This is China! blog

The best part of speaking at the 6th Annual Conference on Legal, Tax and Financial Strategies for Doing Business in China was the venue: San Francisco. The Conference took place December 8th and 9th at the Sheraton Hotel at Fisherman’s Wharf. Though the temperature was cooler than I thought it would be when I boarded the plane in Shanghai, I managed to have a good time nonetheless.

I spoke on “Gauging Government Effectiveness in China’s X-tier Cities” during the Conference. X-tier Cities is my short-hand for indicating cities in China smaller and less developed than Beijing, Shanghai and Guangzhou, so-called 1-st tier cities. My hometown Suzhou is considered a second-tier city, because of its size, mostly; as well as Hangzhou, Nanjing and so on. Third-tier cities include Ningbo, Xi’an Chengdu and the like.

Anyway, the point of my talk is that if local government officials vomit on you because they’ve drunk too much during or after a banquet they’ve hosted, the area is probably not a good one in which to invest your hard-earned millions of dollars or euros or what have you. Of course, there are other ways of measuring government effectiveness of an economic development zone, including openly published measures of local tax obligations; government travel and entertainment expenses as a proportion of sales; percentage of university grads employed at local operations; customs clearance times; bank lending rates and the degree to which locals have to grease the palms of bank workers for a loan; and electricity outage stats.

Additional means of gauging whether a local authority is ready for prime time include the degree to which guanxi must be used to conduct business; the level of civilization (wen ming) administrators display; the degree of enthusiasm local authorities show in your project; and whether officials have their act together sufficiently to organize the area as a center of excellence for your industry.

A problem I’ve discovered in attending conferences in the States is that they are not as current as the conferences occurring in China; hence, there was nothing at the conference about managing in the challenging economic and financial environment. There was instead the basic fare about setting up a WOFE versus a JV; using an offshore entity to invest in China; the revision to the Enterprise Income Tax Law.

There were some interesting topics addressed such as the new Anti-monopoly law: it’s clear there’s a lot that’s unclear in the law and its application. The talk update on Intellectual Property Rights (IPR) was informative and interesting, as it is every year I’ve participated in the Conference (I think this was the sixth). And I did find interesting the discussion about the government’s employee protection and unionization of Fortune 500 companies, with some nuts and bolts I could use in my own company. Otherwise, some of the tax presentations were too technical and too, well, boring to hold my attention. But, then again, read the title of the Conference.

Still, the bistros at Union Square come highly recommended; and the Italian restaurants around Nob Hill were superb. And then there was Hooters….

A couple weeks ago I attended a conference in Shanghai entitled, “HR – Retention: How to keep your best and brightest,” sponsored by the China Economic Review. The full-day conference was a mixed-bag, at times too high-flown to be of real use. Why conference organizers think people from big companies are good speakers eludes me: eighty-percent of the time they speak in tongues induced by the lack of oxygen at 30,000 feet. Frankly, even people who work in organizations with 1,000-plus people don’t find corporate-speak very useful.

Nonetheless, there were some useful nuggets to take away: I liked the polls presented by HR consultancies showing that Chinese staff are the most stressed in China; I appreciated the insight that underscored the observation that Chinese people most of the time leave (more than 70%) because they hate their managers; and Chinese people prize a clear career development plan as much as they do salary and title; I had underestimated corporate branding as a way to attract and retain the best – never again will I make that mistake; and I vowed after the conference to have my office send a nice email thanking people for taking the time to send the cv to our company, as long as the cv isn’t complete garbage (you’d be surprised at the number of chemical engineers interested in working for a legal consultancy).

As a conference attendee, I learned the merits of delivering presentations with useful insights and tactics that attendees can take away and put to use in their operations without delay.

After all, no one can hear you scream at 30,000 feet.

It was the masseuse who clued me in. I had asked her, “How’s business been?” She squeezed my neck hard, replied, “Down a bit. They may be laying some of the staff off.” Pity if they cut her, I winced, as she has been an able masseuse, wringing the knots out of my neck and upper-back for the past half year.

“What clients seem most affected by the downturn in business in Suzhou?”

She pounded my shoulders with her fists. “The Koreans and the Swiss.” The Swiss?

The Koreans I can understand. Samsung had been rumoured to be laying off thousands: sluggish domestic and international markets for their appliances. Korean brands such as Samsung and LG do very well in the China market with product lines that range from refrigerators to air conditioners to mobile phones.

Meanwhile, at home, the South Koreans seem bent on outdoing the Americans in the levels of household debt, according to yesterday’s Wall Street Journal.

“Household debt increased to 66% of South Korea’s gross domestic product last year from 38% a decade earlier, accordingin to a recent study by the International Monetary Fund. ..

“The country also turned into a debtor nation for the first time in more than eight years during the third quarter, larely because banks’ external borrowing in creased while the country’s foreign-exchange reserves fell sharply…”

“As exports fade, South Korean producers are likely to cut back…”

As for the Swiss? Go figure.