"None More Black"
Happy Nigel Tufnel Day! 11.11.11 “It’s one more louder!”____________________"It's gonna be cold, it's gonna be grey, and it's gonna last you for the rest of your life."Both Nigel and Phil got it right, it's black and getting darker. I’ve been consistent in my view that China will not only not save the world, they will likely not make it out of this recession standing up. More here.In my opinion, the entire Chinese economy is unstable—housing, banking, inflation, domestic consumption, labor, you name it. Exports are 20%+ of the economy and the world is not only not buying much the recession is continuing/double dipping. Housing and related markets are thought to be 30% of the economy and it’s looking like the bubble will soon burst. Domestic consumption is also going down and NPL’s are at over 30%! The Chinese may have been able to buy themselves out of the last two recessions/bubbles ('97 and "08) but the laws of economics will catch up to them, just like they've caught up to the US and the EU.Now a few thoughts on how culture will affect your business relationships in China.
This from the WSJ: “The Chinese are particularly sensitive to the opinions of those closest to them…” Sure, that’s nice marketing fluff for women’s shoes and handbags, right? Wrong—this directly impacts any type of business you’re doing in China.The article continues: “The role of friends and family is incredibly important in China, more than anywhere else in the world,” said Max Magni, head of McKinsey’s consumer practice in Greater China and a co-author of the study.”
Why is your contract constantly renegotiated?Why do you always have to be weary of conscious quality fade?Why does it seem that what your told and what actually happens are completely different?Why do Chinese not trust other Chinese people?Why is China one of the most corrupt/least transparent places?From a Chinese author:
the Cultural Revolution played a significant part in China losing many of the values and virtues that it took 2,000 years to cultivate. And, since Deng Xiaoping liberalized China from 1979, money worship has sadly become a more prominent feature of Chinese society.Capitalism and a lack of faith in traditional values have combined to undermine mutual trust among Chinese. This has in turn stoked the corruption that is rampant among officials, who have lost their sense of connectedness with the people. And, without a basic sense of trust and fair play, incidents like that of Wang Yue will continue.
I don’t think that it’s a stretch to say that scandals like the powered milk, the enhanced watermelons, the lead paint, is it beef or pork, fake tires and car parts, rampant kid-napping, really any issues of conscious deception that affect China’s OWN children for profit could be traced back to this lack of any common values. Add in the ideas that ALL Chinese have be taught in school for the last 60 years that the West has taken advantage China and so it’s a patriotic duty to “take back” and “support the rise of China” in any way that one can and you can see why doing business here can be challenging, even threatening.How bad is the crisis of trust? Even the atheistic CCP has started to install “religion” of sorts to help fill the moral void. Confucius has been rehabilitated and enshrined in Tiananmen Square. And if I had to be money on it, I’d say that the increased freedom of activity for foreign religions is on the horizon as well.I’ve stated many times that Chinese don’t trust other Chinese and that China is amoral. Chinese without advanced reading skills or a dictionary have slammed me for saying that Chinese are liars and are immoral. And while I’ve not said these things (trying to think of a response to the contrary...give me a minute...), the point of this blog should be obvious to anyone that’s read more than one posting—China is amoral, there is absolutely no trust here; you’ve been warned. Act accordingly.And unfortunately, the degree to which the amoral Chinese society will affect your business is not going to be getting better any time in the near future. Read this report in the NY about Chinese students abroad (that are eventually going to return to China to work in the MNC's that foreigners deal with directly).
From the article: "90 percent of Chinese applicants submit false recommendations, 70 percent have other people write their personal essays, 50 percent have forged high school transcripts and 10 percent list academic awards and other achievements they did not receive. The “tide of application fraud,” the report predicted, will likely only worsen as more students go to America."
If you really want to know what it’s like to work in a Chinese company, read the NYT article about what the problems US colleges and Universities are having with groups of Chinese students.Chinese generally do not care about anyone that is not in their own close personal network—so much so that children and old people are left to die in the streets. If you don’t think this affects your IP, quality (fade), prices, contracts, etc. you’re just not thinking.
The fundamental problem, in my view, lies in one word that describes a state of mind: shaoguanxianshi, meaning don't get involved if it's not your business. In our culture, there's a lack of willingness to show compassion to strangers. We are brought up to show kindness to people in our network of guanxi, family and friends and business associates, but not particularly to strangers, especially if such kindness may potentially damage your interests.China's moral crisis doesn't just manifest itself in personal life but also in business practice and many other areas. The high-profile "poisoned milk powder" case and the scandal of using "gutter oil" as cooking oil have shocked and disgusted people around the world. Last year an article, "Why have Chinese lost their sense of morality?", in which the author tried to find an explanation, was widely read. He reasoned that China has introduced the concept of a market economy from the west but failed to import the corresponding ethics, while the traditional moral principles of China no longer fit the market economy model.