Smaller Overseas Entrepreneurs Find China Too Frustrating(nytimes.com)
nytimes.com
Smaller Overseas Entrepreneurs Find China Too Frustrating
http://www.nytimes.com/2015/11/04/business/smaller-overseas-entrepreneurs-find-china-too-frustrating.html
50 comments
Speaking from my experiences in Shenzhen, so may be different in other cities (then again, Shenzhen is just next to Hong Kong, so it may be even worse up north) - and this feeds into your 1), 2) and 5):
Nobody here speaks English.
And I don't mean it like in typical Western way of "frankly, you must see that my language skills are indeed not suitably developed for this conversation" not speaking English. They'll roll their eyes if you say "hello" or "thank you" to them; you can sometimes get to be translated by a 9 years old (apparently they have English in schools now, or something - but I'm not sure). Even in tech companies people barely know any English - they know the work-related vocabulary, but forget talking about anything other than the job.
So, learn their language or find someone who you trust who can speak it.
Nobody here speaks English.
And I don't mean it like in typical Western way of "frankly, you must see that my language skills are indeed not suitably developed for this conversation" not speaking English. They'll roll their eyes if you say "hello" or "thank you" to them; you can sometimes get to be translated by a 9 years old (apparently they have English in schools now, or something - but I'm not sure). Even in tech companies people barely know any English - they know the work-related vocabulary, but forget talking about anything other than the job.
So, learn their language or find someone who you trust who can speak it.
》 So, learn their language or find someone who you trust who can speak it.
I agree on this point, but at a cultural, not language level. It's important to understand the personal goals and challenges of employees, wherever in the world, and sometimes they're quite different.
On English in schools:
China's high school qualification requires a 2nd language, which contributes 150 points to the total score (750), at the same level as Maths and Chinese (it then gets a bit complex depending on city and stream, but around 10 subjects are usually studied in a comprehensive school). It is required to pass in order to get a high school graduation certificate.
Which is why the 9 year old can translate something.
The thing is, it's not based on speaking. It's rote memorisation of grammar rules. And hated, as there's little practical application.
On cross-cultural communication and hiring:
And foreigners often just don't get that, resulting in patronising slowing down of speaking but absolutely no change/simplification of vocabulary. Or just no adaptation. Hence the eye-rolling.
I'm in the Northeast, and it is indeed a challenge getting free-flowing conversation going with someone based on their selection itself based on paper qualifications. But it is a myth that English is a problem for the right people. Just interview for it.
I agree on this point, but at a cultural, not language level. It's important to understand the personal goals and challenges of employees, wherever in the world, and sometimes they're quite different.
On English in schools:
China's high school qualification requires a 2nd language, which contributes 150 points to the total score (750), at the same level as Maths and Chinese (it then gets a bit complex depending on city and stream, but around 10 subjects are usually studied in a comprehensive school). It is required to pass in order to get a high school graduation certificate.
Which is why the 9 year old can translate something.
The thing is, it's not based on speaking. It's rote memorisation of grammar rules. And hated, as there's little practical application.
On cross-cultural communication and hiring:
And foreigners often just don't get that, resulting in patronising slowing down of speaking but absolutely no change/simplification of vocabulary. Or just no adaptation. Hence the eye-rolling.
I'm in the Northeast, and it is indeed a challenge getting free-flowing conversation going with someone based on their selection itself based on paper qualifications. But it is a myth that English is a problem for the right people. Just interview for it.
I wonder under what US non immigrant visa category a foreigner can come into the US and open a business and work as an owner/manager?
http://travel.state.gov/content/visas/en/general/all-visa-ca...
For example the requirement for B-1 (business visa) makes it clear that you are supposed to stay temporarily and not here to work:
"For example, additional requested documents may include evidence of:
The purpose of your trip; Your intent to depart the United States after your trip; and/or Your ability to pay all costs of the trip. Evidence of your employment and/or your family ties may be sufficient to show the purpose of your trip and your intent to return to your home country. " http://travel.state.gov/content/visas/en/visit/visitor.html
For example the requirement for B-1 (business visa) makes it clear that you are supposed to stay temporarily and not here to work:
"For example, additional requested documents may include evidence of:
The purpose of your trip; Your intent to depart the United States after your trip; and/or Your ability to pay all costs of the trip. Evidence of your employment and/or your family ties may be sufficient to show the purpose of your trip and your intent to return to your home country. " http://travel.state.gov/content/visas/en/visit/visitor.html
Employees will attempt to steal IP and copy the business.
This sounds a lot like the unfounded "don't tell anyone your idea, it might be stolen!" fear in Silicon Valley. If you are relying on security through obscurity to protect your business' viability, you're doing it wrong.
You need locals to handle staff. You're just a foreigner to be taken advantage of.
In my experience if you speak basic Chinese, personally hire and manage employees and pay and treat them fairly and offer income security, they will see you working hard and personally work hard and be extremely loyal to you, especially if you offer new skills and challenges.
The great firewall can be a bastard and your best with infrastructure inside the country and local knowledge.
Yes, domestic infrastructure is usually necessary due to poor international reliability and speed, but that's hardly an insurmountable or troublesome issue.
Chinese will often find a way to get something done with horribly inefficient routes and deals to the goal. Don't stress trying to make it efficient, this is China.
China can also be amazingly efficient. Look at automation in electronics supply chains, dirt cheap national next-day couriers, a relatively inexpensive national culture of 'book it the day you fly' travel, and often free international financial transfer to Chinese banks in foreign locations. Compare sea-freight, Fedex, rent-seeking travel suppliers, and the pain that is SWIFT. Not to mention Taobao versus driving to the mall, e-bikes versus cars, or permanently open restaurants everywhere! (Not to mention completing divorce proceedings for 8元 = USD$1.50!)
Dont expect your JV partner to work in the companies best interest.
Self-interest is normal in business anywhere. Trust and good partners are hard to find.
This sounds a lot like the unfounded "don't tell anyone your idea, it might be stolen!" fear in Silicon Valley. If you are relying on security through obscurity to protect your business' viability, you're doing it wrong.
You need locals to handle staff. You're just a foreigner to be taken advantage of.
In my experience if you speak basic Chinese, personally hire and manage employees and pay and treat them fairly and offer income security, they will see you working hard and personally work hard and be extremely loyal to you, especially if you offer new skills and challenges.
The great firewall can be a bastard and your best with infrastructure inside the country and local knowledge.
Yes, domestic infrastructure is usually necessary due to poor international reliability and speed, but that's hardly an insurmountable or troublesome issue.
Chinese will often find a way to get something done with horribly inefficient routes and deals to the goal. Don't stress trying to make it efficient, this is China.
China can also be amazingly efficient. Look at automation in electronics supply chains, dirt cheap national next-day couriers, a relatively inexpensive national culture of 'book it the day you fly' travel, and often free international financial transfer to Chinese banks in foreign locations. Compare sea-freight, Fedex, rent-seeking travel suppliers, and the pain that is SWIFT. Not to mention Taobao versus driving to the mall, e-bikes versus cars, or permanently open restaurants everywhere! (Not to mention completing divorce proceedings for 8元 = USD$1.50!)
Dont expect your JV partner to work in the companies best interest.
Self-interest is normal in business anywhere. Trust and good partners are hard to find.
>> Employees will attempt to steal IP and copy the business.
> This sounds a lot like the unfounded "don't tell anyone your idea, it might be stolen!" fear in Silicon Valley.
Its much different. Mechanical drawings, materials processes, and electrical designs that might have taken thousands of man-hours to develop, test, and refine are actually valuable, unlike "this great app idea I came up with in the shower."
> If you are relying on security through obscurity to protect your business' viability, you're doing it wrong.
Security through obscurity refers to computer security processes. "Business by obscurity" is the industry standard, unless you think Apple, Microsoft, Coca Cola, and Wall Street traders are doing it wrong.
> This sounds a lot like the unfounded "don't tell anyone your idea, it might be stolen!" fear in Silicon Valley.
Its much different. Mechanical drawings, materials processes, and electrical designs that might have taken thousands of man-hours to develop, test, and refine are actually valuable, unlike "this great app idea I came up with in the shower."
> If you are relying on security through obscurity to protect your business' viability, you're doing it wrong.
Security through obscurity refers to computer security processes. "Business by obscurity" is the industry standard, unless you think Apple, Microsoft, Coca Cola, and Wall Street traders are doing it wrong.
Mechanical drawings, materials processes, and electrical designs that might have taken thousands of man-hours to develop, test, and refine are actually valuable
Sure, but even these things are not valuable unless you can actually use them to start a successful rival business within a reasonable amount of time. In other words, if there are 10 idle factories tooled to copy your product for the same price or less and your only security is "nobody else has produced the same ballpark product yet" then you are walking on thin ice (even without internal bad actors), since market demand, reverse engineering and technological change will ensure your current sales run is short-lived. This was my point. Technology businesses often need a combination of reasonable speed product evolution, good client/partner relationships, adequate capital and good name and legal standing to effect a greater sense of business security. A single rogue employee is unlikely to have all of these, and thus appeal to clients.
To look at it another way, if your perspective of evil rogue employees duplicating products was correct, how do you think https://en.wikipedia.org/wiki/YKK_Group survive? There's no crown jewels to walk away with, and there is significant anti-Japanese sentiment from the Chinese government.
Security through obscurity refers to computer security processes
Much knowledge is transferable between different types of complex systems... apologies for not appealing your terminological preference.
Sure, but even these things are not valuable unless you can actually use them to start a successful rival business within a reasonable amount of time. In other words, if there are 10 idle factories tooled to copy your product for the same price or less and your only security is "nobody else has produced the same ballpark product yet" then you are walking on thin ice (even without internal bad actors), since market demand, reverse engineering and technological change will ensure your current sales run is short-lived. This was my point. Technology businesses often need a combination of reasonable speed product evolution, good client/partner relationships, adequate capital and good name and legal standing to effect a greater sense of business security. A single rogue employee is unlikely to have all of these, and thus appeal to clients.
To look at it another way, if your perspective of evil rogue employees duplicating products was correct, how do you think https://en.wikipedia.org/wiki/YKK_Group survive? There's no crown jewels to walk away with, and there is significant anti-Japanese sentiment from the Chinese government.
Security through obscurity refers to computer security processes
Much knowledge is transferable between different types of complex systems... apologies for not appealing your terminological preference.
I think this is missing the forest for the trees. It is totally fine to tell people in China your idea. But the point is, your local employees might steal the execution as well. That is, they'll steal blueprints, designs, code. They'll poach other employees. They'll take with them knowledge of your suppliers, your buyers, your customers. And so on.
In SV the common wisdom is that it's fine to tell people your ideas. But nobody is suggesting you give out your code or your blueprints and designs, and put up a spreadsheet on your website of the contact info for all your suppliers and buyers, and all your customer data.
In SV the common wisdom is that it's fine to tell people your ideas. But nobody is suggesting you give out your code or your blueprints and designs, and put up a spreadsheet on your website of the contact info for all your suppliers and buyers, and all your customer data.
Where did you get the idea "Evil Chinese want to steal all your goodies"? I am sitting here on the ground in China with actual experience getting things done, and you are someplace else making some ridiculous hand-waving assertions about the character of 1.4 billion people you've never met, and I am getting downvoted ridiculously. Thank god I don't live in the US: the arrogance, introversion and ignorance is absurd.
I was restating / clarifying what the person you were replying to was saying. I think I was overly dismissive (can't edit my comment now), but my response was more in response to my perception that you were being overly dismissive of the parent's ideas ("This sounds a lot like the unfounded", "Sure, but even these things are not valuable", etc.)
Let's say you are making a computer game. You've hired a team of 10 people. That team will work for you until you have a finished game, and then copy all of the source code, assets, etc and go sell the same game you just paid them to make. And it would be the majority of the staff. Maybe they'll swap out a name and few art assets to make it 'different'. And you can do shit all about it in china.
This story came from a coworker who worked in china trying to make a games business there for a year. I don't know if it was him or someone he knew.
This story came from a coworker who worked in china trying to make a games business there for a year. I don't know if it was him or someone he knew.
If you managed the staff differently, nobody would have a complete enough view of the system to walk away with anything functional. This is how they do it in the defense industry, and it's fair management policy in unknown environments with unknown staff. There is a saying "trust is the availability of effective recourse"... if you have none, act accordingly.
That is exactly how they deal with that. They make them use offline non-admin computers with all the ports burnt off. If they need to look something up, then only a few trusted people can go to the 'internet' computer, where everything is recorded. For good measure, the offline employees are recorded too.
But it's also incredibly inefficient compared to the average 10 person game studio. In the USA, nobody has to do that to make a computer game.
You also missed the part of %80 of the staff walking away to start their own venture.
But it's also incredibly inefficient compared to the average 10 person game studio. In the USA, nobody has to do that to make a computer game.
You also missed the part of %80 of the staff walking away to start their own venture.
I bought a cat exercise wheel off kickstarter. There were a lot of problems shipping the product, but eventually they shipped. The fascinating part is explanations given by the company. They said they paid 50K+ for a master injection mold which was tested extensively and shipped over seas. The parts that were shipped back didn't quite have the tolerances they were expecting and the wheels didn't fit together very well.
It turns out the supplier they were working with in China cloned their product and were selling similar cat exercise wheels in China. A second mold was made and used to ship parts back to the US, and that mold was not made to the same quality as the first. At least, that's their story.
It turns out the supplier they were working with in China cloned their product and were selling similar cat exercise wheels in China. A second mold was made and used to ship parts back to the US, and that mold was not made to the same quality as the first. At least, that's their story.
>Yes, domestic infrastructure is usually necessary due to poor international reliability and speed
Real funny how that international reliability and speed go way up when I have a proxy on. It's almost as if foreign websites are throttled cough cough
Real funny how that international reliability and speed go way up when I have a proxy on. It's almost as if foreign websites are throttled cough cough
> > Employees will attempt to steal IP and copy the business.
> This sounds a lot like the unfounded "don't tell anyone your idea, it might be stolen!" fear in Silicon Valley. If you are relying on security through obscurity to protect your business' viability, you're doing it wrong.
This is completely different. An idea itself doesn't have a lot of value without the business plan and capital to make it happen. The SV narrative is ridiculous because it has people asking for NDAs to tell you about their idea that hasn't even been incorporated yet.
What this person is referring to is the fact that employees and partner companies will take source code, blueprints and other confidential documents and attempt to sell it off or directly start competition. Your secret server sauce could show up at another company with source code, documentation, comments and everything. Many times they'll even use your logos and deliver a lesser product based on your brand name.
Flash memory is a good indicator of this - many chinese manufacturing companies have staff running off-hours manufacturing or pocketing wares that didn't pass QA for later sales. Microcontrollers also deal with this - there are several popular chips (like the FTDI usb<->serial interface chips) that have cheap clones made. Same with basic electronics - think back to all the replacement cables and laptop adapters you've seen with shortcuts taken in the components. There is simply no legal protection against this, and no legal recourse when it's a full company or a former staff member that does it. Especially if your partner is the nephew of a local government official. You wouldn't think it was possible, but corruption is actually worse over there.
This sort of thing happened a lot earlier in US history before corporate and industrial espionage became a thing you could legally sue over. There's actually a sort of industry built around sharing NDA'd spec sheets and documentation over there. Stealing IP is a fact of life. And you can nearly guarantee that the person who does it has a better stable of local contacts than you do.
We're also ignoring the fact that you can't even promise that the work from partner companies meets contractual obligations. Many western companies had manufacturing deals with Chinese electronics manufacturers who delivered inferior (or virus-infected) products. The Chinese milk scandal of 2008 is another sobering story of corruption covering multiple levels. Despite hundreds of thousands of victims, they just tried to ignore it and then buy their way out of it, initially.
> > You need locals to handle staff. You're just a foreigner to be taken advantage of.
> In my experience if you speak basic Chinese, personally hire and manage employees and pay and treat them fairly and offer income security, they will see you working hard and personally work hard and be extremely loyal to you, especially if you offer new skills and challenges.
With some industries, yes. Others no. There's some cultural differences that can cause a lot of friction. Public reputation (face) means a lot to people. But it's more important that others think you're honest than actually being honest. If a person with a strong reputation starts moving against you, in many cases locals and officials will side with them against you in order to curry favor. Favor trading is actually very important when doing major business over there.
It's a market that has a lot of opportunities, but the environment is so different that most attempts at an entrance just end up being swallowed up. Any attempts at redress can easily die an insignificant death mired in bureaucracy.
> This sounds a lot like the unfounded "don't tell anyone your idea, it might be stolen!" fear in Silicon Valley. If you are relying on security through obscurity to protect your business' viability, you're doing it wrong.
This is completely different. An idea itself doesn't have a lot of value without the business plan and capital to make it happen. The SV narrative is ridiculous because it has people asking for NDAs to tell you about their idea that hasn't even been incorporated yet.
What this person is referring to is the fact that employees and partner companies will take source code, blueprints and other confidential documents and attempt to sell it off or directly start competition. Your secret server sauce could show up at another company with source code, documentation, comments and everything. Many times they'll even use your logos and deliver a lesser product based on your brand name.
Flash memory is a good indicator of this - many chinese manufacturing companies have staff running off-hours manufacturing or pocketing wares that didn't pass QA for later sales. Microcontrollers also deal with this - there are several popular chips (like the FTDI usb<->serial interface chips) that have cheap clones made. Same with basic electronics - think back to all the replacement cables and laptop adapters you've seen with shortcuts taken in the components. There is simply no legal protection against this, and no legal recourse when it's a full company or a former staff member that does it. Especially if your partner is the nephew of a local government official. You wouldn't think it was possible, but corruption is actually worse over there.
This sort of thing happened a lot earlier in US history before corporate and industrial espionage became a thing you could legally sue over. There's actually a sort of industry built around sharing NDA'd spec sheets and documentation over there. Stealing IP is a fact of life. And you can nearly guarantee that the person who does it has a better stable of local contacts than you do.
We're also ignoring the fact that you can't even promise that the work from partner companies meets contractual obligations. Many western companies had manufacturing deals with Chinese electronics manufacturers who delivered inferior (or virus-infected) products. The Chinese milk scandal of 2008 is another sobering story of corruption covering multiple levels. Despite hundreds of thousands of victims, they just tried to ignore it and then buy their way out of it, initially.
> > You need locals to handle staff. You're just a foreigner to be taken advantage of.
> In my experience if you speak basic Chinese, personally hire and manage employees and pay and treat them fairly and offer income security, they will see you working hard and personally work hard and be extremely loyal to you, especially if you offer new skills and challenges.
With some industries, yes. Others no. There's some cultural differences that can cause a lot of friction. Public reputation (face) means a lot to people. But it's more important that others think you're honest than actually being honest. If a person with a strong reputation starts moving against you, in many cases locals and officials will side with them against you in order to curry favor. Favor trading is actually very important when doing major business over there.
It's a market that has a lot of opportunities, but the environment is so different that most attempts at an entrance just end up being swallowed up. Any attempts at redress can easily die an insignificant death mired in bureaucracy.
[deleted]
Your secret server sauce could show up at another company with source code, documentation, comments and everything.
If you rely on "secret server sauce", you are probably sunk anyway, since a half-decent reverse engineer can probably replicate your business just by looking at it as a black box system from a client's perspective.
Many times they'll even use your logos and deliver a lesser product based on your brand name.
{{citation-needed}}
If you rely on "secret server sauce", you are probably sunk anyway, since a half-decent reverse engineer can probably replicate your business just by looking at it as a black box system from a client's perspective.
Many times they'll even use your logos and deliver a lesser product based on your brand name.
{{citation-needed}}
"a half-decent reverse engineer can probably replicate your business just by looking at it as a black box system "
Think of a program with business logic spanning millions of lines, with intricate detail spent on lots of domain specific automation steps.
Think of a program with business logic spanning millions of lines, with intricate detail spent on lots of domain specific automation steps.
I'm actually at a bit of a loss for words that somebody thinks a business can be reverse engineered just by looking at it as a black box system. There are so many intricacies with cash flow forecasting and management alone, requiring deep understanding of each market's nuance and settlement mechanisms, simply to pay the bills. That's not even to get revenue in the door. Sorry, but most businesses aren't software programs, they're social systems and local contracts that were socially agreed upon to get something done in a politically acceptable way.
Or even relatively small secret sauce that took thousands of iterations by geniuses. This guy seems to be asserting that Google may as well just give up because they need their algorithms to be secret.
At this point I can't help but think that he made an assertion based on a misconception (someone stealing your source code == someone stealing your idea) early in the thread and is just digging himself deeper trying to stick with it.
At this point I can't help but think that he made an assertion based on a misconception (someone stealing your source code == someone stealing your idea) early in the thread and is just digging himself deeper trying to stick with it.
You really can't see a difference between needing to reverse engineer something and just getting the source with no strings attached?
I am sure there is demand for authentic foreign food in China but I wonder how foreigners get in to open restaurants. I am not sure if you can just come in and open a restaurant in the US if you are not a legal immigrant. Legal immigration into China is a lot harder. For non immigrants it is not clear that there is any Chinese visa that allows for this type of activity. For example the only Chinese visa that sounds related is the M visa for commerce and trade (http://www.china-embassy.org/eng/visas/zyxx/t1071018.htm), but the type of activities permitted under M visa does not seem to apply to restaurateurs:
"What is required to obtain an M visa?
...
An invitation letter from a trade fair such as Canton Fair or from a Chinese firm (in the event that you get your visa through a Chinese agency, it’s possible that they will be the ones to procure the letter for you)" http://www.saporedicina.com/english/business-visas-for-china...
"Which situation does NOT count as a short term working (M)?
Mechanical after sales team come to China to repair, install, maintain, remove, guidance, training (Apply M visa) Bid Winner come to China to do the project guidance, supervision, checking (Apply M visa) Foreigner from head office goes to shanghai branch, representative office to have some short term work (Apply M visa) Foreigner comes to China to attend the sports event, including coach, athlete, team doctor, assistant etc. (Apply M visa)" http://www.visainchina.com/fvisa.htm
The above site also makes it clear that the Z visa is for short term work (under 90 days).
"What is required to obtain an M visa?
...
An invitation letter from a trade fair such as Canton Fair or from a Chinese firm (in the event that you get your visa through a Chinese agency, it’s possible that they will be the ones to procure the letter for you)" http://www.saporedicina.com/english/business-visas-for-china...
"Which situation does NOT count as a short term working (M)?
Mechanical after sales team come to China to repair, install, maintain, remove, guidance, training (Apply M visa) Bid Winner come to China to do the project guidance, supervision, checking (Apply M visa) Foreigner from head office goes to shanghai branch, representative office to have some short term work (Apply M visa) Foreigner comes to China to attend the sports event, including coach, athlete, team doctor, assistant etc. (Apply M visa)" http://www.visainchina.com/fvisa.htm
The above site also makes it clear that the Z visa is for short term work (under 90 days).
I wonder how foreigners get in to open restaurants. I am not sure if you can just come in and open a restaurant in the US if you are not a legal immigrant. Legal immigration into China is a lot harder. Legal immigration into China is a lot harder
Actually unlike in the US, it's very easy here. You register a wholly foreign owned company, get a visa connected to that, and you're sorted. Total cost can be as low as ~USD$30,000. Total time expenditure, perhaps 3 months these days. Of course, that will also require paying rent on a property, and thus you would typically spend a little more time scouting for a suitable location.
Actually unlike in the US, it's very easy here. You register a wholly foreign owned company, get a visa connected to that, and you're sorted. Total cost can be as low as ~USD$30,000. Total time expenditure, perhaps 3 months these days. Of course, that will also require paying rent on a property, and thus you would typically spend a little more time scouting for a suitable location.
How about the bribes? I heard it's difficult for an American to set up shop? Someting about local government officials?
Personally, I won't doing business in China. I did look into buying property there a few years ago, and it seemed impossible. I don't know why we let rich foreigners buy our (U.S.) realestate with a phone call, and money. You don't even need to be a citizen of this country in order to buy an apartment building in San Francisco. All you need is money, and a few phone calls. I'm not picking on the Chinese, I would like to see the U.S. all foreign realestate ownership, unless we can buy reciprocally. Hell, if I were king, I would outlaw REIT's, and limit realestate holdings to maybe a handful per Social security number? I feel a home is more than an investment, and community ties matters.
Got off topic, but rent is on my mind, and I don't like this kind of realestate spculation that's going around me. I'm seeing too many people being kicked out of their communities, while homes sit empty.
There's a ton of links about corruption in China, here's the first one of many-
http://www.businessinsider.com/china-corruption-in-business-...
Personally, I won't doing business in China. I did look into buying property there a few years ago, and it seemed impossible. I don't know why we let rich foreigners buy our (U.S.) realestate with a phone call, and money. You don't even need to be a citizen of this country in order to buy an apartment building in San Francisco. All you need is money, and a few phone calls. I'm not picking on the Chinese, I would like to see the U.S. all foreign realestate ownership, unless we can buy reciprocally. Hell, if I were king, I would outlaw REIT's, and limit realestate holdings to maybe a handful per Social security number? I feel a home is more than an investment, and community ties matters.
Got off topic, but rent is on my mind, and I don't like this kind of realestate spculation that's going around me. I'm seeing too many people being kicked out of their communities, while homes sit empty.
There's a ton of links about corruption in China, here's the first one of many-
http://www.businessinsider.com/china-corruption-in-business-...
Good to know. I was referring to "green card" when I said "legal immigration".
China gives out green cards to foreigners who apply after they have stayed for something like 5-10 years paying taxes with a registered business. However, they are in practice also a lot more friendly about being in-country on random visas, happily provide extensions, and do not kick you out within 10 days under threat of imprisonment if a business-linked visa expires, like they do in the US.
This is not actually true. Although the conditions for permanent residence are pretty lenient on paper, they are hardly ever given out. Less than 5000 were issued in the 10 years to 2014 (in total, ie less than 500 per year). In practice it's FAR harder to get a Chinese green card than an American one.
Also, many of those 5000 "foreigners" are actually the children of senior Chinese officials who have taken foreign citizenship then returned to China. The number of "real" foreigners with permanent residence is even lower.
Also, many of those 5000 "foreigners" are actually the children of senior Chinese officials who have taken foreign citizenship then returned to China. The number of "real" foreigners with permanent residence is even lower.
Everything I said is true. Everything you said is a tangent regarding numbers.
It seems very similar to experiences I've heard about from friends running businesses in Russia and, to a lesser degree, in Mexico (where your business partners are more reliable but the government is horribly corrupt and obstructionist). One rule of thumb I was told regarding the early days in post-Soviet Russia was that you were either going to pay the mobsters a quarter of your revenue or the FSK a third, and that was before Americans started getting killed. (Whatever I think of Putin and the deep-state security cabal running things over there, it is still less chaotic than the Yeltisn days.)
In general, I think anywhere the rule of law lays lightly, this is the norm. Employees are at the mercy of powerful employers, so they learn to take advantage of the system. When foreigners (or idealistic locals) go into business, they find themselves contending with behaviors meant to deal with abusive employers in the absence of an impartial judiciary (this is the same China that lets the wealthy hire people to serve prison time for them, after all). In general, it's just not worth the effort until Beijing's reforms start producing real effects.
In general, I think anywhere the rule of law lays lightly, this is the norm. Employees are at the mercy of powerful employers, so they learn to take advantage of the system. When foreigners (or idealistic locals) go into business, they find themselves contending with behaviors meant to deal with abusive employers in the absence of an impartial judiciary (this is the same China that lets the wealthy hire people to serve prison time for them, after all). In general, it's just not worth the effort until Beijing's reforms start producing real effects.
And if you are American, you are completely bound by the Foreign Corrupt Practices Act, so you can't even bribe that mobster or official. Your rule book is going to be different.
Foreigners really shouldn't be starting businesses in China, the rules (or lack of them) are just not in your favor.
Foreigners really shouldn't be starting businesses in China, the rules (or lack of them) are just not in your favor.
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Considering where US companies operate especially in the Energy sector they probably found a 1000 different ways to "legally" pay bribes without violating the FCP or any other similar legislation.
Not really, you'll get caught eventually, especially in the energy sector; e.g. Triton Energy. It is an incredibly effective piece of legislation, Jimmy Carter and company really gave us something that would benefit the world (you can't just say "this is how they do it here so this is what I do").
It might be benefiting the world in a way already - those who want western businesses in their area may decide to not require them to bribe so hard.
Or you know, if you want western capital, clean up your government.
They can also make it official law. It's not illegal under the FCPA to pay official rush fees, just the unofficial ones.
So in corrupt government X, you make a special western investment tax. The funds of that tax goes to a special fund used for development projects. Those development projects have to go through a convoluted procurement process, which co-incidentally only gets approved with a few politician's organizations. Those organizations then go on those make-work projects, and siphon off a lot of funds and never get them done. The make work projects also help them get re-elected because they create 'jobs'.
So in corrupt government X, you make a special western investment tax. The funds of that tax goes to a special fund used for development projects. Those development projects have to go through a convoluted procurement process, which co-incidentally only gets approved with a few politician's organizations. Those organizations then go on those make-work projects, and siphon off a lot of funds and never get them done. The make work projects also help them get re-elected because they create 'jobs'.
An overseas entrepreneur planning to go to China might refrain solely on the basis that she or he will never be "China" chinese.
You can learn the language, adopt the customs, marry, have a house and children-- and yet still, forever, be judged by your ethnicity. If the people you live around always consider you the "Outsider" and see you as little more than your stereotype, does it matter how much money you're making? What about trying to raise a family in that kind of environment?
Sure: the U.S.'s culture wars are by no means settled and racism can happen everywhere to anyone (especially to minorities). The difference here is how much xenophobia the society at large will tolerate. And in racially (mostly) homogeneous China, the meaningful conversations about how to integrate or assimilate new people are in dear short supply.
Further reading:
http://www.prospectmagazine.co.uk/politics/mark-kitto-youll-...
http://www.nytimes.com/2013/06/15/world/asia/a-disillusioned...
You can learn the language, adopt the customs, marry, have a house and children-- and yet still, forever, be judged by your ethnicity. If the people you live around always consider you the "Outsider" and see you as little more than your stereotype, does it matter how much money you're making? What about trying to raise a family in that kind of environment?
Sure: the U.S.'s culture wars are by no means settled and racism can happen everywhere to anyone (especially to minorities). The difference here is how much xenophobia the society at large will tolerate. And in racially (mostly) homogeneous China, the meaningful conversations about how to integrate or assimilate new people are in dear short supply.
Further reading:
http://www.prospectmagazine.co.uk/politics/mark-kitto-youll-...
http://www.nytimes.com/2013/06/15/world/asia/a-disillusioned...
I have fond memories from Beijing where random patrons loudly and extensively scolded a clerk for not serving me in my (accented yet understandable) mandarin. Any foreigner who has spent enough time in China has been refused service even when speaking the local tongue and respecting local customs, but I've never heard of anyone else having a crowd of boisterous Beijingers come to their rescue ;)
In Vancouver, Canada, it's not uncommon to hear mainland Chinese refer to locals/non-Chinese as "laowai" among themselves (literally "alien" - an informal or slang term for "foreigner," possibly impolite). Some find a way to not speak survival-level English years after arrival, in spite of school and free education programs for new arrivals.
You may be confusing tolerance of xenophobia with the celebration and institutional support of it.
In Vancouver, Canada, it's not uncommon to hear mainland Chinese refer to locals/non-Chinese as "laowai" among themselves (literally "alien" - an informal or slang term for "foreigner," possibly impolite). Some find a way to not speak survival-level English years after arrival, in spite of school and free education programs for new arrivals.
You may be confusing tolerance of xenophobia with the celebration and institutional support of it.
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> More than two years and $1 million in costs later, he is still waiting for the shipment. Chinese customs officials have demanded a permit for importing medical devices
Familiar story. I tried to have ordinary computers shipped to a facility in China, and they were held up in customs for months for no reason.
Familiar story. I tried to have ordinary computers shipped to a facility in China, and they were held up in customs for months for no reason.
I am an overseas entrepreneur in China. I don't consider this article to be very informative.
If people invest money they shouldn't, without due diligence in environments they don't understand with partners they don't know, that doesn't reflect as much on the environment as the investor.
China is very welcoming to foreign investment. Once you have done the paperwork, you can basically stay indefinitely on a work-related visa for a small minimum investment. The total required money in real terms was only 30,000USD a few years ago. I'd be interested to hear if there's any another country with such a dynamic economy and physically safe environment, great food and range of climatic conditions that welcomes people from around the world for such a small personal investment? Sure, China has its issues, many of which such as an immature and ill-documented financial system, utility issues, poor internet connectivity and a weak courts system affect business, but openness to investment is not one of them.
There is no distinction made in the article between the WFOE ("woofie") or wholly foreign-owned enterprise and the JV or joint venture. Instead, an alarmist view is painted of total ruin lurking around the corner for all foreign-involved businesses. (The sums I refer to above are for a personal WFOE: no need for a local partner.)
Everybody knows the courts are oversubscribed, slow and corrupt. This results in different ways to solve problems, including less willingness to extend trust to strangers, the frequent writing off of bad debt, and in some rare situations corrupt regulator-based vindictive ingress, violence, kidnapping and so forth. (Most of the time things are not ugly though, and incidence of violence is extremely low across all of society, not just business. Much lower than the west in my experience.) Because of this situation with the courts, very often contracts are worthless (simply ignored). Cash is king. If you don't trust an employee (eg. sales manager who stole USD$60k in the text), don't give them access to funds. This is business 101, and is in no way unique to China. Why should a Sales Manager control your bank account, anyway? Why should you allow client payment direct to untrusted employees by theft-prone cash? This is just an example of management naivety - no inkling of common sense.
While I am still sometimes amazed at the uselessness of contracts here (I've experienced the "signed the contract? paid the rent? now pay double!" thing personally... solved with a mutually acceptable outcome - I moved out quickly and received a full refund), mostly it's just about learning how to deal with an unfamiliar business environment.
Overheads are often low, potential profits are often large, and we're allowed to come here and do business despite being foreigners. It's not always a walk in the park (frustration and "bad China days" are certain), but overall China's environment is not bad. Given the low regulatory threshold, taxation and overheads, it's really more of a land of opportunity than the west. In a western context, I never could have afforded myself the experience in business that China gave me.
If people invest money they shouldn't, without due diligence in environments they don't understand with partners they don't know, that doesn't reflect as much on the environment as the investor.
China is very welcoming to foreign investment. Once you have done the paperwork, you can basically stay indefinitely on a work-related visa for a small minimum investment. The total required money in real terms was only 30,000USD a few years ago. I'd be interested to hear if there's any another country with such a dynamic economy and physically safe environment, great food and range of climatic conditions that welcomes people from around the world for such a small personal investment? Sure, China has its issues, many of which such as an immature and ill-documented financial system, utility issues, poor internet connectivity and a weak courts system affect business, but openness to investment is not one of them.
There is no distinction made in the article between the WFOE ("woofie") or wholly foreign-owned enterprise and the JV or joint venture. Instead, an alarmist view is painted of total ruin lurking around the corner for all foreign-involved businesses. (The sums I refer to above are for a personal WFOE: no need for a local partner.)
Everybody knows the courts are oversubscribed, slow and corrupt. This results in different ways to solve problems, including less willingness to extend trust to strangers, the frequent writing off of bad debt, and in some rare situations corrupt regulator-based vindictive ingress, violence, kidnapping and so forth. (Most of the time things are not ugly though, and incidence of violence is extremely low across all of society, not just business. Much lower than the west in my experience.) Because of this situation with the courts, very often contracts are worthless (simply ignored). Cash is king. If you don't trust an employee (eg. sales manager who stole USD$60k in the text), don't give them access to funds. This is business 101, and is in no way unique to China. Why should a Sales Manager control your bank account, anyway? Why should you allow client payment direct to untrusted employees by theft-prone cash? This is just an example of management naivety - no inkling of common sense.
While I am still sometimes amazed at the uselessness of contracts here (I've experienced the "signed the contract? paid the rent? now pay double!" thing personally... solved with a mutually acceptable outcome - I moved out quickly and received a full refund), mostly it's just about learning how to deal with an unfamiliar business environment.
Overheads are often low, potential profits are often large, and we're allowed to come here and do business despite being foreigners. It's not always a walk in the park (frustration and "bad China days" are certain), but overall China's environment is not bad. Given the low regulatory threshold, taxation and overheads, it's really more of a land of opportunity than the west. In a western context, I never could have afforded myself the experience in business that China gave me.
Doing business in China is definitely doing it in 'hard mode' from my experience. If you can become successful there, where contracts mean nothing and guanxi with people in power is everything, you will probably plow right through anything you find in the states.
I think if you reflect on "contracts mean nothing and guanxi with people in power is everything" you may find the seed to an answer.
China has 1.4 billion people. There are many that will follow a contract or work with you to adjust agreements to both parties' mutual benefit.
If you are leveraging guanxi, ask yourself why you feel it is ok to further empower a person that is causing harm to society. There are many in China that do represent your values. When you engage in guanxi, you are "feeding the dragon": empowering the wrong people and dis-empowering the right people.
note: when I say "you", I don't mean you personally.
China has 1.4 billion people. There are many that will follow a contract or work with you to adjust agreements to both parties' mutual benefit.
If you are leveraging guanxi, ask yourself why you feel it is ok to further empower a person that is causing harm to society. There are many in China that do represent your values. When you engage in guanxi, you are "feeding the dragon": empowering the wrong people and dis-empowering the right people.
note: when I say "you", I don't mean you personally.
You are also correct. There is a beautiful simplicity to business interactions when you tell them up front: hey, I'm only going to tell you the truth, I'm not going to buy you gifts and alcohol and prostitutes. I'm just going to try to find the best outcome for all of us.
So much easier.
Yet so much harder.
But that's China ;)
So much easier.
Yet so much harder.
But that's China ;)
After starting a business in China I spent a year in London then a year in LA. What irritated me about doing business in the US was the pain of complex inter-state tax nexuses, dealing with government in general (TSA etc.), immigration and expensive legal overheads in general, the need to drive everywhere and the long distances to get to the rest of the world. Certain things, such as the lack of a global perspective in most of the locals, the cheapskate approach to employee holidays, and a half-broken financial system were very similar to China.
Everything you say resonates with my experience too. And not to contradict myself but on the plus side for business in China, I found the expat entrepreneurs there to be pretty close-knit and more than happy to collaborate and help you out. That made things a lot easier and was probably the saving grace for many of my peers.
Having said that, after navigating those waters for awhile, I enjoy dealing with a clear legal framework, laws that are more often than not applied uniformly, and a government that doesn't stifle the free exchange of ideas on the internet to such a point that you need a pretty beefy VPN solution just to do a Google search.
Just my opinion though, good to hear you have been successful in your work - good luck and keep on trucking!
Having said that, after navigating those waters for awhile, I enjoy dealing with a clear legal framework, laws that are more often than not applied uniformly, and a government that doesn't stifle the free exchange of ideas on the internet to such a point that you need a pretty beefy VPN solution just to do a Google search.
Just my opinion though, good to hear you have been successful in your work - good luck and keep on trucking!
Thanks for your level headed post.
I see too many Western news articles on China that present an us versus them attitude. Its unhealthy as commentary (if not the articles themselves) often contain undercurrents or direct statements of nationalism/racism.
In my experience trustworthy and competent employees are not any more difficult to find in China as the U.S. It does take work (and the frustrations stem from different places) but not in aggregate harder than in the U.S. Never had a bad employee in China. Never had to fire someone. Never had to discipline someone. I followed our written labor contracts and so did they.
As to people not following a written contract. It is true that you need to choose your partners carefully and manage your relationship as a written contract can often be ignored. That said, in ten years of running companies in Shanghai, every landlord I had for home and office was meticulous about following the contract. Never had a problem. I only spent four years in Chengdu and had fewer home and office leases but again, no problems.
I see too many Western news articles on China that present an us versus them attitude. Its unhealthy as commentary (if not the articles themselves) often contain undercurrents or direct statements of nationalism/racism.
In my experience trustworthy and competent employees are not any more difficult to find in China as the U.S. It does take work (and the frustrations stem from different places) but not in aggregate harder than in the U.S. Never had a bad employee in China. Never had to fire someone. Never had to discipline someone. I followed our written labor contracts and so did they.
As to people not following a written contract. It is true that you need to choose your partners carefully and manage your relationship as a written contract can often be ignored. That said, in ten years of running companies in Shanghai, every landlord I had for home and office was meticulous about following the contract. Never had a problem. I only spent four years in Chengdu and had fewer home and office leases but again, no problems.
1) Employees will attempt to steal IP and copy the business. This may happen while they are still working for you. If it's easy for your business to be stolen this way don't even bother setting up.
2) You need locals to handle staff. You're just a foreigner to be taken advantage of. They push rules and issues at you all day trying to get more. A local manager will tell them to bugger off in a way you can't.
3)The great firewall can be a bastard and your best with infrastructure inside the country and local knowledge. Things like don't use one time click links as these are used before they even get to the customer.
4) Chinese will often find a way to get something done with horribly inefficient routes and deals to the goal. Don't stress trying to make it efficient, this is China.
5) Dont expect your JV partner to work in the companies best interest.
While China is a huge & interesting market, if there is anyway 1) is going to be the smallest concert or your reliance on a JV partner delivering something I'd look at other markets first.
I'm genuinely surprised the west hasn't made China create a more level playing field for the right to trade/invest in our markets. One day the rest of the world will realise what a one sided deal China has become.