Wo Shi Laowai – Wo Pa Shui

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A Word Of Advice

Posted by MyLaowai on Tuesday, February 2, 2010

I’ve heard that China is “very development” these days. Also that Chinese people are “very diligent”. And that the country is “strongly economy”. The Chinese, I’m told, work hard and well and that “harmoniusness” is a value that is treasured here. Everything, it seems, is “getting good and good”.

It’s certainly true that this is the best place in the world for a foreign investor to put his money, and there are a dazzling variety of ways in which to do it. WOFE’s, JV’s, Rep Offices… China certainly does go far out of it’s way to make you and your money welcome.

But only until you have arrived, because after that it all turns to ashes.

Take for example the diligent local employee. They might be working on an assembly line, or they may be your receptionist. They could be your driver. Whatever role you have employed them in, however, there are a few things that are a near-certainty:

– They will be stealing from you, and I don’t just mean paperclips. Your inventory will be sold out the back door, and you’ll never even know it. Your assets will be sold out the front door, but you’ll never see it go. Your customers will be diverted towards local competitors, your orders will suffer the same fate. Your suppliers will not deliver what you want, when you want, or how you want, but they will deliver your orders to the parallel company your workers have set up. The information in your computer will be stolen within minutes of it being made available to anyone, though it may take them longer to steal it if they have to work for it. The ways in which you will be robbed and cheated are legion, the only thing that is certain is that the first you hear of it will be when your cheques bounce because someone finally went after the bank accounts. Your accountant will be helping with this, if the bank manager isn’t.

– Don’t think you can detect it all, because you can’t. The only thing you can say with certainty is that if you can’t catch them cheating you, then you aren’t looking hard enough. And if you can catch them with their digits in the till, then start worrying about the ones you haven’t caught yet. I’ve lost count of the naive laowai’s who thought they had good employees, only to find out the hard way that bankruptcy was just around the corner.

– Don’t think you can sack ’em if you catch ’em. To start with, you’ll be paying massive compensation claims, and nothing you can say or do will change that. A year’s salary as compensation is routine when you fire someone who was caught thieving from you. Getting caught is a bonus for these people, because that way they catch you coming and going. And even after they are gone, they will bring trouble to you – having a hundred peasant scum turn up at your office or factory in order to intimidate you is far from uncommon, and remember every one of those tyre-kickers is a tea-leaf in addition to being an agitator.

– You can sometimes see justice done via an unexpected yet fortuitous accident, of course. But to be certain that justice was done fairly, it would mean every employee was in hospital, and then you’d get nothing done.

And how about that great economy, huh? Wow, just imagine if every person in China bought just one of your widgets, or whatever you do.

– Well, forget about it. With very few exceptions, the Chinese won’t buy your widgets. Some can’t because the Communist Party steal all their money before they get a chance to spend it. Others won’t buy it because they are boycotting whichever country the Party has decided to hate this month. Some would if they could, but then decide that the locally produced fakes will do the job nicely, thanks. Mostly, the remainder will just steal it from you directly, which brings us back to your employees and their own distribution network.

– If you are in that tiny minority of companies that have not only made some money here, but also managed to keep it from being pilfered by the locals, then congratulations. Enjoy it in whichever manner you choose, as long as it’s inside China. Because getting your money out is a bloody sight harder than getting it in. The entire system is geared to take your money, your talent, your skills, and your knowledge, but the whole point is that you’ll be lucky to get away with the shirt on your back. Deng Xiaoping was a smart cookie, and one of the most unscrupulous and cowardly bastards of the 20th Century – and the latest crop of murdering thugs who run the joint are even worse. They don’t allow you here because it’s good for you, they allow you here because they want what you have. And the WTO be damned.

– Oh, and don’t think that importing your foreign goods is much use, because it isn’t. China is in the business of exporting goods and importing payments, not the other way around. Expect inward-bound shipments to be held up in port for months, banned outright, caught up in paperwork forever, or simply stolen by the Red Army. I know of shipments that were held up during the 2008 Olympics on the basis of ‘security inspections’, that have still not been released. About the only things you can import, in fact, are things like five-axis milling machines, and we all know why that is (if you don’t, Google it).

So folks here it is, MyLaowai’s recommendation to would-be investors in this marketplace:

Just say no. No matter how good it all looks, it isn’t. Sure, I’m here myself, and many of my friends are too. And I suppose that it is just possible that you can make a go of it yourself. But remember that for every one who succeeds, hundreds will fail, and fail big. The only thing in your favour is that there are a few people here, people who know these vermin for what they are, who might be able to help you. Find one or two of us, buy us a drink, and pay close attention to the advice you are given – it might be the cheapest and best advice you ever receive, and it just might save both you and your company from ruin.

In other news, I just received a phone call from a guy I met in a bar a few years ago, the day after he’d arrived in China as it happens. He called me to say that the advice I gave him that night and several times afterwards had saved him and his company, and that he’d like to buy me another drink on the anniversary of that first chance encounter.

It’s not always nice being right about these things, but it sure beats being wrong.

Have a nice day, y’all.

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35 Responses to “A Word Of Advice”

  1. Slap2tickle said

    I can vouch for that, I know it’s not business dealings but with regards to money transfers, it took my father 1 visit to the back to transfer a small amount to me, but when transferring some to my sister it took 12 visits, more than 15 forms filled in, and 2 years later the money still hasn’t been transferred and every visit to the bank produced a new and totally obscure excuse from the bank as to why it had failed or been rejected. I just wanted to apologise to my mum for not getting her birthday gift that year, sorry mum!

  2. justrecently said

    Oh, come on! It’s only fair this way, after all, we stole their easter bunnies, which was an unforgivable and cruel criminal act and will be condemned in history through millions of generations!

  3. Huolong said

    Dear Laowai, I have a link for you: http://v.ku6.com/show/RybzjVUeoKt-eEZ6.html. Reading your blog posts reminds me of the woman, Luo, in the video who is trying to find a husband. Well, for your information, she works for one of the Fortunate 500 Companies, WalMart. And you seem to own and run a profitable business in Shanghai. She is just an entry-level salesclerk while you are a boss. Very different two people indeed.

    Just like what she said in the TV show, every word, every sentence, and every piece of logic that links them together in your posts make perfect sense. But, one thing you share with her is that the world you are creating with your posts and hers with her talks do not make real sense in the physical world. It’s kind of something like, “you win the battle, but lose the war”.

    – If you are not aware of your inventories and assets sold out of the door, how do you know they exist at your premises in the first place? If you do know, why should you let them go missing?

    – If one of your employees gets caught stealing, you can just call the police for detention and even sue him or her in the court with theft. If convicted or brought to solid eyewitness and/or evidence, there is no way for the employ to get one-year salary as compensation. As for the presence of petitioners at the door, is it because you still owe them something? If not, call the police again. If yes, repay them, and they will go. If they won’t go with the repayment, call the police yet again.

    – Going on strike was and is common. You can always sack them each with massive one-year-salary compensation and hire a new crop of them.

    – So many foreign companies are profiting from China’s huge market, low labor costs, and talented employees. So many others are getting packed for ventures in China. Yet others are whining about frustrations, failures, and losses. Even if you are Yahoo, Google, or Ebay, you lost if you lost; you’re losing money if you’re losing money. You failed this market competition, so what’s the point of gritting your teeth in bitterness? If WaMart can succeed, why should Yahoo lose?

    – Lastly, my knowledge about port procedures is so limited that I have to leave it here. Though my common sense tells me that in a country with so many expanding port cities along its eastern, southeastern and southern coastlines, containers pile-ups should not be an everyday business unless there is a good reason for such pile-ups (e.g. government actions are to be obeyed in every country, democratic or not).

    • MyLaowai said

      Dear Huolong,

      Thank you for your comments. You are always most welcome to say your piece here, but this…

      “If one of your employees gets caught stealing, you can just call the police for detention and even sue him or her in the court with theft. If convicted or brought to solid eyewitness and/or evidence, there is no way for the employ to get one-year salary as compensation. As for the presence of petitioners at the door, is it because you still owe them something? If not, call the police again. If yes, repay them, and they will go. If they won’t go with the repayment, call the police yet again.”

      Call the police? Sue them in court? They will go?

      It seems to me you understand very little about the way things work in the Celestial Kingdom, particularly where the hated Laowai are concerned.

      As for the rest of your comments, let’s just agree to disagree, shall we? I’m sure your arguments would make better sense to someone who has just stepped off the plane for the first time, but I’ve been here long enough to know better.

      Thank you again for your time.

      • Huolong said

        I meant the bone they were there to pick with you.

      • Huolong said

        One more thing, if you want to succeed in the China market, adapt to it, don’t try to change it, especially where competition is fierce.

      • MyLaowai said

        I disagree. Whilst it is true that one must adapt one’s thinking to meet the local environment, one must not adapt to the point of doing things ‘the Chinese way’. Bribery and corruption are not the way to be successful in the long term, and most other countries actually have and enforce laws prohibiting it.

        If someone wants to work for me, or with me, then there are some rules that they must abide by, or face the consequences.

        I know who my enemies are, but just because I know how they think, doesn’t mean I want to think like them myself.

      • Huolong said

        The Chinese way is more than bribery and corruption. But, if you go everywhere in the China market against it, you do it at the risk of your own business.

      • justrecently said

        Every market is more than bribery or corruption, but the Chinese markets have a partucularly high share of it. What fequently struck me is how Chinese people who only knew foreigners in China complained that most foreigners they knew were “bad people” or worse. Well, those foreigners they complained about went with the China market – not against it. You can defend your stance as you like, Huolong, and you are certainly a great debator. But even the biggest flowers, thrown onto a shithole, won’t eclipse the stench.
        When something about my country or its habits is wrong, I’m certainly not trying to encourage foreigners or migrants to copy such habits. But that’s an individual choice, of course.

      • Huolong said

        I wasn’t saying the foreigners should copy those bad habits in China. The Chinese Way is a big phrase and part of it is common sense.

        A boss who complains about his employees, his suppliers, even his banks, the labor laws of his host country, and even the expression of opinions by his employees (petitioners; freedom of speech? must be very disappointed the police did not weigh in to disperse the gathering?), an investor who complains about the judicial system of his host country, about domestic policies of wealth distribution (rightly though), his patrons (non-buying Chinese consumers), about the host country’s foreign exchange, China’s late and current political leaders, about China’s customs.

        A so whining boss and so negative investor, it’s no wonder he’s so irritably whining and negative. And my guess is he will remain a whining boss and negative investor for the rest of his failed venture in China, thinking everything in the China market except himself is not right. I think he should consider packing and going back home because he has every reason to do so.

      • MyLaowai said

        I was waiting for it: the old “if you don’t love China, you should leave” line.

        Here’s something for you to consider, Huolong: “If one is in an environment that is inhospitable, culturally stagnant, or just downright backwards, then one has the options of pretending all is well, leaving, or trying to change that environment for the better”.

        This is a good rule that applies as much to you and your countrymen as it does to me. I come from a culture where the people themselves had the courage and the foresight to help each other to improve things for the common good. The West isn’t great because we had great leaders and kings, the West is great because our leaders and kings were held accountable to the people, all people were held accountable to laws that applied to everyone equally, and the vast majority of people were prepared to help others. Changing the world to make it a better place for everyone else is something the Chinese never understood, and still don’t, which is why you’ll keep coming to blogs like mine and having knee-jerk reactions instead of seeing what you can learn from your more advanced brothers from across the sea.

        I’ve looked at your blog, Huolong, and if truth be told it seems to me that there are two people writing it. Some of your posts seem remarkably grown up and mature, whilst others (the more recent ones) are loaded with bile. Why is that, Huolong? Have you recently got a job that pays five mao per post, or have you just lost your idealism?

      • justrecently said

        I don’t think Huolong is a Fiftycent partisan. That kind of partisanship wouldn’t reflect about his own country, as Huolong actually does.

        But I do think that your reaction here is a knee-jerk reaction, Huolong. The accusation of “whining” about patterns of behavior in China is a big phrase, too. I can think of two blogs at once where I’d say the allegation may stick (don’t ask me to mention them), but it doesn’t apply here. “Don’t whine” is a frequent and blanket reaction of people who hear or read something unwelcome, especially when it comes uncomfortably close to the facts. Neither you nor I can tell if Mylaowai is a successful businessman who is writing a polemical blog, or if he is a frustrated blogging businessman.

        As for loving or leaving China, I’d say that a foreigner in China should only invest as much as he is prepared to lose and to walk away from, with or without trying his luck in court in the case of intractable conflicts. That’s the best recipe for success everywhere, and especially there. Rule of law in China is a pretty weak thing.

      • Huolong said

        I’ve decided to write a post in response to Laowai’s A Word of Advice and its comments. Will keep you all posted.

      • MyLaowai said

        I would be very interested in that post, Houlong. May I repost it here?

      • Huolong said

        Of course, you may. And that would be my great pleasure.

        My post will be similar to this: http://www.changguohua.com/e/archives/can-fenging-or-angry-youths-think-for-themselves.html

        But don’t worry about the bile. I’ve grown up somewhat since then – almost two years ago.

    • DaBizarre said

      “just call the police”

      Thank you for the best belly laugh I have had for a long time. Definitely Niu Bi.

  4. justrecently said

    It’s wrong to make fun of people who are less than 1.50 meters tall.

  5. justrecently said

    I agree that she needs help. Meantime, she’s on the internet, and so is Mylaowai. Both of them are making us very happy. But I doubt that Mylaowai needs help from a psychiatrist. He and other investors won’t even need legal help as a rule, because going to the courts leads to nothing for a foreign entrepreneur in China, unless he’s Bill Gates, and does it for fun. Huolong, if I didn’t know that you and Mylaowai are both in China, I’d believe you were a North American greenhorn who never set foot on the Chinese shore.

  6. Huolong said

    of course, he very obviously does not need counseling from a psychiatrist, but he does need it from a soothing career consultant and from a capable communications professional.

  7. Cap't Rad said

    I only got this far… “I’ve heard that China is “very development” these days.” and already knew where this was heading. Keep it up!

  8. […] China is not a good market to put your money. This is about what a Shanghai-based foreign business owner, blogging as MyLaowai, said in a post at his China-bashing blog. […]

  9. MyLaowai said

    Here’s a thought for you, Guohua (and anyone else reading this):

    A person is not the place s/he lives. It’s actually possible for a person to loathe and despise nearly everything about the place s/he lives, whilst still loving nearly everything about his or her own life.

    Think about that.

  10. Huolong said

    As I said to JR, 书不尽言,言不尽意.

    It then follows that your life is kind of detached from the place you live, or well protected against it. For example, you won’t leave the comfort zone of hanging around with other rich expats in Shanghai and remain outside of the local mainstream community. If I were you, I’d learn the language, leave the comfort zone for a while, and learn to appreciate something local.

    By the way, what do you come from? I haven’t read it in you posts.

    My parents are from Sichuan and I grew up in Heilongjiang. I worked in Harbin for about two years and have been now in Beijing for seven years.

  11. Huolong said

    As I said to JR, 书不尽言,言不尽意.

    It then follows that your life is kind of detached from the place you live, or well protected against it. For example, you won’t leave the comfort zone of hanging around with other rich expats in Shanghai and remain outside of the local mainstream community. If I were you, I’d learn the language, leave the comfort zone for a while, and learn to appreciate something local.

    By the way, where do you come from? I haven’t read it in you posts.

    My parents are from Sichuan and I grew up in Heilongjiang. I worked in Harbin for about two years and have been now in Beijing for seven years.

  12. Thanks. I know all along that you’re an asset of China, instead of a liability.

    I take it that you don’t mean this piece of praise literally, Huolong. But then, why should Mylaowai be an asset of China, as it is? I’m speculating that he is one of the people who arrived in China rather idealistically, than cynically. A cynic would play along and shut up (but be much angrier than him).
    If the message of the posts that offend you was groundless, there would be no reason for a discussion. Anyone could shrug and say that someone is venting his weird spleen here. But the message isn’t groundless. And why should anyone put up with things as they are? Before putting up with them, one has to know them.
    I believe that many Chinese people are putting up with things as they are because they believe that it will make China strong, and because the way business is done in your place is making Chinese people stronger, and foreigners weaker. And then, once China has come from strength to strength, you’ll become beautifully democratic, and united, and the party will smile and say “mission completed, now here is your country, just for you, folks”.
    This is just my speculation – I’m trying to find an explanation as to how this status quo should make sense to anyone, Chinese or foreign.
    Let me put it carefully: if things will work that way is a pretty big if. And personally, I see no reason why I should take part in such a gamble at such terms, and I see no reason why anyone, Mylaowai included, should.

    The rule of the game has been that foreign corporations pass on technology, get much, nothing, or something in between in return (that depends to quite an extent on their size, i.e. negotiating power – I’d say China is only for big corporations or for people who have money to play with), and shut up in either case. It frequently works that way. Those who lose money usually won’t make a fuss of it, because it would be bad for business. But the past twenty years were somewhat liquored. But it shouldn’t work that way. I appreciate when both people who are doing good business and those who are doing bad business speak out.

    But they should – there should be no “limits” to what they say in that regard. The suggestion that anyone who does so has lost money isn’t necessarily logical. It’s only a try to stifle unwelcome messages. It would be just as logical to suggest that Mylaowai wants to keep competitors out of China, because it’s so lucrative for him.
    You can define the rules – but we can make the rules know, no matter if we want to put up with them, or leave.

  13. Huolong said

    Let me number my responses.

    1. MLW is an asset. And I mean it. He brings products/services, maybe technologies, expertise, at least jobs for local people.

    2. I wasn’t saying the message was groundless. I simply wanted to say those problems might be MLY’s own fault. He won’t, don’t want, and of course, don’t need to prove otherwise.

    3. I don’t understand what you mean by “….Chinese stronger and foreigners weaker”.

    4. Alternatively, you can look at it historically to make some sense of why things are going on in China this way. For a country as large as China, getting better is a historical process. In other words, statically, things are bad while dynamically, things are better.

    China’s rise is a rare phenomenon in Human history. For you, an individual, it doesn’t matter whether or not you join it. You can always pursue your career wherever you want. But for Germany, her business world and her people as a whole, staying out of it is an option they cannot afford.

    5. I always respect everyone’s freedom of speech.

    6. On the contrary, I think I was encouraging MLY to say more about his complaints. But, he chose not to. I didn’t suggest MLY is losing money. 我倒是觉得他是一个“端起碗来吃肉,放下碗来骂娘”、“得便宜卖乖”的人。

    7. Finally, I have no problem with you making the rules “known”. But please be specific and offer details. And convince people like me it’s not your fault when the rules work against you.

  14. But please be specific and offer details. And convince people like me it’s not your fault when the rules work against you.

    I won’t be specific with details of my own experience, because the more specific I get, the clearer it would become who my employers were. Sorry if that disappoints you, but I have to respect their interests. What I can say is that one of the rather unpleasant things was technology theft – and I can’t blame a victim for that – not even if he wasn’t sufficiently wary.

    I don’t understand what you mean by “….Chinese stronger and foreigners weaker”.

    I’ll repeat my previous line and try to specify: I believe that many Chinese people are putting up with things as they are because they believe that it will make China strong, and because the way business is done in your place is making Chinese people stronger, and foreigners weaker.
    China’s economic growth wouldn’t have happened without involvement in globalization, foreign investment, technology transfer, etc. There is no great difference between the former Communist Party of the Soviet Union’s approach to human rights, and the CCP’s. The difference is that the CCP may provide opportunities for good business. There lies a corrupting power. The most stupid saying of Westerners was and still is that China would cease to be an “authoritarian country” once people in China are better off in material terms.

    Mind you, I’m still at the “Chinese stronger, foreigners weaker” thing. The point is that China isn’t “authoritarian”. It’s ruled by totalitarianism, and by a mortified variation of that, which makes it worse. The CCP have – more recently – tinkered on an ideology which is meant to explain why Chinese people need a different kind of rule from people elsewhere. It takes and rejects aspects of Confucianism, Legalism, Communism, etc. depending on what is useful, and above all, not “western” or “foreign”. It’s a weird ideological laboratory, with lots of “thought work”. But it’s pretty detached from life itself. More lately, the thoughtwork has become something that not only despots elsewhere in the world are fond of, but something some “elites” in many parts of the world are becoming fond of, too. When a – western – businessman tells me that our system is “dysfunctional”, and “look at how the Chinese are rising”, I see a conflict on two fields. One is about political freedoms vs mere materialism. Another is about class background. It may be in my dialog partner’s interest to get rid of those bothersome needs to sell ones own interests to a skeptical public, but it isn’t in the interest of most. Some of what may come across as criticism of China is really a conflict within my society.

    The conflict isn’t as new as it might look. Before I continue, let me make it clear that I’m not going to compare the CCP with Nazi Germany. But I do compare historic and current soft spots of decisionmakers for authoritarian models (and they didn’t think of the Nazi programs as totalitarian in the beginning either). Many British politicians, editors, business people etc. admired the way things were done in Germany after 1933 – quick political decisions without the usual “bickering”, rise in employment and in the economy, and the wish that “things could be done here in Britain in the same way, even if only for a few days…”

    What those who like the old idea of “authoritarianism” fail to see is that what China’s leaders are creating isn’t just based on getting ahead economically. It is to secure their rule within China. I can’t tell how mortified the CCP leaders themselves are, although I don’t think that you can reach China’s political top without some cracks on your hard disk along the way. What I do know is that they draw on public resentment of the West. Mom is strict with you, but she’ll protect you from all those wolves around the house.

    And people are buying it. You too, Huolong. This is what you wrote after the failure of the Copenhagen summit:
    最后说一句,这次中国参加会议是来给别人定规矩来了,这次没让包括贵国在内的富国一手给全球制定规矩是中国的胜利,解振华自然很高兴,百年第一次啊。
    Geez. And I want better conditions for Germany, because our neighbors were so mean to us during the thirty-year war, keeping us weak and split 360 years ago.
    It’s not easy to negotiate with mortified people. And it can be dangerous to support their growth as a nation, when the nation believes that its rise can “make up for past injustices”. As a rule, mortifications aren’t healed by success. They are only confirmed by success. I believe that several classes I’m teaching include at least one student who could serve as an example for that.

    China’s rise is a rare phenomenon in Human history. You can always pursue your career wherever you want. But for Germany, her business world and her people as a whole, staying out of it is an option they cannot afford.

    That’s exactly the question. I don’t think that any country has to shun another country altogether. But I remember that we had discussions before about what’s good or bad about China’s recent unfavorable press in Europe. I think that it can lead to a more dispassioned, but matter-of-fact discussion about the nature of China’s political system. We must ask ourselves if we can afford to continue doing business with China at the current terms. More frequent reviews would make sense.

    Of course, businesses aren’t in China because they want the country to be more democratic, richer, or whatever. They are there because they or their shareholders want to become richer. And they don’t ask themselves political questions. But I believe that even if other countries want to do business with China at all terms, Western countries should not allow China to play them off against each other. If, for example, China imposes sanctions against the U.S. for selling arms to Taiwan, and starts ordering Airbuses instead of Boeings, Europeans should not be ready to take the business that Americans are losing for political reasons. Nor should other countries. Business with China is political.

  15. […] China is not a good market to put your money. This is about what a Shanghai-based foreign business owner, blogging as MyLaowai, said in a post at his China-bashing blog. […]

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