Doing Business in or with China: Kickin’ it Old School

Got an email the other day from a reader who wanted to let us know how much a blog post we did way back in 2006 had helped his company. The post this emailer was extolling was James McGregor’s China Tips and he wanted to know whether I thought all of McGregor’s advice was still relevant.

I do. And I should also mention that McGregor is one of the two or three most knowledgable people alive on doing business with China and his book on China, One Billion Customers, is still a must-read for anyone looking to do business in or with China.

Our 2006 post listed out the following six tips for doing business in China:

1. The Chinese will ask you for anything because you just may be stupid enough to agree to it.  Many are.

2. Avoid joint ventures with government entities unless you have no choice. Then understand that the partnership is about the Chinese obtaining your technology, know-how and capital, while maintaining Chinese control.

3. If you decide to sell your soul and succumb to Chinese corruption, get a good price and focus on charity work in your old age.

4. Government officials can lie to you, but you must never lie to them.

5. Any tech company doing business in China should assume its designs and products are being copied.

6. If your boss wants to come to China to do a quick deal, lose his or her passport.

Let’s go through these doing business in China tips one by one.

1. The Chinese will ask you for anything because you just may be stupid enough to agree to it. I remember a few years ago when one of our clients was seeking to buy its product supplier. The product supplier started out asking for some absolutely absurd amount and when pressed, admitted to one of our China lawyers that the only basis he had for that amount was that he had heard American companies “will agree to anything.”

2. Avoid joint ventures with government entities unless you have no choice. Absolutely true, but it generally makes sense to avoid joint ventures with anyone. For more on the problems inherent in China joint ventures, check out the following:

3. If you decide to sell your soul and succumb to Chinese corruption, get a good price and focus on charity work in your old age. Completely agree. China was serious about foreign corruption way back in 2006 and it is about ten times more serious about it now, especially if you are from a country it does not like, such as the United States, Australia, Canada, India, etc.

4. Government officials can lie to you, but you must never lie to them. This is good advice for pretty much anywhere in the world.

5. Any tech company doing business in China should assume its designs and products are being copied.  This holds true for just about any foreign company doing business in China, not just tech companies. For more on the dangers of IP theft in China and on how to protect your IP from China, check out The Four Best Ways to Protect Your IP from China.

6. If your boss wants to come to China to do a quick deal, lose his or her passport. There are two schools of thought on this. One school says you do not want your C-suite executives to come to China because they will make big mistakes, but the other school says that you do want your C-suite executives to come to China because they will make big mistakes and then realize they are better off leaving China to your company’s China experts.

What do you think?

 

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