This is China! blog

One of the most gorgeous government office buildings I have seen anywhere in China lies in Jiangsu Province, near Shanghai. It’s architecture is an update of Chinese traditional architecture, all clean, straight lines, great panes of glass that frame courtyard gardens and water fountains. The architect, it seems, was American, interestingly. The building as a grand bit of modern art sits back off a busy highway with nothing else around it. Perhaps in a few years that will change as more construction projects grip the district.

One does have to wonder, though, if the budget for the building would pass the requirements just released for government officials’ expenditures. The central government has just released new guidelines on what justifies proper behavior on the part of officials. Party leaders are trying to show the public they are serious about curbing corruption within their ranks. Bans on lavish weddings and funerals may sound strange to us Westerners, but extravagant gatherings is a way in which Chinese show friends, family and neighbors they’ve made the big time. Luxury sedans are out, too; though who will be the poor sod on the local police force to tell a Vice Mayor he shouldn’t be riding around town in a Lexus? Government headquarters as posh as any resort are a no-no, too. Though they sure are nice to look at.

Further reading: BBC, Chinese anti-corruption website

Previous posts:

Kicking the Kick-back Habit

China’s Fantasy Football

The Human Flesh Search

I have this dark vision that one day in China I will attempt to log onto the web in China and it simply won’t be there. Only the People’s Daily appears, and perhaps handful of official mouthpieces as well. Every other website is down – foreign and domestic – and email no longer sends or receives messages.

I have an uncomfortable feeling that someone somewhere in Beijing has his finger on an “internet button” that will simply shut the entire super-network down here in China, just as they were able to in Xinjiang. Of course, you may be thinking, that would be madness. And it would be. But seldom have I ever seen or experienced a situation in which common sense trumped control – it’s usually the other way around, with Power self-destructing in a final, incindiary show of narcissim.

Xinjiang’s economy grew nearly a percentage point less than the country’s as whole, while its total trade volume was nearly twenty percent less than its provincial cousins. Still, central government keeps the electronic screws on the region, perhaps irreperably hurting the economy. It’s certainly affected Chinese investment in the region, as entrepreneurs throughout Xinjiang have been crippled as much as indigenous businesses.

Power disrupts; absolute power disrupts even itself.

Further reading: NYT

Previous posts:

Broken Web

Keeping Tabs on Netizens

When Big Brother Might Be Your Own Brother

How to be picked up by a Techno-chik in China

Inside China foreign businessmen have certainly noticed local government in China taking a harder edge to dealing with foreigners with visas and business approvals. The Rio Tinto case is an extreme point to consider, especially in light of the sensitivity of negotiations on a benchmark price for iron ore.

Reuters recently identified 5 political risks to watch out for in the China adventure 2010. Trade and currency disputes, especially between China and the United States. The article councils looking out for signs that positions are hardening between the two sides as an important determinant in whether relations will become incindiery.

The article also considers the possibility of fallout from the dispute with Google. If reports begin streaming from Beijing of foreign deals scuppered or delayed – especially in the media sector – be sure the Google effect is at play.

Of course, the old bogie man of social stability is a conventional sanity check on whether Chinese leadership will make a dramatic decision. Watch out for signs that inflation or housing costs may be getting out of hand.

Health problems caused by excessive pollution has always been a flash point at local levels. Some foreign companies may find themselves suddenly caught up in a spontaneous government dragnet to close down or spoil the usual suspects.

Meanwhile, issues like Google and Rio Tinto forewarn that the leadership has not yet learned how to sap the political charge from business dealings.

So, though the promise of China’s vast marketplace is still worth the risk, foreign companies need to make sure they have their exit strategies updated if their investments in any way lay near the third-rail of national prerogative in China.

Further reading: Reuters, FT

See also:

In the Eye of the Hurricane

A lot of experienced expat managers of late have been telling me kick-back stories. I don’t know if the incidence of corruption in China operations is on the increase, or if the stories just make for good entertainment. Chinese managers – usually in purchasing and HR – are usually the culprits. One Chinese purchasing manager at an American company had asked a local European company for a commission to get a project. The European GM called the American GM and told him of the incident. The American enterprise promptly fired the purchasing manager. An internal auditor from the home office told me he had come to China for a month to see how systemic the corruption was in the American company. Another company saw the purchasing manager rake in such a mother-lode of kick-backs that he owned two houses in Greater Shanghai, and two in Beijing. Even if the company catches him with his hand in the till and fires him, he still gets to keep the houses.

In another instance, a Western team of experienced expats was sent into a Western company to investigate corruption. Team members began receiving death threats about their intrusion into the inner workings of the company. One of the group simply quit: someone cheating the system simply was not worth his life.

The possibility that Google employees were involved in facilitating the cyber-attack on their own company brings up serious questions about the security of companies overall that operate in China. Is your company safe from your own employees?

With the dissolution of Communist ideology in a profane society, most Chinese have taken on the mantle of nationalism to fill a collective existential void. The basis of this form of nationalism is the wrong that other countries have done China in the past. That includes the Opium Wars;the 21 powers that entered Beijing’s gates after the Boxer Rebellion in 1900;  plus Japan, with the  the atrocities its soldiers committed during its War of Aggression. Daily and nightly television programming and state-run papers in China rabbit on about the incursions as though they had happened just yesterday; meanwhile, most of the rest of the world has moved on to other challenges and to creating new chapters of history. Still, the leadership drones on in Cultural-Revolution fashion about building a strong, self-sufficient nation – even if it is at the expense of the trust other countries place in the Chinese experiment.

Companies in highly sensitive industries – especially those in which technology development has an abiding relationship with their home-country’s national interests – perhaps should be concerned with vetting employees a little more closely than in the past, and with creating monitoring systems and internal controls that act as firewalls against complete enterprise compromise.

It seems Western brands of open-ness and sense of “fair play” may not fit snugly in China’s chip on its shoulder.

Further reading: Reuters, CNET

The latest Pew poll that sees 44% of Americans believing China is the predominant world economic power puts me in mind of similar American sentiments back in 1989, when many Americans believed Japan was buying up America. Remember when Japanese investors bought Rockefeller Center for US$2 billion? The following year, of course, Japan’s bubble economy burst and the Japanese economy was in the doldrums for nearly fifteen years afterward.

Makes one wonder if Main Street may be an accurate – albeit contrarian – barometer for national over-reach, in the same vein as the buy/sell cycle on Wall Street: the average guy buying when he should be selling, and selling when he should be buying. As James Fallows so graphically points out in his blog entry about the poll, China has a long ways to go before it can afford to live life as Americans do. Americans, though, perceive China as already having the world economy in its rice bowl.

Of course, those that live in China know American perceptions as expressed in the poll are overblown. Unfortunately, State-side, CEOs, their VPs and the Boards of Directors don’t much look past polls (and that includes our own President of the United States), and will overreact to the peception that the balance of power is now China’s. Business decision makers will err  either on the side of pandering to Chinese business interests who are only too happy to perpetrate the illusion; or they’ll fortify the walls of Bunker America and push for protectionist measures from Congress.

Either way, politicians, economists and even journalists back in the States are clearly not providing the public a clear view of what’s happening in the world. That means there are a lot of opportunities America will simply not see through the myopia of its own polls.

Further reading: The Atlantic.com, People’s Press, Shanghaiist

A German friend sent me a text message recently after the Chinese General Manager of a Nanjing factory had canceled the interview he had arranged with her. He was interested in working with my highly capable friend to implement quality controls and document systems in the company. The text read: “That boss is going to meet me after the 28th he is drunk [sic] cause of meeting that he had all day and tomorrow morning he has to fly to Xian so I meet him after the 28th … What does that mean when Chinese behave like that?”

To which I suggested if that’s the job she wants, she’d better lower her expectations for actually having a boss who knows how to manage. Of course, the boss would merely respond, “Chinese Way.”