We are planning a series of posts on doing business in China. This has long been a mainstay of our work, and we now have enough distance from client engagements that we can discuss the subject more broadly without risk of disclosing anything. Of course, the irony is that any discussion of doing business in China today is complete conjecture. The US is now in a trade war with China, and that adds a great deal of uncertainty to the subject.
That being said, eventually trade conditions will find some new normal, and China is going to remain a major economic center. Anyone running a technology business is going to have to do business there or come to some sort of accommodation. So set aside political concerns (as much as possible). In these posts we will look at how to set up operations there, ways to conduct business in China, and a range of other topics.
If we had to summarize our outlook on how to approach business in China we would say the focus should remain on just that, your business. There is an incredible amount written about the complexities of doing business there and the vagaries of misguided joint ventures, but too often these miss the point. All too often, we speak to people who approach China with an inherently political mindset. They either seek out the “most connected” partners or come to meetings in full-aggro mode picking needless fights. This is based on the assumption that everything in China is “too political”. While it is true that the State has a big role in the economy, business entities there are at heart commercial, they need to make a profit for their stakeholders just as much as your company needs to make a profit for your shareholders.
Not so long ago, we were working with a client who had a very high-profile joint venture in China. And at some point the Chinese side raised a complaint, because the US side was super-sensitive for their own internal reasons, this complaint quickly escalated into a full-blown fight, complete with boardroom shouting matches and threats to sever all ties. When we were asked for counsel, we went back to the heart of the matter. Why was the Chinese side upset in the first place? The answer was their engineering team could not access a set of needed support files due to a poorly configured firewall. An IT glitch almost resulted in a full-blown breakdown which would have hurt everyone involved. A one week crisis was solved in fifteen minutes on an IT admin’s console. RTFM people. Take a breath.
Now we are not ignorant of the considerable barriers erected in China, but many of these problems have workable solutions. We will touch on both sides of this. Our point is simply that the best way to start doing business in China is to let the businesspeople lead, bring in the lawyers and the government affairs staff and fixers later in supporting roles. Start with commercial principles and understand the other side is likely starting there as well. Doing business in China is not easy, but is not some ‘inscrutable’, impossible puzzle.