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Foreign firms shouldn't walk from China
Kent Kedl
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TEXT OF COMMENTARY
Kai Ryssdal: Doing business in China has never been easy, but it's gradually getting harder. You can just ask the enormous global mining conglomerate Rio Tinto about that. Today in Shanghai, four of its executives confessed to taking bribes. And they are still facing charges of corporate espionage. Overall, though, Beijing is just counting on homegrown companies to be able to do more.
Commentator Kent Kedl has been working in China for 20 years. He says foreigners just have to get used to that.
Kent Kedl: The other day I was sounding off about something a Chinese company had done when a Chinese friend of mine cut me off. "Kent" he said, "We Chinese have only being doing this for about 18 years. In terms of global business, China is like a teenager."
Now China's a country with 5,000 years of history, and I wouldn't normally have the audacity to call her a teenager. But since my Chinese friend said it, I'm going to run with it.
Back in the '80s and '90s -- China's pre-teens, if you will -- doing business here was pretty straightforward: Every foreign company was forced into a joint venture. It was basically an arranged marriage. The Chinese government chose partners for the kids while they were still young. And it wanted to marry off the ugly ones first.
We foreigners played along. After all, this was a big family destined to have a lot of clout: A billion people, a squillion dollars. Let's buy the ring! And order the cake.
But since the 2008 Olympics, China has emerged into what you might call its teenage years. It's confident, some might say arrogant, even, belligerent.
Last year, Beijing said, "If you want to supply all the infrastructure boondoggles we're investing in, here's the key requirement: Don't be a foreign company."
And at the Copenhagen Climate Conference, the Chinese did not play nice. "Hey," they told the West, "you guys got to pollute when you were adolescents. Now it's our turn."
This is not the smiling kid China your grandpa remembers. Today, the country is high on hormones and feeling its power. It's the high-school quarterback and the prom queen rolled into one. Heck, it's the lunch lady too. China can tell the world: "It's my house, my toys, my rules. You don't wanna play? Go home."
Now, lots of American companies are pretty miffed about this, and some want to walk away.
But I say: let's stay in the game. China still needs lots of help and support from foreign companies. It's just more choosy now about who can help, and how. You know, nobody gains if you abandon a teenager. And nagging doesn't work either. Let's not sit and whine about China. Let's respect it as the adult it's becoming, even if we're a bit anxious sometimes about how it will turn out when it grows up.
Ryssdal:Kent Kedl is a management consultant in Shanghai.
The teenager analogy is a good one and perhaps partially true, but it ignores the fundamental cultural differences between doing business in China and doing businesses elsewhere. A better mousetrap and better service are often not adequate. Business strategy for larger Chinese companies is always informed by Communist Party policy, which is not based on Western business logic. Plus, the cost of labor and size of the population -- i.e., lots of cheap labor -- changes the make vs. buy calculation in China. Finally, business transactions are significantly influenced by "Guanxi" -- personal connections and relationships -- which are difficult for Westerners to establish.
"Nobody gains if you abandon a teenager," this commentator says. Perhaps. But the harm caused by dropping a connection with a bully is dwarfed by that of indulging an adolescent who wants all the benefits of adulthood and none of the responsibilities.
Mikike M, I do not have any experience other than watching China play its hand again and again. To use a tired analogy, they're playing chess while we're playing um... tic tac toe. China is ruthlessly pursuing the interests of The Party and I don't fault them for that in the same way I don't fault corporations for pursuing the interests of their shareholders. But we need to at least start reversing the loss of strategic ground to China, both on economic and other terms, so that human rights, the environment, and the strategic and economic interests of the USA aren't always on the losing end.
Don't drink it Jim, stay home and stay away from politics. Fair Matt ? You kidding yourself too. Mr Kedl Shared his view with you. Let's stay in the game. What is your game plan ? What kind of experience you can attach to it ? Or no plan no experience just heat under your hat.
Very valid comments with a quite interesting analogy of teenager.
Along the same line I can further add that what fuels the pyche of the 'teenager' is that she is supporting the bunch of adults in the world economy. So her tantrums and egoistic behavior has to be overlooked. Everybody needs her to pay their bills!!
Yes, when China does something we don't like, or sets unfair terms, let's just go along with it and hope that it will someday get better. Are you for real?!?
But then, we should expect no less from someone who obviously has a big stake in US firms continuing to do business in China?
The world needs to learn how to deal with China. The only problem is that they're organized & focused and we're not.
