December 21, 2007
Recommended Blog: China's Scientific and Academic Integrity Watch
Those of you in China having several years of experience hiring top research talent from the top universities are, I suspect, aware that Chinese students, even from these schools, must be vetted with care. It is not that Chinese are more likely to cheat than another nationality -- academic dishonesty is rife everywhere there is an intent to cut corners (and cheap and easy internet access to sources ripe for plagiarism).
Instead, I think, many westerners have the wrongheaded notion that somehow Chinese students hold themselves to a higher standard of conduct. Steven Stearns of Yale, a guest lecturer at Beijing University （北大）, penned this severe remonstration to his students, noting with substantial emotion his great disappointment at the scale of plagiarism, even at the very apex of the Chinese academy.
Professor Stearns even adduces the Confucian ideal of the gentleman （君子）, a concept long dead to PRC Chinese, which still arguably lingers on in some overseas Chinese communities, especially the Taiwanese. The appeal to traditional virtue may, in fact, appeal to those few within China who have only recently seemed to rediscover the Classics, but it is likely to fall on the deaf ears of Chinese youth.
For how can a gentleman, in the classical sense, whose position as scholar was formerly elevated above all others, especially the merchant, prosper in a ruthlessly competitive commercial society? Is integrity integral to success? Or do they, at least in the mind of the ambitious, mix like oil and vinegar? And to what or to whom does one look as a model of virtue in China? Does one exist any longer?
The blog, China's Scientific and Academic Integrity Watch, on which Professor Stearns's letter may be found is of very great interest to the general reader on China.
Posted by Richard at 4:49 PM | Comments (1)November 28, 2007
Law and Religion: A Western Perspective on China
Southern Weekly （南方周末）interviewed Harold Berman, author of " Law and Revolution," found here and here. That Berman, whose expertise extended to the religious foundations of Western law, should be the focus of a two-hour interview with an iconoclastic and popular Chinese language Sunday Magazine is in itself a wonder -- not solely for its political commentary. One is delighted to know that its readership is, in the minds of the editors, sufficiently well-educated and curious to wish to read it.
法的背後是什麼？
南方周末 2007-11-22 14:30:57
2006年1月31日，中國社會科學院美國研究所研究員、美國埃莫裏大學法學院法律與宗教研究中心客座研究員劉澎在埃莫裏大學法學院伯爾曼教授的辦公室采訪了伯爾曼教授。在這次長達2個半小時的訪談中，伯爾曼先生深入淺出地歸納了自己的法學觀，這是伯爾曼先生去世前單獨與中國學者進行的最為深入的一次學術對話。限於篇幅，本報對訪談有刪節。
劉澎(以下簡稱劉)：教授，您認為在宗教和法律之間存在共同之處嗎？
伯爾曼(以下簡稱伯)：是的，至少有四點：儀式、傳統、權威和普遍性。對法律的信仰是普遍的，就像一種世界宗教。我非常相信基督教和所有偉大的宗教，特別是儒教和佛教，以及所有世俗的信仰，包括共產主義在內，都有一個精神層面的東西。
劉：在一個國家，沒有宗教信仰基礎，法律自身能否單獨發揮作用？
伯：法律只有具備了精神上的效力才能發揮作用，如果每個人都認為違反法律是錯誤的，我們就需要這個法律。我知道這在哪裏都是如此。
劉：您的意思是說，在法律之上還有適用於全人類的某些普遍原則？
伯：對，它存在於人的內心之中。
劉：那麼，您認為對法律的信仰和對宗教的信仰之間是否存在主要的差別？
伯：我認為法律有一個精神層面的信仰，取決於你怎麼看。像《十誡》當中的第六、第七條戒律，已被納入到了所有的文明之中，無論在哪種文化中，盜竊、殺人、毀約等等都是錯誤的。
劉：在中國，我們沒有這種基督教背景、文化和傳統，因此有人強調法律的重要性，呼籲人民尊重法律。我們的問題是，我們有法律，但沒有人執行或遵從它，您有什麼解決辦法？
伯：我認為，如果他們改變自己對法律的理解，事情就會有轉機，因為法律不止是政府所說的話。人們知道的主要是習慣法，那是由人們自己在家裏制定出來的。他們恪守承諾、與鄰為善，他們認為應該如此。
劉：也就是說習慣法是基於人的內心。
伯：是的。子女應該尊重父母，父母應該照顧子女。
Read the interview in its entirety here.
Posted by Richard at 3:40 PM | Comments (0)October 18, 2007
China Plans CCP Branch in Space
The more prescient members at the National Party Congress are evidently thinking far outside the box. Outside the planet, it appears...
China's space communists would "carry out the regular activities of a Communist Party of China branch in space in the way we do on Earth," Yang Liwei, the first Chinese astronaut to fly into space, was quoted by Xinhua as saying on the sidelines of the national party congress. Yang said a party branch would have to await establishment of a permanent presence in space such as a space station, something China is decades from achieving.
[Kudos to Miss Johnson from London. Knightsbridge, perhaps?]
August 27, 2007
Beijing: Analysis of a Left Turn
You will appreciate this fine analysis of left turn in Beijing. With thanks to Emperor B for the onpass. Then watch a video of traffic patterns at an intersection in Guangzhou here.
No, really, it's fascinating!
Posted by Richard at 1:09 PM | Comments (0)July 31, 2007
Price-Fixing in China? Case-in-point: the Aluminum Industry
[Editor's Note: Price fixing and industry collusion aren't generally considered hot topics among investors and lawyers, except when the discussion turns to China. Does Chinese business culture, whatever that may be, favor monopolistic behavior, eschewing competition? Or is price fixing, where it occassionally pops up, merely a symptom of inadequate regulation, incompetent administration or general chaos, regardless of the region?
Alas, these questions have been subject to endless disputation, often argued anecdotally, for lack of hard evidence, as mere unsubstantiated claim. We are thus grateful to Lou Schwartz for today's post, which provides us with the benefit of his lengthy experience analyzing and reporting on the Chinese aluminum industry. His bio may be found at the end of his post.]
Contrary to Lou Dobbs’s characterization of China as “Communist” or “Red,” China’s economy today is actually raw, unbridled capitalism. The Chinese aluminum industry, which I have followed closely for more than eight years, is very representative of the road that China’s economy has taken since the death of Mao and the beginning of the Reform Period. From an outdated and lethargic industrial base managed by an enormous government-run mega-corporation to a plethora of new companies whose world-class plants are financed with much more private capital than state-owned bank loans (in 2006 77.2% of the capital which the Chinese non-ferrous metals industry used for fixed asset investment came from non-bank sources), the aluminum industry represents how Chinese industry has become more like what is described in The Wealth of Nations than the Communist Manifesto. And if there still is a doubt that the Chinese economy has become the greatest example of pure capitalism -- with all its warts -- since Adam Smith described it, one need look no further than the aluminum industry again, which has been spotted organizing cartels in an effort to save themselves from their own excesses.
The Chinese aluminum industry largely has followed the same meteoric trajectory as a wide variety of Chinese industries. In the first forty years (1953-1992) of its existence, the industry’s capacity to produce primary aluminum grew to 1 million tonnes per year (tpy). It took just an additional 5 years for primary aluminum capacity in China to reach 2 million tpy. Assisted by the restructuring of the Chinese non-ferrous industry beginning in 1997, a plethora of new companies in this space has grown China’s aluminum smelting capacity to a projected 14.6 million tpy this year from 3 million tpy as of the end of 2001. By late 2005, a group of 23 primary aluminum smelting companies, smarting from growing losses caused by their unrestrained development of smelting capacity which had exceeded even the torrid ramp up of demand for aluminum in China, banded together and agreed to idle 10% of their capacity to stabilize the price of aluminum. This consortium was sufficiently disciplined in idling capacity that it was able to mostly stave off a series of projected insolvencies among Chinese aluminum smelters.
Perhaps the most significant reason why primary aluminum smelters felt compelled in 2005 to form a seller’s cartel and idle capacity was that the price of alumina, their most significant input, had more than doubled in price -- due to the rapid increase in capacity in the Chinese primary aluminum smelting industry. The world’s producers of alumina, including the remaining Chinese state-owned aluminum industry behemoth--the Aluminum Corporation of China Limited (Chalco) ((中国铝业股份有限公司 (中国铝业)) benefited royally from surging alumina prices: Chalco leveraged the squeeze that primary aluminum smelters found themselves in to acquire companies that were at the brink of insolvency.
As the world price of alumina rose, Chinese entrepreneurs ((including Xinfa Aluminum Industry (信发铝业) and Weiqiao Aluminum Industry (魏桥铝业)), now inhabiting a free-wheeling economy, leapt at the apparent opportunities in alumina refining and in early 2006 began a rapid multi-billion Yuan build-up of alumina refining capacity in China. As of the end of 2007, total alumina refining capacity in China is expected to reach 27.7 million tpy, an increase of 4.4 million-tpy over year-end 2006 and a 17 million tpy increase over year end 2005! Not surprisingly the price of alumina has dropped by two-thirds since late 2005 and the price of the alumina refining industry’s most significant input -- bauxite -- has increased precipitously. This turn of events caused a group of seven private alumina producers, to meet in early 2007 and agree to adjust output to support alumina prices.
Meanwhile, lured by outsized prospects in supplying aluminum sheet, coil and foil for the construction, automotive and packaging industries in China and easy access to capital, Chinese industrialists flocked to the aluminum rolling industry beginning in 2004, pushing capacity up from 1.5 million tpy in 2004 to 2.5 million tpy in 2005; when all the rolling mills under construction or in planning are completed as of 2010, China’s rolling industry will have more than 5 million tpy of rolling capacity. In the so-called “Double 0” segment of the rolling industry (named for the thickness in millimeters of the aluminum foil produced) which supplies aluminum foil to that part of the packaging industry serving the tobacco, food, beverage, pharmaceutical and cosmetics industries, the growth in capacity is expected to grow to a significant proportion of the 940,000 tpy in total aluminum foil capacity which will be in place by 2010. Once again the response of the thinner gauge segment of the aluminum foil industry was to form a cartel to attempt to control output and prices. According to a report in 中国铝业网, in February 2006 five of the principal producers of “Double 0” aluminum foil met at a “summit” meeting to agree, among other things, to hold their respective shares of the domestic market to a fixed amount, to export all output in excess of their agreed share of the domestic market, to adhere to a specified lowest domestic and export processing price and to refrain from selling their products for a price in excess of the imported price.
In the free-wheeling economic environment that is today’s China it is far from certain that the attempts to monopolize markets is likely to have more than short term benefits to the Chinese monopolists. Rather, the central dynamics which Adam Smith discussed with such acuity in 1776 are at work in China today and will ensure that the attempts at monopoly power by some of the actors in this panoramic economy will not permit the level of control that was a fixture of the pre-Reform period.
[Lou Schwartz is president of China Strategies, LLC and publisher of the China Renewable Energy and Sustainable Development Report, as well as the China Aluminum Industry Report. Mr. Schwartz earned degrees in East Asian Studies from the University of Michigan and Harvard University, as well as his J.D. from George Washington University Law School.
Fluent in Mandarin Chinese, Lou work includes matters dealing with China's legal system, economic development, trade and investment. After serving at a large U.S. law firm, Lou has for a decade taught at the University of Pittsburgh School of Law and College of Arts and Sciences.]
Posted by Richard at 9:00 PM | Comments (1)April 13, 2007
Is What You Read About China Remotely Reliable?
In the 1980s, the Chinese government discredited Steven Mosher, a scholar of modern China and PhD candidate at Stanford University, and expelled him from the country. China's claims are immaterial -- it was clear that he was punished for documenting the horrors of the one-child policy.
China then threatened Stanford with excommunication: no funding, no exchanges. Stanford to its great and lasting shame did the unthinkable and expelled Mosher.
At the time, I hadn't yet decided whether to enter a PhD program in Chinese Studies. But I do remember some of my university instructors cautioning me to choose a topic wisely.
Mei Tzu-lin, whom I absolutely adored, was one of the few heroic figures I have ever met in academia. He asked me whether I intended to spend my scholarly life gallivanting through the Chinese countryside, adulterating my findings and conclusions out of fear of reprisal, or whether I was a scholar determined to search for the truth. I vaguely remember stuttering something, shocked by the profundity of his question.
In this essay, discovered on Howard French's fine blog, Carsten Holz provides an answer.
Posted by Richard at 4:27 PM | Comments (4)February 23, 2007
Another Chinese Super(business)man?
James Fallows reports on yet another rags-to-riches megalomaniac. Mr. Fallows's report, perhaps unknowingly, has caught in a 5 minute video all the usual characteristics of this Chinese type: xenophilia (but at a distance), imitation of "best practices," massive display of wealth, rigid enforcement of conformity among his employees, the creation of a personal ideology and, of course, assistants crowding round hoping to collect every tit-bit of his wisdom.
Posted by Richard at 6:09 PM | Comments (0)February 7, 2007
The Chinese on the Business Acumen of the Jews
The happy belief that Jews are, to a man, accomplished money-makers -- hard-working and smart as well! -- is widespread among Chinese. Ask just about any Chinese -- worldwide -- what he thinks about Jews and the response will be precisely that. Go ahead - just ask your colleague.
Deprived of contact with Jews, perhaps having only a vestigial recollection of the Persian Jews, like the Sassoons and the Kadoories, who emigrated to Shanghai in the 19th century to build business empires, Chinese consider it positive, acceptable and accurate to lump all Jews together into an easily managed concept. (Blacks are similarly roped and corralled, but with harshly negative overtones.)
Jewish people might find any stereotype offensive, but this one bestows substantial respect upon Jews, especially when one's Chinese business counterpart discovers that he is Jewish. My suggestion to Jewish businessmen is simply to grin and bear it. Repeat after me: "Yes, damn it, you bet I'm smart. But we're friends and we can make money together!"
(Japanese, to their discredit, have a somewhat similar view of Jews, but the thrust is unkind, with vague reverberations of world conspiracy that is absent from the Chinese. Lots of Japanese publications on that score...)
By the way, ask any Shanghai resident if what other Chinese say about them is true -- that they are without exception the craftiest businessmen, exceeding even Wenzhou people, in the nation. Most Shanghai born and bred folk cringe and deny. But when asked whether Jews are smart businessmen, they readily agree. [Rapidly nodding heads with ejaculations of "oh, absolutely!"]
Here's a fun little read. Books such as these have been on mainland Chinese shelves since the late 90s, but, If I remember correctly, publishers in Taiwan sold similar books in the late 70s and 80s. The titles escape me. Might a reader remember?
Posted by Richard at 12:18 PM | Comments (1)September 12, 2006
Audio: Pirated Editions and American Copyright Law: Part I
Click the little triangle to hear today's post.
Pirated Editions and American Copyright Law: Part I
[Editor's Note: This paper was commissioned by the Chinese-American Librarians Association and presented in a talk given at the Queens Public Library in New York City. Anyone interested in pirated products and copyrights may find this a worthwhile read.]
Pirated Editions and American Copyright Law:
Implications for Libraries Building a Chinese Language Collection
ABSTRACT: This paper discusses the phenomenon of pirated Chinese publications, relevant aspects of American copyright law and the implications for libraries building Chinese collections.
Part I
I. Introduction
There is a large bookstore on Hongqiao Road (虹桥路) in Shanghai which takes up an entire floor of a major electronics mall. It is not nearly as prolific as the 6 floors of Shanghai Shucheng (上海书城 -- Shanghai Book City) on Fuzhou Lu Road (福州路), nor does it have the specialty books such as the reproductions of ancient works, like the bookstore Shanghai Guji Shudian (上海古籍书店), but it is still extensive and modern, and since it was close to where I was living at the time, I visited it often.
One day I decided to walk all the stacks, and quickly noticed the computer books section – several walls stocked to the brim with textbooks – all pirated, that is, printed without permission of the copyright holder.
I then walked through the business section where a large number of best sellers in the US had been translated and put into print in China, again without permission of the copyright holder. Then I traveled over to the CD section, where I could choose from the genuine Deutsche Grammophon CDs imported from Germany at 300 RMB (about US$40) and up, or, the illegal copies made in China, at 1/10 that price. Then over to the VCD section (as DVDs are known in China), where…well you get the picture.
It is not just the traditional street sellers who are the distribution channel for counterfeit book materials. Mainstream bookstores in China carry huge inventories of unlicensed works of copyrighted material for sale to the domestic market. Pirating is a mainstream in China. And it is everywhere.
II. Pirated Chinese Editions and Copyright Infringement in the U.S.
What concerns us today is the purchase of Chinese book materials (books, audio CDs and DVDs) by US library buyers, and its implications. We’ll examine this question: Does library use of unauthorized Chinese publications, commonly known as “pirates” or “pirated editions,” constitute an infringement of intellectual property rights? If so, when and to what extent? And what, if anything, can be done to protect a library from claims of infringement that may be made against it?
What is intellectual property, anyway? There are many definitions. Let us describe it generally, the easy way. Very briefly, it refers to just about anything you can think up and express, and which you might be able to make some money from. In this country, and in most others, government protects assets created by the intellect in a variety of forms, for example, in patents for inventions and designs and the like; in trademarks, like brand names and logos; and in copyrights, of stories, songs, films, etc., even of pantomimes. In other words, the person who comes up with these imaginative inventions of the mind has certain rights in them and others can not make use of them, generally speaking, without permission, usually procurable by the payment of money. This discussion will focus on copyrights, leaving aside patents and trademarks.
How do people protect themselves against the theft of intangible assets, such as these? You can put valuables, like coins and jewelry, in a safe deposit box in the bank. But to make commercial use of them, by selling them, for example, they must be displayed, and you would go to great lengths to ensure that physical valuables are not easily stolen by someone who sees what you have got. Intellectual property laws and the mechanisms to enforce them are the means by which intangible assets are protected. While there are similarities between Chinese and American intellectual property law, there are differences; but enforcement of the law is so very different in effect that where one may be well protected in the U.S., one may be virtually unprotected in China.
Who hurts and who gains when copyright is infringed? The copyright holder is not paid for his work; the seller of an unauthorized work profits while failing to uphold the law. The purchaser usually receives a poor quality substitute, but saves money, and may run the risk of infringing upon the rights of the copyright holder as well. Infringement, in the larger scheme of things, is an attack upon the system of laws and enforcement established to maintain market order and to encourage invention and creation.
Despite a Copyright Act in existence since 1790, America has seen significant book pirating in its history. 19th century American publishers pirated thousands of popular English works without obtaining permission from copyright holders across the Atlantic. One often sees on the cover or title page of works of the time the label “Authorized Edition,” which the reading public may have considered a signal as to the quality and integrity of the text. These days, book pirating in the U.S. is negligible. In modern China, despite the existence of intellectual property laws, albeit in their infancy, and a regime that professes to their enforcement, there is, similar to 19th century America, little check on the infringement of intellectual property rights.
It is cheaper not to pay the rights holder and then force him to sue. The rights holder who sues finds that his chances of success are much more doubtful in China than in the U.S. The infringer in China is more likely to get away with it. Besides, someone else will do it if you do not, creating a cheaper product that will take market share away from you. What is important in understanding this phenomenon is that mainland Chinese, who have only recently been introduced to the idea of personal rights in any form, have not yet gotten their minds around their fundamental nature, which is that rights, which are abstractions, can have finite value in and of themselves. Intellectual property is a complex bundle of intangible rights with real value. This is a difficult concept to grasp.
When I first sold computer hardware into China in the early 1990s, Chinese buyers would not think of paying extra for service (maintenance) on the machines. After a few years, they began to realize the value of service, and began paying for it with greater willingness. It took a combination of the customer’s inability to reproduce the service, as well as their recognition of its value to them, for them to willingly pay for it. Gradually, some intangible services are now recognized by mainland Chinese as having such value that people are willing to pay for it. A similar change may come in the area of intellectual property in China.
But in the short term, one can not expect rapid and radical change in intellectual property rights consciousness. Mainland Chinese seem to recognize that they may have certain legal rights, but apparently they have not yet extended that idea to the general public. In more traditional Chinese parlance, we might even say there remains a serious lack of social ethics (公德心).
In other words, “I have rights,” but there is little recognition that “you as well have rights.” A further complication finds the modern extension of an historically traditional disrespect Chinese generally feel towards the concept of rule of law, in great contrast to their more respectful attitude towards (or perhaps fear of) the rule of man. In such an environment, one can expect relatively lethargic and stuttering progress towards the development of a consciousness in China that equates the unauthorized use of intellectual property with theft; that the theft itself is unlawful and unethical; and is, as well, an attack upon the developing structure of legal rights. With greater exposure to the ideas of intellectual property and the rights involved, China may see progress over the next few generations. It took the United States a long time before a system of intellectual property rights became well established, not only in law, but in the American consciousness. However, even now, as we all know, digital technologies and the ease of cheap copying have once again posed a challenge in the American mindset.
TO BE CONTINUED
Posted by Richard at 4:52 PM | Comments (2)June 9, 2006
Sino-British Joint-Venture Dissolved for Rudeness?
Here is as curious a report as can be imagined. A Sino-British joint-venture dissolved because of one rude encounter between chief executives?
Beijing Guoan Advertising head Yan Gang said the decision [to dissolve the joint venture] came after he was called to London in April to discuss management problems and was allegedly given a brusque reception by WPP chief executive Sir Martin Sorrell.
"I have met a lot of people but never met anyone as rude as (Sir) Martin," Yan told the British newspaper.
"Because of this kind of attitude, we have been forced to cease co-operation with him."
One is stunned as with a brickbat over the forehead. Chinese are supremely practical beings -- a mere snub overwhelming commercial motives? There must be more to the story.
Can any reader, perhaps in the ad business, supplement?
Posted by Richard at 12:39 PM | Comments (2)May 16, 2006
Study: 60% of Chinese Ph.D. Candidates Admit to Plagiarism, Bribery
In a story related to yesterday's post, as well as the HanXin （汉芯）chip scandal, the Christian Science Monitor reports on a Chinese government study of 180 Ph.D. candidates which found that fully 60% admitted to plagiarism and bribery. Can it be possible? Are Chinese academic standards really so very low, when Western instructors both in Chinese and American institutions of higher learning have generally viewed their Chinese students as upon the proverbial pedestal?
If true, American companies building R&D facilities in China, several of whom have been clients, need to pay heightened attention to the trustworthiness of the work their new hires purport to have performed as well as the reliability of results obtained in their own labs.
For modern-day mainland Chinese, does the goal and one's pursuit of it validate any means of obtaining it, including the purposeful obscuration of the truth?
Posted by Richard at 1:45 PM | Comments (2)April 7, 2006
Remarks at the ABA, Section of International Law Conference
[I would like to express my thanks to Amy Hirter of Holland & Hart and Bob Brown of Greenebaum, Doll & MacDonald, for inviting me to speak yesterday to the American Bar Association, Section of International Law conference in New York City. I found it thoroughly enjoyable and instructive. My remarks of yesterday follow, with audio to come. You will find the quick links to the "Irrational Exuberance" series towards the end of the post.]
Good afternoon and thank you for having me here today. My name is Rich Kuslan and I’ll discuss aspects of global business expansion, with specific reference to China and to the function of the business attorney involved in that expansion. For those of you with a good deal of China experience, my apologies for what might be repetitive information for you, but, I trust, still worthwhile.
China business is a hot topic. When I first became involved in it, in the early 1980s, only a very few Americans, outside of the State Department and Intelligence, showed much interest in China. Now, it seems, just about everyone, even those who don’t have much good reason to go there, feels that he must put at least his toes in the water. Expansion into China can prove to be a positive and profitable experience.
That noted, the Chinese waters in which we wish to warm our toes usually prove murky and deep. What lies down there and, by the way, how far down? And what can we do, working with our business clients, using our skills and talents, to help them through it and ensure maximum protection?
A brief note on the subject of law in the eyes of a Chinese businessman. The Chinese historically and by preference, have maintained social order and settled disputes, not based upon the rule of law, but upon the situation: party doctrine, power relationships, familial networks, friendships and other factors. In fact, from 1949, when the People’s Republic of China was established, until 1978, there was but one law in China, the Chinese Constitution, virtually no one populating the legal landscape and extremely few legal cases. (That said, Chinese heavily practiced mediation at the local level.) Since the promulgation of the next law after the Constitution, interestingly enough, the Criminal Law, in 1978, several thousand laws and regulations have been passed in a frenzy to provide the legal framework for a changed society, from one in which law and procedure was traditionally of little value to one in which they have gained in importance.
But still, there remains a tension in Chinese business society – Chinese in business consider the law only as the merest afterthought, for example, when government approvals are needed, and approach the law with resistance. More recently, viewed as a weapon to gain an advantage over a perceived combatant. Legal considerations are not usually a main ingredient in business planning, certainly not to the extent it is in the west. This is the thinking in the heads of the Chinese executives with whom you may find yourself dealing.
With this preface, I’d like to offer two guidelines you might want to take with you into the Chinese business environment.
1. In China, valuable information is always withheld.
This becomes very important when doing due diligence on a possible partner or distribution channel.
For example, it is common for a Chinese business enterprise, even state-owned behemoths ostensibly under the purview of the state or national government, to have two sets of books (or more), one (most likely accurate) for the use of executive management and the other for the tax authorities. This is common practice – but the official tax return that you are given during your review may not be reliable – so, will you become liable for tax avoidance penalties? Or perhaps there are debts owed by the company, but not included in the public set of books. You may find these debts have now become payable by you.
Important information – more accurate than the books to be given over to the Tax Bureau and thus of greater value – has been secreted. The idea that valuable information is always withheld permeates mainland Chinese society and makes the job of, for example, due diligence, that much more difficult. In passing, I note that where this idea tends to dissolve is in the trusted personal relationship between confidants, one in which valuable information is often shared.
A subset of this guideline is that any information that has any worth is considered valuable and thus confidential. But beware, you might be told information is confidential because it doesn’t exist.
To show you this in practice and also to demonstrate how tightly Chinese businessmen hold what we’d consider ordinary information, I give you a common example in business relating to routine information. The salesman in China, having been one myself, who asks the potentially helpful question of his customer what his plans are for the year upcoming, so that he can sell in the right product for the need or want, usually gets the response that it is none of his business to ask for such confidential information. And none is usually given, at least none that is reliable, and often because no plans have been made. One might think that, when searching for the right distributor, for example, where the power balance generally tips towards the supplier, that it would be that much easier to demand and receive accurate information. But, alas, it is not. The distributor feels he has every good reason and right to provide only that information which he feels will convince you to select him.
Knowing the guideline that valuable information is withheld, our job is to discover what that valuable and accurate information is. Part of the work involves three things, and here I generalize somewhat, 1) the ferreting out of bits of information from evidence that goes beyond words, such as forensic accounting, independent valuation of physical assets, interviews with employees and 3rd parties, even the rumor mill, etc., which all may give clues to the true situation, and 2) the creation of trusting personal relationships with management of the target, and even those farther down the chain, that enables one to receive worthwhile information from these sources that tend to confirm or deny suspicions, and allow one to pass on persuasive fact-based exhortations to management that might shake loose something more likely approximating the truth, and 3) some experience in the local business environment, so that one knows what to look out for. Note, please, that this work as herein summarized does not always remove the cloud cover completely, and often, you will find yourself working in the twilight, indeed, sometimes you may be in the dark, and not get a clear-cut answer.
As a personal example of a situation that worked out to the benefit of the foreign investor, once in South China I was dealing with Company X, a potential joint venture partner. Over the week I spent with them, I was treated from the start in an overly festive fashion, which put my antennae up immediately. During that week, I was provided with information about Company X which, based partially on my experience, I believed was very likely untrue, specifically their sales projections, which seemed high, and debt levels, which, for a state enterprise seemed very low. The foreign company was to rely upon this information as an important basis for its decision to invest, and I was to verify or disprove it. In passing, I note my conviction that my legal training helped me to penetrate the façade, but more on this later.
My initial questioning of this information brought responses of confirmation that the information they provided was accurate, but supporting information was lacking. Later in the week, I began to delve deeper into their bases for the information provided -- Why do you think you will sell X units of this product at this location? Who are your customers? How many installers do you currently have in that location? etc.-- probing for holes and finding many, becoming more uncertain about this company each day, when, by happenstance, I picked up the local newspaper which on its front cover displayed a picture of a new skyscraper along with an article on its investors, including this Company X, which had stated to me it was involved only in the manufacture and sale of its core products. Their investment in the building was staggering for the company’s size and it was speculative as well. Not wanting to broach this topic directly with the managing director of the company – hoping not to embarrass him, at least not publicly – I showed the article to one of his aides. The aide denied it, and the other aides denied it, and then, perhaps partially owing to the friendly relationship I’d created with the MD but more probably spurred on by the shrinking likelihood of success of continued denials, the MD himself confirmed it. My suspicions about the other information that I had been presented were more than likely confirmed. The western company did not invest in this firm. That was the good thing that happened for the western company in this deal.
A note: whereas Chinese in the 1990s were poorly equipped to deal with foreigners, and generally unknowing of and unwilling to meet foreign requirements for cooperative business enterprises, Chinese in 2006 are comparatively more sophisticated, especially those operating in Shanghai, the commercial center, and in Beijing. (To a much lesser degree elsewhere in China.) Many 100s of thousands of Chinese have returned to work in China from western business and legal education, and experience in western companies. So the chances are that you may come upon someone who understands something about you that will make your job slightly easier. But in most cases you will need to educate them on your requirements for due diligence. I use the term “educate” gingerly. Perhaps, out of respect, it would be better to say that you will “discuss cooperatively.” (What you need and why you need it.) But this does not mean that they will be any more forthcoming than anyone else. Keep those “suspicious antennae” up, even while forming positive relationships. Those relationships may very well provide you with the information you are looking for.
2. Approach China critically
I’ve written at my weblog asiabizblog.com about what may be called the “Irrational Exuberance,” with apologies to Mr. Greenspan, of those who are gung-ho, pardon the pun, about establishing an operation in China, without having done sufficient homework and blinded by a certain mystique that seems to be part and parcel of China, in the eyes of the west. Eyes that often wear rose-colored glasses. (Does that describe your client?) Perhaps less rosy in the eyes of those who have a good deal of experience there, but I am shocked and amazed by those who continue to come back after one trip, declare it a paradise of opportunity without seeing or wishing to investigate the concomitant risk.
Sigh... This is nothing new. What was the content of Carl Crow’s book entitled “400 Million Customers.” Can you guess? And it was published in 1934. Indeed, ever since the Empress of China set sail from the New York harbor in 1784, to purchase tea and silks, China has beckoned, with a mystery and exoticism (to the westerner) that exerts a pull like no other.
The antidote to the mystique is rational analysis, given the facts that one can glean, supplemented by instinct and reliant upon experience. Analysis – the understanding of the truth of the situation -- is an important focus. That is, one asks the right questions, and sees the answers intelligently and objectively without the detriment of unbridled optimism. When the answers are insufficient to form a sensible response – more penetrating questions and more evidence are required. If the result is not something you yourself would be willing to defend in front of your company’s board of directors, it’s insufficient.
In the interests of time, I note that I detail the process of analysis in several posts on asiabizblog.com, and will put up easy links to the series at the home page tomorrow.
[EDITOR'S NOTE: Here are the quick links to the "Irrational Exuberance, or, Should You Enter the China Market?" series:
Number 1: Should You Be Doing Business In China? (Text only)
Number 2: What Do You Wish to Accomplish? (Text / Audio)
Number 3: Where's the Beef? (Text / Audio)
Number 4: A Handsome Bit of Documentation (Text / Audio)
Number 5: Says Who? (Text / Audio)]
And I may as well tell you I have been told that this recommendation I provide to clients insults the intelligence of some. And yet how many companies delve deeply – I mean, really deep -- before committing themselves to China? Does your client?
Management, in my experience, while it may be sharp as a tack, often does not feel a pressing need for in-depth examination of business opportunities, preferring instead to go with the gut, based on some information, showing that they are decisive first and will ask questions and solve problems later as necessary. (Of course, there are exceptions. But that has been my experience.) In any case, managers, generally speaking, haven’t been taught the skills, unlike those with legal training, to establish and understand the facts.
However, in the practical environment that modern China offers us, given its opacity and potential for surprise, the attorney offers precisely those critical and analytical skills that allow for great value to be added to the mix.
You may have already given thought to this aspect of your contribution to your client’s success, or perhaps it hadn’t occurred to you. Even if you have, have you suggested that management make use of these skills in such a way? Perhaps it is possible for you, and in doing so, you will expand the pie by adding more of your intrinsic value, so to speak, to the decision-making process. As an integrated member of a business team formed to plan and implement expansion into China, the attorney, who is trained to establish the facts and look at them critically before coming to conclusions, can help to provide the counterweight of reality.
And that brings to an end my remarks. Thank you kindly.
Posted by Richard at 3:38 PM | Comments (0)February 2, 2006
Translation Challenge: "Never Give a Sucker an Even Break"
[Editor's Note: I'm honored to have been asked by IP Dragon to write that blog's first guest post. The result is the essay you see below. Focusing on China's intellectual property issues, IP Dragon is well-written and penetrating. Its author has chosen to remain anonymous. This only increases the allure!]
The world knows of China’s leadership in the business of counterfeiting. If it – Delco car battery, tiger claw, night-scan telescoping mast, Viagra, holy relic of Tibetan Buddhism – can be copied cheaply and sold for profit, some entrepreneur (thief?) will grab hold of the opportunity and shake vigorously.
Counterfeiting harms rights holders. That was an “duh, fer sure, dude” statement. But the 2004 testimony of Anthony Wayne, U.S. Assistant Secretary for Economic and Business Affairs, makes one want to holler “Oh, my God!” as if we’d personally discovered alien seed pods in Santa Mira. [See Invasion of the Body Snatchers.] It is “estimated that U.S. companies' worldwide losses to counterfeiting and piracy range from $200 to $250 billion per year. Most counterfeit goods pass.” That sum exceeds the GDP of many nations.
And yet counterfeit products are rarely interdicted at the borders. China’s share? Daniel Chow, a law professor at Ohio State University, has testified that:
“In 2003, China accounted for 66% or over $62 million of the $94 million of all counterfeit and infringing goods seized by the US Customs Service at ports of entry into the United States. Mid-year figures in 2004 indicate that seizures are sharply higher with $64 million seized in the first half of 2004 alone.”
Extrapolating, Chinese counterfeits may account for US$150 billion of worldwide IP losses. No wonder it is estimated that counterfeiting produces as much as 8% of China’s GDP. Counterfeiting inevitably accompanies – and may very well benefit -- the growth of infant economies. In the 18th century, using cobalt mined in Connecticut, American potters imitated the fabulously popular China blue and white porcelain. And remember that Japan in the 1950s and 60s was rife with fake goods. Or more recently, Taiwan.
So what is the attraction with fakes? Or is this another “duh, dude” question?
In the 1980s, my cousin did business in Taiwan. Being a profligate entertainer of major customers, he once decided to impress by holding an emperor’s banquet (金玉滿堂) at the Hilton in Hsi Men Ting (西門町), the older downtown section of Taipei (台北). The centerpiece of the table was bear paw (熊掌), a traditional delicacy in Chinese cuisine, favored by only the very wealthiest. In the Taipei of the 1980s, a prepared dish of bear paw cost a King’s Ransom of nearly US$750, equivalent to the monthly salary of an office worker. A raw paw was shown to the guests before it was cooked. If I remember correctly, his guests were enormously impressed.
Several years later, a lady who had worked as a waitress in that same restaurant told me there was but one real paw in the refrigerator. Whenever the dish was ordered, the paw was trotted out to show the beaming guests and then immediately returned to cold storage. The chef would proceed to cook whatever meat he might have lying around that was less common than beef – alligator, venison, elk – and far less expensive. !Profit! And with just a little sleight of hand it descends in sheets. The crux of the bear paw con is dual, requiring a customer who’s neither ever tasted bear nor sees the paw cut up and cooked.
Yes, counterfeiting is a classic con. It needs but a sure thing -- a paying customer. An entrepreneur with energy, capital, nerve, imagination and a great product may still fail. The counterfeiting of an established brand requires similar elements, within a business environment favorable to the unimpeded trespass upon individual property rights, to allow the con to flourish. Bear paw is an established delicacy in Chinese cuisine.
Counterfeiters in China have established world-class CD duplication facilities (capital); harnessed the production power of entire villages (energy); threatened the lives of children with fake infant formula (nerve); built secret manufactories or factories in ship containers for mobility (imagination). But there’s virtually no economic risk. Someone else has built and crossed that bridge. The brand has already been established. The buyer is a certainty.
Even at a youthful age, I could not believe the premise of the movie, “The Sting,” (1973) the hit that starred my favorite pseudo-Oreo manufacturer, Paul Newman. Two good-natured gangsters (an oxymoron?) ante significant funds up front to replicate a bookie joint on the off chance they might score many times more dough from their mark. Several times, the scheme was nearly blown. The sucker could have simply walked away. Too much risk for a counterfeiter, don’t you think?
Despite two millennia of discourse and instruction on the Confucian ideal of 天下為公 (usually translated as “the world is a commonwealth”) and its modern diminutive, the Communist slogan, 为人民服务 (“serve the people”), Chinese find impractical, to say the least, the integration of the individual and the family into a greater public “good.” [Is this simply a display of my western liberal arts education or a genuine preoccupation with a beneficial and unifying ideal?] It apparently mandates the sacrifice of individual benefits to complete strangers with whom no bond is valued. Most undesirable. The individual thinks, “Where is the value to me and mine?”
The novel concept of individual rights under the law, often seen written into a subtext of the phrase 合法权益, has been received to a powerfully positive reception by P.R.C. Chinese. Everyone now, it seems, has some individual power. But the larger framework for these rights is barely constructed. The remnants of the old system do not suffice as its foundation. What can be built on detritus?
My strong impression from readings and discussions on this subject is that mainland Chinese view the law as but a tool – a means to an end – whereby individual gain can be gotten at the expense of a rival. They do not respect it as a particularized expression of an encompassing framework established to protect the welfare of the populace at large, despite sloganeering to the contrary. The law is for “me,” but not, more importantly, for “us.”
Until that conceptual foundation has been built – who knows when and if, despite the work by many brilliant intellectuals – the rights you hold in your intellectual property will be the object of stubborn disrespect and counterfeiting will continue to be a staple of the Chinese economy.
Well, dude, maybe that was just a bit too serious. Why don’t we turn to some hilarity for the nonce? Remember W.C. Fields’s epithet that one should "never give a sucker an even break?" [Translate that if you can!] Read this article for the story of a Chinese counterfeiter with a preposterous con who played upon the profundity of his wealthy collector-customer’s inexpertise. In doing so, he collected US$500 and the attention of the world’s media. Ah (deep breath), success!
Posted by Richard at 10:08 PM | Comments (1)May 31, 2005
Background to Danger
Eric Ambler describes in vivid color, in his suspense novel, "Background to Danger," the cross-cultural "copying" of which I wrote last week: that unfortunate species of simple replication that goes no further, creates nothing new:
“Mr. Hodgkin… was typical of that strange species of Englishman – the export travelers. You came across them in the most unexpected places; in remote Far Eastern towns, on local Continental trains, in the smaller hotels in cities all over Europe.
They spoke foreign languages fluently, grammatically, but with appalling accents, and were on excellent terms with whom they came in contact. They drank foreign drinks, ate foreign foods, listened to foreign points of view and remained completely incurious and indomitably English.
For them, the journey from Paris to Istanbul was different only from the journey from London to Manchester in that it was longer and punctuated at irregular intervals by baggage examinations. The cities of the earth were so many railway stations, distinguishable only by the language displayed on the advertisements and the kind of coinage expected by the porters."
[Paragraph breaks inserted for web readability.]
For all his international experience, the Mr. Hodgkin of the novel thinks viciously ill of his foreigner-acquaintances. “They’re like animals," he says, "and…I hate the sight and sound of them.”
While one is tempted to believe that such cruel sentiment was more typical of pre-World War II consciousness, there are those today who insert themselves culturally into the world of the other only to preserve a mere functionality. I speak not only of Americans or Englishmen, but Chinese and Japanese, as well.
Lacking the balanced consideration and deserved respect for that other world in which they circumnambulate, they may find some success at their work, and yet fail utterly at a larger purpose they may not see. The act of "copying" becomes to them no more than a gesture of utter cynicism.
Posted by Richard at 12:53 PM | Comments (0) | TrackBackMay 26, 2005
Fakes
One who deals daily in cross-cultural exchange, as do I, recognizes the propensity for mimetic behavior towards the subject of one’s ardor. Chinese often criticize – while hiding a secret admiration - those few westerners who’ve become more “Chinese” than the Chinese themselves.
But we all copy. Our ability to mimic is a valuable tool that allows us to understand and to learn. [I’m definitely not referring to this.] The greater value to oneself and to humanity, however, is in going beyond mere replication towards the creation of something new, characteristic of oneself and yet never before expressed.
Chinese speak in the perjorative of Japanese civilization, some of the cornerstones of which without doubt pay homage to China, as if it was a poor imitation. But anyone with only a bare knowledge must acknowledge the distinctive, idiosyncratic Japanese-ness in something as commonplace as udon (うどん). Compare it with la-mian (拉面). Both are noodles, the first Japanese; the second, Chinese, but characteristically different in their ingredients, taste and texture. Each is redolent of its own culture and not of the other, despite their common root of origin in China. What began as a copy has been recreated anew.
Americans, knee-deep in fake designer clothing and auto parts and watches, bemoan the outright Chinese piracy of American intellectual property (while often enjoying it in the privacy of their own homes). Rightly so, but it is as if Americans had never indulged in similar behavior.
Americans were once intellectual property pirates themselves -- of European technology, of the published works of British authors, of consumer products produced by other Americans. [For some background, see this study, this paper and this book review.] The legal regime established to prevent piracy developed in America and the western world incrementally over the past 150 years.
The western world, especially Americans, however, steadfastly insist that the Chinese immediately create the legal, economic and ethical environment that will end Chinese IP piracy. It simply can’t be effected in a nation of 1.3 billion, where people copy with a clean conscience: Chinese haven’t been taught and do not grasp the idea that copying is considered to be theft. Generations may pass before they do.
Aside from the relatively narrow business issues of asset theft and loss of profits, we need to know -- to gather a wider understanding -- what the Chinese are copying, why are they copying it and where are they going with it.
The Japanese have the well-deserved reputation of taking the clay of foreign ideas and things and shaping them anew. [This paper deals with the topic.] Chinese appear to have, in a sense, mimicked this exact behavior. And Chinese aren't merely copying things to be sold at market for profit, but, in fact, have progressed well beyond to the level of social structures and ideas.
The ultimate question is this: will the Chinese move beyond mere replication to something newly creative and expressive of themselves? More discussion of this to come.
[Note: The day after this posting, the Financial Times has printed Oded Shenkar's, "Why Fake Goods are a Natural Economic Motivator." Subscription Required. From the piece,"The Chinese have a huge problem sustaining a stream of innovations; de Tocqueville pointed this out 170 years ago and it is still true today. There are many ways in which they are planning to catch up but, for now, free borrowing is essential to the system. It took the US almost a century to turn from a violator (ask Charles Dickens if he ever got royalties from American publishers) to an IPR champion. How long will it take China? The Chinese do not even have a proper legal framework in place. For instance, legal opinion is split as to whether exporting a fake product constitutes a sale under Chinese law. What is not in question is that enforcement is largely absent."
Posted by Richard at 9:49 PM | Comments (0)April 21, 2005
Courtesy at the Crosswalks
This week, I write from Washington, D.C., where work on a client project takes me but steps away from the White House. Lucky for me, indeed – not that I have or would wish to have access to that office – but simply because this week sees the blossoming of the cherry trees, gifts from the Empire of Japan in 1912. So much of the DC environs has become as decrepit as any city that has slithered out of Philip Dick’s imagination, that this glorious gift from the Emperor redoubles its inestimable value nearly a century later.
Round about that year, the Qing dynasty of the Manchus had collapsed utterly, the Chinese Republican government was about to, and pitcher Smoky Joe Wood of the Boston Red Sox in the United States would say "I threw so hard I thought my arm would fly right off my body." Most Americans at the time were very likely oblivious to anything regarding the world at large, other than the World Series, which was particularly American. But in his comic novel, Picadilly Jim, P.G. Wodehouse speaks through his cricket-loving butler, Bayliss, to inform a heartbroken American that baseball originated as “rounders,” a children’s game played effeminately with a racket and a soft ball.
Whatever they claim to be, Americans generally will not run over a pedestrian. Here in D.C., whether walking or driving, I have found Washingtonians to be extraordinarily courteous and patient with the street-crossing walker. Fast-forward to Shanghai, the “Pearl of the Orient,” at least to mainland Chinese. What Shanghaiese driver will pause for a pedestrian? What one will stop for an elderly woman with bowed shoulders carrying her groceries in her arms and a young child on her back? Perhaps only a foreigner from DC…
Herein lies a lesson to be learned, one to be extrapolated from experience. In China, “big” wins – always, and with mind-numbing repetition. “Little” must defer. The walker, after all, is a mere bi-ped with limited speed and range of movement. No match for the 1 ton auto or the 10 ton bus. When, on crowded urban streets, competing bus companies rush from one stop to the next in search of customers – and make the driver’s compensation dependant upon surpassing a quota of tickets sold – “big” becomes a public danger.
True, the city of Shanghai, alone among Chinese cities, has attempted to force drivers to defer to pedestrians by placing financial responsibility on the driver in case of injury due to accident – even when not at fault. [For some background on Chinese auto transportation, see this.]
But, aside from this most modern of mainland Chinese cities, still 40 years behind its counterparts of Hong Kong, Singapore or Taipei, most Chinese drivers consider themselves “big.” The emphasis on the brutal exercise of power by those who apparently have it finds itself expressed throughout Chinese society, even where that expression is illogical or detrimental to the individual or society-at-large. This is, however, not a concept that has traditionally been in the ascendant. The recent 50 years have brought it to life and allowed it to flourish, but changes are in the wind.
More on the application of this idea in the Chinese management setting in an upcoming post.
Posted by Richard at 3:00 AM | Comments (0) | TrackBackMarch 28, 2005
The Changing Value of "Guanxi"
When Westerners discuss Chinese business, they inevitably fall upon the venerable topic of indispensable “guanxi (关系),” or, in ready-bake parlance, “connections.” With a charming innocence, Westerners ascribe to the term “guanxi” an almost mystical power, as if it were a talisman to be worn about the neck. [The pin-yin method of romanization makes it very difficult for newcomers to the mandarin dialect. “Guanxi” should be pronounced approximately like “gwan shee.”]
Why? One with “guanxi,” it is believed, can get things done in China others simply can not. Many Westerner businessmen will regale the listener with stories of a Chinese colleague who, solely by virtue of his incredible “guanxi,” accomplished some task – helping an application through a government office, overturning a denial on a permit, etc. -- once thought impossible. Sometimes these stories ring true; at other times, I have been more impressed with the Western businessman’s willful ignorance to pierce to the root cause of the success.
A personal connection to a decision-maker, wherever on the globe, is valuable. But, it is presumed, Chinese hold far greater sway with any given connection than other ethnicities. There is more than just a grain of truth to that. Most Americans, according to my experience and observation, will generally not perform favors for even dear friends, unless either the request is logical or there is a direct and immediate benefit to the person who receives the request.
Chinese, on the other hand, are quite willing to perform favors -- without investing a great deal of ratiocination -- merely because a request has been made by a personal contact. Chinese are extraordinarily sensitive to the needs of their personal contacts – a faculty one might wish more Americans might develop.
To be fair, Americans open their hearts to strangers asking for assistance, while Chinese give strangers short shrift. The idea of “the public good,” if it ever existed as other than a traditional philosophical idea in the collective Chinese psyche, is in practice severely underdeveloped. As one Chinese manager said to me with no little shame as we walked through garbage strewn streets of Shanghai some years ago – “中国人最缺的就是公德心。[Chinese lack an awareness of the importance and value of the public sphere.]” That isn’t atypical of Americans: drive through the streets of Newark, New Jersey, and one can say the same.
But, really, how important is guanxi in China?
Influence works: pull strings whenever possible. However, while one might get some leverage through a personal connection, the value of guanxi is steadily on the decrease.
Just 25 years ago in China, political and economic power was concentrated in the hands of a very few. There were but a handful of decision-makers. One’s connection to that personage of power might arrange a transfer to a desired work unit, a larger apartment, enhanced medical care, etc.
With experience, one learned to take claims of pie-in-the-sky guanxi cum grano salis. [Perhaps I should not mix my metaphors, or, for that matter, sweet with salt.] In the 1980s, every Chinese waxed eloquent about his contacts, knowing full well their importance to the listener, when he very often but blew the proverbial hot air.
Some people were indeed very close to the center of power. And yet even they were difficult to access; they rationed their guanxi; they negotiated for value in return. They did not give it away to any and all takers.
But enough of the past. In short, that world – where a needle decided for a field of haystacks -- has begun to fade from view. With China's tremendous economic development, there are far more decision-makers now than there have ever been in China’s modern past, and their numbers continue to grow. Some people will still be well plugged in far better than others. But no one can possibly know all of the decision-makers, or even, for that matter, a substantial portion of them. A lock on guanxi is a relic.
Yes, one must acknowledge the vestigial value of guanxi. As I stated, pull strings whenever possible. But do not focus on it. Instead, in the China of today, we must look to the development of a far more important business skill -- that of creating relationships of trust with strangers.
More on how this may be done to good effect in upcoming posts.
Posted by Richard at 7:56 PM | Comments (1) | TrackBackMarch 21, 2005
Where Would You Like the Comma Placed, Sir?
Let’s continue our discussion of the manager in the Chinese enterprise, which I began in "Chinese Management -- Beyond Garbage In, Garbage Out."
Western Flights of Fancy
When I counsel western expatriate managers running businesses in China, I find a few predisposed to flights of fancy. They expect P.R.C. Chinese business managers, and other P.R.C. Chinese in positions of authority, to act benevolently towards their staff, as if the constructs of ancient Confucianism were practical management methods in the modern day.
Measure this against the reality and one will find it very far from the truth. In 20 years of involvement with Chinese companies, I have only met three Chinese nationals -- all elderly, whose formative years preceded the Liberation of 1949 -- who practiced a management style one might call benevolent. (And yet I have encountered many Taiwanese who practice a benign, generous and compassionate “fatherly” authority over their staff, with, in all cases, great success.)
One musn’t blame or ridicule these westerners – they have merely picked up on a fantastic thread running through the western imagination, one unfortunately propagated by academics, journalists and travelers who have known as little of every day Chinese life as non-specialists, with sparse exception. It is emblematic of the long and preciously held western consciousness about China that many still consider it exotic, mysterious, exciting.
The Authoritarian Style
P.R.C. Chinese management style is founded upon the premise that all good flows from the manager. Fear of loss – of job, prestige, income, self-respect – demands that staff placate the manager at all times, regardless of the demand.
“You are my salesman. On Saturday (our usual day off), you will wash my car.” Most Chinese staffers would readily agree, albeit grumbling in secret, to such a demand. Imagine the reaction from an American salesman! (Far more outrageous demands have been made, but I hesitate to include them here, for fear that the reader would not believe me.)
Some Hong Kong Chinese and Taiwanese adopt a similar management style, especially while managing in China. Even their demands exceed one’s usual tolerance for outrage.
As for whatever business problems that must be resolved during the course of the day, the PRC Chinese manager, with exception, of course, is often a micro-manager, causing surprisingly curious and even stammering reactions in staffers. One asked me, in timorous voice and bowing heartily, where I thought certain punctuation should be placed in a presentation I was to give. Only fear could have given rise to such a queer question, for the staffer was extremely intelligent.
But what is one to do, thinks the ordinary Chinese staffer?
So, What is Going On?
The usual explanation is population. There are far too many Chinese for too few employment slots. One in a position of authority can exploit the situation to his benefit.
But I think there is more going on than simply supply and demand.
The urban intellectuals -- Mao, for example, was briefly a librarian at Peking University; Zhou studied in Japan and France -- who formed the peasant-based Communist movement in the first half of this century consciously instituted a rigid discipline over them. One became subject to the exacting requirements of obedient thought and choreographed action in virtually all aspects of life.
That militarizing mode of behavior has served pervasively as the model over the past 50 years. Chinese decision-makers throughout society have been trained – well-trained -- to emulate the authoritarian command of the politically powerful. Concomitantly, those who serve have been trained to obey, with contempt redounding to their detriment.
A Change Coming?
But, as I wrote,
“…the role of the manager in a Chinese enterprise is in flux. The authoritarian style, while remaining the style of choice, shows fine cracks running up and down its facade.”
How has it changed? There is a new Sino-western combination of management styles: one that, while abjuring authoritarian command, allows one to maintain close supervision over staff.
Importantly, without sacrificing results, this style is a kind of carefully managed freedom that allows staffers to better utilize their skills and knowledge to resolve business problems for the benefit of themselves, the management and the business. I have used it with success.
More on this in a future post.
Posted by Richard at 7:18 PM | Comments (1) | TrackBackMarch 16, 2005
China's Crescendo
Even business readers will want to read this piece on music – because that’s not what it's entirely about.
THE PERFORMANCE
Lang Lang （郎朗）, the 22 year old Chinese pianist-sensation, performed here in New York over this past weekend. As much as half of the audience was of Chinese descent, as one could clearly tell by the Mandarin and Cantonese spoken by the crowds loitering in the lobby and then surging up the stairs.
The brilliant performance -- some said the orchestra was rather a bit too loud – was greeted by listeners who gave the performers an enthusiastic standing ovation. One might temper this with the comment that Americans, unfortunately, give just about everyone a standing “O;” but Chinese don’t. [The New York Times article is archived and must be purchased.]
Other than an extraordinary expression of artistry and beauty, this concert was most assuredly a statement of arrival and of pride. “We, Chinese, have made it: we have met the westerners on their ground and on their terms. And we will show them the glory of Chinese culture as well.”
Western and Chinese music was played on the same program: Rimsky-Korsakov and Rachmaninoff as well as the traditional songs of Blind A-bing (瞎子阿炳). I will posit that Yu Long (余隆), the CPO's artistic director, wished to display the orchestra’s command over portions of the classical western repertoire; to please his Chinese audience with traditional favorites; and to educate his western audience by displaying what Chinese consider to be the grandeur of a Chinese musical heritage unknown in the west. Indeed, a success on all counts.
But perhaps they went a bit too far.
Auf vs.Von: Like a Fake Louis Vuitton Handbag?
Accompanied by the China Philharmonic Orchestra (CPO), the virtuoso premiered “Das Lied auf der Erde” [The Song From the Earth], composed by Ye Xiaogang. Those who listen to Mahler will at once notice the similarity in name to “Das Lied von der Erde” [The Song Of the Earth], lieder which set Tang dynasty poetry to music.
[For those of you who wish to learn more about Mahler, I would recommend friend and fine writer David Hurwitz’s book and CD entitled, The Mahler Symphonies: An Owner's Manual.]
The management company of the CPO notes that
…at the suggestion of Yu Long, music director of China Philharmonic Orchestra, composer Xiao Gang Ye was commissioned to create this Chinese version of The Song of the Earth. Gustav Mahler’s The Song of the Earth, or Das Lied von der Erde, is an irreplaceable masterpiece. Instead, The Song from the Earth, or Das Lied auf der Erde, reflects a different geographic and cultural background. The dawn of this ambitious re-creation, just like New China, signals the foundation of a symphony culture for China and its auspicious future.”
A copy with minor changes, much like a deluxe fake bag remade in the image of luxury parent? Not at all -- although one is forced to consider such an unfortunate idea.
THE STATEMENT
The creation of Ye Xiaogang’s piece is a statement that China intends to reclaim itself from the mind of the West, to re-create itself as it wishes. However, its target, in this case, was merely a harmless and delightful fancy in the mind of an imaginative western musician.
From the point of view of the non-Chinese audience, was such a statement necessary or even worthwhile? It was probably not even understood.
For Chinese, that the statement involves a re-creation of a western piece points up the extraordinary value the Chinese artists and the audience place on Things Western. “We have arrived – the West must stand up and take notice – and we are taking back what is ours.”
RECLAMATION: A MAJOR IDEA IN CHINESE LIFE
Reclamation from the West is a major topic for modern Chinese: antiques held in western collections, a demand for repayment of moneys allegedly stolen by an American business in the first half of this century, of China’s place in the world as a major business and political power [search Google for 中国强大国家 and read the Chinese language bulletin boards].
This lifetime student of China respectfully suggests: Chinese must learn what is and what is not theirs to reclaim -- what is and what is not important to reclaim. As Chinese wend their way into the international community, the increasing friction generated by their demands may produce a clamor that exceeds the splendor of the music they so well express.
Posted by Richard at 2:31 PM | Comments (1) | TrackBack
