BizChina

On September 24, 2009, I will be speaking on China labor law issues at Seminar International's Hiring in Asia Seminar in Seattle. I will be sharing the podium with Dave Parker, CEO of 9spaces, a leading China-focused human resources research and services company. Together we will be discussing hiring and retention in the Software Engineering, Manufacturing Services, and Shipping industries. Dave will focus on the business side and I will cover the legal side.

In addition to our talk on China, Chris Gootherts, Microsoft's Staffing Manager for China and Thailand will be presenting with Darryl N. Johnson, the Former U.S. Ambassador to Thailand, on "Choosing the Right Country and the Right Services: Recruiting West to East." Chandrakiran Malarapa of Prithvi Information Solutions, Shaalu Mehra of Perkins Coie LLP, and Madhu T. Rao, an Associate Professorat Seattle University's Albers School of Business, will all be talking on Hiring in India. Davis Bae, immigration lawyer extraordinaire with the Bae Law Group and Craig Chelius, Executive Vice President of Protelus Corporation will talk on "Cautions and Advantages to Hiring in Japan, Vietnam, South Korea, the Philippines, Thailand."

This is shaping up to be a great seminar and if you want to attend, click here to register.

Since my using references to Bob Marley songs seems to play so well (see here and here).....

Anyway, just read an excellent and blunt blog post on Chinese brands over at the perpetually insightful Silicon Hutong Blog, entitled, "Brand Reality Check." The post uses a Tom Doctoroff article in AdAge (subscription required) as the starting point for arguing China will "not be producing a bevy of global brands at any time in the near future." I completely agree.

Silicon Hutong convincingly makes the following argument against those those who might list the few fairly well known Chinese companies as proof that China can develop great brands:

Those who disagree with Tom (and manage to eschew ad hominem attacks) point out that Haier has managed to build a global brand entirely without marketing. While that point would be debatable (if you could buy a Siemens fridge for the same price as a Haier fridge, which would YOU buy, and why?), let's not go there.

Instead, let us grant for a the sake of argument that Haier is indeed a global Chinese brand. Let's even grant that Lenovo, Tsingtao Beer, and Li-Ning are global brands.

When you look across China's landscape of millions of companies, could it not be said that these companies are at best the exceptions to prove the rule? That China has so few international brands in so few industries that what we are witnessing is not a trend but a statistically irrelevant series of accidents?

Silicon Hutong rightly notes that great brands "are built; they do not happen by executive fiat or by government edict. And the sooner China's companies learn the rules of that game, the better off China will be."

So why are China's companies behind in their branding and what will change this and when?

Why are Chinese companies behind in their worldwide branding? In the last year or so, my law firm has begun to represent a number of very large, very successful, and very well run Chinese companies. Without exception, these companies are doing an amazing job in building their businesses outside China and, for the most part, they are doing an amazing job in figuring out the landscape in places like the United States. But, also without exception, they spend (and I am admittedly making a wild, shot in the dark guess here) about one one hundredth of what their comparable American counterparts on advertising and public relations. And it shows.

I have asked friends of mine in the same or related industries as my Chinese clients if they have heard of my clients and, almost without exception, they have said they have not. Then when I tell them more about my clients and the scope of their operations in the United States and/or their market capitalizations, they look at me like I am totally joshing. They say things like I must be wrong. I must be using a different name in the United States. My client must be lying. In other words, they cannot explain how a company can be doing in the United States what I say my clients are doing without their knowing about it.

Or go ask 100 people at random in Peoria to name two Chinese companies. I'm betting less than a handful (if any) could name two and less than half could even name one. Until Chinese companies start realizing (and by realizing I mean more than just paying lip service) the critical importance of name recognition and reputation, Chinese brands are going to remain mired in relative anonymity. Does anyone think even five people will be able to do it?

What will change this lack of Chinese brand recognition and when will that happen? I do not know but I am certain it will happen eventually (ten years?) and when it does, it will probably come pretty much out of nowhere. I base this prediction on how Japanese (Sony, Honda, Toyota, Nikon) and Korean (Samsung, LG, Hyundai) pretty much all of a sudden went from nowhere (or even disrepute) to reputed.

What do you think?

Thought provoking post over at TwoFish's Blog, entitled, "Best and the worst – The Sanlu Settlement." The thesis is that China's handling of payments to those injured by the Sanlu dairy food poisonings was handled better than would have been the case had Sanlu been in the United States and been subject to a class action suit.

TwoFish makes some valid points, which points are certainly more sophisticated than some commentators who fly over to China for a week and come back proclaiming that if only China allowed tort claims (it does) just like in the United States, all (or at least nearly all) food safety problems would be solved there.

TwoFish says China handled Sanlu "quite well" and he challenges those who are "critical" to "explain what the Chinese government could have done better:"

As I said above, as far as the actual settlements and consequences, I do think that the Chinese government handled things quite well, and I’d like for people that are critical of the legal aftermath to explain what the Chinese government could have done better. Yes, one could argue that the payouts where low, but as it was, it totally bankrupted the company responsible. If you mandate US-style damage awards, then the whole thing becomes a lottery, in which people that are the first to file or who have particularly good lawyers get the bulk of the money, and everyone else spends years fighting over the scraps that remain. (What happened with asbestos.)

Also if you have a long nasty class action lawsuit, then most of the money ends up with the lawyers (there is an entire industry devoted to asbestos lawsuits). In the mean time, honest dairy farmers and dairy workers who weren’t involved in the scandal are hurt because the company gets pounded into dust.

China did handle Sanlu pretty well, but in large part, that was because that case received so much publicity, China almost had to handle it well. As much as I agree with TwoFish that a class action where the plaintiffs' lawyers get rich and the plaintiffs themselves get a pittance is no solution at all, I do not believe top down remedies can work consistently.

The Sun Bin blog has a fascinating and thoughtful post analyzing how China handles border disputes and when it uses its military. The post, entitled "China's Policy in Border Disputes," mostly consists of an interview with Professor M. Taylor Fravel of MIT, whose academic focus has been on Chinese territorial disputes and its use of force. This is an interesting and important post and I highly recommend it.