Monday, September 8, 2008

Funny Business in China

Book review by Larry Mongoss, guest blogger

Business Republic of China
Tales from the front line of China’s new revolution
by Jack Leblanc
Blacksmith Books, 248 pages, HK$118 / US$14.95

What do an academically oriented young man from Belgium with an interest in physics and a dour middle aged party secretary at a pipe factory in China have in common? Well, neither has ever had a mortgage, any entrepreneurial experience, or anything in the way of material well being. Still both were positioned to prosper greatly in the miracle that has seen China go from a business backwater to one of the biggest players on the block.

Jack Leblanc’s book Business Republic of China: Tales from the front line of China’s new Revolution provides a superb coverage of the challenges, mysteries and sources of success or failure for foreigners doing business in China. Covering a period of almost two decades, it also gives some insight into ways in which business in China has grown up, or failed to, in that time. This is a light and entertaining book that I would recommend to anyone thinking about doing, or just observing, business in China.

There are two threads that run through Leblanc’s book. One is very intentional and in the forefront, and that is the vast cultural and practical differences that exist between business in China and business in more developed countries. The other thread, that is much more in the background, underlines what happens when you turn a substantively socialist country upside down and desperately try to hold some of the pieces in place. In short, there are two ways to do well in business in China. Be smart, or use connections.

Of course it never hurts to have both of these, but there is enough variety in the stories Leblanc tells that in most cases the dominance of one over the other does come out. Mr. Li, the motorcycle magnate, presumably the same person that Ted Koppel interviewed in The People's Republic of Capitalism, stands out as superbly capable. So does Mr. Zhang, the widget maker, who manages to buy the brand of the German make previously dominant in his market. On the other side, Ms. Luan, the party secretary turned public relations head mentioned above, and Smile, who got Leblanc into all of this in the first place demonstrate that connections can be enough.

The book itself is written up almost as a series of informal case studies. While the writing is not quite what could be called literary, several of the cases could belong to the mystery genre and I enjoyed greatly watching the cases unfold. Leblanc is called in to troubleshoot a number of joint ventures that have not worked out as expected. He typically starts by trying to get to know the management team on the Chinese half of the joint venture. He seems to be surprisingly successful in doing this, so I suspect he understates his own personal charm in the telling of his stories. Whether from frank conversation, or just checking to see how the numbers add up, he uncovers some interesting activities. The great delight is just how varied these activities are. I won’t spoil the endings by reveling them here, but the pipe factory, and a bottled water factory are especially interesting.

Still, my favorite chapter was actually the first, in which Leblanc goes to China to teach physics, and finds himself in the literature department. The description of his arrival in Beijing in 1989, is so reminiscent of my own arrival in China around the same period, that I couldn’t help but be touched. His ignorance of Chongqing, and the train ride from Beijing that took him there are also great introductions to China. Most important though, his lack of understanding of what was happening and the handling by his Chinese hosts is a compelling insight into what it felt like to be adrift in that land and time. Fortunately for me, I actually ended up teaching what I thought I would, but not so for Leblanc. The request that he teach English literature, his response to it, and his hosts reaction to that are both comical and telling.

His drift into business is unplanned, and does not seem particularly well executed. But that is the beauty of the story. Leblanc, like most Chinese at the time, did not really know what made sense, and just hoped for a good outcome. In this case he got one, making a big sale of European glass for a new hotel. From all appearances the result was largely luck, but may have been related to Leblanc’s own likability. Either because he did not have a real preconceptions of business, or because of a natural empathy, Leblanc learned early on to simply go along with the way people around him did things. That is an important lesson.

Not all of the mysteries facing a person doing business in China come from a deep cultural divide. Many of them rest on the simple ability to put yourselves in the shoes of the people you are talking with. Many people fail to do this. Leblanc, and almost all the honorable outsiders he worked with, were European. As an American it is nice to hear how people from those more civilized places would also make stupid self-centered assumptions about the way the world should work. In the end it is the person, not the place they come from. Perhaps western business rewards insensitive people, so that a disproportionate number of those trying to do business in China really don’t belong there.

My biggest complaint about the book is the continual reference to those from outside China as barbarians. The more idiomatic translation of the two most common terms used to refer to non-Chinese are “honorable outsider” and “foreign person.” It is true that both of these can, and often are, used derisively, but they are also used both affectionately and, most commonly, as simple monikers. Keep in mind that people from Shanghai make fun of people from Beijing, there is no shortage of outsiders.

All in all, I would have to say this book is both entertaining, and informative. It is not a complete guide to doing business in China and plainly says that. Still, it probably tells more about this subject in its few pages than many lengthier tomes. If, after reading it, you come away frustrated at how fickle, chaotic and unfathomable things can be in China you have learned a great lesson.

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