There are a lot of books about how to do business in China, and most of the foreign entrepreneurs here read at least one or two of them before they started out. But it seems not everybody did so, or at least not everybody followed the basic advice in these books, which may lead to disastrous results. You may have seen yesterday’s article in the Financial Times about the fate of a German business man in China already on other sites or on Twitter, but it’s too good not to post it here as well.
The story in short: A German business man with supposedly lots of China experience under his belt made all the classic mistakes in setting up and running a company in China. In 2004 he founded Business Media China, a company selling billboard advertising space at railway stations and airports all over China (and even listed it on the Frankfurt Stock Exchange). He trusted his Chinese associates (a male and a female) completely without checking them or trying to control them. When the two become romantically involved and realize their boss has no clue about what is going on, they eventually start to defraud the company. They go so far as to set up another company within the company that takes away all the business. The German business man does not realize what is happening behind his back and finally has to raid his own office to get evidence.
A great article to read if you do business in China, or if you ever plan to do so in the future. Some things I have seen myself as well over the past years here (I even had people trying to set up a company within my company, but found out about it on time), but most things are easily avoidable. Most important is to never give complete control away. You could probably do this in Europe or the US, but China is different. That does not mean that Chinese cannot be trusted (to the contrary, many of my Chinese business friends I trust more than Europeans I did business with in the past), but you just have to be more careful. Just don’t give people the opportunity to try things, then they won’t happen.
You can find the full article in the Financial Times here.
Hou gaan Marc,
I've found three English-language sources — among the dozens I've covered in preparation — to be rather helpful:
1) Tim Clissold's MR. CHINA.
2) Jack Perkowski's MANAGING THE DRAGON
3) James McGregor's ONE BILLION CUSTOMERS (and given that you're in Shanghai, almost any of Carl Crow's stuff from the interwar period).
A newer primer-type book has been Rob Collins and Carson Block's DOING BUSINESS IN CHINA FOR DUMMIES, which, despite the deceptive title, is a veritable :: treasure trove :: of factoids and key advice | Incidentally, Block runs http://www.loveboxstorage.com in B-Town.
Thanks for this, I've crossposted.
Prague's,
–ADM
"You could probably do this in Europe or the US, but China is different. That does not mean that Chinese cannot be trusted (to the contrary, many of my Chinese business friends I trust more than Europeans I did business with in the past), but you just have to be more careful."
I know you can't say it but why not just call a spade a spade……
@anonymous It's not about calling a spade a spade, but I really think that once you build up a level of trust and respect with Chinese business partners, you can trust them more than Europeans. I once lost several hundred thousands of dollars because of a German business man that I had know for years and that I learned to trust, but he turned out to be a con man (just like his younger associate) – I will get back to them one day, but that's a different story. So far I did not have this experience in China.
Hallo Marc,
Zo zie je maar weer "de gelegenheid maakt de dief" en het zijn sterke benen die weelde (vertrouwen) kunnen dragen.
Groeten, Antoinette Friedrichs.
I say don't trust anyone but your parents, whether you are in Europe or China. But overall, I'd say from my experience that it is much, much more difficult to find a trustworthy person in China than in the West. At least in the West a few people live by the Golden Rule or a moral code. The only code I found in China was "if it makes money it is right".