BizChina

Virtually every week, somebody emails or calls me with the perfect (usually distressed) United States company for me to pitch to "all the people" I know in China. I have even gotten calls from government agencies asking me what they should be doing to lure Chinese businesses.

Here is what I am seeing.

Chinese companies looking to buy American companies are usually looking for a valuable technology or commodity or, to a much lesser extent, a strong brand name. If the company you are pitching has neither, the chances of a Chinese company buying it are really slim. People have told me that Chinese companies "have to be" interested in companies with really good marketing people. They tell me Chinese companies are terrible at marketing and so they obviously will be buying American companies that are good at it. That's true in theory, false in reality.

There are a few oddball purchases and formations out there and those generally consist of the following.
-- The wealthy Chinese businessperson who owns a Chinese company and wants to buy an American company so his son or daughter can go to UCLA. These purchases tend to be more random.
-- Haier. Even though I am convinced Haier's setting up production in the United States is a money losing proposition, I still think it was brilliant. I believe Haier came to the United States despite its doing so hurting the bottom line. I believe Haier came to the United States so as to minimize export/import risk in the long term, so as to improve its reputation in the United States, so as to learn from the United States, so as to improve its marketing in the United States and the West and so as to be better perceived in the United States. In other words, it did what Toyota and Honda did when they built US car plants back in the 1970s. This sort of prescience from a Chinese company has so far been vary rare, but I do see it slowly increasing.

Which brings me to Hummer. I can see a Chery buying Volvo to increase company prestige and to improve their in-house technology. I just never believed a Chinese purchase of Hummer would go through because I never thought it made sense. I did not think it made sense because I could see no logical reason for a Chinese company to buy Hummer with the intention of keeping its production in the United States, especially when the Chinese company is not in the auto business. I therefore never bothered to write about it until now because I did not see it as indicative of anything of much import.

It has now become pretty certain the China deal for Hummer is a non-starter.

I just do not see it. Do you?

Stan Abrams over at China Hearsay is (or will be?) speaking on China intellectual property at an IP conference for SMEs in the Netherlands and he has mapped out on his blog what he is going to say. And here it is:

1. Register your IP as early as possible.

2. Don’t sacrifice IP protection for speed (i.e. don’t jump into the market before you take care of your IP).

3. Have a well-crafted, reasonable, and feasible China IP plan in place before anything goes wrong.

4. Do your homework (keep your eyes open for infringement and listen to your distributors and agents).

5. Check up frequently on licensees, distributors, agents, and manufacturers.

6. Avail yourself of all reasonable enforcement measures (after doing a cost benefit analysis of course), but understand the obstacles involved.

Couldn't have said it better myself.

I just love this post, "Saying “I love you” with a toilet: of indirect displays of love in Chinese families," over at the Speaking of China blog. I love it because it perfectly illustrates how Chinese express an emotion (in this case love) differently than in the West.

Differently, not necessarily better or worse.

The post is about an American woman, married to a Chinese man, and how her in-laws show their affection for her by first installing a stand-up toilet, and then adding on rooms to their house. A Chinese client of mine (who has been living in the United States for probably 15 years now) told me of how her father never once told her mother that he loved her, but that her mother always knew from the way he acted.

There has to be a way to relate this post to doing business in China and I would love (see how easy we Westerners are with that word) for someone to expound on it.

Matt Schivenza's always interesting blog has a new post up on nudity (well, sorta) in China, entitled, "Foreign Woman Removes Top At Beach in Qingdao, Causes Major Disturbance."

The post tracks exactly what I was talking about this morning with a client. No, not nudity, but rule of law in China and how so many Americans misunderstand its extent in China and misperceive what China is really like.

Bear with me here as I discuss the rule of law in China as the nudity discussion will follow.

The client with whom I was having this discussion is a very successful and sophisticated international businessperson who has been doing business in China for around five years. He was telling me of how an American competitor of his had gotten into legal troubles and was on the verge of pulling out of China. My client told me he thought his competitor had brought the problems onto his company by believing he could get away with not following Chinese laws. We then talked about how when it comes to China's laws relating to business, they are actually usually fairly clear and actually usually not all that bad. We both agreed that companies that follow China's business laws overwhelmingly avoid problems.

But, we both also agreed that what we were discussing had little to nothing to do with China's non-business laws and little or nothing to do with the corruption. In other words, China's business laws, as written are good and following them usually insulates you from problems. But, not following them and having the right connections (which damn few foreigners have, despite their thinking otherwise) can oftentimes serve to avoid problems also.

Which all brings me back to nudity and to Matt's post.

Matt's post is on a Qingdao newspaper article about the reaction to a Bulgarian blonde who insisted on running around topless in the middle of a hot day at Qingdao's Number 1 Beach . This is Qingdao's most popular beach and the last time I was there -- in April -- it was crowded. The Bulgarian caused quite a stir and gave rise to a local newspaper article, which Matt translated.

The article noted how despite the controversy and approbation by many onlookers, the lack of any law clearly prohibiting the conduct precluded anyone from putting a stop to it:

Shortly thereafter, this reporter went to the beach management office, where he was told by a person responsible that although the beach had encountered topless guests in the past, they had never found one daring to go topless in front of so many people. “There’s nothing we can do about it!”. This reporter was told that in the past several days many residents and guests alike have complained about this matter, but because no clear law exists prohibiting this sort of behavior, beach employees simply could not intervene.

Matt sees all this as proof of the rule of law:

I find this story amusing because a) the Bulgarian woman continued sunbathing topless despite what appears to have been an enormous amount of attention on top of the persistent questioning of the reporter, b) that the supposed ‘moral outrage’ involved didn’t prevent beach-goers from crowding around the woman and taking her photo, and c) that rather than compel the woman to put her top back on, the beach officials were preventing from doing so due to the absence of a clear legal statute regarding these matters. See, China is a nation that respects the rule of law!

To a certain extent, I have to agree. This does not prove there is freedom of political expression and this does not prove bureaucrats do not sometimes act thuggishly, but this does prove that China does have laws that are followed.

This also proves something perhaps even more important. This proves something many of my expat friends in China are always talking about. They say they find it ridiculous that China is viewed as this incredibly oppressive place where the government is spying on you all the time and concerned with your littlest actions. They oftentimes like to tell me that China actually has more freedoms than the United States or England. I am very skeptical of these comparisons, but I certainly concur that individual freedoms in China are given a fairly decent swath, so long as they do not impinge upon the government/party.

What do you think?