customer.
Don’t bring home the Chinese way of going around rules to get things done. Follow explicitly all of the rules of your government. Taking shortcuts will come back to haunt you.
If your company or industry gets caught up in the middle of a political battle in Washington concerning China—or a dispute between Washington and Beijing—duck, shut up, and call your