Amateurial views on Chinese Legal and Business Evolutions

Global Crisis and its effects on China, Part 2

2009-04-26T18:56:00.003+08:00

http://www.china.org.cn/business/news/2009-04/26/content_17672672.htm

After a digression on the society's reactions to the crisis, let's see what is the Government doing and\or thinking.
According to this article the crisis, being of course an unfortunate event, and of course derived by the total incapacity of the West to lead the World, could also bring some benefits.

This makes absolutely sense! Think about it, what do you do when you are in a situation of desesperation, when you are in the corner? You have to choices, fight or die. So, on one hand, Chinese people itself, at least those with some resources, chose to fight and, on the other hand, the Government also decided to fight. Ok, every Government is doing something, according to the respective possibilities, and the Chinese one is second to none, especially when choosing to put in the market a huge stimulus. But, apart from the stimulus, is adjusting the aim of the China's FDI attraction's strategy.

So, according to this article, the least developed Central Regions of China could benefit from the crisis thanks to the new policies of the Government.

I don't know if this can be true or not.....as for my personal point of view, I think that in China the crisis is already over and everything is coming back to the normality! Why? Just have a look at the rent prices :-)!

Global Crisis and its effects in China

2009-04-25T18:31:00.004+08:00

I am not going to analyze this topic under a legal or financial point of view, I am not entitled to this. The best perspective is the "social" implications of this crisis in China, which are extremely different from those taking place in other parts of the World.
In Europe, or in America, people has stopped to laugh, seems hopeless, wondering about their future, with the respective governments dramatically failing in finding a proper solution.
In China is totally different. Despite the many closures of factories or companies, mainly perpetrated by cowards foreign companies, which undeniably affected the life of people, the situation here if completely different. It looks like now the "Communists" are not the Chinese, but the Europeans and the Americans, with the Chinese become "Capitalists".
Nobody here is desperate, people still laugh and, in the unhappy situation of a loss of job, they don't wait for the help of the government, but they personally try to change their own situation, by opening their own activity.
Recently I watched a program on a Chinese Channel, it was about the promotion of some franchising and small family run businesses. The program was focusing on 2 couples, which respectively lost their previous jobs and, after a period of sadness, decided to invest some small money in some personal business. The first couple decided to invest in a small ice cream shop, and the other on some moving car offering typical chinese street food. Apparently the business was succesful and, at least can work as a stimulus for other people.

It seems that, recently, the franchising as a business model is getting the more the popular. I am not talking about the big brands franchising, which require lots of money, but instead of sitting there and wait for the help of the sky, the good thing about China is that things are easier to accomplish.

So, maybe, instead of waiting always for the help of somebody else, typical habit of Europeans, it would be better to do something by ourselves.

Is China Unhappy?

2009-04-13T17:27:00.003+08:00

Ok now, let's try to reason here!!! I have been reading the review of a book, just published here in China and, apparently, going to enter in the Best Seller's list! The name of the book is "The Unhappy China".

I didn't read the book, and I think I won't read it until they will translate it in English at least, but one thing makes me think: why now?

It's definitely not a case, I really think this has been planned for quite a while. China has always been mistreated, first by the colonial powers, then by the Japanese, then by the Foreign Companies starting with the Open Door Policy. At the beginning of the opening up of course China needed the foreign investments, to try to catch up with the other Countries. But now? The publication of this book, in which the authors apparently state that China should stand up and lead the World, therefore replacing the USA as leaders, since they are already corrupted and are the cause of this global crisis, is a clear sign that China is not willing to take it anymore.

Which kind of consequences there will be? Still early to say however, putting together the publication of this book, and the recent laws and regulations, you can easily say that China is going towards a big changing. The time during which the government would offer us any kind of benefits just to have our investments it's over. Regulations on foreign investments have been tightened up, to get a visa for work is the more the difficult, new M&A rules are clearly more restrictive, new Corporate Income Tax increased for the foreign Companies.

So, I don't know if China is happy or not, but I guess that all these measures and these nationalistic publications won't make happy other people.....but I guess this is all part of a circle.

'Mianzi" for beginners

2009-04-13T14:53:00.002+08:00

Gaining "face", losing "face". Again, is this concept so relevant when you are going to do business in China? And again the answer is: Yes and No!

"Face", in my opinion and according to my personal experience, is more related to the civil life. This is an important concept, or at least it was, because could inhibite people to behave wrongly. However, as every business person knows, there can't be any "face" in business, where everything is about money. Same in politics, who are the "thick faces"? Politicians and business persons!!!! Talking under a business point of view, this is particularly true in China. The attitude of the business persons here is different from the one of Europeans and Americans. To be direct is considered not polite, therefore you cause a loss of face. So, in this case, the concept of "face" is still relevant. However and unfortunately, corruption practices are really a contemporary problem but, since it's done in secret....then there's no face problem....except when you get caught of course!

The face is also something that we, as foreigners, should care. Why? I am pretty sick of foreigners coming to China with a so called business plan, consisting just in "cutting costs" points. Did anybody ever considered one of the reasons that are bringing China on the edge of Nationalism? Exception made with big investors, that can allow themselves to speak their mind and not caring too much of the employees, all the other small foreign investors, especially those 1 man Companies, are really behaving in an old fashioned imperialistic style that really doesn't help them when the legislators have to issue some new policy, or a visa!

So, if you equate "face" with "reputation" or "self respect", then "face" is an extremely important concept. But please do not use the face just as a temporary make up to cover corruption, or do other dirty business.....

"Guangxi" for beginners!

2009-04-13T14:28:00.002+08:00

I am sure everybody knows what's the meaning of "guangxi". It means "connection", "relationship"....!
Now, the key question is: "Is it really so relevant in China"? Well, yes and no, as everything in China business.
Yes because, honestly, if you don't have good relationships with potential clients, authorities, partners....then it's very difficult for you to start your business here; so, the more relevant people you know, the better off you are! However....to have "guangxi" is not all what it takes! Are you an expert in what you are doing? Your products/services are good enough? Did you actually prepare a business plan before coming to China? Or you have just heard that China is the "market of the future"?

China IS the market of the future, actually it's like this since kind long time, but some Companies just now woke up. No worries, there is space for everybody, IF there is a good strategy behind! China is a very challenging market, you can make and lose a lot of money in no time, actually you lose your money in no time, whilst to make money...well....needs more time!

As I said, the "Veni, Vidi, Vici" attitude, is NOT helpful. You need to build "guangxi", but not only. You need to prepare, and this require some degree of open mindness that not every business person possesses.

So, let's say it clearly: are you coming here to produce T-shirts? Yes? Then stay home! Are you investing in some value added project, high-tech, CDM? Then you might have chances!

Eldorado?

2009-04-13T14:10:00.000+08:00

"How to do business in China", "How to succeed in China", "The perfect manual for your Chinese Investments", I can continue forever with a list of all these "professional" advices, that promise you the "Eldorado". Do you want to know the truth, or at least my personal interpretation of the truth? Well, as I see it, there is no book that can teach you how to do business here! There are just books showing you the business manners, explaining the laws...those are ok. But never trust anyone promising you the Eldorado....China is an extremely difficult place to invest, and if your attitude is like "Veni, vidi, vici", then you can forget you dreams of glory and prepare yourself to the imminent failure!

Now, to be positive: is true that China is a great place to invest? YES....BUT with some distinguo...In this "semi-professional" blog I will try to explain, sometimes also in a funny way, the do's and dont's (and the pros and cons) of doing business in China.