# Silk Road International > Asia business consulting, research, and field notes. 35 years on the ground in China and Thailand. Public Ghost content for AI and LLM tooling. This file includes a bounded export of public pages first, then recent public posts. Append `.md` to any post or page URL to get the content in Markdown (for example, `/example-post.md`). ## Pages ### About URL: https://www.silkroadintl.net/about/ Last updated: 2026-07-12T07:07:19.000Z # About Silk Road International Your Branch Office in Asia ## David A. Dayton, MBA, PhD Founder & Managing Partner ![David presenting at BYU Marriott School of Business](https://storage.ghost.io/c/84/12/8412d9ea-f8fe-482f-8289-e2b3c5f36cc5/content/images/2026/07/about_1.jpg) David has been working in and with companies in East and Southeast Asia for more than 30 years — managing QA, supply chain, logistics, and HR for his own companies and others in China, Taiwan, and Thailand. He has started and sold his own companies, and consulted for banks, airlines, factories, SMEs, MNCs, universities, and governments. ### Speaking & Recognition ![David speaking at a podium](https://storage.ghost.io/c/84/12/8412d9ea-f8fe-482f-8289-e2b3c5f36cc5/content/images/2026/07/about_2.jpg) David is a business coach and a sought-after speaker and consultant on Thai and Chinese corporate cultures — a keynote speaker with hundreds of presentations in Chinese, Thai, and English across China, Hong Kong, Taiwan, Thailand, the EU, UAE, and the United States. He has been published in academic and professional journals and interviewed by CNN, CBS, BBC, 60 Minutes, EuroBiz, and others. ### Education & Credentials ![David Dayton speaking at Global Sources China Sourcing Fair](https://storage.ghost.io/c/84/12/8412d9ea-f8fe-482f-8289-e2b3c5f36cc5/content/images/2026/07/consulting_6_new.jpg) David speaks Thai and Mandarin, and holds two MAs in Thai Urban and Corporate Cultures, an MBA from ESSEC in Singapore, and a PhD in Chinese Business Anthropology. He is an ICF-certified Business Coach and has taught university courses in China and the US, including Developing Business in China, Business Anthropology, Strategy for China, Intercultural Communications, and Doing Business in ASEAN. ### Personal ![David presenting to a classroom](https://storage.ghost.io/c/84/12/8412d9ea-f8fe-482f-8289-e2b3c5f36cc5/content/images/2026/07/about_4.jpg) David is also a happy grandpa and husband to the beautiful Jessica Wang. His hobbies include travel, reading, chocolate, and triathlons. ## Ready to talk? [Schedule a 1:1 with SRI Today](https://www.silkroadintl.net/contact/) ### Services URL: https://www.silkroadintl.net/services/ Last updated: 2026-07-13T06:01:18.000Z # Services [Schedule a 1:1 with SRI](https://www.silkroadintl.net/contact/) ## What Can SRI Do for You? ### Doing Business in... Series ![David teaching cultural fluency and emotional intelligence](https://storage.ghost.io/c/84/12/8412d9ea-f8fe-482f-8289-e2b3c5f36cc5/content/images/2026/07/consulting_1.jpg) SRI's Doing Business in... series distills 30 years of on-the-ground experience in Asia into ten practical modules — a "how to" manual built on real, lived experience. These courses have been taught in boardrooms, on factory floors, and in universities, helping thousands of companies, entrepreneurs, and students localize and maximize their operations in Asia. ### Services ![Group photo at the Wenjiang China-US family education forum](https://storage.ghost.io/c/84/12/8412d9ea-f8fe-482f-8289-e2b3c5f36cc5/content/images/2026/07/consulting_2.jpg) For 25+ years SRI has worked with MNCs, SOEs, SMEs, NPOs, schools, start-ups, and individuals, using that experience to guide clients' corporate improvement and help them co-create a more dynamic corporate culture. SRI works with you to build unique solutions matched to your specific needs, focusing on the individuals, content, and processes that matter most — customized to your organization, timeline, and budget. ### Training & Speaking Events ![David presenting to a training session](https://storage.ghost.io/c/84/12/8412d9ea-f8fe-482f-8289-e2b3c5f36cc5/content/images/2026/07/consulting_3.jpg) Whether it's an afternoon with C-level leaders over Zoom, a multi-day retreat for regional managers, or an extended rollout of new communication skills in an overseas office, SRI can meet your needs. Past work spans teamwork activities in Bangkok, technical trainings in the UAE, leadership seminars in Shanghai, and cross-cultural negotiation workshops in the US. ### Culture Audits ![Audience at a David Dayton speaking event](https://storage.ghost.io/c/84/12/8412d9ea-f8fe-482f-8289-e2b3c5f36cc5/content/images/2026/07/consulting_4.jpg) You know your corporate culture at home — but do your partners and employees in Asia understand it the same way? Using the same words doesn't mean everyone means the same thing. Through open interviews, extended on-site observation, customized surveys, and coordinated follow-up, SRI helps make sure every office and employee is on the same page, then helps manage the culture-change process that follows: setting goals, developing new behaviors, finding champions, resolving concerns, and bringing skeptics on board. ### Executive & Business Coaching ![David Dayton speaking at a conference podium](https://storage.ghost.io/c/84/12/8412d9ea-f8fe-482f-8289-e2b3c5f36cc5/content/images/2026/07/consulting_5.jpg) Coaching isn't SRI telling you what to do. It's a collaborative process that helps you and your team discover how to maximize potential and improve performance by building on the abilities and knowledge you already have. You know yourself best — SRI knows how to ask the questions that get you to the "ah ha" moments. ![David in conversation at a conference](https://storage.ghost.io/c/84/12/8412d9ea-f8fe-482f-8289-e2b3c5f36cc5/content/images/2026/07/about_3.jpg) **Individual coaching** is booked in sets of 6 or 12 one-hour sessions, in person or online. ![David Dayton on a video conference call](https://storage.ghost.io/c/84/12/8412d9ea-f8fe-482f-8289-e2b3c5f36cc5/content/images/2026/07/consulting_7_new.jpg) **Team coaching** addresses trust, accountability, communication, and how individuals work within team structures. It can be booked alongside a culture audit or as a stand-alone 3-month engagement, and works best on-site. [Contact SRI to discuss your project →](https://www.silkroadintl.net/contact/) [Schedule a 1:1 with SRI Today](https://www.silkroadintl.net/contact/) ### Podcast URL: https://www.silkroadintl.net/podcast/ Last updated: 2026-07-21T06:38:43.000Z # SRI's Corporate Cultures Podcast Conversations on doing business in China and Southeast Asia. [![Mildly Intriguing Media](https://storage.ghost.io/c/80/be/80be6d15-255e-45d8-a455-2b0f8e7f7b1e/content/images/2026/07/Color-logo---no-background.svg)](https://www.mildlyintriguingmedia.com/?ref=silkroadintl.net) The SRI podcast is part of the [**MIM Podcast Network**](https://www.mildlyintriguingmedia.com/?ref=silkroadintl.net), a community of independent podcasts from around the world. ## Listen to David David hosts and appears as a guest across a number of shows discussing Chinese and Thai corporate culture, cross-cultural business, and life in Asia. Episode links below. SRI Corporate Cultures Podcast season 1 can be found [here](https://music.amazon.com/podcasts/ecb2a477-9bc9-42c6-8f01-36a104df76ca/silk-road-international%E2%80%99s-corporate-cultures-podcast?ref=silkroadintl.net). SRI Corporate Cultures Podcast season 2 can be found [here](https://open.spotify.com/show/1mUoFAzUcMppqcdYS2E5Qs?ref=silkroadintl.net). ![Luminous](https://cdn.prod.website-files.com/6843818ae02e2061caa680f6/6843818ae02e2061caa6814c_luminous-horiz-rgb-fullcolor.svg) ### Building Trust in China David's interview with Jared Ward of Luminous. [Read & Listen](https://www.silkroadintl.net/building-trust-in-chinaan-interview-with-jared-ward-of-luminous/) ### More episodes coming soon This page is being updated with David's full podcast archive — guest appearances and the SRI Corporate Cultures Podcast. [Ask David](https://www.silkroadintl.net/contact/) ## Would you like to have David on your show? [Contact SRI](https://www.silkroadintl.net/contact/) ### Contact URL: https://www.silkroadintl.net/contact/ Last updated: 2026-07-12T07:13:52.000Z # Contact SRI Let's talk about doing business in Asia. ![David Dayton in Taiwan](https://storage.ghost.io/c/84/12/8412d9ea-f8fe-482f-8289-e2b3c5f36cc5/content/images/2026/07/consulting_6.jpg) For more information on SRI's Doing Business in China/ASEAN courses, coaching, or consulting services, get in touch directly. ### David A. Dayton Email: [info@silkroadintl.net](mailto:info@silkroadintl.net) Phone (US): +1 801.542.9458 Phone (Thailand): +66 063.145.7962 Skype / WeChat / Line: dvdd8n [Schedule a 1:1 with SRI →](mailto:info@silkroadintl.net) ### Home URL: https://www.silkroadintl.net/home/ Last updated: 2026-07-19T06:47:22.000Z # Silk Road International Your branch office in Asia. ### Subscribe to the SRI Newsletter Field notes on doing business in China and Southeast Asia, straight to your inbox. Subscribe Success! Please check your inbox to confirm. ❖ SRI is an international coaching and consulting company that helps clients better understand and manage what's really happening on the ground in China and Southeast Asia. ❖ SRI helps clients solve problems and overcome cultural, political, and logistical issues that attend regional business. ❖ SRI focuses on people, helping to improve cross-cultural communications. ❖ SRI works from the basis that localized understanding is the key to resolving conflicts in international corporate settings — and that trust matters most, because (corporate) culture trumps strategy in day-to-day workspaces. ![David Dayton speaking in Chengdu](https://storage.ghost.io/c/84/12/8412d9ea-f8fe-482f-8289-e2b3c5f36cc5/content/images/2026/07/home_body.jpg) ❖ David has been interviewed by: BBC, CBS Evening News, CBS's 60 Minutes, AP, NPR, and CNN ❖ Published in: EuroBiz magazine, Right Sight Asia, Garden International, The China Sourcer, and China Economic Review ❖ Featured on: the New Zealand government's international trade information website, and China Success Stories ❖ Speaker for: Global Sources' New Buyer Training seminars (Shanghai/HK/Dubai) and Supplier Education program ❖ SRI's blog was named a top-10 China business blog and featured on the WSJ China blog "best of" lists [More About SRI →](https://www.silkroadintl.net/about/) ### Does your corporate culture work in another culture? It's not just technical skills and knowledge, it's culture—your culture, their culture, and a shared corporate culture. [Contact SRI](https://www.silkroadintl.net/contact/) ### Experience Matters We learned the hard way—on our own—so that you don't have to. We've worked in China and Southeast Asia for more than 30 years. [Contact SRI](https://www.silkroadintl.net/contact/) ### Do you have Interpreters, not translators? Using the same words doesn't mean the same things. You need to understand meanings, nuance, innuendo, and feelings. [Contact SRI](https://www.silkroadintl.net/contact/) ## What Can SRI Do for You? ### Services & Coaching Custom solutions built on 30 years of on-the-ground experience. [Learn More](https://www.silkroadintl.net/services/) ### Doing Business in... Series Ten practical modules distilling real, lived experience in Asia. [Learn More](https://www.silkroadintl.net/services/) ### Training & Speaking From Zoom briefings to multi-day retreats and keynotes. [Learn More](https://www.silkroadintl.net/services/) ## Latest from SRI [**Latest Blog Post** Building Trust in China—an interview with Jared Ward of Luminous](https://www.silkroadintl.net/building-trust-in-chinaan-interview-with-jared-ward-of-luminous/) [**Latest Podcast** New episodes coming soon](https://www.silkroadintl.net/podcast/) [**Newsletter** Sign up for our email newsletter — coming soon](https://www.silkroadintl.net/contact/) [Read More on the Blog](https://www.silkroadintl.net/blog/) ## Posts ### A few things SHEIN's drop in value tells us about working in China URL: https://www.silkroadintl.net/a-few-things-sheins-drop-in-value-tells-us-about-working-in-china/ Last updated: 2026-09-06T08:17:56.000Z **SHEIN** is the fast fashion brand that took the world by storm. At one point in 2022 it was valued at $100 billion. But by 2024, that number had crashed to “just” $27 billion, and it’s now operating at a loss. And while you might not be in fast fashion, the drop in SHEIN’s value has a more than a few lessons for anyone doing business in China. Here are a couple of quickies: **First**, SHEIN’s innovation was indeed revolutionary. That it spawned so many copies and government actions against it in the West shows just how significant its business model was. So if you don’t yet believe, it’s time to admit that China *is* innovative. Whether from 0 to 1 or 1 to 100, when that innovation is combined with China's world-leading supply chains, they are formidable and even dominant in just about any industry they enter. The age of “China just copies things” is mostly over. Yes, most of the world’s copies still come from China, but China is also leading frontier technologies and business models from biotech and AI to EV's and batteries. Underestimate China at your own peril. But as SHEIN’s drop in value shows, even global dominance can be stopped, or at least slowed 75%, with focused tariffs and the closure of loopholes. This should be a lesson for governments moving forward: that tariffs applied specifically and loopholes closed can have the desired effect on Chinese industry. **Second**, The Chinese government is involved in every business decision of any significance in China—yes, even in “private” companies. Not only is SHEIN either hiding their supply-chain diversification (likely) or not doing it (unlikely) because of fear of the Chinese government, but they are limited in what they can openly/legally do at all due to restrictions on what China allows its companies to do outside of China. Just because you need to diversify your supply chain to meet the demands of foreign customers (the result of successfully following the Chinese government’s instruction to Go Out), does not mean that you will be allowed to move jobs, production, capital, IP, or equipment out of China. Just ask Apple. Or Manus. This is significant for anyone doing business in China. You personally, and your company's assets can all be "stuck" in China for indefinite and undisclosed amounts of time and for unclear reasons. I have an associate who has been exit-banned from leaving China due to a retaliatory counter suit in Chinese court. Rule of law in China doesn't work in China the same was as it does in the West. Ditto transparency, justice, "private" companies. **Third**, SHEIN has lost billions (with a B) of USDollars in the last two years, in part because the Chinese government didn’t do anything—meaning, it didn’t say “no” but also wouldn’t overtly give SHEIN the blessing it needed to go through with the London-approved IPO listing. When you’re beholden to the government, business decisions can’t be made independently. And everyone in China is beholden to the government. This is where companies are caught between a rock hard place. They need government approval, or at least apathy, to be successful in China. But being successful means that companies are on the State’s radar and likely seen as a financial tool for multiple levels of government—all holding different priorities than corporate profit. This is a great example of wuwei (无为, 無為) or inaction. Usually it means that things happen though nothing is explicitly done. In this case it’s something that the government ostensibly wants (companies Going Out) and is approved abroad and would be good financially for the company, but isn’t going to happen because no one with authority is going to actually say yes or no due to conflicting, unclear, or new priorities. China want global companies, but it doesn't want it's IP/capital to leave China (they know what happened to every Western firm that came to China!!). You can’t have common prosperity in China if your Chinese companies are leaving the country. Further to this point, if you can achieve government priorities and subsequently also make a profit, bonus. But don’t expect that “common prosperity,” “capitalism with Chinese characteristics,” and whatever other policy is currently in vogue is designed to help you make money unless you’re specifically part of the current 5 Year Plan. And even then, once that plan has ended you can be taxed retroactively for subsidies you received!! Like Frank says, You’re riding hight in April, and shot down in May. The willingness of the Chinese govt to now retroactively cancel subsidies and then use those changes to go after decades of “back taxes” in midst of the worst non-covid economy in the last 20 years should clearly show whose priorities come first. Not private businesses’. SHEIN is just one example of a company that was a model in China, only to be caught in mixed signals, global tariffs, conflicting government priorities. Yes, China is a big market. But that doesn’t mean it’s blue ocean. You need to know more than your product and industry to be successful. You need the combined map of local culture, government, judicial, market, supply chain, and industry to navigate successfully. SRI has been working in China and Southeast Asia since 1989 and can help you make the most of your China experience. Call or email today for a free consultation and introduction. [Original article](https://www.economist.com/business/2026/08/24/how-shein-came-crashing-down?ref=silkroadintl.net) ### China Admits It Lies About Its Own Economy. So Why Do We Still Trust the Numbers? URL: https://www.silkroadintl.net/china-admits-it-lies-about-its-own-economy-so-why-do-we-still-trust-the-numbers/ Last updated: 2026-07-21T07:15:23.000Z In a recent podcast, Miles Yu stated, "China is fundamentally dishonest about its economic reality." (Miles Yu, China Insider, Hudson Institute, July 2026) You'd think that statement from an academic would garner some attention from general media concerned with China and the state of global economics. Nope. Nary a reaction from any corner of the internet. Why? Well maybe the podcast isn't exactly Joe Rogan-level popular, but it's not nothing. The real reason? Because everyone already knows this. It's not news. China admits it. Multiple party/state leaders over the years have confirmed this truth: Chen Qiufa (Gov. of Liaoning, 2017), Ning Jizhe (Head of National Bureau of Stats, 2016), Li Keqiang (Former Premier, 2007). Think about that. Really let it sink in. The second largest economy in the world, the country that wants to remodel the global order in its image (or at least to its advantage), the country that most countries trade with more than any other, is known to actively lie about its current and historical economic reality. This would not be acceptable for any other country in the world. What a front-page scandal it would be if this claim were made about Germany, or the US, or even somewhere smaller like Singapore or Thailand. This isn't corruption hidden in the system. This isn't underdevelopment of education or government statistical capability. This is official, systemic dishonesty — recognized by the center and accepted globally as part of the package when doing business in China. So if everyone knows it, what's the point in bringing it up again? Because doing business in China is fundamentally different. Too often we hear this and that about China, we see gleaming towers and EVs and assume that they're just like us, or maybe even better. Some of that is partially true. China looks "modern" (whatever that means, a la Latour), and it's likely the source of just about everything you own or your current employer produces. Everyone there is driving electric cars and using iPhones. But China fundamentally runs on different rules and expectations. And rule #1 is: whether you're Chinese or foreign, China is a low-trust society. The joke among Chinese themselves is that Chinese companies keep very different financial books for the various important people who need to see numbers. I've heard of as many as seven different books: one for the owner, one for the investors, one for the board, one for the bank, one for the government, one for the wife of said owner, and one for the mistress of said owner. Is corruption unique to China? No. But being the supply chain for the world and the world's largest trading partner is. That means Chinese corruption is deeper and more extensively embedded in global economics than corruption in (pick any other single country). China wants to claim both a right to global leadership (no US hegemony, a "shared future") and status as "only a poor developing nation." Developing nations don't lead. And leaders don't admit to and then continue to use economic stats which are non-transparent and systemically corrupt. How deep does this go? It's not just government stats and business books. It's academia too. There are international journals that won't accept submissions from academics in Chinese institutions. There are websites dedicated entirely to exposing Chinese academics who've plagiarized their work, and they take down ranking academics regularly. You can wave this off as something everyone does. As an American, I'm already inured to the coming whataboutism — "yeah, well, Trump!" Again, corruption exists everywhere. But everywhere else corruption is not recognized as both endemic and systemic by the very leaders promoting the reliability of their own statistics to the rest of the world. What does this mean in reality? It means China isn't investable in the way its GDP headline suggests. It means the true depth of public debt is unknown. It means the extent of the property crisis isn't fully clear. It means that in the involution (overcapacity and unprofitability) of multiple industries is becoming a feature, not a bug. It means that in a downturn, you have little to no confidence that the factory you're working with will still be solvent and operating through the end of your contract with them. This is an all too common story recently. Chinese companies openly acknowledge razor-thin or negative margins, kept alive by government subsidies to preserve employment, secure necessary supply, or bridge lean years (sometimes decades) while taking over an industry or market. For example, officially, China's economy grew about 5% last year. Independent estimates, such as this from Rhodium Group, put real growth closer to 2.8%. That's not rounding error; it's half the headline number! These numbers have real consequences as they are what investors, suppliers, and foreign governments use to make decisions. Beijing knows the official numbers don't hold up too. It recently proposed legislation making local officials criminally liable for faking statistics, a tacit admission that faking them was and is routine enough to need a law against it. (A Beijing denial is the surest form of confirmation.) This is also why Li Keqiang, before he became Premier, admitted he ignored GDP and tracked electricity consumption, rail freight volume, and bank lending instead; now known as the "Li Keqiang Index." If a sitting premier didn't trust the official numbers, why would you? Does this mean there are no world-class factories or capable government offices with real cash behind them? Absolutely not. But it means the burden of proof sits with you, not them. The books you're shown aren't the books that matter. The stats you're quoted aren't the on-the-ground truth. Real verification happens in site visits, utility and payroll checks, independent third-party audits, on-the-ground relationships that don't depend on what an employee shows you. With AI-generated storefronts, catalogs, and even "factory tour" videos now cheap to produce, you increasingly can't tell if the factory is real, if production is quietly subcontracted to a third party, or if the business exists at all without someone verifying it in person. I did factory verification work in China for more than a decade. I've seen incredible factory websites whose physical address was literally a pile of bricks—three walls and a generator running a single machine. That's the actual work. If you're sourcing, investing, or operating in China and trusting the numbers you're handed instead of the numbers you've verified yourself, you're already exposed. [Schedule a 1:1 with SRI ](https://www.silkroadintl.net/the-7-big-mistakes-in-china/) to talk through what real due diligence looks like on the ground. Or start with SRI's own D[oing Business in China course ](https://www.silkroadintl.net/dbi?utm%5Fsource=sri-blog&utm%5Fmedium=blog&utm%5Fcampaign=china-economic-dishonesty&utm%5Fcontent=dbi) for the framework you need to do it yourself. --- Sources Miles Yu quote: China Insider podcast, Hudson Institute, July 2026\. Show page: https://www.hudson.org/foreign-policy/welcome-china-insider Chen Qiufa / Liaoning admission (2017): Governor Chen Qiufa told the provincial legislature that Liaoning fabricated fiscal data from 2011 to 2014, inflating some local income figures by over 100%. https://www.bloomberg.com/news/articles/2017-01-18/rustbelt-china-province-admits-it-faked-fiscal-data-from-2011-14 Ning Jizhe (2016): as head of the National Bureau of Statistics, wrote in People's Daily that local statistics are routinely falsified and called fixing it the lifeline of statistical work. https://www.caixinglobal.com/2018-06-21/legislature-reports-widespread-fabrication-of-official-data-101292368.html Li Keqiang (2007) and the Li Keqiang Index: per a leaked US State Department cable, Li told the US ambassador GDP figures were man-made and that he tracked electricity consumption, rail freight, and bank lending instead. https://en.wikipedia.org/wiki/Li\_Keqiang\_index Rhodium Group GDP gap: Rhodium estimated China's 2024 real growth at 2.4 to 2.8%, versus Beijing's reported roughly 5%. https://rhg.com/research/after-the-fall-chinas-economy-in-2025/ Statistics fraud legislation: an amendment to China's Statistics Law adding steeper penalties for falsified data was submitted to the National People's Congress in April 2024\. https://www.scmp.com/economy/economic-indicators/article/3260361/chinas-beefed-statistics-and-accounting-laws-under-review-robust-fines-increase-cost-fraud ### The 7 Big Mistakes in China URL: https://www.silkroadintl.net/the-7-big-mistakes-in-china/ Last updated: 2026-07-13T03:25:08.000Z If you’re on Chinese social media, you might be seeing things this: > The 7 mistakes ("中产破产七件套"): > 盲目创业 — Reckless entrepreneurship/starting a business blindly > 高额房贷 — Excessive mortgage debt > 配偶全职带娃 — Spouse quitting work to be a full-time parent > 盲目鸡娃 — Blindly over-investing in kids' education ("chicken-blood parenting") > 盲目投资 — Reckless/blind investing > 忽视自身健康 — Neglecting personal health > 爱攀比消费 — Status-driven, comparison-based spending Literally the opposite of 7 Habits for Highly Effective People. LOL! But it’s not really that funny in real life. These mistakes are the result of a work ethic that chases money and status at all costs. Two quick anecdotes from my work experience in China. **First, “You can’t give them negative feedback.”** After working in China for so many years and then getting a PhD and an MBA, I get requests from many Chinese entrepreneurs to give them feedback on their initial pitch to foreign investors. They want to know what a foreigner thinks about their business “plan.” At least that’s what they tell me they want. Actually, what they’re looking for is a pat on the back, an introduction to a potential investor, and some shallow positive comments on how well I think they’ll do in their new venture. Of course, I don’t tell them that. From an American perspective, I’m focused on telling them what they’re missing in the “plan.” And yes, the scare quotes are necessary, in my experience very few really have a developed plan—usually just a cool product idea, a factory connection, and a potential buyer. I will compliment good ideas, but I’ve never seen a plan with any firm financials, a strategy beyond their first client, a supply-chain plan, or manufacturing cost details. I point out these issues and Chinese entrepreneurs usually leave embarrassed and angry that I’ve made them lose face. My office manager has told me a dozen times, “You can’t give them negative feedback. They don’t really want to know if you think it will work. They just need to let others see that they got foreign approval.” Now this isn’t everyone, but the Chinese entrepreneurial space is wildly different from the Western one. While Western investors may not going to go through your plan with a fine-toothed comb, they do need the security of seeing that you’ve done your homework. China, though, works on speed and connections—do we have a product (concept), a buyer, and a supplier? If so, we need to jump on this now and worry about details later; if we have those things, it’s likely that there are dozens of others in China who also already have the same. In the West, the name of the game is preparation and then regular positive returns. In China, the game is bringing proof of concept to market first. Period. Profits, if they ever do come, comes later, when you’ve been bought out or been around long enough to prove that you can get government support to keep going. This is a high stress, high speed environment that rewards momentum over efficiency. **Second, “My daughter and my liver thank you.”** As a teetotaler, I was the odd business partner for many Chinese factories. Many salesmen were not sure how to deal with someone who both speaks Mandarin and has studied the culture, but at the same time doesn’t engage in evening drinking, banquets, and Karaoke. Usually after an order or two, they get used to me and say something like, “We weren’t sure about you at first, but now we know you’re a good customer.” The background behind this is the 24/7 nature of business in China. If there is work to be done, you do it. If you don’t, someone else will take the opportunity from you. During the 15 years I was living in China, the government instituted national holidays, 1 day a week weekends; then two. But regardless of the time of year (other than Chinese New Year), I would get calls at 3 a.m. on a Sunday to go fix issues or approve projects in factories—they can’t wait 5-6 hours for the morning, and they are even less willing to wait until Monday! That’s almost 4 missed shifts! Sure, China Speed is impressive and it’s great when you only have to deal with it irregularly. But think about what that pressure means for the Chinese who are living it! It’s literally deadly. The Chinese business environment is cutthroat. It’s high speed (“China speed”). And it’s full on, all the time. For people that don’t have a cultural excuse to step away on weekends, it can be physically and emotionally devastating. Divorce, alcoholism, stress, ulcers, and a constant chasing of “next.” I managed projects at one factory regularly for over a decade. Same project manager. We became pretty good friends over the years. At first, he didn’t believe me when I told him to just take me to KFC instead of a fancy banquet or that I don’t drink or that I’m not interested in Karaoke (hostesses). But after a couple of orders, he realized I was telling him the truth. After a few projects (more than a year), his daughter would meet us at KFC, and I’d help her with her English homework. After a few years and her high school graduation, he confided in me, “My daughter and my liver thank you.” Because of me as his client, he would get a few nights a month “off.” Meaning he didn’t have to take clients out to drink and he could go home and spend time with his daughter. (His wife was working full time in another office in the same factory.) He told me that because of his time with me, he and his wife had talked many times about how to set rules and limits for their own personal behavior. He had, like most salesmen in China, serious liver issues from years of “business dinners” with clients and says that he would have missed most of his daughter’s childhood too if not for our many projects. In the recent economic slump (since 2018, really) many of my Chinese friends have asked how they can come work in the US, or how to get their kids out of the Chinese system. It’s not an exaggeration to say that anyone in China with money has left or has plans to leave. These seven mistakes are almost all results of this high-speed, low-efficiency, max-stress, relationship-dependent, 24/7 churn, that is the China miracle of the last three decades. It’s real, it’s brutal, and it destroys lives. And it’s also systemic due to GDP and other growth-at-any-cost targets set by national and local level governments (i.e. investors). And at a personal level, it is unsustainable physically and emotionally. In my China experience, it’s not just a meme; these are generational mistakes that cost many people their physical, emotional, financial, social, and/or professional lives. ### Building Trust in China—an interview with Jared Ward of Luminous URL: https://www.silkroadintl.net/building-trust-in-chinaan-interview-with-jared-ward-of-luminous/ Last updated: 2026-07-18T14:39:13.000Z I had the great pleasure to be invited to talk with Jared Ward of [Luminous](https://luminous.com/?ref=silkroadintl.net) and the OPS Unfiltered podcast. Great conversation about China and doing business there and other places in ASEAN. Here's a link. Enjoy! [David Dayton on the OPS Unfiltered Podcast](https://podcasts.apple.com/us/podcast/this-is-how-to-build-trust-in-china/id1736554411?i=1000684087716&ref=silkroadintl.net). [Or watch on Youtube.](https://youtu.be/zS1ygGiSEHk?ref=silkroadintl.net) ### Is it now safe(r) to go to China? URL: https://www.silkroadintl.net/is-it-now-safer-to-go-to-china/ Last updated: 2026-07-18T14:47:55.000Z **TLDR: Yes, it's physically safe, but that's not what most people are worried about.** This week the US State Dept. lowered the Travel Advisory from 3 (reconsider travel) to 2 (exercise increased caution). So of course this raises the question: Is China demonstrably safer this week than last? No. But it was never really physically dangerous to begin with. I've lived and worked in China for 15 years. When I first went to China in 1995 it was safe, but difficult. Life was still hard in China despite officially starting to open up. Petty theft was common. Food quality was questionable. But there was little concern for physical safety, other than road safety—which was honestly terrifying! 10-20 years later, from the 00's through 2017, China was much cleaner, but still pretty much the same safety story; food scandals, petty theft in railway stations, and millions of new drivers (a whole new road-safety threat). But expats were generally not afraid for their physical safety. I had my pockets picked a number of times and I had a few phones stolen. Once I chased down a thief trying to make off on my bike, but can only remember two times when I felt unsafe in 15 years in China. Today, it's different, but not in the way that you might think. Petty theft is down. Driving safety is up. Food and product standards are higher, though scandals are still common—see the cooking oil and sanitary products scandals in the last year. But being in China “feels” different (appropriate use of scare quotes). The biggest concern that I hear from other expats is about the gray areas in government policy and media censorship and surveillance. These are things that no one seems to have a handle on and may or may not be consistently applied across the country. The unknown is scary. When I was teaching at a university in Shanghai last semester the Department Chair asked my help in recruiting other foreign teachers. She wondered why I was willing to come to China when they were having such a hard time recruiting other foreign professors. Other professors that could come to China won't for a lot of reasons that don't have anything to do with China (tenure, family, economics, etc.). Other issues that relate to China, but are still individual include the questionable professional and monetary value of spending a semester in China. But the concerns that are at the top for most foreigners, professors and business people alike, are much more legal and governmental. Things that the university can't really address, and that's the concern. Here are a few. Exit bans. This is the scariest thing. I have two friends/associates who are stuck in China and can't leave due to exit bans. If there is a legal case against you, you can be detained in China until it's resolved. One of my friends has been detained in the country for more than 2 years now because the case has never come to court—he claims the prosecuting party is paying the court to not hear the case to force him to negotiate. This is not an uncommon story. Foreign Espionage Law. This too is pretty scary, again because it seems to be so arbitrary. When going to China, we all (should) know that someone will likely always be watching us. Not just because we stand out as foreigners, but because the law now rewards our neighbors for snitching on us. Every class we teach will have someone that reports on ALL discussions and any questionable topics/comments had in class. Corporations all have a Party rep that does the same thing. If you're not careful, you could be reported, questioned, detained, and/or deported because of something you've said. Does it happen often? No, but the law itself has a chilling effect on people who would otherwise be willing to teach/work in China. I have had the police invite me to tea twice. And let me tell you that those visits can have a very chilling effect. These two points, the Exit Bans and the Foreign Espionage Law are specifically why the Travel Advisory was previously at 3—arbitrary enforcement and local govt harassment of small businesses. And the laws are still in effect, even if US citizens are no longer being detained. So is China really any safe(r)? Media Censorship. Whether in China or out, social media is typically the most common use of a phone. If people are cut off from that, it's likely going to be an unwelcome lifestyle change. And it's not just losing access to stupid cat videos. Families use SM apps to keep in touch, friends use them to digitally “hang out” together. Going to a foreign country usually means sharing everything on the apps with those back home. China is like going into a media black hole. While in China I can't get access to foreign university or professional sites or resources, even on campus. No google (translate, scholar, doc, maps, etc.), no linked in, no fb/TT/insta/WhatsApp/messenger/etc. Finally, Being Alone. In 20 years of being an expat, this is the most common problem I've seen with other expats—one member of a couple, a child, or someone who came over by themselves can't deal with China. If you don't speak Mandarin, if you don't have a support system, if you can't regularly contact your family/friends back home, China can be crushingly lonely. And China doesn't have support services for expats like you'd find in more cosmopolitan countries, even fewer now than before Covid. Even ABCs can have a hard time adjusting to a world that is completely Chinese. Lots of affairs, divorces, early returns home, mental break downs, and drinking. Bottom line? China is physically safe. And if you're in China for a short period of time you may not have any issues at all. But there are real issues that a company, or the university in the case of the Department Chair I was speaking with, can't manage or make disappear with a bit of extra compensation. My point isn't to scare people away from China. I will continue to go to China. And I'll continue to teach people how to be more successful in their trips too. China is absolutely doable, but there are things that you have to know are out of your control that you have to live with in China. And the unknown can be scary. The more you understand about China and the longer you're there, the more you learn how to adjust and adapt and enjoy it. Good luck! ### SRI Shorts China Contradictions URL: https://www.silkroadintl.net/sri-shorts-1203-china-contradictions/ Last updated: 2026-07-13T11:34:38.000Z A quick SRI Shorts take on the contradictions you run into doing business in China. ### SRI Shorts—learn to live with contradictions URL: https://www.silkroadintl.net/sri-shortslearn-to-live-with-contradictions/ Last updated: 2026-07-18T14:47:55.000Z China is where I learned that two things can be right at the same time. More importantly, it's where I realized that being able to mentally handle and professionally manage active contradictions was the best way to deal with rapid change and stark cultural differences present in China. We see this daily in our work with clients in China—companies are growing their presence, but profit margins are shrinking; foreign enterprises in China are becoming more efficient in the local market but increasingly disconnected from their global HQ; unemployment is high, but so is turnover. China is either/both the largest market and manufacturer for my clients but also “our biggest problem globally,” as one CEO put it. Another described their own operations in China as “opaque” and “obtuse.” One company went so far as to hire a “China guy” in their HQ in the US just so that he could “translate” to the executive team what was going on in their China office (and they had a foreign director in China—it wasn't a language issue). Take these two headlines—same data, different stories. Yes, both are true. And you're better off if you read both (as opposed to one). The key is balancing the contradictions, trusting your people, and being willing to keep moving forward—you can't drive a parked car! Contradictions can be managed if you've got good information and are willing to act. ### SRI Shorts—China’s New Visa Rules URL: https://www.silkroadintl.net/87rarufomgl1p8kxzs3dn1247zr9nu/ Last updated: 2026-07-18T14:47:56.000Z The first edition of SRI Shorts—Quick reactions to current topics. China is offering 30 days visa-free travel (for some)! This is great news, but does it change travel in China? Um… not really. But it’s a step in the right direction. [***View video here.***](https://youtu.be/t%5FTW8dgDrd0?ref=silkroadintl.net) ### SRI Shorts China's New Visa Policy URL: https://www.silkroadintl.net/sri-shorts-1125-china-visa/ Last updated: 2026-07-13T11:34:38.000Z A quick SRI Shorts look at navigating the China visa process. ### Michell Bradley and SRI's David Dayton Discuss Corporate Culture in Asia URL: https://www.silkroadintl.net/sri-podcast-michell-bradley-corporate-culture-asia/ Last updated: 2026-07-13T11:33:27.000Z Michelle teaches global leaders how to build cultural intelligence, psychological safety, and inclusive communication across APAC and beyond. She teaching in English and Mandarin and she is the founder of Elephant Communications and an ICA-certified coach, CQ Fellow (2026), Certified Fearless Organization Scan Practitioner, Master Certifier of Prism Global TeamLEAD, and a graduate of the Advancing Inclusion in Asia Masterclass. ### Tang Xin and SRI's David Dayton Discuss Chinese Expats Working in Foreign Environments URL: https://www.silkroadintl.net/sri-podcast-tang-xin-chinese-expats/ Last updated: 2026-07-13T11:33:26.000Z Tang Xin is a global Chinese expat with decades of experience in multiple countries. He has worked for Chinese and foreign companies both in and outside of China. He currently resides in Chengdu with his family. ### Renaud Anjoran and SRI's David Dayton talk about manufacturing in China over the last three decades URL: https://www.silkroadintl.net/sri-podcast-renaud-anjoran-manufacturing-china/ Last updated: 2026-07-13T11:33:25.000Z Renaud is the founder of Sofeast. He started working on the ground in China for foreign buyers in 2006\. He writes practical advice for importers several times a week on the qualityinspection.org blog. ### Elliott Zaagman and SRI's David Dayton talk about working in China URL: https://www.silkroadintl.net/sri-podcast-elliott-zaagman-working-in-china/ Last updated: 2026-07-13T11:33:25.000Z Elliott is an executive coach, corporate trainer, and writer who focuses on how Chinese leaders and organizations interact with their global employees and the public. ### Dan Harris and SRI's David Dayton Discuss Law and Business in China URL: https://www.silkroadintl.net/sri-podcast-dan-harris-law-business-china/ Last updated: 2026-07-13T11:33:24.000Z Dan Harris is a founder of Harris Sliwoski, an international law firm with lawyers in Los Angeles, Portland, Phoenix, Salt Lake City, Seattle, China, and Spain. He represents companies doing business in emerging market countries, mostly in Asia and Latin America. ### Steve Wood and SRI's David Dayton talk about doing business and living in China and the Middle East URL: https://www.silkroadintl.net/sri-podcast-steve-wood-china-middle-east/ Last updated: 2026-07-13T11:33:23.000Z Steve is a transformational Human Resource and Change Management Leader with over 25 years serving Global Fortune 500 companies ranging in size from 200 to 320,000 employees. ### SRI Corporate Cultures Podcast Episode 6: Wayne Goeckeritz URL: https://www.silkroadintl.net/sri-corporate-cultures-podcast-wayne-goeckeritz/ Last updated: 2026-07-13T10:19:35.000Z SRI's David Dayton and guest Wayne Goeckeritz discuss some of the culture differences that come up when working with Chinese companies and cyber security issues that accompany working with non-Western clients. [Listen on Amazon Music →](https://music.amazon.com/podcasts/ecb2a477-9bc9-42c6-8f01-36a104df76ca/episodes/4c75caca-683f-425e-8eab-c8fbd36183a8/silk-road-international%E2%80%99s-corporate-cultures-podcast-sri-corporate-cultures-podcast-episode-6-with-wayne-goeckeritz?ref=silkroadintl.net) ### SRI Corporate Cultures Podcast Episode 5: Nick Wilshire of AusCham in Jiangxi, China URL: https://www.silkroadintl.net/sri-corporate-cultures-podcast-nick-wilshire/ Last updated: 2026-07-13T10:19:36.000Z Nick is a Vice-Chair of the Australian Chamber of Commerce South China and a 20-year vet of working in China. Nick talks to SRI's David Dayton about manufacturing and legal issues in Jiangxi, working and training for a 1/2 marathon during quarantine, and Aussie Cham dealings in Shenzhen and Hong Kong. [Listen on Amazon Music →](https://music.amazon.com/podcasts/ecb2a477-9bc9-42c6-8f01-36a104df76ca/episodes/305138c3-99a4-4e0c-aa78-ddda8e16f864/silk-road-international%E2%80%99s-corporate-cultures-podcast-sri%E2%80%99s-corporate-cultures-podcast-episode-5-with-nick-wilshire-of-auscham-in-jiangxi-china?ref=silkroadintl.net) ### A better way to look at corruption, a review of Ang’s China’s Gilded Age. URL: https://www.silkroadintl.net/a-better-way-to-look-at-corruption-a-review-of-angs-chinas-gilded-age/ Last updated: 2026-07-18T14:48:18.000Z [China’s Gilded Age, The Paradox of Economic Boom and Vast Corruption, Yuen Yuen Ang.](https://www.amazon.com/Chinas-Gilded-Age-Yuen-Ang/dp/1108745954/ref=sr%5F1%5F1?crid=1C3B7I9NQLY0E&keywords=Ang%20gilded%20age&qid=1650404419&sprefix=ang%20gilded%20ag%2Caps%2C499&sr=8-1&ref=silkroadintl.net) This is now one of my favorite books on China—right up there with Capitalism with Chinese Characteristics (Huang), Anxious Wealth (Osburg), Marketing Death (Chan), Wealth into Power (Dickson), and Chen Village (Chan, et al). It’s not only readable and very interesting but also immediately usable. This is really two books in one. The first is a discussion of Chinese corruption and the way to understand it more clearly. The second is a remaking of the way that corruption in general should be understood. BOTH are great. BOTH are necessary. But together I think that they muddy the understanding of China more than is necessary. Two notes on my perspective. First, as a qualitative researcher, I’m less comfortable discussing specific statistical models than I am the qualitative aspects of corruption and business. Second, as a almost 20-year China business veteran I know a lot about corruption firsthand. I am definitely using this book moving forward in both research and teaching about China. I have already used it in my Developing Business in China (UVU MGMT 4620) class and will continue to assign chapters for students to read and share the corruption analytics in future lessons. One suggestion/question that I have with methodology is the inclusion of Ease of Doing Business statistics in future comparative analysis. One of the constituent variables in this measure is how often one must interact with various levels of government to set up a business. Is China structurally designed to require more interactions (facilitating more access payments) relative to other countries? Would this be valuable to add to the model? Just a thought. Another question that I have is the idea of stability. The author notes that nations and their corruption are not stable variables, and that China’s decades of rapid growth highlights this. How do we measure the influence of (in)stability on corruption? Is Thailand, despite dozens of coups in the last 90 years, relatively stable or unstable? This concept seems like it could significantly influence the types and amounts of corruption in a given state. China has had explosive growth and a massive campaign to crackdown on corruption and modernize the bureaucracy, but they are certainly more stable, in terms of whole-government turnover than is Thailand. I’m left not sure how to understand this concept. The explanation for the development of incentivizing bureaucrats to work for the system and their own interests is also a valuable insight. The process of change, crisis, and co-opting is enlightening in understanding the miracle of Chinese growth from the 80s through 2012\. And the chapter on profit-sharing is absolutely essential to understanding the motivations of bureaucrats at various levels—what I margin-noted as “the incentivization of efficient corruption.” In the past I’ve taught China-business from the perspective of China as a corrupted meritocracy—to succeed, you have to be both great at what you do, but with 1.5 billion people and cut-throat competition, you have to have connections (access) as well. One without the other is likely not enough. One significant concern that I have is that a discussion about corruption (by its very definition, immoral or at least illegal acts) that tries to amorally discuss corruption is fraught with internal inconsistencies. The author, who creates a fantastic new framework for understanding corruption also tires to walk the line of neutrality on a subject that is innately not neutral. Not that Ang tries to negate the significance of corruption but rather that it seems she tries to present it in a context that congratulates China for managing it so well. Almost like, “yes, corruption is wrong, but it’s a reality and China’s really nailed the balance between promoting corruption and harnessing its existence for the good of the country (Party).” She has a point, but I disagree. Three particular examples will suffice. First, the fact that officials in China do indeed provide a quality service to the general public and are corrupt at the same time does not negate the immoral aspects of corruption. That corrupt officials happen to do well, in their own best interests, seems to me to suggest that an amoral view of corruption (a feature) is to be understood as a success in the case of China. Yet the legalization of lobbying in the US, regularly compared as a similar practice to Chinese access money, is used to point out that China is “similarly” corrupt (a flaw) as other developed states. Tony Soprano ran a legit waste disposal business and successful bar but that doesn’t justify the rest of his life. Second, differential corruption is still corrupt. That Chinese officials have moved from speed-money type corruption to access money corruption doesn’t make China less corrupt, indeed the monetary amounts are likely larger with access payments, though the number of daily transactions may be fewer. This change in types of corruption is a shift in type only and does not indicate a less-corrupt system. This change actually turns petty criminals (speed money) into felons (access money). Further confusion occurs in how access money is presented. Third, access money is presented as a more acceptable type of crime since a similar type of influence buying is legal in the US, AKA “lobbying.” The problem with this logic is that it doesn’t hold true across other crimes or systems. Spousal abuse maybe legal in some middle-eastern countries but not in the US. Can we justify the existence of abuse in the US because it’s acceptable in other countries? I fully recognize one of the goals of the book is to contextualize corruption between countries (one of the author’s successes is to dismantle and reconstruct a new and better methodology for understanding corruption), but the US comparison, to my reading actually does the opposite—softening the feel of illegality by putting western dress on Chinese corruption. “China wouldn’t be considered nearly as corrupt if it had US lobbying laws.” My point is not that there are methodological issues with the book or that it doesn’t do what it claims, but rather that it feels like it soft peddles Chinese corruption as something “sophisticated” and “similar to western models” and “unlike other developing countries” like India or states in Africa. There are straw-man arguments (ch.5) and turns of phrase (p. 33, 52, etc.) that seem to always be in favor of China’s success in managing corruption. I quite like the detailed discussion of prior incomplete models of corruption. And the detailed descriptions of the (new) corruption rubric makes for visually teaching about corruption much easier. Likewise the pointed discussion about how corruption is not unique to China, though this book is about China, is a necessarily important and well argued point. But again, the comparison with the West (the US in particular), to me seems to legitimize access money in China as a step in the evolutionary process to “modern” state status—a common CCP talking point. I don’t think that the CCP needs or deserves any assistance in making their case for the legitimacy of social evolution. My key concern is that if access money is sophisticated in China and also legitimated in the US and the West via lobbying, then the implication can be read as “corruption in China is just like in the US.” Which it is not. To her credit, the author takes pains to remind the reader that other types of corruption are still rampant in China, though less than before Xi’s campaign. But, and this is significant, grand theft and speed money are neither legal nor common in the US and access money (lobbying) is also still illegal in China. The two are not similar. Wording favoring China is also a concern. This is presented repeatedly in the choice of wording about China vs other countries. On page 32 Bangladesh is “the most corrupt” country and Singapore is “the cleanest” country but in the same paragraph on page 33 China “is perceived as more corrupt.” I’m not trying to pick nits, but academics choose their words for specific meaning and, in my opinion the author repeatedly choose words that lessen the significance of corruption in China. Throughout the book there are no wordings that makes China seem worse than it is, only not as bad. Maybe this is my own bias. So be it. It feels to me reading the book that the author takes pains to make sure that China doesn’t look so bad by comparison. She even goes so far as to note that people in the US only hear about the corruption and not good things and so dislike China more (more than they otherwise would, the author assumes). But what she doesn’t factor in is that there is a large (majority?) of Americans that dislike the power of lobbies in the US as well. Identifying Chinese corruption with legal “corruption” in the US doesn’t, in my mind, make American’s say, “Hey they’re just like us, cool,” but rather “damn it, they’re just like us—but worse!” Finally, the (should be obvious) idea that western models of reducing corruption to a single variable won’t work in non-western (or even differently western) cultures is now backed with the statistics that anthropologists haven’t included before, and so hopefully will no longer be as easily ignored. Thank you! And Ang’s mix-method research approach, including document research, statistical analysis, and ethnographic interviews is a standard that I myself and others need to aspire too. Really really great work! **Notes/Summary/Grades.** Mix methods practice and advice, awesome! "Yea, but the US is corrupt too.” True, but a separate discussion. When discussed simultaneously it distracts from the China argument. Access money is the main form of corruption in China (and there are nuances to types of corruption). A new analysis of corruption is needed. This is such a great addition to the current lit on both China and corruption! It takes both competence and corruption to work in China. Corrupt states are often seen as either or, not both. Great work! Corruption is not unique to China, but understanding its unique nature and practice within China is deeply important to understanding govt and business behaviors in China. China’s current age is similar to the a past age in the US is a dangerous argument that can too easily be simplified (and often is, by the CCP) as, “China is on the same development path as the US so the world needs to leave China alone.” China is BOTH a confucian-style meritocracy AND a festering regime that could crumble! Again, the breaking of dialectical thinking is valuable to understanding the nuances of China. Is China communist? Ang says no, Chinese leaders themselves say yes. I’m personally erring on the side of what the Chinese leaders themselves say—we’ve had almost 4 decades of not reading/listening to them hoping that they’d become what the we in the West wanted/expected. Time to stop this delusion. Having a better tool to measure corruption is great. But I question the value of finding cultural similarities to corruption across states. That there is access money active in China and the US should not imply that the corrupt behaviors (and corrupt systems) are similar. This is what I thought the opening argument of the book was—corruption can’t be compared without misleading understandings, But the framing of Chinese corruption in the context of the US Gilded Age muddies the message, I think. China isn’t speed money like India, its access money like the US—again, isn’t this single variable reduction the argument that the author was supposedly trying to discount? Yes, Ang’s new analytical framework is so much better than a single dimension, but I fear the one-to-one comparisons will just be repeated with new vocabulary—they are by the author herself. **Personal experiences/interviews with corruption in China and Thailand** Buying office equipment/supplies and paying for seminars for govt officials in Thailand. (1990s) Paying to have officials come out to do their job (get approvals for licenses) in Shenzhen. (2000s) Factories providing blank and signed letterhead and unnamed bank accounts for govt officials to get new factories opened and running in Huizhou. (2000s) Being offered women while at factory hotels in Zhejiang and Dongguan. (2000s) Paying police in random stops in Shenzhen and Bangkok. (90s, 00s, 10s) Having QC employees kidnapped and held for ransom by a factory and not having police help (other than negotiate the fee to release, and keep some of it for themselves) in Foushan. (2000s) “We thought we paid off all the right people, but we didn’t get what we expected.” (Chinese MNC in Thailand, 2018) Opening a restaurant in Shenzhen costs 2x what it actually costs due to the access monies needed. (Western restaurateur, 10s) “If you want to know who’s going to be rich, look at the 5-year plan and then see which govt branch is included in that plan.” (Chinese Shenzhen listed-company CEO, 2017.) ### SRI Corporate Cultures Podcast: Nathan Draper & Fai Rynyarat, Multilingual MC in Bangkok URL: https://www.silkroadintl.net/sri-corporate-cultures-podcast-nathan-fai-bangkok/ Last updated: 2026-07-13T10:19:36.000Z SRI's David Dayton is joined by co-host Nathan Draper and Multi-lingual MC Fai Rynyarat to discuss language, Thai business culture, and working in Bangkok with foreigners from different countries. [Listen on Amazon Music →](https://music.amazon.com/podcasts/ecb2a477-9bc9-42c6-8f01-36a104df76ca/episodes/a692900d-8f52-4d20-9591-00ff6ffd516e/silk-road-international%E2%80%99s-corporate-cultures-podcast-sri%E2%80%99s-corproate-cultures-podcast-with-nathan-and-fai--multilingual-mc-in-bangkok?ref=silkroadintl.net) ### SRI Corporate Cultures Podcast: Dr. Eric Hyer on China's Global Balancing Act URL: https://www.silkroadintl.net/sri-corporate-cultures-podcast-eric-hyer/ Last updated: 2026-07-13T10:19:37.000Z SRI's David Dayton talks with BYU professor of political science and Asian studies, Dr. Eric Hyer, about China and its international balancing of relationships with Russia, the US, and the rest of the world. We discuss implications for Taiwan, business opportunities moving forward as well as where Dr. Hyer thinks China is headed. [Listen on Amazon Music →](https://music.amazon.com/podcasts/ecb2a477-9bc9-42c6-8f01-36a104df76ca/episodes/fc0f2ce0-b505-4634-b827-2399e5027588/silk-road-international%E2%80%99s-corporate-cultures-podcast-sri%E2%80%99s-corporate-culture-podcast-with-dr-eric-hyer?ref=silkroadintl.net) ### SRI Corporate Cultures Podcast: Nathan Draper on Bangkok During COVID Restrictions URL: https://www.silkroadintl.net/sri-corporate-cultures-podcast-nathan-draper-bangkok/ Last updated: 2026-07-13T10:19:37.000Z SRI's David Dayton and Nathan Draper discuss the CV restrictions and processes for getting back into Thailand, new and mostly unseen recent development projects in BKK, and how the famous laid-back Thai attitude has helped people in the Kingdom cope with the economic issues surrounding CV restrictions. [Listen on Amazon Music →](https://music.amazon.com/podcasts/ecb2a477-9bc9-42c6-8f01-36a104df76ca/episodes/8cfa4f8d-4366-4810-8c8a-87a72a387796/silk-road-international%E2%80%99s-corporate-cultures-podcast-sri%E2%80%99s-corporate-cultures-podcast-with-nathan-draper-in-bangkok?ref=silkroadintl.net) ### Interview: Sarah Visser and Andrea Hill URL: https://www.silkroadintl.net/interview-sarah-visser-and-andrea-hill/ Last updated: 2026-07-13T10:01:16.000Z David sits down with Sarah Visser and Andrea Hill for a conversation on the SRI podcast. ### SRI Interview: Craig Morris URL: https://www.silkroadintl.net/sri-interview-craig-morris/ Last updated: 2026-07-13T10:01:17.000Z David interviews Craig Morris for the SRI podcast. ### SRI Corporate Cultures Podcast: Greg Bryant on Business During Lockdowns in Shenzhen URL: https://www.silkroadintl.net/sri-corporate-cultures-podcast-greg-bryant/ Last updated: 2026-07-13T10:19:37.000Z SRI's David Dayton and Greg Bryant discuss doing business during lockdowns in Shenzhen China. Greg is a consultant in the immigration industry as well as an entrepreneur and international franchisee in China. [Listen on Amazon Music →](https://music.amazon.com/podcasts/ecb2a477-9bc9-42c6-8f01-36a104df76ca/episodes/a6fdeee7-56cd-4d15-ac86-3e5029312eaf/silk-road-international%E2%80%99s-corporate-cultures-podcast-sri%E2%80%99s-coprorate-cultures-podcase-business-and-lockdowns-with-greg-bryant-in-shenzhen?ref=silkroadintl.net) ### SRI's David Dayton interviews Dan Hill and John Visser URL: https://www.silkroadintl.net/sris-david-dayton-interviews-dan-hill-and-john-visser/ Last updated: 2026-07-13T10:01:17.000Z David talks with Dan Hill and John Visser on the SRI podcast. ### Face and Leadership (in Thailand) URL: https://www.silkroadintl.net/face-and-leadership-in-thailand/ Last updated: 2026-07-11T04:39:23.000Z ![](https://images.squarespace-cdn.com/content/v1/60736b9a1db2562fd3d224d6/1619640020540-8KGPL4HQFEFP0QWHT5FS/TWTL.jpg?format=original) Larry has written one of the best books on Thai culture that I've ever read, The Way Thais Lead. His focus is face and leadership, but what is really valuable is his in-depth research combined with his lifetime of experience in Thailand. The book dissects Thai face and values and distills them down to not just historical roots, but actual practical daily examples of leadership. If you want to understand Thai culture, read this book FIRST. [Here he is on Thai TV talking about it, in both Thai and English.](https://www.leadwithcq.com/resources/?ref=silkroadintl.net) Persons details out the different types of face and how Thais gain and lose the same. Appearance, honor, acclaim, virtue, and personal essence are all factors in face in different times, spaces, places and for each individual. Understanding that helps in navigating Thai business and political culture. For example, there is a great discussion in chapter 8 & 9 about face as social capital, specifically what face requires and who can be exempt and that capital is spent. "While Thai society looks still, calm and peaceful, just under the surface is a struggle between egocentric agendas in a zero-sum game for prestige, power, and money" (P.131). In my opinion, this book really is the best way to understand Thai politics, business culture, and social relationships--Larry has spent his life in Thailand and done so much of the heavy lifting for the rest of us. ### May Day News URL: https://www.silkroadintl.net/may-day-news/ Last updated: 2026-07-18T14:48:18.000Z I wonder what’s coming up for May 5th in China. And May 35th too. My mother and grandmother before her would always make homemade spudnuts (think slightly potato-flavored somewhat-dense but very delicious frosted donuts) and have the kids weave ribbons around the May Pole. As is usually the case, it was a horrible tradition but had great food that my siblings and cousins all still crave. So of course, I just went to Krispy Kreme. This week was a smorgasbord of great stories about China. I think that two things have happened. First, everyone is getting tired of writing about the CV story. Sure there is much more to learn and there are many human interest stories still to be written, but we all needed a little break. Second, since many are still in lockdown and China seems to have moved on from pretending to care to taking advantage of the crisis there is a lot of indignation combined with a month or so of research time culminating in a great week of news. That or China’s just acting more shitty than usual. **Human Interest Stories** [Nice story about abandoned gods in Taiwan.](https://sports.yahoo.com/taiwanese-sculptor-giving-discarded-gods-home-030448782.html?ref=silkroadintl.net) One collector is turning his hobby into a museum. I would love to have some of these statues. I’m going to have to look him up on my next trip to the island. [An interesting little piece on the history of wearing masks.](https://www.the-tls.co.uk/articles/a-short-cultural-history-of-mask-wearing-essay-jordan-sand/?utm%5Fmedium=Social&utm%5Fsource=Twitter#Echobox=1588178396) I’m of the impression that masks won’t help you not catch anything airborne, but they are like blinkers in cars—they’re for others. They stop you from spitting/spraying/exhaling directly onto others. And they provide a bit of social comfort that you’re not an ass-hole. And in our tech-dominated world, they also give the wearer a bit of anonymity. This is disgusting. [Selling children on the (WeChat) black market.](http://www.sixthtone.com/news/1005575?ref=silkroadintl.net) I understand that there are multiple reasons for this, poor healthcare, one-child policy, lack of oversight, etc. But despite the structural issues, it’s horrible the way that it’s being done. As both an adoptee and the father of an adopted child, I understand both sides of the issues and my heart breaks for the children and both sets of parents. I hope that the horrible processes will at least place some of these kids in better homes with loving parents. Every time there is a disaster in China, we hear the same stories—NGO’s (which really cannot be NGO’s in China) are corrupt, inefficient, and facilitate the govt plans. [The Red Cross and this bout of CV is no different.](https://www.nytimes.com/2020/04/28/world/asia/coronavirus-china-red-cross.html?referringSource=articleShare&ref=silkroadintl.net) [April is the cruelest month.](https://supchina.com/2020/04/29/the-cruelest-month/?ref=silkroadintl.net) **CV** Multiple outlets claiming that leaked docs expose the coverup in China. [Daily Telegraph](https://www.dailytelegraph.com.au/coronavirus/bombshell-dossier-lays-out-case-against-chinese-bat-virus-program/news-story/55add857058731c9c71c0e96ad17da60?ref=silkroadintl.net) and the [Daily Mail](https://www.dailymail.co.uk/news/article-8279859/Bombshell-intelligence-lays-bare-China-lied-coronavirus-outbreak.html?ref=silkroadintl.net) and [Fox](https://www.foxnews.com/world/new-dossier-condemns-china-for-destroying-evidence-of-covid-19-outbreak?ref=silkroadintl.net). [China is reopening but not getting back to normal.](https://www.marketwatch.com/story/chinas-re-opening-has-been-rocky-the-party-line-may-start-to-change-this-analyst-says-2020-04-29?reflink=mw%5Fshare%5Ftwitter&ref=silkroadintl.net) There are reports of 25% unemployment and factories running machines (to consume electricity for official statistical reports), but it’s likely that SMEs have been crushed, like in the US and elsewhere. The lack of available financing for most will likely mean lots of defaults, lots of gray-market loans (20% or more monthly interest rates) and lots of people moving back to the countryside to farm family lands. One of the biggest problems China will face, other than the economy, is the [resurgent outbreaks in other cities.](https://www.dw.com/en/china-tries-to-contain-new-coronavirus-outbreak/a-53280411?ref=silkroadintl.net) You think that China your friend? Wrong. [They won’t even let WHO back into China to do an “investigation.”](https://www.nbcnews.com/news/world/who-official-says-agency-not-invited-take-part-china-s-n1197516?ref=silkroadintl.net) This just lets you know who’s in charge now. China will both pay the WHO (with the ending of US funding) and tell them what to say and where they can go. Really just a formalization of the status quo. In absolutely no surprise to any breathing human on the planet, [China censors how authorities actually dealt with the CV.](https://globalvoices.org/2020/03/02/china-censors-report-of-how-authorities-hid-covid-19-genome-sequence-test-result-for-14-days/?ref=silkroadintl.net) The thing about communism is that it’s valueless and implemented by personalities, so [you never know if what you do today will kill you or promote you tomorrow. ](https://asia.nikkei.com/Editor-s-Picks/China-up-close/Xi-returns-to-his-favorite-hobby-crushing-dissent?ref=silkroadintl.net)CCP history is littered with the bodies of yesterday’s hero’s that became today’s political fodder. It needs to be very clear that believing that the virus came from a lab and claiming that it’s human engineered and a bio-weapon are very different things. China wants to confuse the two so that anyone claiming a lab origin is presented as someone lying that China tried to start a war. I wouldn’t put it past them, but I’m not making that claim. I’m only saying it’s not even questionable that [shoddy practices at labs make the lab-origin theory more than plausible.](https://www.nationalreview.com/corner/nothing-to-see-here-just-labs-in-china-being-sloppy-with-biological-disposal/?ref=silkroadintl.net) **Global Politics** No one really knows anything about Kim Jong Un. So I’m not going to post anything about him. [But this NK guy in SK is getting a lot of attention](https://foreignpolicy.com/2020/04/27/south-korea-elections-thae-yong-ho-north-korea-defector/?ref=silkroadintl.net) both for who he was/is and in which areas he should be considered an expert on NK and in which he is an SK politician. Personally, I realize that different interviewees have different value in different situations. To accommodate that reality, in my research I try to combined personal anecdotes (long informal unstructured interviews) with extensive participant observation and historical context and documents. While I’d like to see Taiwan recognized by the US and other western powers, I’m not holding my breath. [There are calls for it, for sure, and they are getting louder. ](https://www.irishtimes.com/opinion/michael-mcdowell-time-to-stop-kowtowing-to-china-over-taiwan-1.4139586?mode=amp&ref=silkroadintl.net)I support this. But I don’t know what China will do—that may not be the correct position to have (being afraid of the consequences of doing the right thing), but that’s where I am. I don’t want to see the reaction be worse than the problem (again, cough cough). Meanwhile, back in China—there is no rest for the wicked. [CCP trying to take advantage of US and others’ reactions to the CV and WHO and supply chain issues.](https://www.businessinsider.com/china-harnessing-coronavirus-pushing-its-foreign-agenda-2020-4?ref=silkroadintl.net) If you still don’t believe that China’s int’l moves over the last at least 15 years, if not 40, are all calculated, then I have some bridge property to see you in Arizona. [China is actively trying to remake the global order in their own image](https://www.politico.com/news/magazine/2020/04/15/its-not-just-the-who-how-china-is-moving-on-the-whole-un-189029?ref=silkroadintl.net) [The US is looking into ties between the UofT and the Wuhan lab at the center of the CV pandemic.](https://www.wsj.com/articles/u-s-probes-university-of-texas-links-to-chinese-lab-scrutinized-over-coronavirus-11588325401?ref=silkroadintl.net) China has for decades used ties, people, cash, bribes, favors, access, etc. to get return access to foreign tech and science. It’s literally been a published goal to get everything they can at any cost. Only now, decades on, is the US govt and uni’s around the country (and in other countries too) recognizing the compromised position they have placed themselves in regarding Chinese “investors.” The worst part of this, lost tech and science and nation security aside, is the “normal” people, students and professors on both sides, that are caught up in this knowingly and unknowingly. For almost two decades on this blog I’ve written that I think that [China has an insecurity complex.](https://www.abc.net.au/news/2019-09-29/communist-china-strong-nationalistic-deeply-insecure/11557570?ref=silkroadintl.net) They don’t know how to deal with outsiders and have maintained that they were both the best there ever was and should be the top again and that they were wronged by everyone else on the planet. There is some bits of truth to each claim. But since China is ideologically driven and censors any real debate on where they actually fit in the world and how the rest of the world functions diplomatically, they are like lost teens—talented, ambitious, ignorant and clumsy. No one believes in communism anymore, so they have nationalism (I hate my enemy more than I love myself) as a state-sponsored substitute. As corrupt as China is, they likely have nothing on the royal family in Thailand. The king is rarely in country and an increasing number of Thais don’t want him to be there anyway. And as heir to one of the wealthiest family inheritances, [he’s spending the CV crisis living in luxury](https://www.dw.com/en/thailands-king-living-in-luxury-quarantine-while-his-country-suffers/a-53303644?ref=silkroadintl.net) in Europe. [With a huge haram](https://nypost.com/2020/05/01/kim-jong-un-may-be-holed-up-with-his-pleasure-squad-report/?ref=silkroadintl.net)—whoops! Sorry, that’s Kim Jong Un. Why did we lose China? It’s really a condescending question. [But that aside, here’s a quick answer:](https://www.realcleardefense.com/articles/2020/04/30/why%5Fwas%5Fthe%5Fus%5Fso%5Flate%5Fto%5Frecognize%5Fthe%5Fchina%5Fthreat%5F115238.amp.html?%5F%5Ftwitter%5Fimpression=true&ref=silkroadintl.net) 1\. My enemy’s enemy is my friend trumped all commies are bad. 2\. We assumed everyone wanted to be and could be just us (neoliberal democracy) with a few quick adjustments. Oh, and money. Lots of money. I couldn’t agree more. [There needs to be a coordinated response to China,](https://theprint.in/opinion/dont-suffer-alone-india-and-the-world-need-to-act-against-chinas-intimidation-tactics/411179/?amp&%5F%5Ftwitter%5Fimpression=true&ref=silkroadintl.net) not just regarding CV. China is so big that only through coordinated actions will smaller countries survive—I’m talking about you, ASEAN and EU. Two insights into Chinese foreign policy from different quarters. First from Oz—calling the Chinese bluff, [historically trade threats don’t really amount to any financial consequences.](https://amp.smh.com.au/politics/federal/canberra-to-call-beijing-s-bluff-over-economic-boycott-threat-20200428-p54nw0.html?ref=silkroadintl.net) [And this really interesting analysis on China’s lack of any real history of diplomatic strategy.](https://www.youtube.com/watch?v=WejSKbicS00&app=desktop&ref=silkroadintl.net) Yup, SunTzu is a fraud. He’s great for dealing with domestic/family issues, but not IR. [Nationalism doesn’t work abroad.](https://www.scmp.com/news/china/diplomacy/article/3081546/chinas-nationalism-might-work-home-its-causing-upset-world?ref=silkroadintl.net) And here is another discussion about [the effectiveness of China’s propaganda at home and internationally.](https://www.nytimes.com/2020/04/16/opinion/china-coronavirus-propaganda.html?action=click&module=Opinion&pgtype=Homepage&ref=silkroadintl.net) If you hated the BRI rap songs from a year ago, you’ll [hate the One Sea friendship song too!](https://www.japantimes.co.jp/news/2020/04/28/asia-pacific/china-philippines-sea-song/?ref=silkroadintl.net#.XqsfSi85QWo) Filipinos do. If songs are great, [masks should be a good propaganda tool too, no?](https://thechinastory.org/mask-diplomacy-a-novel-form-of-statecraft/?ref=silkroadintl.net) [China reads the world differently than the West does.](https://www.theatlantic.com/magazine/archive/2020/05/mcmaster-china-strategy/609088/?ref=silkroadintl.net#pq=cpgYlu) Ditto capitalism. Ditto religion, people, HR, etc. Here is a [Harvard interview about the Chinese Govt](https://www.harvardmagazine.com/podcast/2020/william-c-kirby?ref=silkroadintl.net) and what it expects from the world and how it sees itself in that world. I also read a tweet that mentioned that in the last week something like governments from 6-8 countries have called the Chinese diplomats in their respective countries. And not for tea. Well, if you think about it like the PSB in China calls you in for tea, that would actually be like what is happening. [China doesn’t know how to negotiate](https://kathmandupost.com/politics/2020/05/02/in-a-series-of-meetings-chinese-envoy-calls-for-unity-among-ruling-party-members?ref=silkroadintl.net)—they bribe, cajole, threaten, and pout. And if you needed more evidence as to China’s inabilities, ask the Aussies—[the “gum stuck to China’s shoe” Aussies.](https://www.theguardian.com/world/2020/apr/28/australia-called-gum-stuck-to-chinas-shoe-by-state-media-in-coronavirus-investigation-stoush?ref=silkroadintl.net) And because of behavior like this, on the tails of the worst virus and cover-up in 100 years, people honestly ask: [Does China have any friends?](https://www.newsweek.com/does-china-have-any-friends-left-west-1500231?amp=1&ref=silkroadintl.net) And the answer is a resounding [no. They have no allies and no friends, only a few dependents. ](https://www.nationalreview.com/the-morning-jolt/authoritarian-regimes-are-not-your-friend/?ref=silkroadintl.net) [China coordinates EVERYTHING](https://globalnews.ca/news/6858818/coronavirus-china-united-front-canada-protective-equipment-shortage/?ref=silkroadintl.net) it does abroad and considers it’s own citizens, especially part members, assets in its maintenance of domestic power and bid for a new world order. **Business** Like their counterparts from Japan and the US, [companies from the EU are leaving China. ](https://www.forbes.com/sites/kenrapoza/2019/07/16/europe-joins-us-companies-moving-out-of-china/?ref=silkroadintl.net#3f581eae15bf)I’m not sure how much of this is long-term movement and how much is just an immediate need to both get products now as well as find some security since the future of CV is still unknown. Taiwan needs help. [And they need to take back their tech sector while everyone is getting out of China.](https://carnegieendowment.org/2020/01/29/assuring-taiwan-s-innovation-future-pub-80920?ref=silkroadintl.net) Anything by Evan Feigenbaum is good to read too. [Chinese investment in Africa. ](https://static1.squarespace.com/static/5652847de4b033f56d2bdc29/t/5ea8679f7baaaa53d7a3bd4c/1588094880616/PB+43+-+Chen+-+Manufacturing+Nigeria.pdf?ref=silkroadintl.net)With the expected growth in Africa over the next few decades, this is going to be a bigger story as the numbers continue to rise. But, honestly, CHina’s investment in Africa, while likely not very fair, is really the only money going there. The EU and the US pulled back decades ago and China is filling a gap in infrastructure that they are both good at and is needed on the ground. [BRI projects continue to be questioned. ](https://share.america.gov/study-warns-against-chinese-belt-and-road-investment/?ref=silkroadintl.net)Let’s be honest here. China has both the capacity and ability to do infrastructure projects that no one else can do (at the prices offered). And they offer loans without ties that the EU and US require. But the Chinese projects are crap, they likely are overpriced and the loans benefit China long-term and the ideological price is looking the other way while China bribes elites and destroys local economies. This is not to say that the US or the EU has an outstanding record in developing countries, but it is a myth that China is ideology-free and a partner and friend to the 3rd world. The old saying in China manufacturing was “Win-Win in China means that your factory wins twice.” In addition to the NPR in the US running stories that are directly from the Chinese Global Times or People’s Daily, [Canada has its own issues with Chinese content](https://nationalpost.com/opinion/conrad-black-canada-needs-a-much-better-cbc?ref=silkroadintl.net). More [here.](https://torontosun.com/opinion/columnists/furey-chinese-canadian-dissidents-are-under-attack-and-the-cbc-has-joined-the-pile-on?ref=silkroadintl.net) I’ve seen more than a few tweets about US news outlets running straight up copies of articles from the CCP rags in domestic publications and online services. I’m all for free speech and I think that the CCP should be able to publish in the US. But any govt run org should NOT be republishing/rebroadcasting CCP propaganda. And US outlets should identify their foreign govt sources of copied (paid for) “news.” And in another edition of “Really? No shit? You don’t say.” We find out today that, just like the accusations against Huawei, [Xiaomi devices are “collecting an insane amount of private data.”](https://fossbytes.com/xiaomi-devices-found-tracking-and-recording-browsing-data-of-millions/?ref=silkroadintl.net) One of the reasons that [decoupling will be so difficult, time-consuming, and expensive,](https://www.wired.com/story/us-china-want-divorce-cant-afford/?ref=silkroadintl.net) is that China has become not just the low-price leader but also THE global resource for high-tech manufacturing. Add onto that the fact that there are many few restrictions for R&D in China and that the Chinese govt is actively pushing the envelope for AI and other tech that is still suspect in the US and you have an environment that Tech from the West do not want to abandon. [They will, in part, due to their own selfish supply-chain needs, but not because they want to.](https://www.axios.com/the-us-rift-with-china-has-tech-on-edge-a9cf232a-1521-44b9-a99d-e47454a20da1.html?ref=silkroadintl.net) [US Commerce Dept tights rules on exports to China.](https://www.wsj.com/articles/commerce-department-tightens-rules-on-exports-to-china-11588016185?redirect=amp&ref=silkroadintl.net#click=https://t.co/XjcWOG9HOE) About time. But without a corresponding increase in investment in both the US tech and manufacturing as well as that of our allies, we’ll just be giving China an incentive to build it’s own industries and limiting out own capacities. Do you remember just two months ago when China said that it was allowing foreign financial products and companies into the Chinese market?[ Yea, well, they’ve changed their mind.](https://www.reuters.com/article/us-china-banks-regulations/china-asks-banks-to-halt-new-sales-of-products-that-may-lead-to-unlimited-losses-sources-idUSKCN2291ZL?ref=silkroadintl.net) Part of my dissertation focus on the reality that Chinese who grew up in the Leninist concept of socialism with Chinese characteristics understand companies and capitalisms in different ways from their western peers. There is no doubt in my mind that they consciously know that their fiduciary responsibility is to the Chinese state, and not to foreign stock markets. They don’t comply with audits, and many are faked when they do, and they don’t consider up to 70% ownership of a “private company” by a state agency to be a conflict. [US investors beware.](https://www.reuters.com/article/us-health-coronavirus-sec-china-idUSKCN2242A1?ref=silkroadintl.net) ### China as world leader? URL: https://www.silkroadintl.net/china-as-world-leader/ Last updated: 2026-07-18T14:48:18.000Z [This is an opinion piece that seems to have hit the nail on the head re structural problems that led to the pandemic.](https://www.youtube.com/watch?v=Svrj6Bw5K9A&app=desktop&ref=silkroadintl.net) And one of the structural issues is that [China feels free to crush Hong Kong.](https://nationalpost.com/opinion/terry-glavin-we-are-losing-while-world-battles-covid-19-china-crushes-hong-kong?ref=silkroadintl.net) And continue [the repression of religion and identity in Tibet.](https://thediplomat.com/2020/04/chinas-hidden-crackdown-in-tibet/?ref=silkroadintl.net) [And the response is literally prioritizing thousands of rich old white people over millions of poor minorities.](https://www.nytimes.com/2020/04/22/opinion/coronavirus-pandemics.html?ref=silkroadintl.net) As an old white man in the US, this is not typically my stance, but I think that the political decision making has been disgusting ON BOTH SIDES! Not China, but the only reason North Korea exists is because of China, so we can talk about them here. Looks like there are problems at the top, and that means that[ there are worries at the bottom.](https://www.nknews.org/2020/04/north-koreans-panic-buying-at-high-end-pyongyang-shops-sources-say/?ref=silkroadintl.net) Panic buying. [So maybe Most Noble Sister #1 will be the next Dear Leader of NK?](https://www.vice.com/en%5Fus/article/n7jx8g/kim-jong-uns-sister-could-replace-him-if-he-dies-who-is-kim-yo-jong?ref=silkroadintl.net) Who knows?! Apparently [NK leaders don’t have emergency succession plans.](https://www.nknews.org/2019/03/contingency-planning-who-would-succeed-kim-jong-un/?ref=silkroadintl.net) Also not China, but Chinese wumao are angry again (it’s a new day so of course they are) because [a Malaysian rapper seems to have supported protesters in Hong Kong.](https://www.thestar.com.my/news/nation/2020/04/22/malaysian-rapper-rapped-by-chinese-netizens?ref=silkroadintl.net) Chinese little pinks couldn’t deal with Thailand’s furious netizens, doubt they’ll fair much better with the Malaysians. From the “who knows if this is true” file is the story of leaked documents from the Wuhan lab, the Gates Foundation, and the WHO regarding [the modification and intentional release of CV by Chinese scientists. ](https://amp.ibtimes.sg/who-wuhan-lab-hack-reveals-coronavirus-spliced-hiv-make-it-deadly-spread-using-dry-ice-43536?ref=silkroadintl.net) It seems that VOA has been, again, [broadcasting commie-style information—repeating discredited CCP talking points.](https://www.nationalreview.com/2020/04/voice-of-america-taxpayer-funded-broadcaster-losing-its-way/amp/?ref=silkroadintl.net) Not surprising given its history (detailed in the link)—even lamented by HRC. It would be no shock though, if the VOA, like it’s domestic counterpart NPR swung ideologically left. Gov of CA has spent $1bil on masks from BYD in Shenzhen. Yes that BYD, the carmaker that has already failed on it’s two major orders in the US (electric busses for LA and for New Mexico). And BYD doesn’t even make masks. From my own personal research notes in Shenzhen in 2018: One other thing that Tony shared with me is that BYD, the car company that is so popular in Shenzhen, is only popular because of the investment from the city government of Shenzhen. The Shenzhen city government invested quite a bit of money into the company and into their acquisition with Tesla. And the result of that is that there are a lot of these cars on the streets because of tax deals and special incentives, especially in Shenzhen. But you don't see these cars in other cities around the country. It's not a very good car. One of the things that he mentioned was that even though electric cars are quite popular, the best-performing and most expensive BYD car is not nearly as good as the least expensive Tesla battery-operated car. They're both technically running on much of the same software and physical frames and platforms but they are not the same quality car. 2019 note: This is been bore out with a huge drop in sales of electric vehicles with the end of govt incentives. This article by Matt Schrader should really lead this edition of news, it’s that good. [Friends and Enemies: A framework for understanding Chinese political interference in Democratic countries.](https://securingdemocracy.gmfus.org/friends-and-enemies-a-framework-for-understanding-chinese-political-interference-in-democratic-countries/?ref=silkroadintl.net) I’ve stated before that I don’t believe that CV was a bioweapon, but I also won’t rule out that it was accidentally released—especially since the lab in question in Wuhan had security issues as recently as 2018\. While the author of this article praises her own research diligence in putting this together—it’s [basically a list of Chinese new links that claim to be authoritative](https://www.axios.com/wuhan-institute-of-virology-china-coronavirus-79ad2d32-9834-4099-8a94-5df501845e3d.html?ref=silkroadintl.net) on the origin issue. How comforting. Axios is usually better than this (and not nearly as self-congratulatory). [The rumors of Huawei being kicked out of the UK’s 5G phone network are, it seems, unfortunately premature.](https://mobile.reuters.com/article/amp/idUSKCN22327E?ref=silkroadintl.net) Too bad. Two in one—James Palmer’s China Brief is the second best newsletter on China that I know of, the first being Bill Bishop’s. This [China Brief has details about the new quarantine in Harbin and the Pew research numbers showing that Americans don’t like China](http://click1.crm.foreignpolicy.com/ViewMessage.do?ref=silkroadintl.net) (almost 3-1) and don’t trust Chairman Xi to do the right thing (about the same 3-1 margin). If the link doesn’t work go to Foreign Policy’s home page and link to it there (sorry). In addition to new outbreaks China, [people that had previously “recovered” are still testing positive.](https://www.reuters.com/article/us-health-coronavirus-china-patients-ins/recovered-almost-chinas-early-patients-unable-to-shed-coronavirus-idUSKCN2240HI?ref=silkroadintl.net) Concerning this whole CV thing and the associated reaction and national PR campaigns, [Taiwan seems to have nailed it. From containment to appropriate reaction, to dealing with China, to helping the world and doing it all politely and friendly.](https://www.aei.org/articles/amid-covid-19-crisis-taiwans-opportunity-to-escape-chinas-vise/?ref=silkroadintl.net) Can we just stop the Taiwan-is-part-of-China charade already? [If you don’t think that much of your pro-China social media is a coordinate effort, you’re just not thinking. ](https://www.nytimes.com/2020/04/22/us/politics/coronavirus-china-disinformation.html?referringSource=articleShare&ref=silkroadintl.net)China doesn’t have a system that is replicable or desirable for most of the world. So what to do? [Change the message—lie about others](https://www.foreignaffairs.com/articles/china/2020-04-22/chinas-coronavirus-information-offensive?ref=silkroadintl.net). If others are comparably worse, then China doesn’t look so bad. To do this China has spent decades and millions of dollars to retrain journalists to like and promote and support China as their default (as opposed to not trusting an autocratic communist police state). [This apparently has worked well in Central and South America.](https://www.nytimes.com/2020/04/21/opinion/china-latin-america-covid.html?ref=silkroadintl.net) There should be no surprise that [China, Iran, and Russia are all using the same playbook—take advantage of the freedoms of their enemies.](https://www.politico.com/news/2020/04/21/russia-china-iran-disinformation-coronavirus-state-department-193107?ref=silkroadintl.net) The WP has a decent piece on the price of doing business with China, but since they don’t offer free articles or access even through universities, I won’t link to them. It’s becoming trite to repeat the concept of not letting a crisis go to waste in regards to China’s actions, but here we are again. [China is taking over struggling businesses](https://www.indiatoday.in/business/story/world-wakes-up-to-china-hostile-takeovers-of-companies-amid-covid-19-pandemic-1669240-2020-04-21?ref=silkroadintl.net) AND making [aggressive moves in the SCS](https://asiatimes.com/2020/04/china-lays-ever-larger-claim-to-south-china-sea/?ref=silkroadintl.net) while other countries are dealing with the fallout from the China-originated CV. Additionally, China is [threatening Taiwan and cracking down on HK ](https://www.reuters.com/article/us-china-security/china-rattles-sabres-as-world-battles-coronavirus-pandemic-idUSKBN2230GC?ref=silkroadintl.net)again. [China is also pushing ahead with 5G deployment](https://www.newamerica.org/cybersecurity-initiative/digichina/blog/beijing-authorities-push-rapid-5g-deployment-despite-covid-19-headwinds-translation/?ref=silkroadintl.net) in conjunction with trying to contain CV (no, this is not a link to a theory that CV is caused by 5G, sorry James Wood). China isn’t safe. Not for foreigners or any public figure with any semblance of dignity or an opinion. [Stories about Chinese getting their public comeuppance for not toeing the Party line.](http://elephant-room.com/2020/04/20/the-stories-we-are-afraid-to-tell/?ref=silkroadintl.net) And to no one’s surprise, [CV started out MUCH earlier than officially reported in China—Looks like at least the end of September. ](https://www.inkstonenews.com/science/mutations-suggest-coronavirus-started-spreading-earlier-thought-study-says/article/3080723?ref=silkroadintl.net)I spent the month of October last year in BKK completing research for my dissertation. I flew home on Nov 9th and about two weeks later had a flu-like nothing I’ve ever experienced before. I was so completely exhausted that I thought I had some strange disease and when to get blood tests around Thanksgiving time. They said my blood was clean but that I looked to have “a flu of some type.” I don’t know if it was CV, but of course, now I’m not ruling it out. It took me more than two weeks to recover. There is so muc[h disease and pollution and illness with poor medical care in China, there is no way that China could ever be expected to correctly count the exact number of CV deaths](https://asiatimes.com/2020/04/how-china-hid-tens-of-thousands-of-virus-deaths/?ref=silkroadintl.net)—hell, NY can’t even do it. I can honestly say that I had no clue about the Chinese situation in Oz until I read [Clive Hamilton’s book, Silent Invasion.](https://www.amazon.com/Silent-Invasion-Clive-Hamilton-ebook/dp/B079WWT29L/ref=sr%5F1%5F1?dchild=1&keywords=clive+hamilton&qid=1587616430&sr=8-1&ref=silkroadintl.net) But it was a great read and I’ve followed a number of great Australian China watchers since. Clive is now saying that Canada is in the same boat—[they have been both ignorant of China’s intentions as well as too accommodating and unwilling to push back against the CCP.](https://nationalpost.com/news/world/academic-who-blew-the-whistle-on-chinas-influence-on-australia-says-canada-is-in-even-worse-trouble?ref=silkroadintl.net) Globally, China is now person anon gratis—[activities in the SCS are offending ](https://asiatimes.com/2020/04/chinas-territorial-move-angers-neighbors/?ref=silkroadintl.net)neighbors. [Pressure in EU is becoming a political issue ](https://www.express.co.uk/news/world/1273844/China-coronavirus-eu-news-coronavirus-china-news-coronavirus-conspiracy-theories?ref=silkroadintl.net)for former China supporters. [And in Canada](https://www.thestar.com/amp/news/canada/2020/04/24/think-tank-slams-ottawa-over-silence-on-beijing-attempt-to-interfere-with-free-speech.html?ref=silkroadintl.net) and the US, there seems to be a greater recognition [that China is indeed more of a real threat](https://www.foreignaffairs.com/articles/world/2020-04-13/end-grand-strategy?ref=silkroadintl.net) than was considered before. [The destruction of the US economy notwithstanding. ](https://asiatimes.com/2020/04/china/?ref=silkroadintl.net)And while it’s small, there are already [tide changes for leaders that previously supported China ](https://www.theguardian.com/world/2020/apr/24/pro-china-kiribati-president-loses-majority-over-switch-from-taiwan?CMP=share%5Fbtn%5Ftw&ref=silkroadintl.net)(over Taiwan). And Gothenburg in SW is not only [ending their sister-city relationship with Shanghai](https://hongkongfp.com/2020/04/24/gothenburg-axes-twin-city-agreement-with-shanghai-as-sweden-closes-all-confucius-institutes/?ref=silkroadintl.net) but the country is closing all Confucian institutes. [I really can’t believe that Capitalism is being blamed for the post CV problems.](https://www.aei.org/op-eds/capitalism-is-the-solution-not-the-problem-for-the-pandemic-world/?ref=silkroadintl.net) Sure there is corruption in capitalist systems, but communism is THE cause of the CV in the first place, specifically top-down control with no watch-dog press and a command and control economy. Yes, capitalism is the worst system, but it’s better than all the rest. [Glad to see that the FCC looks to be gearing up to revoke the licenses of 4 Chinese telecoms.](https://www.wsj.com/articles/fcc-signals-likely-revocation-of-four-chinese-telecom-firms-licenses-11587755961?ref=silkroadintl.net) And more people are realizing that [the reformation of the PLA isn’t a peaceful addition to the global community.](https://theconversation.com/is-it-time-for-a-new-way-of-war-what-chinas-army-reforms-mean-for-the-rest-of-the-world-134660?ref=silkroadintl.net) The Missouri lawsuit is going to be interesting to watch. [Here’s some background and opening analysis.](https://www.justsecurity.org/69817/missouris-lawsuit-doesnt-abrogate-chinas-sovereign-immunity/?ref=silkroadintl.net) In other news, the environment is still threatened by the world's largest emitter of pollution—China. [Expect more, not less, coal plants from China moving forward](https://chinadialogue.net/article/show/single/en/11966-China-relaxes-restrictions-on-coal-power-expansion-for-third-year-running?ref=silkroadintl.net). Using the BRI as an excuse, China is building more coal plants for other countries too. [More on the environment, Chinese dams are devastating the Mekong. ](https://foreignpolicy.com/2020/04/22/science-shows-chinese-dams-devastating-mekong-river/?ref=silkroadintl.net)China has, for years, told the states of the Mekong that the waters in China are theirs. Period. This is a great example of how China will lead. ### I've had enough (not necessarily China-related) URL: https://www.silkroadintl.net/ive-had-enough-not-necessarily-china-related/ Last updated: 2026-07-18T14:48:19.000Z I'm no statistician, but it seems abundantly clear to me that no one knows what the hell is really going on. Some countries are claiming victory (SW, CN, TW) while most are still in lockdown. Most of those in lockdown are now decidedly divided between those that want to keep the lockdown and those that want to open up. The evidence and goalposts on both sides change almost daily. People can't even agree on what an expert is, let alone if they should be listened to or not. The politics of this crisis is soul-crushing for anyone that still had hope in humanity. Even the concept that decisions made in a crisis are uniquely flawed precisely because they are made in a crisis and should, therefore, be understood in hindsight in that light has become a pitched battle between partisans vying for some immediate political point and/or future political victory. I'll admit to not reading much US news on purpose before quarantine--the purpose? To avoid exactly this. The daily media attention on both politics and the virus seems to me a complete waste of time and money. Is anything better, more clear, less divisive? Is there anyone with more hope, more confidence in government, or faith in humanity? This morning I was reading about SW and their attempts to go back to work and everyone opposed literally screaming, "you want to kill people!!" in response to their plans. Ditto TX, GA. Death, disease, money, everything is political. Is the CA herd immunity (now confirmed earlier cases than WA) real? Will TX kill off all of North America? Does GA really want to kill poor people and blacks? It all depends on your political affiliation. I really just need to stop reading the news again. If you weren't jaded before, the coverage of this event should push you over the edge. Like Ice Cube is now ironically saying, Everythang Corrupt (yes, the same F\*ck the Cops Ice Cube of the 80s). Maybe the Marxists are right that capitalism is broken. And maybe the Righties are right that the media and schools are equally broken. If the last month at home has taught me anything, it has reinforced the reality that politics in general, including those that cover it, is nothing more than a self-serving shit show. As a former conservative-turned-libertarian-turned-political-atheist I’m left wondering why should anyone vote for anything other than their own personal financial benefit? Why shouldn’t everyone take as much from the system as they can get (before it collapses)? If I can care for myself and set up my kids, why shouldn't I just walk away from everything else? This has convinced me that I should really be making plans to check out of this rat race. The social contract is broken and calls for a collective morality are all just communist retreads (if we just had the right leader making all our decisions for us). My nephew committed suicide two weeks ago in China. He had no job in rural Jiangxi and when his mom lost her job due to quarantine he lost hope. I have a close friend whose cancer treatments were stopped due to travel and hospital restrictions here in the US. Her disease has metastasized so quickly without hospital care since the quarantine that she’ll die in the next week or so—and her family has been locked at home together watching her die. My uncle died last week and only 1 of his 7 siblings was allowed to attend the funeral. It’s sad that so many people have died due to CV and sadder that even more will die because of the preventative measures. One of my friends quipped that we’re saving a few thousand old rich white people at the cost of a few million poor brown ones. (As an old white man myself, I appreciate the sentiment but am appalled at the cost.) I’ve just realized that besides losing so much being quarantined we've wasted most of the last two months following nothing of value. Just like in December, no one that hated Trump has changed their mind, ditto those who hated China. No one who was going to vote for Biden is now not going to, and those that support the WHO and the UN still do too. (And no, finishing Netflix is not valuable.) And now in April 2020 we’re all surrounded by all that same corrupt BS of 2019 and death and economic destruction to boot. ### Trying to Graduate, late news updates URL: https://www.silkroadintl.net/trying-to-graduate-late-news-updates/ Last updated: 2026-07-18T14:48:20.000Z **News for April 13-19** This week is a double bonus! Two weeks at once! Ok, it's not really a bonus, I was late with last week's news (and yesterday's too) because I’m desperately trying to finish my dissertation this month so I can graduate in August. Sorry for the delay! Wish me luck! [Calls for free speech in China, to help prevent the next pandemic, likely to go unheeded.](https://www.bloomberg.com/news/articles/2020-04-16/in-china-demands-for-more-free-speech-outlast-virus-lockdowns?ref=silkroadintl.net) The unfortunate aspect about this is that both people are not asking for a new regime, they simply want more free speech to help protect their own lives. (Of course, it’s sad too that they aren’t pushing for a new regime either.) [CV fears seem to be significantly overblown.](https://www.dw.com/en/why-coronavirus-fears-are-disproportionate-compared-with-other-health-risks/a-52281566?ref=silkroadintl.net) This is not a political statement on my part, I’m just saying that the “cure” is going to be worse than the highest rates of death predicted for the disease. One of the biggest fears of the US ceding its role as world leader in organizations like the UN and WHO is that [China is the one filling the vacuum](https://www.newsweek.com/how-bush-obama-ceded-world-health-organization-china-increasing-risk-pandemics-like-coronavirus-1497667?amp=1&%5F%5Ftwitter%5Fimpression=true&ref=silkroadintl.net)—Whatever your qualms with US leadership, China is orders of magnitude worse with its record on HR and lack of freedoms and transparency. This is another good article that just doesn’t take the final step. [It lists out 4 specific ways that China infiltrates American life](https://www.dailysignal.com/2020/04/15/on-4-fronts-how-china-quietly-infiltrates-american-life/?ref=silkroadintl.net), but doesn’t discuss int’l bodies, which, the recent debacle with the WHO has shown, is deadly relevant to our daily American lives. [The CCP has, for at least 2 decades, been investing in international bodies](https://www.politico.com/news/magazine/2020/04/15/its-not-just-the-who-how-china-is-moving-on-the-whole-un-189029?ref=silkroadintl.net)—not just governmental organizations, but anything that sets global standards. [China says that its economy shrunk by 6.8% in Q1.](https://www.cnbc.com/2020/04/17/china-economy-beijing-contracted-in-q1-2020-gdp-amid-coronavirus.html?ref=silkroadintl.net) Thailand is saying its economy shrank by a similar 6.7%. Both numbers are likely lower than they really are. One of the ways that China is trying to recover is to [fake export certificates. ](https://amp.usatoday.com/amp/?ref=silkroadintl.net) [Does China’s propaganda work?](https://www.nytimes.com/2020/04/16/opinion/china-coronavirus-propaganda.html?action=click&module=Opinion&pgtype=Homepage&ref=silkroadintl.net) Yes and no. It works to a large degree within China because there are few other options and nationalism is whipped up to accompany stories that otherwise wouldn’t have as much traction. But with fear, personal risk and other information available, it’s not nearly as effective. China is able to sow disinformation abroad, but there are many alternative sources of info and so their message isn’t nearly as effective. But, when they can coopt organizations like the WHO, they become much more powerful and deadly. [Also, it doesn’t help when there are reports that China was reverse engineering an existing drug without permission and applying for a license for a “new” anti-CV drug as early as Jan of this year.](https://www.thegatewaypundit.com/2020/04/exclusive-coronavirus-spread-hubei-province-chinese-officials-applied-remdesivir-patent-knew-treat-coronavirus-now-application/?ref=silkroadintl.net) What happens next, in a destroyed economy? [China recovered first and many of its companies (SOE’s, National Champions, et al) are going to get support from the govt to again ‘go out’ and buy up strategic resources around the world. ](https://foreignpolicy.com/2020/04/15/china-is-bargain-hunting-and-western-security-is-at-risk/?ref=silkroadintl.net)There is a significant security risk that needs to be recognized and confronted head-on. [Decoupling from China will come at a price. ](https://www.inc.com/glenn-leibowitz/apple-ceo-tim-cook-this-is-number-1-reason-we-make-iphones-in-china-its-not-what-you-think.html?ref=silkroadintl.net)And many US companies don’t want to pay—and, be honest, neither do many consumers. Most people are angry at China right now, but how much more are we willing to pay for consumer goods (most of Walmart and Target) and even electronics and autos? [If there is a winner of the CV crisis, it’s Taiwan. They did a kick-ass job protecting themselves ](https://time.com/collection-post/5820596/taiwan-coronavirus-lessons/?xid=tcoshare&ref=silkroadintl.net)and showed up China, WHO, and most of the world in the process. [This article focuses on a week that China sat on data in Jan.](https://apnews.com/68a9e1b91de4ffc166acd6012d82c2f9?ref=silkroadintl.net) And that’s the hard date when the world now knows that Beijing knew something and chose not to share it. But other reports show that they (at least MDs in China) knew[ something was up as early as Nov and maybe even had inklings of issues as early as Sept.](https://www.newsweek.com/coronavirus-outbreak-september-not-wuhan?ref=silkroadintl.net)—at least that is the earliest dates for some genome tracing of the virus. I think that giving China a pass from Nov-Jan is a mistake. [The rise of nationalism and xenophobia in China is alarming,](https://www.nytimes.com/2020/04/16/world/asia/coronavirus-china-nationalism.html?ref=silkroadintl.net) but not unprecedented nor surprising. This is the line that they CCP has used historically—gin up an external enemy to cover up for attacks on or failings by the CCP. Australia has been on the front lines with China—tied so closely economically, and with 100K’s of Chinese students and immigrants—it has been a flashpoint for much of the world’s interactions with China. [Waga Waga has now ended its sister city relationship with Kunming and Beijing is none too happy about it.](https://mobile.abc.net.au/news/2020-04-20/coronavirus-china-kunming-wagga-council-sister-cities-racism/12160058?pfmredir=sm&ref=silkroadintl.net) [It seems to me that the brokerage business (money management and global investment banks) runs in a parallel universe from the rest of us.](https://www.bloombergquint.com/business/wall-street-s-biggest-ever-china-bet-is-riding-on-these-bankers?ref=silkroadintl.net) It doesn’t ever question government morals or ethics, it never looks at Human Rights, it ignores people and pandemics because its job is making (up) money—and that seems to supersede politics and even humanity. How is Social Responsibility a requirement for almost all other companies but not the largest ones in the world? [And finally, China is banning online gaming and chatting with foreigners.](https://www.talkesport.com/news/china-to-ban-online-gaming-chatting-with-foreigners/?ref=silkroadintl.net) If China’s internet wasn’t already, for most in the PRC, just a Chinese intra-net, it’s now even more so. Like other industries and organizations that are in China, this will force int’l companies to either create new China-only entities, or partner with local Chinese companies, create China only games, and or adjust apps and software for the China-specific market. **News for April 6-12** [This is a great timeline of the Wuhan outbreak with emphasis on East Asia.](https://sensehofstede.nl/timeline-of-the-covid-19-outbreak?ref=silkroadintl.net) [It looks like decoupling might be for real this time.](https://www.the-american-interest.com/2020/04/08/the-long-hard-road-to-decoupling-from-china/?ref=silkroadintl.net) I guess cover-ups of plague-esque diseases will push people over the edge. [But it certainly won’t be easy.](https://www.the-american-interest.com/2020/04/08/the-long-hard-road-to-decoupling-from-china/?ref=silkroadintl.net) Since 2009, China’s push for global leadership seemed to be moving forward apace. But the reaction from many nations and people is now is that China is not trustworthy. [On the heels of the ZTE and Huawei issues last year, China’s position has slipped significantly.](https://www.straitstimes.com/opinion/covid-19-a-blow-to-beijings-ambitions-for-global-leadership?close=true&ref=silkroadintl.net) Related int’l relations with China in the last two months: [US to cut HK/China out of high-speed internet cables.](https://www.wsj.com/articles/u-s-allows-google-internet-project-to-advance-only-if-hong-kong-is-cut-out-11586377674?ref=silkroadintl.net) [Samsung ends mobile phone production in China](https://www.reuters.com/article/us-samsung-elec-china-idUSKBN1WH0LR?ref=silkroadintl.net) [Japan to fund companies to leave China](https://www.msn.com/en-sg/money/topstories/japan-to-fund-firms-to-shift-production-out-of-china/ar-BB12lS8Y?li=BBr8YXL&ref=silkroadintl.net) [US companies definitely leaving China](https://www.forbes.com/sites/kenrapoza/2020/04/07/new-data-shows-us-companies-are-definitely-leaving-china/?ref=silkroadintl.net#462823fb40fe). And they may get [some govt support to do so as well.](https://www.forbes.com/sites/kenrapoza/2020/04/10/kudlow-pay-the-moving-costs-of-american-companies-leaving-china/amp/?ref=silkroadintl.net) [US DOJ still focusing on Chinese espionage](https://www.politico.com/news/2020/04/07/justice-department-china-espionage-169653?ref=silkroadintl.net) China pretends to take int’l pressure seriously but continues to do the same things once they’ve made some public comments—[stop domestic sales of animals but offer tax breaks for their export.](https://www.wsj.com/articles/amid-coronavirus-pandemic-china-bans-domestic-trade-of-wild-animals-but-offers-tax-breaks-for-exports-11586683800?redirect=amp&ref=silkroadintl.net#click=https://t.co/DT1jXgTTyz) Companies in China are hurting. [Badly. Some think that Luckin is just the tip of the economic-collapse iceberg.](https://foreignpolicy.com/2020/04/08/start-up-crash-reveals-china-post-coronavirus-economy-luckin-coffee-fraud/?ref=silkroadintl.net) (many more links too. Unintended consequences attend success—[so many Chinese students go abroad for school that they no longer need to adapt to local cultures and peoples.](https://www.merics.org/en/china-monitor/conflicted-hearts-and-minds?ref=silkroadintl.net) They live in Chinese bubbles (language, food, friends, media, news), similar to many Chinese temporary expats (not migrants). And, in relation to the current CV situation, [many are reconsidering their options about returning](https://www.timeshighereducation.com/news/more-half-chinese-students-could-still-cancel-uk-study-plans?ref=silkroadintl.net#survey-answer). There is so much economic carnage from the “cure” to the CV outbreak that there will be no way that the govt can bail out everyone. Not in China, or the US. [And that’s why markets are going to get nervous and banks panicky. ](https://www.scmp.com/business/china-business/article/3079307/chinas-us1-trillion-consumer-loan-bubble-bursting-army?ref=silkroadintl.net) To be honest, the economy is scary. But the reactions by the CCP are as scary or worse. [So. Many. People. Are. Disappeared. ](https://twitter.com/BrendanCarrFCC/status/1248442812414201866?ref=silkroadintl.net)Sick and wrong. And equally as disgusting is [the int’l cover-up media campaign by the CCP](https://www.economist.com/graphic-detail/2019/04/20/china-is-using-facebook-to-build-a-huge-audience-around-the-world?ref=silkroadintl.net) to portray the CCP as the global savior. There has never been good data from China, but the question is how much is political, [Chinese data seems to correspond with political events](https://www.economist.com/graphic-detail/2020/04/07/chinas-data-reveal-a-puzzling-link-between-covid-19-cases-and-political-events?ref=silkroadintl.net), how much of it is [a lack of transparency ](https://thewire.in/tech/covid-19-the-devil-in-the-data?ref=silkroadintl.net)or corruption? ### April Fools: People that Beleive #'s from China. URL: https://www.silkroadintl.net/april-fools-people-that-beleive-s-from-china/ Last updated: 2026-07-18T14:48:19.000Z **April Fool’s News (March 29-April 4)** BEST NEWS SO FAR THIS MONTH—and, no, it’s not a joke: [Possible Vaccine!](https://www.upmc.com/media/news/040220-falo-gambotto-sars-cov2-vaccine?ref=silkroadintl.net) And now to what I had previously written. I have a number of friends in the US that are/were members of the CCP prior to moving to the US, usually for graduate school. Most of them are adamantly opposed to the CCP. I have another group of friends, all extremely well educated, with whom I share news and personal stories on a regular basis. I attempted to mix the two groups and was surprised, I guess naively, that it didn’t work as I had hoped. The rise of the CCP, not Chinese individuals or companies, has created a real fear of Chinese people—the CCP is actively weaponizing Chineseness and that is creating fear (and racism) where it is unnecessary and did not exist before. While not all can be blamed on the CCP, there is much ignorance and hate in the hearts of people everywhere, MUCH of the problems that Chinese people face outside of China can be laid at their feet. I am concerned about how the CCP could affect my life, but my family is from China and my profession is China-centered. Most people do not have this connection and likely never will, even if they work with/in China for a short period of time in the future. But, the fear is real—the CCP is more influential than we acknowledge. People not otherwise connected to China limit their contacts and self-censor out of fear (of the unknown). Transparency is the key to bringing down the CCP—there is a reason why its soft-power doesn’t work well outside of China: when in open competition with other, better ideas, CCP ideology almost always fall short. Thank God. **The COVID-19 Response in the US.** Your life is officially now a joke! Yours and mine and everyone's. This isn’t life and it will hurt millions of people that will not get sick regardless of infection or not. [And our lives will NEVER be the same again](https://www.chronicle.com/article/Why-You-Should-Ignore-All-That/248366/?ref=silkroadintl.net). We are delaying the inevitable, likely only until fall or spring of next year—80% of the US will get this at some point. The question is, can we survive the cure? What happens when the economy grinds to a halt in May? How many countries on the planet can withstand the social pressures of economic collapse that are certainly coming? Quarantine may indeed be the best way to fight the virus, but epidemiologists don’t know how to run the economy. **China’s Multi-media Offensive.** First, China is doubling down on the strategy of never letting a crisis go to waste, promoting itself as the hero of Covid-19\. Despite the unknown number of dead and the fact that it seems to be resurgent in China again, [they are claiming not only to have defeated it but are the self-proclaimed saviors of the world as well.](https://www.vice.com/en%5Fus/article/8843dz/heres-how-china-is-rewriting-the-history-of-the-coronavirus-pandemic-to-make-itself-the-hero?ref=silkroadintl.net) China is attempting to use divisions and monetary needs in other countries to insert the China-savior dialogue into the conversation in [other countries in the EU](https://foreignpolicy.com/2020/03/31/china-isnt-helping-italy-its-waging-information-warfare/?ref=silkroadintl.net) and North America. Fortunately, there are people that are still pushing back, and China can’t [disappear people in foreign countries as easily as they can people (princelings even) in China.](https://www.nytimes.com/2020/03/31/business/china-ren-zhiqiang-censorship.html?ref=silkroadintl.net) Here is a great piece that discusses [China’s current PR situation globally and ](https://www.forbes.com/sites/kenrapoza/2020/03/30/the-coronavirus-is-becoming-a-public-relations-disaster-for-china/amp/?ref=silkroadintl.net)a few countries’ responses to China. And another article that details [the lengths that China is going to to control the narrative in Italy.](https://formiche.net/2020/03/china-unleashed-twitter-bots-covid19-propaganda-italy/?ref=silkroadintl.net) More: [China hops to use CV as a platform to continue its campaign for a new world order.](https://thehill.com/opinion/international/490816-can-china-use-coronavirus-to-pave-the-way-to-a-new-world-order?ref=silkroadintl.net) And another piece on the same theme—[disinformation is key to Chinese PR.](https://www.macleans.ca/opinion/the-coronavirus-pandemic-is-the-breakthrough-xi-jinping-has-been-waiting-for-and-hes-making-his-move/?ref=silkroadintl.net) **Responses to China** China isn’t the only government that is attempting to take advantage of the crisis. Hungary is off the rails, but many [other countries in SEA and other places are arresting journalists and limiting free speech on social media platforms.](https://www.nybooks.com/daily/2020/03/31/how-authoritarians-are-exploiting-the-covid-19-crisis-to-grab-power/?ref=silkroadintl.net) Third, the effect of this is that relationships, both global and domestic are suffering. While we’ve probably seen this headline ever month for the past two years, it’s still true this time too: [US-China relations at their lowest since Mao.](https://www.vox.com/2020/3/31/21200192/coronavirus-china-donald-trump-the-ezra-klein-show?ref=silkroadintl.net) [The UK is pissed off too.](https://senatorpaterson.com.au/2020/04/04/mps-flay-china-for-outbreak-cover-up/?ref=silkroadintl.net) Good—it’s helping to push them in the right direction, removing Huawei from their network already. We’ll see what’s next. Here’s my two bits on this. I agree that the relationship is in a bad place right now. But I don’t think that that is worse than the prior status quo. China was literally getting away with murder and organ harvesting and espionage and violent repression against HK and encroachment of physical territory in SCS and threatening Taiwan. We needed someone like Trump to push back on China and not use traditional channels. The relationship needed to be reset completely. A half-hearted attempt that didn’t hurt the Wall-Street interests wasn’t going to cut it. Do I think that Covid-19 is necessary or deserved, of course not. But dramatic actions needed to happen and might not have been pursued completely without massive public disasters like HK and XJ and CV. The human toll of this virus and the cure is going to be incalculable, but certainly greater than just the virus. Already, [domestic violence is up](https://www.theglobeandmail.com/world/article-domestic-violence-reports-rise-in-china-amid-covid-19-lockdown/?ref=silkroadintl.net) and economic numbers are horrible. And really, only China has had a month+ of quarantine. Wait until June. The virus started in Wuhan. We can all pretty much agree on that. The CCP itself was printing that in papers before they realized they were going to get blamed for a global pandemic. The real question though is where in Wuhan—[papers in China in February, that have since been taken down, claim that it came from the govt labs.](https://twitter.com/jasonrantz/status/1245207091620376577?ref=silkroadintl.net) And it's not just twitter now,[ it’s being printed more](https://www.zerohedge.com/health/smoking-gun-chinese-scientist-finds-killer-coronavirus-probably-originated-laboratory-wuhan?ref=silkroadintl.net) and [more](https://creativedestructionmedia.com/news/asia/2020/02/16/report-chinese-scientist-who-worked-at-unc-finds-killer-coronavirus-probably-originated-from-a-laboratory-in-wuhan/?ref=silkroadintl.net) and [more](https://mol.im/a/8188159?ref=silkroadintl.net) (and more—I won’t link to the Wapo article since they have a paywall that I can’t get around)—this needs to become the global narrative. There are a number of resources that are attempting to list out documented Chinese media and academic reports on the timeline of the CV-19 outbreak and Chinese govt response. [Wuhan Virus propaganda timeline](https://www.centerforsecuritypolicy.org/wuhan-virus/?ref=silkroadintl.net). And here, some China-focused Youtube guy has put together a list of media links in a video (links in the comments). [Here is a timeline linking the virus to the labs in Wuhan.](https://www.nationalreview.com/2020/04/coronavirus-china-trail-leading-back-to-wuhan-labs/?ref=silkroadintl.net) I do know where it came from, I read something just yesterday that throat swabs indicated that it’s from pangolins. But I know that China covered it up and then reacted with the hammer of god—more so than with any previous disease outbreak. I would not be surprised if it was found to come from poor safety measures or an animal at a lab. It’s from China, and Chinese scientists were telling a different story than the govt before they were shut down. So why put stock in this paper? Because it’s China’s MO to shut down stories that compete with the official narrative (and there can only be one) post hoc. And further, because nothing that “officially” comes from China is likely to be the truth—[Death numbers form Wuhan, for example, are likely low “by a factor of 15 to 40.”](https://www.businessinsider.com/wuhan-residents-say-chinese-government-coronavirus-death-toll-is-low-2020-3?ref=silkroadintl.net) [And now people are saying that China and WHO are responsible for a global genocide.](https://madrascourier.com/opinion/how-china-the-who-orchestrated-a-global-genocide/?ref=silkroadintl.net#.XoR8IjKakzU.twitter) And of course, the next step in this thought process is [China paying compensation to the world.](https://henryjacksonsociety.org/publications/coronaviruscompensation/?ref=silkroadintl.net) Um… never going to happen. [How Chinese lies started a Pandemic.](https://thetyee.ca/Analysis/2020/04/02/China-Secrecy-Pandemic/?ref=silkroadintl.net) [China is a hostile state. ](https://www.telegraph.co.uk/politics/2020/04/01/coronavirus-means-must-now-treat-china-like-hostile-state/?ref=silkroadintl.net)I completely agree, the only thing I would add is that this is not new as of the pandemic. The best bad joke I’ve read on twitter this week was something along the lines: Chinese people are laughing at the [US intelligence for publishing a letter this week saying that Chinese numbers are totally bogus](https://www.bloomberg.com/news/articles/2020-04-01/china-concealed-extent-of-virus-outbreak-u-s-intelligence-says?sref=SCKvL4TY&ref=silkroadintl.net)—The Chinese have known this for years! Much of the global industrial capacity was willing to live with the bad numbers in China when the prices were good and there was little to no political pressure.[ But the tradewar and the virus have forced companies to question their supply chain strategies.](https://www.bloomberg.com/news/articles/2020-03-31/supply-chains-latest-not-made-in-china-is-tech-s-next-move?ref=silkroadintl.net) On a related note, China is a bad global player, WeChat censorship and outreach on behalf of the Chinese State is widely known, but that [it is extending its reach to both the Chinese community overseas as well as anyone with the app](https://www.hrw.org/news/2019/02/20/how-chinas-censorship-machine-crosses-borders-and-western-politics?ref=silkroadintl.net) is an increasingly distressing reality. And, if that wasn’t bad enough, Tencent (owner of WeChat) has just made [a deal with the UN to carry teleconferences. ](https://www.prnewswire.com/news-releases/tencent-and-united-nations-announce-global-partnership-to-hold-thousands-of-conversations-online-through-platforms-including-voov-meeting-for-the-uns-75th-anniversary-301033166.html?ref=silkroadintl.net)China has a plan to remake the global order into its own system—if that benefits anyone else along the way, bonus! But mutual benefit is NOT the goal of a Chinese led system. And a UK former supreme court justice has basically stated that [the current cure is an unchecked police state](https://www.spectator.co.uk/article/former-supreme-court-justice-this-is-what-a-police-state-is-like-?ref=silkroadintl.net) and people need to be questioning authority. Why question? [Because this is going to be the Great Depression all over again. ](https://marker.medium.com/this-looks-like-a-depression-not-a-recession-16a123f966d8?ref=silkroadintl.net)It will be [worse than 2008 for sure.](https://www.bloomberg.com/amp/news/articles/2020-04-02/home-lenders-brace-for-up-to-15-million-u-s-mortgage-defaults?%5F%5Ftwitter%5Fimpression=true&ref=silkroadintl.net) And it’s not just the US and China that will be hurt, [all of the world is going to suffer for years.](https://www.afr.com/companies/healthcare-and-fitness/how-the-virus-could-stagger-asia-s-giants-20200403-p54gpu?ref=silkroadintl.net) Any other options other than destroying the world economy? [Some think so.](https://fee.org/articles/an-alternative-to-the-lockdown-strategy-in-the-fight-against-coronavirus/?ref=silkroadintl.net) And [TAIWAN has certainly been more successful](https://www.pbs.org/newshour/show/taiwans-aggressive-efforts-are-paying-off-in-fight-against-covid-19?ref=silkroadintl.net) than anyone else—gee, I wonder why? Could it be that they’ve been prepping for war with China for decades now? Probably. And a “fun” read, only in that it’s well written but should really scare the bejesus out us all. [Chinese espionage.](https://www.1843magazine.com/features/the-friendly-mr-wu?ref=silkroadintl.net) Maybe the most memorable thing about this article won’t be that [a billion-dollar Chinese company was a fraud,](https://www.bloomberg.com/opinion/articles/2019-05-04/luckin-coffee-ipo-more-a-tech-startup-than-a-drinks-company?ref=silkroadintl.net) but that the author of the article that originally exposed it was mad at the inclusion of the word “some” in the article title: [Luckin Coffee is a painful reminder of ‘the extreme fraud risk’ of some China-based companies.](https://www.cnbc.com/amp/2020/04/03/luckin-coffee-debacle-is-a-painful-reminder-of-fraud-risk.html?ref=silkroadintl.net) The good news, for China but no one else, is that [the UN, like WHO, is securely in China’s pocket.](https://qz.com/1830789/un-partners-with-chinas-tencent-surveillance-software/?ref=silkroadintl.net) Tencent is going to facilitate global spying on behalf of China host teleconferencing for the UN moving forward. If you think I’m joking, read this about Zoom, another Chinese company, routing private calls through China and being an open party for hackers. [Here’s another piece on the same story.](https://www.bloomberg.com/news/articles/2020-04-02/luckin-coffee-plunges-86-on-board-probe-of-fabricated-sales?ref=silkroadintl.net) While I was in SZ conducting research, I would go to Starbucks in the AM, as would most of the C-level people in the company. Most of the staff, engineers, and salespeople drank Luckin—it was cheaper, delivered, and Chinese, a significant distinction I was told. Luckin was China’s and it was going to not just push Starbucks out of China, but go global too. I was a real source of pride for the Chinese to count more Luckin cups than Starbucks cups in the office each AM. I wonder if these new limits in the US on Chinese tech can be retroactive to include Zoom? No? Oh well, at least [Huawei will still be on the hook. ](https://mobile.reuters.com/article/amp/idUSKBN21K007?ref=silkroadintl.net) And as bad as the CCP is, I agree that [we can’t curtail their free speech in the US](https://slate.com/technology/2020/04/republicans-want-twitter-to-ban-chinese-communist-party-accounts-thats-dangerous.html?ref=silkroadintl.net) to combat them. BUT but but, I do think that official CCP accounts online should be at least identified as such. Masks. Diplomatic tool? Virtue signal? Effective healthcare? [CDC telling people in the US to wear masks.](https://www.reuters.com/article/us-health-coronavirus-usa/stuck-at-home-and-jobless-americans-confront-growing-costs-of-coronavirus-idUSKBN21K20K?ref=silkroadintl.net) My opinion is that they work to keep you from spitting on others and/or other spitting on you. But they don’t keep out air-borne diseases and most people wear them wrong to boot. [Chinese are now out of lockdown, but, again, they don’t trust their govt and are not going shopping much yet.](https://www.bloomberg.com/news/articles/2020-03-31/chinese-shoppers-can-go-out-again-online-buys-show-they-won-t?ref=silkroadintl.net) [If the US does anything cooperative with China](https://www.nytimes.com/2020/04/02/us/politics/coronavirus-trump-china.html?smid=nytcore-ios-share&ref=silkroadintl.net), I’m going to regret voting for Trump. I have a specific list of issues that I use to measure candidates and China was at the top of the list in 2016. [Some idealist are still hopeful for the US](https://www.theatlantic.com/ideas/archive/2020/04/why-china-ill-equipped-great-power-rivalry/609364/?ref=silkroadintl.net)—count me as one of them. The long-term bet is on democracy and freedom. And finally, a person-to-person story about [a mother in China and a daughter in the US trying to talk about CV and the political narratives and fallout. ](https://www.nytimes.com/2020/04/03/opinion/sunday/coronavirus-china-US.html?ref=silkroadintl.net)This is more common than you think. ### If you don't believe China, you're either a denier or actively spreading the disease. URL: https://www.silkroadintl.net/if-you-dont-believe-china-youre-either-a-denier-or-actively-spreading-the-disease/ Last updated: 2026-07-18T14:48:18.000Z I'm not going to link to the articles but the CCP is blaming both a US military woman and/or Italy for the source of the outbreak and at the same time demanding gratitude from everyone for saving the world. CCP is working overtime coming up with those whoppers. [The PAP, Chinese special security forces are in HK](https://www.reuters.com/article/us-hongkong-protests-military-exclusive/exclusive-chinas-internal-security-force-on-frontlines-of-hong-kong-protests-idUSKBN2150JZ?ref=silkroadintl.net) This news, combined with the recent expulsion of US journalists from both China AND HK/Macao reinforces the increasing realization that HK as we knew it is no more. One China two systems is, for most intents and purposes, dead. Though it will probably take another serious financial or legal event to see the rest of the MNCs leave, HK’s special status as an independent commercial gateway to the PRC is likely over. If you’re not reading the FP China Brief by James Palmer, you’re missing out on a lot of good analysis. For example, Chinese students at US universities are leaving in droves. This means both serious troubles for these students trying to finish their education from or in China, but it also means that unis in the US that rely on foreign student tuition are going to suffer. Decoupling means that xenophobia on both sides will continue rising. Also, if there is any silver lining it’s the idea that unis in the US will hopefully be less beholden to Chinese money (via Confucian Institutes and/or students). In a related note, there is a lot of blame being put on the US administration for doing what China could not—force Chinese scholars back to China. But beyond the headlines, a careful reading shows that the concerns of the FBI and NIH are significant and often ignored when blame is being shoveled out. [Are Chinese academics returning to China? Yes they are, in larger numbers than ever before. But those numbers don’t deny the covert espionage nature of the Thousand Talents Program run by the CCP to profit from foreign research. ](https://www.propublica.org/article/the-trump-administration-drove-him-back-to-china-where-he-invented-a-fast-coronavirus-test/amp?%5F%5Ftwitter%5Fimpression=true&ref=silkroadintl.net)That US universities didn’t do their job in policing Chinese scholars (and others) does not deny the individual dishonesty of many academics who were paid well to double dip and/or send classified info back. Should the US do much much ore to keep the globe’s best academics here? Of course. But that doesn’t mean that we should ignore the TTP or it’s effects on US R&D. Just a couple of years back I was advised by another Anthropology professor that if I wanted lots of easy funding, I just needed to make sure that my research somehow linked to the BRI. [Now, while there are still many active projects, most are not what they were originally expected to be and many don’t exist at all.](https://thediplomat.com/2020/03/will-covid-19-halt-chinas-going-out-economic-strategy/?ref=silkroadintl.net) Additionally, there are growing complaints at home (in China) that too much money is being spent on foreigners and not enough on domestic problems. Covid-19 will definitely exacerbate those calls to stay home. The increasing int’l concern that China is not a team player will add to the difficulties beyond China’s immediate neighbors. I study Chinese MNCs outside of China, and I can tell you that they move as there are monies offered by the CCP and opportunities opened up by Chinese (money) diplomacy. This isn’t to say that there are not millions of SME entrepreneurs, there are. But the big boys work with the state and the state paves the way for their int’l business. [Another picture essay of closed down cities and sites across the world.](https://www.reuters.com/news/picture/before-and-after-the-coronavirus-idUSRTS3517B?ref=silkroadintl.net) [But maybe the most distressing news is the disinformation campaign being waged by China—](https://www.japantimes.co.jp/opinion/2020/03/16/commentary/world-commentary/chinas-information-warfare-failing/?ref=silkroadintl.net#.XnGn7S3MwWo)they are both claiming that they are saving the world AND that the US started the plague. What kind of evil do you have to be to finance a PR campaign when people are dying across the globe?! There is a real fight for the hearts and minds of the world’s population. Do what you can to beat back the CCP propaganda. This doesn’t mean you need to support one faction or another in the US—just make sure that China doesn’t win with their lies. And it’s not just a war of words either, [China has threatened the US medical supply chain](https://www.project-syndicate.org/commentary/china-exploit-control-of-pharmaceutical-exports-by-brahma-chellaney-2020-03??ref=silkroadintl.net) over language it doesn’t like from the White House. Again, how evil can one be to threaten the lives of innocent civilians in the midst of a pandemic?! Sickening. And it’s not just foreigners that the CCP is trying to brainwash. [Their domestic efforts are increasingly leading to physical punishments and arrests at home.](https://www.nytimes.com/2020/03/16/business/china-coronavirus-internet-police.html?ref=silkroadintl.net) Spent the AM today talking with another China hand that is still working on supply chain management with China—He’s back up and working after the last two months of time off. But he says that it’s been increasingly difficult for others to get started as so much of the Alibaba/Amazon supplier pages are just filled with garbage. “You’re never going to beat China on price.” There is just no way that you’re going to accept the slim margins that the Chinese traders can survive on. They are better at providing similar products at lower prices than manufactures in the US will ever be. With the business model so successful for so many years now (and the size of the domestic China market), there is a real disincentive for Chinese companies to design or innovate for foreign markets. [Two versions of the same story](https://www.theatlantic.com/ideas/archive/2020/03/china-trolling-world-and-avoiding-blame/608332/?ref=silkroadintl.net)—[China is to blame ](https://www.newsweek.com/nigel-farage-china-coronavirus-west-rethink-1493085?ref=silkroadintl.net)and it is NOT politically incorrect to say it! I couldn’t agree more. This isn’t just pointing fingers. This requires a recognition of what the CCP is and a rethinking of not just global political relationships but also supply chains and education and travel too. This is a [very interesting piece discussing China’s role in the WHO](https://www.institutmontaigne.org/en/blog/fighting-coronavirus-pandemic-chinas-influence-world-health-organization?ref=silkroadintl.net)—noting that China controls bodies that control budget and other voting powers, but actually donates very little to WHO (and other) budgets. Thus it is outsized in its influence on WHO decisions. Also WHO is a government organization, meaning that it (naively/ignorantly/politically) never questions the numbers that it receives from other government organizations. It needs China’s future support and so will not say anything negative about China and will continue to ignore Taiwan. [China's economy is in bad shape.](https://www.reuters.com/article/us-china-economy-business/virus-had-eye-popping-impact-on-chinas-economy-beige-book-idUSKBN21A3R9?ref=silkroadintl.net) No, [I mean really bad.](https://www.marketwatch.com/story/no-chinas-economy-hasnt-gotten-better-the-implications-could-be-more-serious-than-investors-realize-2020-03-23?ref=silkroadintl.net) I really only think that 3 of these 5 are important—the disruption to supply chains, the increase in “smart city” tech (AKA government surveillance), and the massive increase in teleconferencing—everyone from elementary schools to global businesses is now using Zoom on a daily basis. [5 tech centered changes from CV-19.](https://www.businessinsider.com/five-ways-coronavirus-will-affect-the-connectivity-tech-industry-2020?ref=silkroadintl.net) These two [PWC](https://www.pwc.com/world2050?ref=silkroadintl.net) and [BBC](http://www.bbc.com/travel/story/20200322-five-superpowers-ruling-the-world-in-2050?ref=silkroadintl.net) articles are both interesting and likely to have been written before CV-19 (and it seem to me like the BBC piece is based on the PWC report?). Which means that they’ll likely change somewhat if they are re-released in 6-8 months. For one, by the end of 2020 the Chinese economy is clearly not nearly going to be as strong or as globally connected as I think the authors are currently basing their analysis on. Second, I’ve worked in and with China for 25 years now, despite the increased number of Chinese that have studied overseas and speak some English (still staggeringly small % overall) China is still amazingly insular and domestically focused. Chinese individuals and products may indeed be global, but the attitude, customs, outlook, and future are decidedly not. I do agree that it’s likely that China, India, and SEA will be the largest economies in the world in 2050, I don’t agree that Indonesia, Brazil, Mexico, or even India or Russia will be the “superpowers ruling the world.” And, to be honest, I have real doubts about the Chinese miracle being sustainable or its numbers being anywhere close to real. ### "Dogs and Cats living together, mass hysteria!" URL: https://www.silkroadintl.net/dogs-and-cats-living-together-mass-hysteria/ Last updated: 2026-07-18T14:48:19.000Z I broke a pin on one of my guns the other day and had to get it fixed. The guy at the gunshop on Saturday said to me, "Coronavirus is almost as good for business as Obama was!" Yup, the world is crazy and we're all going to die. Sorry. But, before you kick the bucket, here are some books and other readings that might be helpful in passing the time in quarantine. All joking aside, please stay home, stay safe, and help others as generously and as often as you (safely) can. God Bless. World War Z is a good book and very different from the movie. The Book of Basketball is huge, and now that there are a season's worth of podcast updates, it's a good time to revisit it. For the real China nerd, [this article claims to be a look at the various annual budgets for China.](https://www.bloomberg.com/news/articles/2020-03-13/unraveling-the-mysteries-of-china-s-multiple-budgets-quicktake?ref=silkroadintl.net) But this is really just a quick overview of the financial situation in China, more of a Q&A than a deep-dive into the budgets. This piece from Canada goes into the [details of the Confucian Institute contracts that are, secretive, manipulative, support the CCP, decrease academic freedom and transparency in the West, and should have never been signed in the first place.](https://nationalpost.com/news/chinese-governments-confucius-institute-holds-sway-on-canadian-campuses-contracts-indicate?ref=silkroadintl.net) But since universities are run like shit, they have doubled the admin, doubled down on PC and social sciences, and generally gone after money over integrity, it should be really no surprise that this is where we are in "higher" education. Enjoy! [This is a short article discussing containment vs constraint. ](https://www.ambassadorsbrief.com/posts/miMoENcXvPHsu9GnW?ref=silkroadintl.net)I've noted before that I don't like the idea of "containing" or even constraining" China--mostly because of the difficulty in defining what and who that really includes. What is "China?" The people? The CCP? The economy (and which parts of the economy)? I'd love to see both more access and engagement with China (people and econ) but I 100% understand that that also supports and encourages the CCP. I'm not sure where the line is and I don't like the trade war currently being waged, but I'm willing to say that at least it's something, which is better than nothing. Another thing I don't know is how much Coronavirus will really change our daily and working worlds. Sure, we'll get better at teleconferencing and there will likely be a ton of new podcasts (stay-tuned, as soon as I get my dissertation defended I'm starting one too). But are we going to stop shaking hands or flying or going out to crowded places? Doubt it. [Here are some really high-level predictions, not saying much really, but interesting to see how people think that the immediate future will be different because of this.](https://www.bloomberg.com/news/articles/2020-03-13/coronavirus-will-change-how-we-shop-travel-and-work-for-years?ref=silkroadintl.net) There are way too many people with way too many opinions on the current state of what's going on that will all either be wrong or yelling about something else next week. So I'm not going to add much to the cacophony of hysteria. What I will end on is this: please be mindful of the info that you do share--the CCP is actively trying to take credit for saving the world and blame the US in the process. And anyone that is anti-Trump and/or Anti-US is buying into much of it. You don't have to like Trump to recognize that the CCP is evil and correcting their propaganda is not the same as supporting Trump (or any other leader that you don't like). The CCP is NOT China, is not Chinese, is not Chineseness, etc. ### What are you more afraid of? Racism, no TP, Covid-19? URL: https://www.silkroadintl.net/what-are-you-more-afraid-of-racism-no-tp-covid-19/ Last updated: 2026-07-18T14:48:19.000Z **Here is my take on news of the last week.** 1\. It's still bad, Covid-19-wise, though trending better in China, but not really anywhere else. Though the #s in the US seem to suggest that it's not quite as deadly as was originally thought. Unis and school districts where I live are discussing shutting down at Spring Break--online only from March/April through the end of May. No decisions yet. Yea! I get to spend 2 months 24/7 with my kids!! 2\. The Chinese economy is in worse shape than anyone thought and people are maybe 50% back to work. This, I think will be the real story. No way that the Chinese GDP only drops 1 point, right? 3\. The Chinese media cover-up of both the virus and the economic woes is maybe even worse than the economy too. Meaning, you can’t trust numbers out of China and the spin, “China attempted to save the world by buying it time that was subsequently wasted” is cheap BS only to be believed by the most callus of authoritarian shills. Read another way, “Yes, the cost of authoritarian action is very high in human terms, but look how efficient dictators are!” Let's just say this, if you're a Not-Trump fan you'd better not be praising dictators in other countries for being more efficient in violating HR in the name of the public good. A couple of other news issues are worth talking about. It’s really been tragically interesting to see how SK, Taiwan, countries in SEA and Japan have differed in their responses to China and Covid-19\. Other than Taiwan and VN, many countries were initially worried about offending China and the results were not good (HK and SK and Japan) all erred on the side of trusting and being polite to China. All three have been devastated since. Taiwan has done well from the beginning and SK and Japan seem to have received from their poor initial reactions. Others, the Philippines and Indonesia, it seems, have decided to just stick their collective heads in the sand and ride out the epidemic. Thailand, my home away from home, is, of course, both preparing for Songran and another coup d’etat. [Here is a linguistic article about how to read (or not read) Chinese](http://www.pinyin.info/chinese/crisis.html?ref=silkroadintl.net) It came up again in China twitter and quickly became a meme. How many Chinese students are not coming back to global universities this year?[ 90% in some cases.](https://www.bizjournals.com/columbus/news/2020/03/03/why-ohio-state-is-getting-rid-of-one-of-its.amp.html?ref=silkroadintl.net) I know that my uni is banking on the Chinese market for one of its unique finance degrees. A couple of other schools are closing their Confucian institutes this semester as well. Good riddance. (Of course, the UofU still has theirs, with no plans to terminate it. One more legitimate reason to hate the UofU.) [This piece about online censorship is interesting for a couple of reasons, ](https://apnews.com/cbde0ac8f6b52a37206a6f374e1f0398?ref=silkroadintl.net)first, it highlights the fact that while the CCP "controls" everything, it is still just a massive collection of uncommunicative silos, like most bureaucracies around the world. Second, as more and more classes move online where the censorship is digital, there will be more and more instances like this one. 30 kids in a room getting a couple of things that are inappropriate is bad, but manageable. 3000 or more with the ability to share instantly that same inappropriate info is unacceptable. [Interesting story on Biking through China during a quarantine.](https://nymag.com/intelligencer/%5Fpages/ck7dz6f5600rikvy6b0zj0dzu.html?ref=silkroadintl.net) [Great Video of China in quarantine from space.](https://www.nytimes.com/video/world/asia/100000007013566/coronavirus-satelliteimages.html?ref=silkroadintl.net) [After 9 Days in China, here are the WHO’s main findings (via Reddit).](https://www.reddit.com/r/China%5FFlu/comments/fbt49e/the%5Fwho%5Fsent%5F25%5Finternational%5Fexperts%5Fto%5Fchina/?utm%5Fsource=amp&utm%5Fmedium=&utm%5Fcontent=post%5Fbody) [This is a great parody! ](https://www.youtube.com/watch?v=i%5FQXvh8fVPI&ref=silkroadintl.net) “just white people things” and “where the hell’s the rice?” LOL! This is how we need to be treating and talking to each other. That people are arguing about the name of the Wuhan virus when there are scores of other diseases named after places/people/events says a couple of things. People like be angry at someone else (makes them feel better about themselves?). Priorities are wrong when perceived racism takes precedence over actual health. Finally, this argument is literally the active and consciously-constructed CCP disinformation campaign to wipe out the history of early whistleblowers and remove any CCP responsibility for anything. My personal experience in China, 10+ years, lived with my Chinese family in a Chinese community (no other foreigners in my complex) is that the Chinese people I met and worked with are overwhelmingly polite. They were also openly racist towards blacks and when drunk are not nearly as polite to me. In my decade-plus there, I’ve been told to get out of the country (when watching the Olympic torch run), that I shouldn’t have been allowed to marry a Chinese woman (multiple times), that my ½ Chinese kids weren’t welcome at public schools, among other things. Though I was told that mixed-race kids were smarter and more beautiful. Anyway... THIS IS ONLY MY OWN PERSONAL EXPERIENCE. I’m not saying that all Chinese people are anything!! [But the comments of this online draft are not surprising.](https://www.modernghana.com/amp/news/987856/chinese-draft-law-on-foreigners-triggers-violent.html?%5F%5Ftwitter%5Fimpression=true&ref=silkroadintl.net) The Chinese internet is likely more like Twitter than real life—it’s biased and populated with people that want to be heard. What does Joe, I don’t remember my own name, [Biden think about China and Taiwan?](https://thediplomat.com/2020/03/joe-bidens-record-on-china-and-taiwan/?ref=silkroadintl.net) Who knows?! But here’s a piece that at least points out what he’s thought in the past. [NNT says that panic is the correct response](https://www.marketwatch.com/amp/story/guid/B8C48CFE-60A0-11EA-9EB1-848872F13637?ref=silkroadintl.net)—it’s not rational to be rational (normal) in an epidemic or any event that we’ve never seen before (Black Swans). His book about Black Swans is not an easy read (non-stats background) but very interesting; he has a trio of books, actually. I’ve read two so far—changes the way that I consider things. I would encourage you to read them if you have not (in general, read hard things). US Senate is taking aim at more individual Chinese companies, or at least aps, in this case (TikTok). Samm Sacks has some great commentary on the hearings, including the appropriateness of the discussion around banning TikTok but also the problematic nature of trying to control data and tech and promote US (vs China) global policy via legislation. https://pandaily.com/us-senate-targets-tiktok-regulation-but-what-else-is-at-stake/ The difficulty, rightly pointed out, is NOT that these Chinese companies are Chinese, but that they are part of the Chinese political system. The CCP has weaponized Chineseness (professionals, businesses, students, etc.) against capitalism, the neoliberal global community, and other countries. That’s the problem that isn’t going away no matter what ByteDance does. And in a related case [Senators are trying to block BYD and CRRC from building buses and railcars](https://thehill.com/policy/cybersecurity/486218-senators-urge-americans-to-wake-up-to-security-threats-of-chinese-made?ref=silkroadintl.net) for Chicago, LA, Philly, NYC, Boston, and DC. BYD already screwed up busses for Albuquerque and LA and the fear now is that their tech is both compromisable by hackers (remotely controlling the vehicles) and the CCP (tracking citizen movements and comms). [Just put this article in the “If you think that the “China Model” is good for anyone other than dictators and China, you’re wrong, Part 345,673,288,467.](https://www.japantimes.co.jp/opinion/2020/03/06/commentary/world-commentary/covid-19-crisis-reveals-ccps-true-colors/?ref=silkroadintl.net#.XmWkzi3Mymm) From the article: > Crises bring out the best and worst of individuals and organizations. The COVID-19 outbreak highlights what some would say is a strength of the Chinese political system: the ability to make quick and bold policy adjustments, such as shutting down travel between large Chinese cities and enforcing restrictions on banned public activity. > > But the health crisis also reminds us of an unpleasant truth about the Chinese Communist Party: For all the talk from Chinese officials and state-approved commentators about how the rise of China is good for the world, the overwhelming and driving objective of the CCP is its own survival. > > The world increasingly understands that the Chinese government is bent on controlling the discussion of China-related issues not only within but also outside of China. > I’m not sure how to handle both the unavoidable global nature of economics today and at the same time manage national security. My suggestion in the past is that companies and individuals with ties to the CCP (membership, PLA partnerships, etc.) ought to be banned from universities and contracts (especially govt contracts) in the US. Surprise surprise surprise (bonus points if you read it in Gomer Pile voice), [China’s worst-performing provincial economies have structural issues,](https://macropolo.org/analysis/provincial-snapshot-liaoning-how-a-rust-belt-province-stagnated-and-why-it-matters-to-china/?ref=silkroadintl.net) namely SOE’s and poor business climates, that are a drag on their economies and inhibit growth. This article is good for pointing out systemic problems in the business environment in ChinaChina—namely, the preferred positions and influence of SOEs and the difficulties doing business (legally and efficiently) in China are not just problems in the North. [The Poison in China’s System.](http://chinaheritage.net/journal/professor-guo-yuhua-on-the-poison-in-chinas-system/?ref=silkroadintl.net) Enough said—just read it. In another shocker, even countries that are “friendly” with China, [Pakistan](https://www.beltandroad.news/2020/03/04/one-of-chinas-most-ambitious-projects-becomes-a-corridor-to-nowhere/?ref=silkroadintl.net) and [Myanmar](https://frontiermyanmar.net/en/the-belt-and-road-initiative-in-myanmar-staring-down-the-dragon?ref=silkroadintl.net#.XUTDVtxJYT8.twitter) in these cases, are finding that BRI isn’t all that they were sold. A road to no where. BRI may be a bust. “The investments were only an incentive.” China’s ultimate objective, she says, “is not to build connectivity but to increase Beijing's political and strategic influence.” [China & Japan & Covid-19](https://www.brookings.edu/blog/order-from-chaos/2020/03/09/mask-diplomacy-how-coronavirus-upended-generations-of-china-japan-antagonism/amp/?ref=silkroadintl.net) The cynic in me says, Yea, but masks are worthless and many places actually advise NOT using them as they instill a false sense of health security in the wearer. But still, better relations between Japan and China will not hurt anyone. ### Info control is a really really big deal--This (not military) is the real China threat URL: https://www.silkroadintl.net/info-control-is-a-really-really-big-deal-this-not-military-is-the-real-china-threat/ Last updated: 2026-07-18T14:48:19.000Z The collecting of online news that’s been censored in China. [Short YouTube clip about the collectors,](https://www.youtube.com/watch?v=m5fsidSOJMw&feature=youtu.be&ref=silkroadintl.net) and [an article about the same.](https://www.thenation.com/article/world/china-journalism-coronavirus/?ref=silkroadintl.net) I agree that this is very important, but also, I watch this as I watch the fictional show The Hunters on Amazon Prime and I wonder if this collection of info will do any good. How soon will this be both forgotten and discredited? I’m sure that some academic somewhere will use it for a dissertation, but who is going to access this stuff other than the odd researcher? I don't mean to discourage any of these efforts, I'm just not hopeful for a more-caring future, I guess. This is so, so, I don’t know what it is exactly, but it’s multiple levels here: [“Just to recap I’m half Asa Akira, half Alex Jones hybrid who works for the CIA.”](https://melissa.blog/2020/02/25/the-rogan-bump/?ref=silkroadintl.net) Melissa Chan went on the Joe Rogan Show and talked about China. Can we all agree that regardless of what you think of Joe Rogan, he's proved that people want to listen to LONG in-depth discussions about real ideas? In addition to China influencing US media and companies, [they are looking to control the infrastructure that allows int’l media as well.](https://www.news.com.au/technology/innovation/military/experts-warn-of-chinas-growing-offensive-capability/news-story/f7b4dc7fd02a422a77409881fc2a99c4?ref=silkroadintl.net) Of course they are. It’s the smart move. And the West is still arguing with itself about if it’s racist or not to call out China’s ideology—Hey, ideas are not people, they don’t have a race. China (CPP/Govt) is an ideological threat If you’re in China now, or looking to manufacture there, you need to read this: [Would the Last Company Manufacturing in China Please Turn Off the Lights, Part 4\. ](https://www.chinalawblog.com/2020/02/would-the-last-company-manufacturing-in-china-please-turn-off-the-lights-part-4.html?ref=silkroadintl.net)Dan and Steve at China Law Blog are AWESOME and have been for more than a decade now—I’ve known them since the early 00s. The blog post points out that Covid-19 is just one of many things that have started to push foreign manufacturing out of China for other places. For example, after surviving SARS, Swine Flu, baby-milk scandal, and the 2008 financial crash, I left China after more than a decade because of family/children reasons—it can be hard living in China, even if your family is Chinese. Among other reasons, supply chain diversity, politics, HR violations, now Covid-9 is adding to the increasingly frustrating uncertainty of doing business in China. It still seems like it’s a question of the devil you know vs the devil you don’t, but now companies are having their hand forced and so are jumping into other countries may be sooner than they otherwise would have. Good news! Chinese Government says there will be no economic impact from Covid-19\. Conveniently they do “own” the banking system, which, is likely to take HUGE hits from this event and the last 8 years of poor performance. > Like all economic booms, excess and mal-investment are present, with vacant real-estate properties and low or no return-on-investment projects. The sheer amount of loans outstanding require perfect economic conditions with no exogenous shocks. Currently, with mass quarantines and fear, it should be expected that a large percentage of these loans enter default. Given the extreme level of banking assets relative to Chinese GDP, this is a recipe for a financial crisis. [Bad News, no one believes them. ](https://www.marketwatch.com/story/china-faces-the-possibility-of-a-financial-crisis-which-would-send-a-shockwave-through-the-world-2020-02-25?ref=silkroadintl.net)So what does this mean for the global economy? Money and product supplies would be severely restricted and hurt consumers and borrowers and companies alike. I, like the author’s of they article, think that [China will be more like Japan and start now (it’s already started) to decline in economic power/influence/size.](https://hbr.org/2019/09/can-china-avoid-a-growth-crisis?ref=silkroadintl.net) Demographics, debt, productivity, reduced FDI and access to foreign tech, lack of corporate leadership—all problems the Chinese are dealing with now that will likely be accelerated by the impacts of the Covid-19 outbreak. [Here is some info on the WHO news conference](https://www.statnews.com/2020/02/25/new-data-from-china-buttress-fears-about-high-coronavirus-fatality-rate-who-expert-says/?ref=silkroadintl.net)—seems like China data can be read in may differing opinions And [it just gets worse and worse. ](https://www.washingtontimes.com/news/2020/feb/24/lexmark-lenovo-tech-funnels-data-china-intelligenc/?ref=silkroadintl.net)I really don’t want to pile on China (at least I don’t want to pile on Chinese people), but it really seems that they just shoot themselves in the foot with domestic laws (security law in particular) that affects Chinese MNCs in foreign countries. No way that the concerns about Huawei are going to be limited to just them and ZTE as CCP ideology via UFWD cells all over the world are more and more exposed (related story: new regs against Chinese “journalists” in the US). From the article: “[…many agencies at the federal level have banned Lexmark and Lenovo](https://www.washingtontimes.com/news/2020/feb/24/lexmark-lenovo-tech-funnels-data-china-intelligenc/?ref=silkroadintl.net). “But they have access to sensitive information at the state level — whether elections, courts, police, education, family and children services and so on,”” It’s taken a decade for Chinese to start to trust their own domestic milk manufacturers, so why should foreigners trust them or any other scandal-plagued state-backed company? Unless there is no other choice, the educated monied classes in China don’t buy Chinese products that affect their most precious investment, their child. [““Foreign brands are seen as way more trustworthy than domestic ones and this reputation is likely to last for a very long time, particularly for middle-class cities,” said Dan Wang, China analyst for the Economic Intelligence Unit (EIU).” ](https://www.scmp.com/business/companies/article/3051808/foreign-brands-still-dominate-parents-do-not-trust-chinas-home?ref=silkroadintl.net) If you don’t believe that socialism is a threat or even that China is/could be one, you’ll just pooh pooh (see what I did there?) this as so much hyperbole. But that is not what the Chinese/CCP think about the West, and it's not how they act either—“In sum: [Whoever rules the words rules the world.](https://www.nbr.org/publication/chinas-vision-for-a-new-world-order/?ref=silkroadintl.net) In the eyes of the CCP, the West’s superior discourse power is an existential threat more imminent than the remote possibility of a foreign military invasion.” [The CCP is not taking the “threat” of liberal democracy and free speech casually and conversely neither should we be lackadaisical in our assessment of the idealogical threat posed by China.](https://www.lowyinstitute.org/the-interpreter/china-s-counteroffensive-war-ideas?ref=silkroadintl.net) The only silver lining is the complete incompetence with which Chinese diplomats have attempted to speak out in the competitive arena of ideas. Need more evidence? [The ability to conduct espionage has forever been changed—and the US is lagging behind. ](https://news.yahoo.com/shattered-inside-the-secret-battle-to-save-americas-undercover-spies-in-the-digital-age-100029026.html?ref=silkroadintl.net) And now for something completely different. Thailand has a [crisis of governance (again) marked by mass demonstrations](https://www.thaienquirer.com/8420/major-rally-at-mahidol-universities-around-thailand-joining-and-taking-up-banners/?ref=silkroadintl.net) just at the wrong time (not that there is a good time for a crisis, but with China’s issues forcing MNCs to move, more instability isn’t exactly a great advertisement for the Kingdom). [Thailand is a corrupt military junta](https://www.thaienquirer.com/8343/the-thai-state-has-consistently-suppressed-its-unions-the-latest-srt-case-explains-why/?ref=silkroadintl.net) that seems intent on [destroying even the pretext of equality](https://www.thaienquirer.com/8336/future-forward-accuses-thai-junta-of-aiding-najib-and-associates-in-1mdb-scandal/?ref=silkroadintl.net)—no surprise as equality isn’t really a Thai value (e.g. the Monarchy and Buddhism). But a less corrupt govt is as least an historical (last 60 years) way that most Thais have been able to better their lives. Sad. Who doesn’t love Thailand?! ### Weekend Update (without Kevin Nealon, sorry) URL: https://www.silkroadintl.net/weekend-update-without-kevin-nealon-sorry/ Last updated: 2026-07-18T14:48:18.000Z [US can’t get data from China. ](https://edition.cnn.com/asia/live-news/coronavirus-outbreak-02-14-20-intl-hnk/h%5F9cdec1220974ad91b90df507b850f935?ref=silkroadintl.net) That might not be a bad thing, though since [Scientists can’t confirm the validity of the Chinese numbers.](https://www.scientificamerican.com/article/scientists-question-chinas-decision-not-to-report-symptom-free-coronavirus-cases/?ref=silkroadintl.net) This is a good piece, but I doubt that there has been much negative change on the ground to Xi’s power. [Probably the most problematic long-term result of the Covid-19 is that nothing will really happen. ](https://jamestown.org/program/how-the-wuhan-epidemic-has-dented-xi-jinpings-authority-and-prestige/?ref=silkroadintl.net)Yes, there will be decoupling, but that was already begun. Yes, the Chinese economy will slow down, but that too had already started. I know from personally speaking with investment bankers and funds managers in the US that they are “still bullish” on China in the long run and will not pull investments. Neither XJ, nor Tibet, nor Covid-19 seems to be enough to dissuade individual retirement plans. More and more I'm thinking about this--how to work in and/or invest in China and still be socially responsible. Clearly, the models of the past 40 years are not what should be followed moving forward. [From (another) article about Chinese dystopia](https://www.nationalreview.com/2020/02/china-communist-government-technological-revolution-orwellian-dictatorship/?ref=silkroadintl.net#slide-1): > China seems confident that it will soon rule the world, given its huge population, massive trade surpluses, vast cash reserves, and industries that produce so many of the world’s electronic devices, pharmaceuticals, and consumer goods. > > For a year, the Chinese government has battled massive street demonstrations for democracy in Hong Kong. Beijing cynically assumes that Western nations don’t care. They are expected to drop their characteristic human-rights advocacy because of how profitable their investments inside China have proven. > > Beijing was right. Few Western companies complain that Chinese society is surveilled, regulated, and controlled in a nightmarish fashion that George Orwell once predicted in his dystopian novel, *1984*. > > All of these recent scandals should remind the world that China got rich by warping trade and stealing technology in much the same way that it deals with epidemics and dissidents. That is, by simply ignoring legitimate criticism and crushing anyone in its way. > > If the Chinese Communist Borg is willing to put millions of its own citizens at risk of infection and death, why would it care about foreigners’ complaints that China is getting rich and powerful by breaking international trade rules? Chinese govt and their tech response to Covid-19 is both fascinating and horrifying. From on increase in robot food delivery to assigning everyone in some cities a QR code based on a health declaration form. [Those without “green” codes cannot go out in public, regardless if they have been infected or not. ](https://www.inkstonenews.com/tech/china-applies-surveillance-technology-big-data-coronavirus-epidemic-control/article/3051754?ref=silkroadintl.net)And now the news that Chinese tech companies have figured out how to complete [facial recognition even when people are wearing face masks.](https://qz.com/1803737/chinas-facial-recognition-tech-can-crack-masked-faces-amid-coronavirus/?ref=silkroadintl.net) A couple of my personal takeaways from news and podcasts are: 1\. The massive on the ground human forces that it has taken to quarantine hundreds of millions of people. The CCPs local cadre and also many private security companies and housing project managers have done yeoman’s work in responding to this outbreak (certainly with mixed results). 2\. The importance of last year’s HK protests should now be clear to everyone, especially (hopefully) people in the mainland. Responsible government isn’t just a distraction from making money, but it really does affect the daily lives of the entirety of humanity. 3\. The depth of the inhumanity of the CCP. I believe that they truly do want to stop the virus, and sincerely to save people’s lives. But that is not all, nor maybe even their primary motivation. Stability (meaning no challenge to the govt) and regime continuity are paramount; for the CCP there is literally an acceptable number of deaths in managing this crisis as long as the “core” and Party are not questioned. [Never let a crisis go to waste](https://outline.com/2WCB7q?ref=silkroadintl.net)—not sure where this dictum came from originally, but Xi certainly has taken it to heat, using Covid-19 outbreak to consolidate power in Hubei and Wuhan. A replacement by Xi’s cronies has also been made in HK and Macao. There may be questions about Xi’s popularity, but there likely aren’t any doubts about his level of control. [And just in case you think that you’re too removed from China to be infected, read this piece.](https://www.wsj.com/articles/how-one-singapore-sales-conference-spread-coronavirus-around-the-world-11582299129?mod=hp%5Flead%5Fpos5&ref=silkroadintl.net) I’m seeing tweets about Massive Demonstrations against both the govt and China today in Seoul. And increasing concerns that with the spread there and in Japan (and lack of quarantine for the Diamond Cruise passengers) is raising concerns about the Summer Olympics in Tokyo in July. [China as a source of black swans.](https://globalbrief.ca/2020/02/china-and-the-breeding-of-black-swans/?ref=silkroadintl.net) (I’ve not read this one yet, but it looks good.) [Free plane tix to China](http://www.chinagoods.com/freetoyiwu?ref=silkroadintl.net)—Honest! Of course, you have to fly to Yiwu (Zhejiang, near Hubei) and you must land before the end of this month. But, if you wanted to film your own post-apocalypse movie, this might just be your chance! [Great little thread on how to understand Chinese politics/governance.](https://twitter.com/AMFChina/status/1231021543418978306?ref=silkroadintl.net) This is really sad—[people without Covid-19 are not getting the necessary care/treatment in China.](https://www.wsj.com/articles/patients-without-coronavirus-struggle-to-get-urgent-care-in-china-11582134713?mod=hp%5Flead%5Fpos1&ref=silkroadintl.net) I’ve mentioned this before to people thinking about going to China. Unless you’re willing to pay extra (bribes), you’re not going to get the services you need—and even then it will not be the quality of service that you’re likely used to from the West. NOTE: The reporter ends the video with “I’ll be here for a while because it’s not clear when the government will allow anyone in this city to leave.” She was expelled from China earlier this week. [Here is a good 30,000’ view of what Covid-19 might mean for the world.](https://thediplomat.com/2020/02/red-flag-impacts-of-coronavirus-in-china-and-the-world/?ref=silkroadintl.net) Bonus! My China Podcast list: I pick and choose topics and pods that are of interest to whatever I’m working on at the moment (my dissertation on Chinese corporate culture in Thailand); usually, I get in 2-3 podcasts a day during my exercise (I listen on 1.5 speed). - NHK News in Mandarin - MSG - Asia In-Depth - Sinica Podcast - The Little Red Podcast - Merics - Caixin-Sinica Business Podcast - Inside China - Middle Earth - China Power - China Tech Talk - The China History Podcast - Fairbank Center for Chinese Studies - Analyse Asia - NCUSCR Interviews - Shorenstein Center - Rules Based Audio - UPenn Center for the Study of Contemporary China ### Chinese Foreign Policy Primer URL: https://www.silkroadintl.net/chinese-foreign-policy-primer/ Last updated: 2026-07-18T14:48:20.000Z If you weren’t sure about how China conducts foreign policy, this week’s news could be a primer for you. In addition to bogus disease numbers (see below), monetary and political influence at WHO, China also [threatened an editor in Nepal](https://kathmandupost.com/16/2020/02/19/why-china-s-statement-targeting-the-post-is-a-cause-for-concern?ref=silkroadintl.net), threatened to [retaliate against Czech companies](https://mobile.reuters.com/article/amp/idUSKBN20D0G3?ref=silkroadintl.net) in China, and ejected three journalists (on specious grounds) from China (see below). All in a week's work for the CCP. The ejecting of journalists seems to be getting the most news (likely because it's journalists writing the news, eh?). And most see these last ejections as retaliation for the US naming 5 Chinese news outlets as state actors and requiring them to register as such, limiting their scope of actives in the US. Probably one of the smartest things I’ve read, is the opinion that China doesn’t understand the difference between “news,” “opinion,” and “editorial” pieces in countries with a free press. And while I think that this may be true for a majority of Chinese citizens who are not familiar with the responsibilities and autonomy of the 4th estate, I do not believe it holds for Chinese policymakers. Rather, I think they fully understand, but they choose to willfully conflate the three so as to be able to assign full responsibility to the host state govt. This stance is an admission that they assume that the host govt is in control, a promotion of the Chinese model of govt control as the default, and that because of these first two points a right and/or ability to act against individuals and free press as representatives of the host govt. It’s very strategic and provides them with both a propaganda target as well as multiple opportunities to show their domestic audience their power without actually damaging foreign relations beyond repair. These actions also highlight another significant position, that China is completely at odds with anyone inside or outside of China holding competing views of an ever-expanding list of “sensitive” issues (Hong Kong, Tibet, Xi, XJ, Taiwan, SCS, Corvid-19, etc). For the longest time, China advocates were able to say that "at least China isn't exporting their authoritarianism. Only now is the mainstream media and the average China investor realizing that indeed China has been actively and strategically exporting censorship and political and financial control for decades now. The two most interesting stats to follow in China, if you want to know about the sate of manufacturing and actual disposable income are electricity consumption and transportation respectively. And while it’s more about quarantine than income now, trans numbers are still informative: [Transportation in China running at about 20% capacity](https://time.com/5785651/china-economy-slowdown/?ref=silkroadintl.net) and most workers facing a 2-week quarantine when they return to their work-site means that the economy will likely continue to run at 40%-50% for the rest of this month. (no electricity number for 2020 yet) Some individual investment groups follow similar numbers (speed of payments, shipping times, etc) to judge just how the Chinese economy is really doing since all the official numbers are crap. Here’s a real doozy of a number: [HSBC to cut 35k. ](https://sg.finance.yahoo.com/news/hsbc-2019-pre-tax-profits-drop-third-13-054249396.html?ref=silkroadintl.net)It’s interesting to me that while the traded war is mentioned, the US and EU are the markets to blame for most of the disappointing results. I would have thought that a year of protests and Covid-19 would have had more impact. If you’ve never used HSBC they are by far the best bank in East or SEA (don’t know about Japan/SK)—especially their HK offices and online services. Thai and Chinese banks are typically a horrible combination of paperwork, bureaucracy, lines, and untrained staff with limited permissions. In relatively better news, and I hope that this is indeed the moment when the corner is turned, but I have my doubts, [many cities are allowing manufacturing to return](https://www.caixinglobal.com/2020-02-18/local-governments-start-to-loosen-coronavirus-restrictions-on-companies-101517304.html?ref=silkroadintl.net). This, even though a factory in CQ started back up this week and was closed down within a couple days with 3 new confirmed cases of Covid-19\. Also, many cities are still not allowing commercial and retail stores to reopen yet. The 2-week quarantine for all returning residents will mean that it will be a slow ramp-up regardless. Out in Western China, there is still “the Muslim problem.” And by problem I mean, China still won’t allow for religious freedoms. The production value looks like a Jr. High school project and the narration is slow and turgid, [BUT THE INFORMATION IS CHILLING AND WE KNOW FROM OTHER LEAKS IT’S TRUE.](https://www.cnn.com/videos/world/2020/02/17/xinjiang-uyghur-leaked-report-ivan-watson-pkg-intl-ldn-vpx.cnn/video/playlists/around-the-world/?ref=silkroadintl.net) On a completely different note, the death of the CCP has been widely exaggerated. [The CCP is agile, has widespread public sport, has unquestioned control, is generally well educated, and has the resources to react to almost any calamity. ](https://www.theatlantic.com/ideas/archive/2020/02/coronavirus-wont-be-chinas-chernobyl/606673/?ref=silkroadintl.net)It is not just a bunch of old men waving red flags and spouting ideological phrases to apparatchiks with guns. Most people in China fear chaos more than the CCP, and despite all the historical disasters and crackdowns, propaganda and patriotic education has worked on even some of the best-educated Chinese. The failures of democracy abroad and the constant mantra of “100 years of humiliation” at the hands of the West ring true for many, thus alternatives to the CCP are never seriously considered. [This is a short but interesting identity negotiation piece on a Canadian-Hong Konger.](https://www.wearehkers.com/main-english/jade-reconnecting-with-hong-kong-i-felt-isolated-navigating-my-identity-and-politics?ref=silkroadintl.net) Many people outside of China are being forced to have similar negotiations as the CCP tries to control the definitions of Chinese and Chineseness. [Social credit system in action. ](https://www.whatsonweibo.com/children-of-hubei-medical-workers-to-receive-10-extra-points-on-high-school-enrolment-examination/?ref=silkroadintl.net)Medical workers' kids get 10 extra points on enrollment exams. One take on this could be that it’s the govt run amok, involved in everyone’s lives. That awarding points to kids that had nothing to do with anything shows how intrusive this can be. Another take is that the govt can’t do much but it will compensate these families for their commitment to the state's efforts. [Q1 growth in China expected to be at 3% ](https://www.reuters.com/article/us-china-health-jobs/china-races-to-contain-job-losses-as-coronavirus-batters-economy-idUSKBN20C18F?ref=silkroadintl.net)and urban unemployment over 6%. But the official China news is that everything is OK and China GDP will still hit 6% this year. This is a short article that focuses on the WHO only, but [China’s use of int’l organizations to promote it’s own Taiwan and other policies globally is very real](https://www.reuters.com/article/us-china-health-taiwan/dont-be-kidnapped-by-china-taiwan-tells-who-in-bid-for-separate-virus-tally-idUSKBN20C0P7?ref=silkroadintl.net), very active, and very influential. [Hong Kong is no more. Long live Hong Kong!](https://www.pbs.org/wgbh/frontline/film/battle-for-hong-kong/?ref=silkroadintl.net) [“the Chinese health system: overloaded, ineffective, expensive and chaotic.”](https://theconversation.com/coronavirus-how-health-and-politics-have-always-been-inextricably-linked-in-china-130720?ref=silkroadintl.net) [Interesting blog post on the Corona-complacent.](http://charleshughsmith.blogspot.com/2020/02/covid-19-pandemic-complacent-are.html?ref=silkroadintl.net) Focusing mostly on the poorly thought out positions of those that claim the Covid-19 isn’t a big deal. Personally, I don’t know what to believe. I don’t believe the numbers out of China, and Japan looks to be increasingly problematic. But really I’m just reading the news like everyone else. [I do like his thoughts on retirement though.](https://www.oftwominds.com/retirement-options.html?ref=silkroadintl.net) [If you or your kids have TikTok, you need to delete it. ](https://www.abc.net.au/news/2020-02-19/should-we-trust-chinese-owned-tiktok-personal-data/11962086?ref=silkroadintl.net)In addition to censoring news and posts to convey only the CCP opinion on many issues (like: Hong Kong, Taiwan, XJ, WHO, Covid-19, Tibet, Japan, SCS, etc.) but the ap collects a TON of personal user data. [Trump admin will now treat state-run Chinese media as state actors and force them to register in the US.](https://www.reuters.com/article/us-usa-china-media-idUSKBN20C2G1?ref=silkroadintl.net) About. Freakin’. Time! When people not connected with China run the Covid-19 numbers, [they just don’t add up. ](https://www.barrons.com/articles/chinas-economic-data-have-always-raised-questions-its-coronavirus-numbers-do-too-51581622840?redirect=amp&ref=silkroadintl.net#click=https://t.co/FuHXFz8o7P)No surprise here—This is China! From the article: “A statistical analysis of China’s coronavirus casualty data shows a near-perfect prediction model that data analysts say isn’t likely to naturally occur, casting doubt over the reliability of the numbers being reported to the World Health Organization.” What’s really sad about this is that it’s endemic to China and it literally means that [people are dying for the Party line.](https://bmcmedethics.biomedcentral.com/articles/10.1186/s12910-019-0406-6?ref=silkroadintl.net) Here’s a paper that says the organ donation market in China “…can only be plausibly explained by systematic falsification and manipulation of official organ transplant datasets in China. Some apparently nonvoluntary donors also appear to be misclassified as voluntary.” Yea, it looks like all those horrible pictures from Falundafa that we try to avoid around HK and embassy are real. In a related story, here is [Bloomberg threatening a great China journalist](https://theintercept.com/2020/02/18/mike-bloomberg-lp-nda-china/?ref=silkroadintl.net) with financial ruin if she won’t sign an NDA. The timing of this is really political on her part, as she is a Warren campaign activist, but the story is chilling and despicable nonetheless. ### Today's China news-Corvid-19 dominates the headlines URL: https://www.silkroadintl.net/todays-china-news-corvid-19-dominates-the-headlines/ Last updated: 2026-07-18T14:48:18.000Z I've not posted for a while as I'm trying to complete my dissertation. It's been about 1 year now since I've completed my research and I'm hopeful that I'll defend and graduate this summer. We'll see. Some days I'm hopeful and somedays I feel overwhelmed and lost in data, news, ethnographic stories and how to balance them all. In the midst of all the news about XJ and then HK and then Corona Virus, I started collecting China-related news articles and sharing them with a few friends who were politely interested and not following much of the stories on their own. Months on now, I just realized that I should be posting those here as well. So here is my attempt at a frequent new aggregator--no AI, no algorithm. Just me sharing news that I find important/interesting. This could be a sick game, no pun intended. Where did this quote come from, the Chernobyl mini-series or news out of Wuhan? Now the State tells us the situation here is not dangerous. Have faith, comrades. The State tells us it wants to prevent a panic. Listen well! It's true. But it is my experience that when the people ask questions that are not in their own best interest, they should simply be told to keep their minds on their labor and leave matters of the State to the State. We seal off the city. No one leaves. And cut the phone lines. Contain the spread of misinformation.” [Link to a Live Covid-19 Counter](https://www.youtube.com/watch?v=qgylp3Td1Bw&ref=silkroadintl.net) [The economic fallout in SEA will be harsh and long-lasting](https://carnegieendowment.org/2020/02/13/economic-fallout-of-coronavirus-in-southeast-asia-pub-81070?ref=silkroadintl.net) as many countries are too dependent on China. [China’s food security and Bazil. ](https://www.theatlantic.com/international/archive/2020/02/china-brazil-amazon-environment-pork/606601/?ref=silkroadintl.net)I don't look at China in LA much, but this piece rings true with what I've read about BRI projects in other places. This week the PD and GT started running pieces that included bits about Traditional Chinese Medicine in their stories--mostly how it's helpful and scientific (because communism is nothing but scientific, just as the folks that survived Chernobyl). Turns out that [TMC is another legacy of Mao,](https://slate.com/technology/2013/10/traditional-chinese-medicine-origins-mao-invented-it-but-didnt-believe-in-it.html?ref=silkroadintl.net) and as such it’s mostly propaganda and nationalism. Surprise surprise. I am not a China is a military threat believer. Meaning, I don't buy the Thucydides Trap theory that China and the US are destined to clash militarily. But I am quite a proponent of the idea that the amoral Chinese system promoted by Chinese communism and large amounts of Chinese cash (and the size of the Chinese market) will mean that China and Chinese business practices will become an ideological threat. [Chinese corruption in LA City Hall is the latest piece on this topic.](https://laist.com/2019/01/14/fbi%5Fcity%5Fhall%5Fcorruption%5Fhuizar.php?ref=silkroadintl.net) Shanghai without people. I was last on the Bund in July, and there was standing room only. I was first there in 1995--and it was more populated then than now, though not 2019-levels full. https://supchina.com/2020/02/16/one-person-city-eerie-photos-of-shanghai-during-coronavirus/ The first rule that I learned as I began starting research on China was that when it comes to government numbers in China, everything was a lie or at least a fabrication. As one person told me, "I don't lie, I just make one or two words more beautiful." The second rule is that a CCP/government denial is the best confirmation you can ever hope for. [Govt denies Covid-19 patient zero is a lab scientist.](https://www.scmp.com/news/china/society/article/3050872/chinese-research-lab-denies-rumours-links-first-coronavirus?ref=silkroadintl.net) But then on the same news day... [Chinese scientists in Guangzhou research institute publish a paper that claims origins are from a lab.](https://www.zerohedge.com/health/smoking-gun-chinese-scientist-finds-killer-coronavirus-probably-originated-laboratory-wuhan?ref=silkroadintl.net) Weekend news: [There are 1,700 medical professionals in China that are infected with the virus.](https://edition.cnn.com/2020/02/13/asia/coronavirus-health-care-workers-infected-intl-hnk/index.html?ref=silkroadintl.net) And of course, you can't trust Chinese numbers. So then add in the numbers that the govt won't report, the fact that there seems to be a high rate of false negatives AND the fact that the Chinese healthcare system was already overburdened before the virus and now it's completely swamped. There are multiple stories about healthcare professionals who are dying from overwork (not the virus). [What's more, China can't get it's story straight. ](https://www.cnn.com/2020/02/13/asia/china-numbers-novel-coronavirus-intl/index.html?ref=silkroadintl.net)They changed the counting and the numbers went down for 1 day (turned out to be a supplies issue), then the numbers doubled with new testing, and then the numbers jumped 10-fold in a day! And we still don't know the full detials. Some great reporting (no link) from Caixin (Chinese) about how there were recorded cases in BJ and SH two weeks before big announcements of a "new" epidemic in Wuhan. It's also everywhere in SEA, and many of those countries don't have the medical resources to control it. Yesterday the US AG filed racketeering charges against Huawei. [And today the Pentagon allowed the Comm Dept case to move forward.](https://www.politico.com/news/2020/02/12/pentagon-set-to-back-huawei-restrictions-114613?ref=silkroadintl.net) This is all great news, I think. But it could be all for naught if Trump puts Huawei on the table for negotiations of Phase 2\. If there is a compelling case to be made that Huawei is neither a CCP pawn nor a bad tech partner in general, I've not heard it. As I read all the news about China in Oz, Canada, and the US and live and study corporate culture 24/7--I'm convinced that the China Model as an ideology is MUCH more developed/deployed/advanced than most in the West are willing to accept and already much more influential than we fully understand. I believe that the CCP has realized that multiculturalism and socialism are academic and social tools in the West that they can use. Here is a link to a podcast (SpyCast, by the international spy museum) that just happens to be about [Chinese agricultural espionage today](https://www.spymuseum.org/multimedia/spycast/episode/chinese-corn-caper-a-conversation-with-mara-hvistendahl/?ref=silkroadintl.net)\--it's a pretty good discussion. I had already ordered the book before I listened to the Podcast, and now I'm even more interested in getting to it (once my dissertation is complete. Interesting little side debate near the end about the Chinese scientist at Los Alamos a couple of years back--the host claiming that he was totally guilty but that the FBI was incompetent, while the guest was saying that it was more racial profiling. Shower thought: I realized the other day that my entire life is China--my work, my reading, my family, my wife's business, most of my friends, as much as 1/2 of my conversations and media is in Chinese, many of my work trips/vacations, most of my meals! For the first 25 years of my life, I would have never have guessed this possible; the last 25 have been a complete second life. [Censorship and Orwellian controls on campuses outside of China are expanding ](https://thetab.com/uk/sheffield/2020/02/12/sheffield-university-hong-kong-chinese-students-sissi-li-42125?ref=silkroadintl.net)as both Chinese money becomes China's only remaining effective soft power influence and as China (desperately) tries to control everything Chinese (education, media, ethnicity, history, culture, etc.). This story isn't even nearly as scary as the one last week about the Minn St. student who went back to China and was arrested for things he said on twitter the semester before. I talk with PRChinese students all the time and they are freaked out as much as the HK and Taiwan students are. They are all scared to comment or debate in class because they all assume that someone will report the discussion back to the CCP representative in the PRC embassy. They are worried about their families and their ability to return to school if they go home. The good news is that Uni's are becoming very aware of this right now and are starting to push back. But the bad news is that Chinese money (from the govt, from research investments, from students) is still very powerful and will become more so if the economy slows down in the US (which it will, btw, as the domestic measures to control Covid 19 start to affect the global economy). [In a related story, Harvard and Yale are being investigated for gifts from China/Chinese companies/organizations. ](https://apnews.com/f401177ae6899f359e77c58c34accc6e?ref=silkroadintl.net)This is going to get MUCH MUCH bigger. China runs hundreds of influence programs backed by the coffers of the govt. They pay, like in the case of the Harvard Physics Prof, piles of cash to many thousands of scholars and business people and politicians around the world for either access or turning a blind eye. For example, The Thousand Talents Program is a public program with a private list of over 2000 academics that the Chinese pay for access to their research--The Physics head at Harvard was part of this and was paid millions over the course of the last decade. How there not a public list of the TTP participants yet? This story pooped up today too-[\-2 years ago this China watcher in NZ was robbed](https://twitter.com/Anne%5FMarieBrady/status/1228043602728640512?ref=silkroadintl.net)\--only her China-specific info at home and at her office. Her piece on the ideological weapons of the PRC is seminal (links in the twitter thread. And do you remember the millions of people in HK that were protesting against the PRC all last year? Well, they're still at it. Hundreds of protestors last night still fighting the govt and their appeasement of Beijing in the fight against Covid 19\. The HK govt has refused to close the borders and quarantine buildings (for infected mainland visitors) have been firebombed. This guy, a pretty famous China watcher, is claiming that [the HK protests will go down historically as one of the great (influential) protests that changed the course of history](https://yaleglobal.yale.edu/content/global-impact-chinas-1989-vs-hong-kongs-2019?ref=silkroadintl.net). I hope so, but I'm betting that HK and the virus combined will not change China much. I'm pretty pessimistic that there will be any national reaction in China unless there are both 10s of thousands of dead bodies in China and a viable new option for stability first. [Here is a speech by Rubio about how American needs to respond to China,](https://americanmind.org/essays/american-industrial-policy-and-the-rise-of-china/?ref=silkroadintl.net) I agree with the tone and the conclusion, but I am not sure about his prescriptions. I like that he says that we can not be agnostic about China and just follow the market. I also like that he wants to have national-level goals and coordination again. But our economy has moved on to information and is no longer dependant on manufacturing, to return to such would be, I think the wrong thing to do. I don't like Trump's trade war and focus on manufacturing for this reason. Although I admit that I don't know much about the specifics of the American econ and am glomming onto an idea that makes sense to me. [And here is the response by a China watcher/prof.](https://americanmind.org/features/rubio-takes-the-lead/to-meet-chinas-challenge-innovation-not-nostalgia-is-key/?ref=silkroadintl.net) His prescriptions are much more in line with what I've been thinking for a few years now--targeted legislation and actions against specific Chinese individuals, govt bodies and organizations like Huawei, more education in skills and technical training, and I would also add that we need a much better immigration policy. Non-China story for diversity (well, it is indirectly a China story). [Has there been another historical anti-colonial activist that has disappointed more than Suu Kyi in Myanmar? ](https://www.cnn.com/2020/02/13/asia/china-numbers-novel-coronavirus-intl/index.html?ref=silkroadintl.net)I remember being all excited about democracy and change via her protests in Burma while I was in college. She has turned out to be just another corrupt politician. ### The "New" China Threat URL: https://www.silkroadintl.net/the-new-china-threat/ Last updated: 2026-07-18T14:48:19.000Z Here is the challenge, presented by Huawei to the world: [If you think we're a company of (potential) spies and a security threat, then publicly prove it!](https://beta.scmp.com/comment/insight-opinion/world/article/2178974/accusers-must-prove-china-tech-companies-are-risks?ref=silkroadintl.net) Here is a not so polite, and rather hostile answer. [But an answer that I factually don't disagree with.](https://nypost.com/2018/12/22/how-arrest-of-chinese-princess-exposes-regimes-world-domination-plot/?ref=silkroadintl.net) > In short: ““All organizations and citizens,” reads Article 7 of China’s National Intelligence Law, “must support, assist with, and collaborate in national intelligence work, and guard the national intelligence work secrets they are privy to.” All Chinese companies, whether they are private or owned by the state, are now part and parcel of the party’s massive overseas espionage campaign.” This, the CPC, is why everyone is scared of Chinese companies, visiting scholars and students. The people (and likely most of the private for-profit companies) are not evil or even have any bad intentions. But the govt is actively weaponizing them. By law, it can force them to serve state interests even if the individuals themselves don't want too (and historically has used family detentions, public shame, arrests, threats, etc. to do ensure cooperation). Requests to pass on sensitive data from an employer become hard to ignore when the CCP threatens your mother's job or your father's freedom back home in China. Increasingly often, Chinese state security is “influencing” Chinese living abroad. The weaponization of individuals starts innocuously, with the reality that most business people in China join the CPC (Huang estimates that it’s as much as 80% of C-level individuals), typically for better access to government officials, loans, permits, etc. The argument for joining not being a display of party loyalty, but that it’s just a practical reality of China—if you want to (return to) work in China you need the connections that the CPC provides its members. But a more complete understanding of this membership is that everyone that is committing to the CPC for practical and not ideological reasons is thus also in effect calling out the CPC, that their membership, and the CPC's rule, is only perfunctory: “We’ll commit on paper to your ideology but we neither believe it nor really want to participate in it; we simply recognize that we need membership in your organization to make money.” The result of this is that the CPC wins either way; members are a committed communist ideologues or they are trapped in a commitment with Leninist security state that can use their membership, however insincere, against them whenever they need. And the unfortunate reality is that this intimidation is extending to the larger PRC Chinese population as well. Chinese citizens' ability to travel domestically, get a passport and/or clear customs, fly, stay in top-hotels, ride bullet trains, get bank loans, buy a car or apartment, start a business, or even send their kids to a private school or public college are all linked to ideological status—social credit (at one of many different levels of tracking). The social and physical status of “normal” Chinese citizens, those without party membership, is increasingly tied to the CPC, and the influence of the CPC via corporations and individual foreign “assets” (CPC’s term for Overseas Chinese) is increasingly and rightfully regarded as potentially dangerous. It sucks to be a PRC Chinese right now—and it’s the fault of the CCP. P.S. [Happy Birthday Mao.](https://pjmedia.com/instapundit/316806/?ref=silkroadintl.net) ### The CCP & US Policy on Chinese Immigration and Espionage, Part III--Epilogue. URL: https://www.silkroadintl.net/the-ccp-us-policy-on-chinese-immigration-and-espionage-part-iii-epilogue/ Last updated: 2026-07-18T14:48:20.000Z This is an epilogue written in the months since the original article. Part I with [the original article is here](https://www.silkroadintl.net/s/blog/wp-admin/post.php), Part II with [the editor's comments is here](https://www.silkroadintl.net/s/blog/wp-admin/post.php).Increasingly, Chinese outside of China are expressing feelings of “uncomfortableness” about their perceived foreignness. The trade war is said to be inflaming stereotypes and skepticism about the intent and commitment of ethnic Chinese outside of China to their host/home countries. Governments in Australia, New Zealand, and the US have come under attack by Chinese and other rights groups claiming that they are enacting policies that are increasing racism and inciting hysteria by treating all ethnic Chinese as if they were spies of the CCP and the PRC. This is truly unfortunate, as they all certainly are not all spies, and should have both the same rights and protections as others--namely innocent until proven guilty. My wife is from China and I have children that were born in Hong Kong and my family of 6 has lived in China, Hong Kong and Taiwan for years. The disparaging remarks made about ethnic Chinese in general is hurtful, ignorant, inappropriate and misdirected. All governments, including China and the US, have the right to protect their sovereignty and security. At the same time complex multivariate issues concerning race need to be handled delicately and thoughtfully (i.e. not via twitter). My personal opinion is that until last month there has been far too little criticism leveled at the CCP and the PRC government for attempting to literally turn all ethnic Chinese into objects of concern for foreign governments. The growing fear of ethnic Chinese, not just China’s government/CCP, is the result of a decades-long conscious United Front campaign to merge the concepts of "Chinese people", "Chinese history", "China" (the country), the "Chinese government", and the "CCP" into one singular entity. (The recent campaign in western China claiming that “we’re all Chinese,” is just the latest example.) Practically, this means that criticizing the policies of the Chinese Government is (instrumentally) interpreted by the CCP as being racist. Not accepting the CCP’s claim of 5000 years of continuous history is similarly read as being an enemy to both China and “the truth”. Having opinions that differ from official PRC policies on any one of numerous political issues (Tibet, Taiwan, Tiananmen, South China Sea, South Tibet, Falun Gong, et al) is interpreted as wanting to split China, being racist and "offending the Chinese people" (every one of them no matter where they live—how is that even possible?). Even my suggestion here that the CCP has actively promoted a unified and limited definition of Chineseness, which has been academically documented for years now, has been called out (see previous post) and will likely again be labeled as paranoid and racist. As recently as August, China has officially requested that all ethnic Chinese around the world support the official positions of the CCP (speech by Zhao Leji, Aug 29, 2018, paraphrase: call on ethnic Chinese, including citizens of other nations, to support Beijing’s national interests and President Xi Jinping’s Chinese Dream for national rejuvenation; SCMP 25/09/18). The WSJ noted, > “Beijing targets the Chinese-American community in particular, the report says, viewing them as members of a Chinese diaspora with an “allegiance to the so-called Motherland.” Not only does this impede Chinese Americans’ freedom of speech, it also creates the risk that they will be viewed suspiciously within the U.S. even though few may accept Beijing’s directives, the report says. The report urges against demonizing any group of Americans or visitors to the country.” > Typically, when anyone does not agree with the call to arms, the CCP claims that the offender is either “forgetting their roots” or being racist—as if the CCP was the sole determiner of all things Chinese. Indeed, that is their position and desire. Dictators are like that. I love China and I love the Chinese people, particularly my own family and extended family, many of whom still live there. I have spent decades of my life in China and Taiwan and have many friends in each place. But I do not make my political decisions based on where my wife was originally from or the ethnicity of my children, to do so would indeed be racist. But the CCP is asking for just that, pressuring ethnic Chinese and others to specifically associate ethnicity with nationality and a single political party with "Chineseness". Declining the CCP’s request on intellectual, historical, or any other grounds is tantamount to being labeled a race-traitor to or an enemy of China. This strict positioning unfortunately reinforces the perceptions that China is indeed attempting to weaponizing Chinese citizens abroad--enlisting them, regardless of their personal political proclivities, into the CCP's cause. How should foreign governments responded to the massive scale of this relatively new behavior? Attempting to document the source of the concern, namely the CCP, is a start. ### The CCP & US Policy on Chinese Immigration and Espionage, Part II--Editor's Discussion URL: https://www.silkroadintl.net/the-ccp-us-policy-on-chinese-immigration-and-espionage-part-ii-editors-discussion/ Last updated: 2026-07-18T14:48:19.000Z **UPDATE 10.12.18:** [From the article, Google's China Problem is America's China Problem:](https://www.bloomberg.com/amp/opinion/articles/2018-12-10/google-in-china-does-it-need-dragonfly?ref=silkroadintl.net) Larry Diamond, a senior fellow at Hoover, told me: “If you understand how China operates, it would be shocking to the point of disbelief if they were *not* in an organized fashion trying to penetrate Google.”And this: "Chinese citizens are subjects of a totalitarian government. This does not mean that every Chinese national at Google is a spy or a plant. It does mean that Chinese Googlers are more likely to face pressure from their government than Googlers who come from more open societies. Just like the old Soviet Union, the Chinese state views its people as its appendages. " To be fair, the Chinese government itself calls the Overseas Chinese "Assets" not appendages.\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_This is a compilation of emails with an editor about the article that I[ previously posted in Part I.](http://silkroadintl.net/blog/?p=1773&preview=true&ref=silkroadintl.net)**Discussion with editor** Hi David, The situation is indeed messy, as you say, but some of the sources you cite make unsubstantiated claims or offer opinions I think are flat-out wrong. I'm also surprised by some of the conclusions you draw from otherwise solid observations. This point here for instance -- "Since successful businesses in China still often rely on influential relationships, many Chinese claim practicality as the initial impetus for joining the CCP" -- seems to support the idea that one shouldn't be justified in placing individuals under suspicion, because joining the party is indeed a matter of practicality and doesn't fit into the rather extreme "CCP is weaponizing its citizenry" narrative. I don't think it's at all justifiable to put private Chinese citizens -- even those who are CCP members -- under the same umbrella of suspicion as ZTE execs or criminals. It's paranoia, is what it is. And I think instead of calling for vague "more effective measures," you'd be well served to come out and call this paranoia simply what it is: unhealthy and unbefitting of a first-world democracy. The first third of your article is headed this direction, and it's something I feel many people can get behind. The middle third undermines your initial (and stronger) point. Anyway, the situation is messy, but I'd try to convey that by addressing the paranoia that has arisen from overblown fears over Chinese espionage, etc. But I'd only want to proceed with edits if we were in agreement that these fears are indeed overblown. Let's discuss if not. Best,EDITOR\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_Dear EDITOR,Thank you for your comments. I’m quite pleased with your willingness to both spend time responding and openness in sharing your concerns and opinions. I’m very interested in your reading of the “first third” of the piece and have re-read it a number of times to try to understand your positioning. Sincere thanks for sharing this. Let em responded to each point, not to debate, but to try to find a position that works for each of us. First, I agree that it’s quite messy. Innocent citizens are bing caught up in a mess that is actively being created by the CCP and is being inappropriately responded to by the US HNS. But that is not the entire story, and to leave it at that (or even less, as you seem to suggest) is, I think, incorrect. I’d be glad to present both academic work that points to broader issues that need better thinking as well as use personal anecdotes to highlight shortcomings. Second, I don’t know that we have to agree to have a well edited piece—that may be my misunderstanding of your site’s goals though. I think that my conclusion states clearly that I don’t know what to do but SUGGEST that only a specific segment of people are targeted—not all Chinese. Third, in that vein, I do not think that it’s justifiable to place private citizens that are not members of the CCP under an umbrella of suspicion. But if the CCP continues to specifically use C-level executives and academics in positions of influence to achieve political goals in foreign countries, as Brady documents with extreme detail and academic rigor, then I can see the result being a logical policy position that is not paranoid. Fourth, joining the CCP for guanxi and practicality is certainly a very diverse and not easily simplified occurrence in the PRC today. I have family that are members. I have friends in the US that joined and have never thought about it since. Joining the party may indeed be an innocuous practical act by many/most. But it is not seen as such by the CCP. And there is also extensive evidence that Party members are the first to be contacted for United Front work abroad. Additionally, the extent of corruption in China is undisputedly rooted (or at least fostered by) party connections—party affiliation is not just for social relationships. Finally, the original FP article did not take into context Chinese influence, and I am not willing to make the same mistake. Having said that, I am not pleased with current US immigration policy, but I am also very much not in the camp of everything in the current US policy arena is ignorant BS and should be considered in a vacuum. US immigration has been a mess for decades, not just the last two years. The issue is at times ignored and at other times focused on too much. But if the direction that you’d like this piece to take is that the fears about Chinese CCP members are both somehow similar to what’s happening on the Mexican border and are also unfounded paranoia then we likely won’t agree. Personally, I’m fine not agreeing. But I’m not fine putting my name on something that is not representative of my understanding of current issues. I’m willing to adjust and listen/study to your opinions if you’d like to move forward. I do hope that competing personal views are an acceptable position. I’d be more than happy to use only academic sources and not dumb down the piece for general consumption if your main concern is unsubstantiated claims. At the very least, I very much appreciate this opportunity to have you read and respond—thank you. I hope that we can reach an agreement. Thanks! DD\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_Hi David,Your thoughtful and comprehensive response is much appreciated. I don't have access to Brady's paper, unfortunately, but would be interested in taking a look. I think there's a way forward, but perhaps less academic would be better. But before we get to that, let me address our disagreement real quick. All that you say is correct in theory, but even if CCP interference/influence is playing out at the scale that some researchers insist, it's still, in my opinion, worth it to actively argue that it doesn't matter, because the vast, vast majority of people going to the U.S. from China, even party members, have no interest in being "spies" or whatever. Wray's comments are frankly incendiary, and it's somewhat unprecedented for the director of a national security organization to bring what is a high-level conflict between governments -- anti-espionage, essentially -- into the civilian realm. Casting suspicion on all "Chinese students" (essentially what he did, without saying it outright) feels like a terribly irresponsible thing for someone with his power to do. Your piece is academic and presents both sides, and does its due diligence, but I might be encountering a little difficulty converting it to an article for a consumer media platform precisely because it's arguing two sides. 1) Immigration policy is bad, and is exacerbated by (what I think are overblown) suspicions; 2) the Chinese government's influence campaign is causing increased suspicion. I see those as competing positions ...The other thing is, when I first approached your piece, I thought it might be an op-ed -- which would be great -- but now I think it actually defies that genre. (It remains slightly too academic.) As an op-ed, the conclusion "something must change with U.S. immigration policy" feels incomplete. How must it change? If we set ourselves to answering that specific question, we'd then have a structure and a specific, op-ed-esque direction forward. Which is to say -- sorry if we're just circling back again -- the parts about CCP influence seem like they should be a caveat, limited to two or three paragraphs, as opposed to a central argument (one of two central arguments, as it were). What do you think? EDITOR\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_DEAR EDITORGlad to hear back from you!! Again, thanks for this. Here are my thoughts. I think, our general disagreement is three fold. First, you want to point to scale, and I want to point to scope. Certainly ALL Chinese students and business people are neither CCP members nor spies. But that is not my claim, nor Wray’s (this is a weak straw man at best). In my opinion, more important than both these points is the larger context of China’s understanding of what the CCP calls “its assets” abroad—students, business people, and the overseas Chinese community. You’re right in saying that lumping everyone together is problematic. I agree. But I also think that you’re also being too dismissive of the context and the sheer number of incidents by people who are not “spies.” You want to put the blame for individual issues on Wray's comments. Not only is the timing incorrect to support that positions but, in my opinion (and I think I can document quite extensively), the comments are a response to China’s changing the nature of the traditional espionage more than a decade ago. The recent US (and global) response to China’s United Front work is a secondary (and oft-times clumsy) reaction to China’s fundamental reinterpretation of everything from the definition of “Chinese,” to filial piety and nationalism (the CCP’s words), to actual corporate and international espionage by Chinese who are not “spies,” to extraterritorial force and coercion. Chinese citizens abroad are the victims of the policies of both governments. Second, I feel like you want my piece to say something that I didn’t necessarily intend—that’s not wrong or necessarily a problem, it’s your reading, but it is also different than what I intended. Originally I had hoped to balance the individual anecdotes caused by poor US policy and procedures with the documented reality of increased CCP activity. If that’s a story that we can tell, I’d like to work with you. If you only want the personal stories of Chinese in the US to use as critique of the US without global Chinese context then I’ll have to pass. Third, I likely don’t write very well, and as a professional editor you noticed that immediately. I’ve apparently mixed two stories. I apologize for this. While for you it may be just a frustration, for me it’s been both embarrassing and also very interesting to see your focus on anecdotes over more substantial materials (and that’s saying something since I’m an anthropologist!). I realize that the confusion and frustrations are likely a function of my poor attention to your site’s audience and direction. As I stated before, I’m fine with disagreement. I’d still like to see what we can do. I more than willing to write a piece that is less academic, but not one that presents individual events out of a larger context. Please let me know if you think we can move forward. Thanks!!DDHere’s a copy of [Brady’s Magic Weapons piece](https://www.wilsoncenter.org/sites/default/files/for%5Fwebsite%5Fmagicweaponsanne-mariesbradyseptember2017.pdf?ref=silkroadintl.net) too.\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_Hi David,Thanks for sending Brady's piece. I agree with it, generally. "Chinese citizens abroad are the victims of the policies of both governments" is a thesis I could get behind. I just hesitate slightly because I fear it will be hard for some readers -- who, if they're in the U.S., are already inundated with anti-Chinese espionage talk -- to understand that we're not trying to blame the victims. I think you and I aren't quibbling all that much over facts\*, but framing. The "documented reality of increased CCP activity" is a fine story to tell, but it almost seems like we don't need to tell it in the context of immigration. But also, that's a story that's been told quite often -- I can see it turning into one of those "China narratives," like "Beijing's air is bad," which newspaper editors outside China might return to with regularity because it sells. You writing is good, and I appreciate both the chance to read it and to have this discussion! Best,EDITOR ### Update on Part 1 of CCP, US Immigration, Espionage, etc. URL: https://www.silkroadintl.net/update-on-part-1-of-ccp-us-pol/ Last updated: 2026-07-18T14:48:18.000Z Since I posted on Wednesday the world has published a ton of articles all agreeing with my position. OK, they aren't responding to me, we just all happen to be writing about the same topic. But it’s nice to know that the opinion that I developed in July, and which was rejected by an editor (in China), now seems to be more correct, or at least more in-line with what other scholars are also saying. Since Wednesday:[**Hoover Institute**](https://www.hoover.org/sites/default/files/research/docs/chineseinfluence%5Famericaninterests%5Ffullreport%5Fweb.pdf?ref=silkroadintl.net)[**SupChina**](https://supchina.com/2018/11/29/chinese-communist-party-influence-ops-real-threat-or-imaginary-reds-under-beds/amp/?ref=silkroadintl.net)[**NPR**](https://www.npr.org/2018/11/29/671796941/beijing-is-pushing-hard-to-influence-u-s-views-of-china-report-says?utm%5Fsource=twitter.com&utm%5Fmedium=social&utm%5Fcampaign=npr&utm%5Fterm=nprnews&utm%5Fcontent=2058)[Good take (h/t SupChina) on why we are where we are.](http://www.settimananews.it/italia-europa-mondo/you-wronged-thinks-the-us-of-china/?ref=silkroadintl.net)I would add here that it's not just that China has not accepted the US world economic order, the US disappointment in China is based on the now-outdated concept that neoliberal economic expansion and opening up would/should/always does lead to similar political opening up. It has not. And, to be honest, most Chinese I talk with don't think that it should either. Very few Chinese that I've spoken with over the years think that China is "ready for democracy. " They may be disappointed or even angry with their govt, but that doesn't mean they think that today's China is ready to be democratic.[E**XACTLY what I’ve said**](https://mobile.reuters.com/article/amp/idUSKCN1NY1HE?%5F%5Ftwitter%5Fimpression=true&ref=silkroadintl.net)—it’s not fair to them (the students), but it’s also not fair to not lay much/most blame for the current situation on the CCP itself. "Every Chinese student who China sends here has to go through a party and government approval process," one senior U.S. official told Reuters. "You may not be here for espionage purposes as traditionally defined, but no Chinese student who’s coming here is untethered from the state.” ### The CCP and US Policy on Chinese Immigrants and Espionage. Part I URL: https://www.silkroadintl.net/the-ccp-and-us-policy-on-chinese-immigrants-and-espionage-part-i/ Last updated: 2026-07-18T14:48:19.000Z **The following is an article that I was asked to submit to a journal, and the following posts will detail the subsequent review process that ultimately led to my withdrawal of the submission. I feel that the article was thoughtful but certainly needed some help and direction. You’ll see the editor agreed with some of that assessment. The difficulties came when the direction of the editor and my original thesis diverged. So, I’ve waited a few months and am now positing the entire article and conversation with the editor here. I have also added an epilogue that reflects some of the continued concerns and issues facing Chinese and the US/China relationship.** **First the article, and then the editor's comments, and finally the epilogue--three separate posts over the next few days.** **Original Article** David Dayton, is a Ph. D candidate in Global Sociocultural Studies at Florida International University, and is currently conducting dissertation research into Chinese corporate cultures in Thailand. He has a MA in Asian Studies focusing on Thai urban religious practices and an MA in Southeast Asia Cultural Anthropology focusing on Thai corporate cultures. He is a consultant for Silk Road International and has more than 20 years of professional experience in Greater China and Thailand. **The CCP and US Policy on Chinese Immigrants and Espionage.** The Foreign Policy (FP) article [*Don’t Close the Door on Chinese Scientists like me* (Foreign Policy, June 4, 2018),](http://foreignpolicy.com/2018/06/04/dont-close-the-door-on-chinese-scientists-like-me/?ref=silkroadintl.net) has appropriately received much attention for its well written and impassioned plea for a better system of immigration to the US. I whole heartedly agree with the expressed sentiment and empathize with the writer’s plight. I am very sympathetic to Chinese immigration and the struggles of living with uncertain status in America and navigating the process of becoming an American citizen. Problems with immigration to the US have certainly impacted the quantity and quality of applicants and have made the process more daunting than is necessary for all involved. I strongly believe that there should be significantly more opportunities for families and educated professionals from all countries to legally immigrate to the US. At its core, the greatness of the US has always been found in those immigrants who arrive specifically to make their own lives better—and in the process make the US better as well. In my opinion, the opportunity to immigrate to the US should be enhanced and incentivized and opened up. **US IMMIGRATION ISSUES** My own life has been directly blessed by immigrants to the US. In 1913 my great grandmother, at age 13, immigrated from Denmark through Ellis Island. As a child, I remember her teaching me Danish songs and rhymes and telling stories about her life before America. Additionally, my wife is originally from China and is now a US citizen. Like many, her citizenship process was straightforward and just took a prescribed amount of time to complete. Both of these wonderful women have loved both their home countries and their adopted home. My family and friends have also experienced some of the horrors of US immigration as well. My adopted daughter is also from China and is still working through the citizenship process. Unlike my wife’s application though, my daughter’s immigration process has been tortuously difficult, expensive, and at times actually terrifying. In one communication with USCIS, we were accused of violating the Hague Convention on human trafficking! Additionally, the paperwork for one of my biological sons, who was born in China, required paternity tests (plural), multiple interviews (arguments) with embassy staff, and weeks of delays in getting his Certificate of Birth Abroad. Just this last year, a colleague had to quickly arrange emergency flights back to China for his family rather than them being formally deported due to paperwork mistakes—mistakes made by US immigration officials. His family was thus forcibly separated for months. An immigration officer at LAX once put his hand on his gun, stepped in between my wife and I, bumped my chest, and told me to “step back” as I was translating questions from the immigration staff to my wife on one of her first visits to the US. He then, in Cantonese, threatened my wife saying that if I talked to her again we would both be put into a holding room and would miss our connecting flight. I told him that I understood what he had said and would file a report on his comments and behavior. He responded by telling me that this was my “last warning” and if I spoke again I would be detained. **Transnational Chineseness** Though immigration proceedings in the US can be a scary, horrible mess, policy is not formulated in a vacuum. Specifically, the Chinese Communist Party (CCP) is making the immigration process increasingly and unnecessarily difficult for both individual Chinese as well as extended Chinese families. The current global context for citizens of The People’s Republic of China (PRC) abroad can be summarized as government, rather than individual, centric (Ng, 2018). "For the Communist Party, there is no distinction between its business executives, spies, police chiefs, media stars, crime bosses and its politicians. The same people play multiple roles. Everyone, ultimately, is on the same team (Foxall and Hemmings, 2018).” Recent events in Australia and New Zealand specifically highlight how denying that the CCP under Xi Jinping has actively mobilized its transnational population of professionals, students and corporations (Dickson, 2013) is naiveté at least (Ohlberg, 2016) and willful ignorance at best (Brady, 2017). Since Xi’s ascension to power, the CCP has purposefully blurred the lines of what it means for individuals and non-governmental organizations to represent China and the CCP (Human Rights Watch, 2017). The CCP is purposely weaponizing its own citizenry via language and the definitions of China (Yang, 2008; To, 2014) and “Chinese” (Suryadinata, 2017), ethnicity (Zuo, 2018), media (Bandurski, 2018; Hilton, 2018; e.g. purchase of SCMP; SCO media forum), scholarship (Peterson, 2017), student activities (Allen-Ebrahimian, 2018; ), educational grants and investments (Johnson, 2018), economic and professional incentives (Leng, 2018), coercion and force (Dorfman, 2018; Economist, 2018; Palmer, 2018), corporate influence (Philipp, 2015; e.g. US Congressional fears over ZTE’s & Huawai’s government connections) and the nationalization of Chinese companies listed abroad (e.g. Angbang, et al), social movements abroad (e.g. 2008 Olympic torch demonstrations; Monk and Barme, 2008), extensive surveillance (Mitchell, 2018), and actual espionage (Myre, 2018; Miiller, 2018). There are currently more than 350,000 Chinese students in the US, more than 3.3 million total Chinese-born immigrants in the US (2010 US census), and the Chinese are now the largest single annual arrival population in the US (Lee, 2015). The author of the FP article calls for the US to avoid policies that police all Chinese, and instead suggests that the US should wait for individual “actions” to happen before targeting individual Chinese citizens. This call is both in line with traditionally espoused western legal values of equality and fairness and a more humanitarian approach—as well as being constant with current US policy (Williams, 2018). But it’s also too late. As the citations above indicate, extensive “actions” by the Chinese government and Chinese citizens in the US have already happened (Ignatius, 2018). News outlets have, as recently as this month (Wise 2018; Bing, 2018), detailed the depth and breadth of Chinese espionage in the US (Auslin, 2018). In a speech in Salt Lake City for China Town Hall 2017, former White House Fellow and Special Assistant to the US Attorney General Nelson Dong stated that there has been an “explosion of Chinese espionage cases in the US the last 5 years” (Dong, 2017). Closer to my home, security briefings for military personnel in Utah in 2017 and 2018 included information about land sales to overseas Chinese buyers in north western Utah County (Lehi city area). Security officials claimed that there was a dramatic increase in home purchases by Chinese buyers immediately after the announcement of the NSF facility—a facility with virtually no employees (personal communication, 2018). The activities of individual citizens is an issue because the CCP doesn’t treat individuals or corporations as private, but rather as “Chinese” (Suryadinata, 2017). As the recent concerns about Huawei and ZTE highlight, private Chinese companies are often not exclusive private. In China, corporate ownership is rarely transparent or straight forward and as much as 51% of ownership of private enterprises can be held by local, regional, and national governments, State Owned Enterprises (SOE), or other state actors (Dickson 2008; Huang 2008). Most successful business people are members of the CCP as well (Dickson 2010). And as early as the 1990s it was recognized that China was using students and academics for political purposes abroad (Bachelard, 2017). More recent accusations against both Confucian Institutes and “private” Chinese media corporations (Brunnstrom, 2017) show that the CCP has increased their use of these tactics in subsequent years (Brady, 2015). Many Chinese join the CCP in China for the networking (Zhang 2018) and other advantages that membership provides (e.g. access to loans and to powerful individuals, as well as better social credit scores). But after joining the CCP there are expectations for party members (Dickson, 2010). Since successful businesses in China still often rely on influential relationships, many Chinese claim practicality as the initial impetus for joining the CCP (Browne, 2014). Anyone planning on a professional future in China will need to maintain these practical party relationships. This same sense of pragmatism also becomes the impetus for continued participation in CCP sponsored actives overseas (Seo, 2018). And once a member, always a member as one can never resign from the CCP (Brady, 2017). Reducing the number of visas for Chinese in the US will, as the FP author points out, likely increase the exodus of Chinese graduates from the US, enflame tensions between the two already-feuding countries, encourage China’s nationalistic drive for independence in technology, not to mention increase incidents of racism in both countries. Some observers are already calling the ZTE case China’s “Sputnik moment” (Yuan, 2018). If this is indeed the result, likely more Chinese will be returning to China to support “Made in China 2025” regardless of US policy. But US immigration isn’t the singular culprit in a loss of China’s best and brightest—the US wasn’t retaining Chinese graduates or professionals even before this recent spat. Since 2013 the numbers of Chinese students staying the in the US after graduation has dropped from 92% to 45% (Forbes, Jan 2018). The massive economic opportunities in China, as well as significantly weaker research regulations (Bloomberg News, 2018) and China’s call for their own foreign students and professionals to return (Kelly, 2018) has influenced the return migration of tens of thousands of Chinese graduates. "On June 27, 2018, the Center for Strategic and International Studies (CSIS) reported on how China’s own laws affect how businesses and individuals must interact overseas, “First, China’s cyber security preferences are impacted by its own National Intelligence Laws. These national laws require that: ‘All organizations and citizens shall, in accordance with the law, support, cooperate with, and collaborate in national intelligence work, and guard the secrecy of national intelligence work they are aware of. The state will protect individuals and organizations that support, cooperate with, and collaborate in national intelligence work.’”" (Chinascope, 2018) (This paragraph was added after the editing conversation.) Building on these laws, President Xi and the CCP have specifically told Chinese students and academics (Fuze and Lim, 2017), business people and influencers (Anderlini and Smyth, 2017), corporations (Laskai, 2018), and international organizations (e.g. World Internet conference, World Overseas Chinese Entrepreneurs Conference, SCO,), that they are expected to support the homeland and follow the party (Economist, 2017; Suryadinata, 2017) and “tell China stories well” (Xinhua, 2016). According to one of my Chinese interviewees, this means that Chinese “feel a responsibility to only say good things about China” (personal communication, 2018). Furthermore, CCP policies and practices are directly influencing corporate decision making (Lim and Smith, 2018) as well as individual Chinese (Ching, 2016) living abroad, and consequently, the governments of the countries they are living in. The combination of this complex Chinese identity and nationalism (Johnston, 2016) cum espionage increasingly affects foreign policy and the lives of Chinese individuals and families. In the NBC interview that the original FP article was responding to, FBI Director Wray said, "To be clear, we do not open investigations based on race, or ethnicity, or national origin,” he said. "But when we open investigations into economic espionage, time and time again, they keep leading back to China”” (Williams, 2018). Regardless of country of origin, immigration policy based on race is wrong. Period. By pointing out issues with the CCP I’m not defending US immigration policy and I specifically do not want to see a return to the past racist policies of the Chinese Exclusion Act. The FP author clearly and correctly points out that significant and systemic mistakes have been made in US immigration policy regarding Chinese in the past. But the CCP is also actively exploiting the cultural loophole of US opposition to race-based immigration policies. In that light, and within the context of increased global Chinese espionage, the US must find a better immigration policy as well as more effective measures to counter the CCP influence. Because of my family’s own experiences, I can truly empathize with I hurt for those caught up in the current disaster that is US/China immigration policy. I’m not sure that there is a perfect or even practical answer, but a starting point would be to clarify current policy provisions that seem exclusionary and racist. Another step could be to consider treating Chinese individuals that are members of the CCP the same way that corporations with ties to the Chinese government are currently treated—with appropriate suspicion and scrutiny. Whatever the specifics ultimately turn out to be, something must change with US immigration policy or the loss of scientists and other quality Chinese individuals will be the least of the US’s concerns. **Works Cited** Allen-Ebrahimian, Bethany, China’s Long Arm Reaches into American Campuses. Foreign Policy, March 7, 2018\. Anderlini, Jamil and Kamie Smyth, The West grows wary of China’s influence game, Financial Times, December 19, 2017\. https://www.ft.com/content/d3ac306a-e188-11e7-8f9f- de1c2175f5ce Auslin, Michael, China v America: The espionage story of our time. The Spectator, Coffee House, January 29, 2018\. Bachelard, Michael, The party line, in “China’s Operation Australia,” Canberra Times, 2017\. https://www.canberratimes.com.au/interactive/2017/chinas-operation-australia/soft- power.html Bandurski, David, Breaking the grip of western newswires. China Media Project, June 3, 2018\. Bing, Chris, Chinese hackers stole sensitive U.S. Navy submarine places from contractor. Scoop News, June 8, 2018\. www.cyberscoop.com. Bloomberg News, Chinese workers abandon Silicon Valley for riches back home. January 10, 2018\. Brady, Anne-Marie, China’s foreign propaganda Machine. Kissinger institute on China nd the United States, October 26, 2015\. https://muse.jhu.edu/article/595922 Brady, Anne-Marie, Magi Weapons: CHina’s political influence activities under Xi Jinping. Conference paper, Arlington Virginia, September 16-17, 2017\. Accessed online May 2018\. Browne, Andrew, Review—The Great Chinese Exodus. The Wall Street Journal, August 16, 2014\. Brunnstrom, David, U.S. Congress urged to require Chinese journalists to registrar as foreign agents. Reuters, November 15, 2017\. https://www.reuters.com/article/us-usa-china-media/u-s- congress-urged-to-require-chinese-journalists-to-register-as-agents-idUSKBN1DF0HU Chinascope, Chinafornia, online access: http://chinascope.org/archives/16448. Ching, Frank, Beijing seeks loyalty from ethnic Chinese settled abroad, Business Times, May 4, 2016\. Dickson, Bruce J. China’s Cooperative Capitalists: The Business End of the Middle Class. In China's Emerging Middle Class, Beyond Economic Transformation. Pp. 291-309\. Cheng Le. ed. Washington DC: Brookings Institution Press, 2010\. Dickson, Bruce J. Wealth into Power: The Communist Party’s Embrace of China’s Private Sector, New York, Cambridge University Press, 2008\. Dong, Neilson, China Town Hall presentation, Salt Lake City, October 11, 2017—Author’s own notes. Dorman, Zach, The Disappeared. Foreign Policy, March 29, 2018\. https://foreignpolicy.com/ 2018/03/29/the-disappeared-china-renditions-kidnapping/ Economist, The subtleties of soft power: China is spending billions to make the world love it, The Economist, Beijing, March 23, 2017\. Economist, The, Forbidding Kingdom: China’s law-enforces are going global. The Economist, Beijing, China. March 31, 2018\. Foxall and Hemmings, June 3 2018, SMH, Chinese strategy in full force in Australia, https:// www.smh.com.au/politics/federal/chinese-strategy-in-full-force-in-australia-20180603- p4zj7p.html. Furze, Anders and Louisa Lim, “Faustian bargain”: defence fears over Australian university’s $100m China partnership. The Citizen, September 2, 2017\. Hilton, Isabel, When China rules the world. Prospect Magazine, June 2018\. Huang, Yasheng Capitalism with Chinese Characteristics: Entrepreneurship and the State, New York, Cambridge University Press, 2008\. Human Rights Watch, The cost of international advocacy: China’s interference in United National Human Rights Mechanisms. United States, 2017\. Ignatius, David, China’s fingerprints are everywhere. Opinion, The Washington Post, January 9, 2018\. Johnson, Natalie, CIA warns of extensive Chinese operation to infiltrate American institutions. Free Beacon, March 2018\. www.freebeacon.com/author/natalie-johnson/ Johnston, Alastair Iain, Is Chinese nationalism rising? Evidence from Beijing. International Security, Vol. 41, No. 3, Winter 2016/2017, pp.7-43\. Kelly, Luke, How China is winning back more graduates from foreign universities than ever before. Forbes, January, 25, 2018\. Laski, Lorand, In drive for tech independence, Xi doubles down on civil-military fusion. China Brief, Vol. 18, Issue: 8\. The Jamestown Foundation, May 9, 2018\. https://jamestown.org/ analyst/lorand-laskai/ Lee, Erika, What happened to America’s other illegal immigrants?, Zocalo Public Square, Time Magainze online, July 8, 2015\. http://time.com/3949424/chinese-immigrants-u-s/ Leng, Sidney, Need a Personal Loan? Sure, if you’re a Communist Part member. SCMP, June 12, 20018\. http://www.scmp.com/news/china/policies-politics/article/2150451/need-personal- loan-sure-if-youre-communist-party-member Miiller, Andrew, Chinese spies steal U.S. tech Secrets. The Trumpet, Trumpet Brief, April 16, 2018\. www.thetrumpet.com/authors/61-andrew-miiller) Mitchell, Anna and Larry Diamond, China’s surveillance state should scare everyone. The Atlantic Daily, February 2, 2018\. Monk, Paul and Geremie Barme China experts Paul Monk and Geremie Barme analyse the China situation. Lateline, ABC News, Friday April 11, 2008\. Myre, Greg, China’s spies. NPR National Security, Heard on Morning Edition, February 9, 2018\. Ng, Teddy, Fears about Chinese influence grow as More powers given to shadowy agency, South China Morning Post, Front Page, International edition. 21 March 2018\. Ohlberg, Mareike, Boosting the Party’s Voice: China’s quest for global ideological dominance. Merics China Monitor, Merator Institute for China studies, 21 July 2016\. Palmer, Alex W., The case of Hong Kong’s missing booksellers. The New York times Magazine, Beijing, April 3, 2018\. https://nyti.ms/2q3tMXF Peterson, Rachelle, Outsourced to China: Confucius institutes and soft power in American higher education. A Report by the National Association of Scholars, April 2017\. Philipp, Joshua, EXCLUSIVE: How hacking and espionage fuel China’s growth. Epoch Times, September 14, 2015\. Segal, A. (2018). How China is preparing for cyberwar. The Christian Science Monitor Sonne, Paul, China hacked a contractor and secured a trove of highly sensitive data on submarine warfare. Washington Post, June 8 2018\. Suryadinata, Leo, The rise of China and the Chinese overseas; ISEAS Publishing, Singapore, 2017\. To, James Jian Hua, Qiaowu: Extra territorial policies of the overseas Chinese, in Chinese Overseas (book 8). Brill Academic Publishers, 2014, p.122\. Williams, Pete, FBI director Chris Wray, in NBC interview by Pete Williams, Mar. 22, 2018\. Accessed June 9, 2018\. Wise, David, America’s other espionage challenge: China. The New York Times, Opinion. March 5, 2018\. Xinhua, President Xi urges new media outlet to “tell China stories well.” Global Times, December 31, 2016\. Yang, Bao’an, “Zhongguo younan, huaren zhiyuan, Zaobao Xingqitian, June 8, 2008\. 杨保安， 中国有难，华⼈人⽀支援， 早报星期天。 Yuan, Li, ZTE’s near-collapse may be China’s Sputnik moment. The New York Times, June 10, 2018\. Zhang, Yangyang, Party People: What kind of students join the CCP? Sixth Tone, June 14, 2018\. http://www.sixthtone.com/news/1002438/party-people-what-kind-of-students-join-the- ccp%3F Zuo, Mandy, Ethnic Chinese and want to live in China? Find out if you qualify for new five-year visa. South China Morning Post, January 29, 2018\. ### Adaptation vs Innovation? Maybe it’s the wrong question. URL: https://www.silkroadintl.net/1767/ Last updated: 2026-07-18T14:48:19.000Z One of the critiques of China is that it doesn't have a creative, innovative domestic business environment. But two recent articles made me question whether that is really necessary, or even advisable, for China or other countries trying to play catch up to the US. (I don’t have room to discuss the advantages of a dictatorial state directing the economy in this piece.)[First is an article about WeChat,](http://www.scmp.com/business/article/2129987/tencent-takes-aim-apple-and-google-app-stores-wechat-mini-program-push?ref=silkroadintl.net) a mobile chat app in China that now boasts 980 million global users. What makes it unique is that it was first an adaptation of chat apps on iPhone but has since evolved into it's own platform that allows users to download and run apps within the WeChat app itself. It's amazingly popular and successful with a ton of advantages, not the least of which is that it has basically created it's own ecosystem that users don't have to leave to lead a digital life. The platform allows for smaller apps to run simultaneously, so, for example, it allows for payment to retail and/or individual users by letting individuals to split a restaurant tab 4 ways via instant transfers and then pay the retailer. You can hail a ride, read the news, posts to social media, edit photos, pay bills, and so much more all in the same app. The WeChat platform is THE business platform for China-related business today. You cannot deal with Mainland China in any meaningful way without WeChat. Outside of China, other than with PRC expats, it is slowing expanding, incorporating Hong Kong and Taiwan into social circles that China's other government-sponsored soft power resources haven’t otherwise been able to do. Basically, you have to have WeChat to interact with (PRC) Chinese people. The CCP has taken notice of that and structured laws to incorporate anyone that uses the app and censors any conversation that it deems problematic via both corporate liability requirements as well as government censors. Expect both control of and use to expand as digital ID cards on WeChat are coming soon. Second, is a [WSJ article about CRISPR gene splicing.](https://www.wsj.com/articles/china-unhampered-by-rules-races-ahead-in-gene-editing-trials-1516562360?ref=silkroadintl.net) It was invented and pioneered in the US. But due to regulations in the West, actual testing has been taken over by China. 85 patients so far in China since 2016 vs 0 in the US and 0 in the EU. For me the highlights of the article are that China is both equal to the US in ability to perform this type of cutting edge work AND that it has no qualms about moving forward with trials. There are 1.5 billion Chinese ("enough and to spare" to paraphrase Chinese friends of mine) and they all want a better life--but a different better than the US. The US is worried about equality, information (patients rights), legal and health consequences, processes to make sure that it's as safe as possible in the long term. For example, regulatory hurdles have still not been overcome after years of dedicated work to meet FDA demands, while Chinese doctors apparently received approval after a single Power Point presentation. The Chinese government is specifically oriented to passing the US in high-tech within the next 20 years. And they have little to no experience with the legal issues surrounding many advanced processes or human rights. In fact, they don't really care about legal or HR issues--and at this point that inattention is giving them a huge advantage moving forward. For decades now my fear has been that China will eventually take over the world just by shear numbers and by dint of the way those billions are accustom to doing business. With the financial and political backing of the State and the lack of regulations or Human Rights concerns, the opportunities for China to dominate are quite literally endless. On a related note, [Chinese money is affecting the Indian Tech industry as well.](http://www.scmp.com/business/companies/article/2129873/money-chinese-tech-firms-deciding-indias-next-unicorn-say-venture?ref=silkroadintl.net) It's happing in Cambodia too--Chinese money is overwhelming both local competitors as well as the local government institutions. It's not just that the Chinese are outbidding other rivals, but that with the backing of the Chinese state they are investing such massive amounts directly, or indirectly via related projects, that they are taking over entire industries—mostly strategic infrastructure projects that benefit both the host country and China. Some of these projects are leaving host governments with limited resources to pay back Chinese investment loans (Sri Lanka) or a Chinese dominated sector that then becomes a security issue (Nepal, Pakistan). ### National Security and Chinese Businesses URL: https://www.silkroadintl.net/1763/ Last updated: 2026-07-18T14:48:19.000Z **National security fears.**With two large Chinese projects being halted or terminate in the US this last month (ANT and Huawei), the specter of Chinese state sponsored corporate espionage was center stage. US and Chinese analysts are all pointing to a “trust gap” in the US with Chinese investors. Specifically, the fear is that “decisions are not being made by Chinese businessmen in China, but rather government interests in Beijing.”China shouldn’t be surprised about politics influencing business and trade when just about everything in China, from rap music to computer hacking, can be officially considered political activities. The investment and business environments in China are equally controlled by the State and participation is often highly political for both domestic and international corporations. Additionally, he US has legitimate fears about CCP influence in large Chinese Tech companies: e.g. the 5 year and long-term plans to dominate global tech markets, a recent history of extensive corp espionage, "made in China 2025," laws that force Chinese companies abroad to have CCP reps as board members, opaque corporate ownership laws, government involvement in erstwhile private Chinese companies, government sponsored hackers, tech companies linked to military (Huawei), etc. The standard Chinese response is that the US either misunderstands the situation in China or that the innocent Chinese businesses are being used as political pawns to keep China down and the US on top. Specifically, the Chinese claim that that most investment money coming to the US is from entrepreneurs and corporations looking for legitimate business opportunities and that the US is simply a hegemon in decline or racist or both. This fact that there is legitimate monies coming from China to the US is both true and misleading at the same time. Yes, most Chinese investors in any international businesses venture are entrepreneurs and likely have honest and even deeply capitalistic intentions. No doubt many of them want as little interference from either the US or Chinese government as possible as well. But that is defiantly not always the case for a significant percentage of Chinese entrepreneurs. Three specific caveats need to be made when discussing Chinese businessmen and business and their relations to various levels of government in China.**First, what is a private company in China?**You might think that private means just that, private: no public shares and no governmental investment or official ownership connections. And in the US you’re correct. But you’d be wrong to conclude that private in China means the same as it does in the US. There are a number of reasons why this is so. To begin with China has only had aspects of a market economy for less than 40 years. This means that until the early 00s almost all corporations either came from former SOE’s, TVE’s, the military, or governments. Most private companies are still tightly connected to government or military at some level. And while many private companies do not have overt connections to the state, most are connected personally, professionally (as suppliers, partner-companies, buyers, borrowers from or lenders to) to the various levels of government and as such have responsibilities to the state that would not be expected in the US. Indeed, in China more than 50% of a “private” company can be owned by government investors (individuals or agencies or their representatives) and still be considered private (Huang, 2008). Government connections and ownership are especially common for any company from sensitive or priority industries (banking, finance, electronics, automotive, aerospace, communications, et al). Additionally, in China, these and many other industries are fiercely protected from foreign competition.**Second, Red Hats.**An astonishing percentage of Chinese entrepreneurs are also voluntary members of the CCP—as many as 70%! In China these party-member entrepreneurs are called Red Hats (红帽). Joining the CCP isn’t like joining a political party or registering to vote in the US. Joining the CCP means that you swear (even if it’s insincere and purely practical) allegiance to the CCP, denounce any religion, and pledge to support the Chinese state, among other promises. These Red Hats can be, and increasingly are, called on to fulfill their covenants outside of China--just last week HNA sponsored a meeting for the swearing in of Party member-employees across their offices in China. More on that below. Xi has recently called on all CCP members, specifically businessmen overseas, to represent the party and the state and stay loyal and true to their commitments to the party. What does that mean exactly? Many of the Chinese that I’ve interviewed, as well as accounts I’ve read in academic publications (Huang, Pei, others), all point overwhelmingly to the fact that membership in the CCP provides access to government projects, loans, inside information, and to necessary and important individuals. Membership is a practical necessity in China—if you want to do business in China, you need to have access to the connections, officials, money, and whatnot that is part of doing business with the bureaucracy in a socialist state. Indeed, many conclude that corruption (political connections) are one of the major reasons for the growth and stability of the Chinese 40-year economic miracle. Without the social connections that party membership provides, non-Red Hat businessmen are eliminated from the limited opportunities that are provided via local governments and national 5-year plans. This is capitalism as Chinese have known it for the past 40 years. And this understanding becomes important when going abroad because Chinese don’t automatically flip a switch and assume that everything in country X is going to fundamentally different than what they are used to—and when going to lesser developed countries many of their prior experiences in China are repeated. Like anyone, prior successful behaviors are repeated until they prove unsuccessful.**Third, “Follow the Money.”**While doing research on Chinese companies overseas, I had the ex-military, Red Hat founder of a Chinese tech company in Guangdong Province give me this piece of advice. If you want to know who is now and who will be soon making money, “look for the piles of money.” Meaning, look to government investments priorities, contracts, incentives, projects, plans, and sponsored industries for China’s economic leaders. The people that know where the government is spending money are now or soon will be rich/successful, he said. With some insider-information and the right connections “the money flows like water.” Though he complained that this hurt truly independent startups, he was also actively chasing government money (and was himself fantastically wealthy). This doesn't mean that all private contractors that work on Chinese government projects are "insiders" or CCP plants or even Red Hats. But most of them are at least well connected to the government AND are Party members.**Fourth, The United Front.**In the last year alone, governments in AUZ, NZ, the EU, andthe US (as well as a few African nations) have proposed laws against foreign influence in politics, focusing specifically on Overseas Chinese who have been accused of illegal influence in domestic political spheres. These cases have lead to high profile political resignations in AUZ and NZ. Chinese journalists may soon be required to register as foreign agents in the US too. Reading the details, these cases highlight how private citizens are supported by the CCP and encouraged to promote Chinese interests abroad (i.e. subvert domestic interests in favor of PRC positions). These government-supported subversive activities are not just limited to political activities either. Student groups, “privately held” Chinese newspapers, businesses, academic journals, among many others are all areas where CCP influence is being promoted, encouraged, and where individuals that do not support the "correct positions are being threatened. One unique example is the fleets of private fishing vessels in the South Chinese sea that are paid to act as a de facto floating militia—purely private in ownership, but available for political/military activities and financially supported by the state. Competing businesses, with Taiwanese ownership or sympathies, are often blackballed (other Pro-Chinese businesses and individuals are encouraged to freeze them out of markets). Another example is the Confucian institutions that are slowing spreading to universities around the world. On campuses students and professors are “encouraged” to support and research pro-PRC issues, and those that do not are ostracized, limited in access to funds or research opportunities in China, or are directly or indirectly (via their families back in China) threatened with other consequences for not being loyal to China. When the largest financial supporter of China-centered research on campus is the Confucian Institute, pressures to support specific positions carry significant weight. Called The United Front, propaganda and influence activities (covert and otherwise) are all part of an overt official international campaign to unite overseas Chinese with the PRC. At the recent Global China Town Hall, I asked about the influence of Chinese politics limiting scholarship and/or individuals at universities in the US. The topic was immediately dismissed out of hand and my question was not discussed further. In private follow-up conversations with professors and students at multiple universities it is acknowledged as both real and a growing influence. Some universities have closed existing Confucian Institutes and others are denying the formation of new ones—but the money that backs these institutions is extremely hard to ignore. Add to the culture of Red Hats entrepreneurs and the active United Front campaign the increasingly international electronic surveillance of the new social credit systems and you have a global 24/7 Orwellian network tracking calls, chats, friends, business and social and political activities, monies, and the locations of Chinese businessmen and their families and employees. How is Chinese business not political? Certainly not all Chinese are part of a global CCP conspiracy and not all Chinese companies are actively participating in corporate espionage either. But many are active in supporting PRC positions out of a sense of both patriotism and personal opportunity (and maybe even a sense of self preservation as well). Many Chinese under 40 are increasingly nationalistic as well. The US and other countries are right to be wary of the fact that loyalty to the CCP is likely a practical if not personal priority of many Chinese that want to be successful and/or want return to China and continue in business or politics at some point. ### Questions about how do deal with a Global China (in Hong Kong) URL: https://www.silkroadintl.net/questions-about-how-do-deal-with-a-global-china-in-hong-kong/ Last updated: 2026-07-18T14:48:20.000Z I love to listen to the witty and very knowledgable banter of Kaiser Kuo and Jeremy Goldkorn over at the [Sinica Podcast on SupChina](http://supchina.com/series/sinica/?ref=silkroadintl.net). I’ve been listening to these guys for years now—long before they started SupChina when it was still hosted at Pop-up Chinese (and also long enough to know that they are much more knowledgeable about China than their poor puns and re-reading of the week’s Caixin News on the [Caixin-Sinica Business](http://supchina.com/series/caixin/?ref=silkroadintl.net) Podcast would suggest—yuck). These guys have an engaging rapport with one another, they are funny, extremely well educated, very experienced in China, and have GREAT guests and the best recommendations. They typically ask timely and provocative questions of their guests too. If you’re not subscribed to the [Sinica Podcast from SupChina](http://supchina.com/series/sinica/?ref=silkroadintl.net), then you are truly missing out. These guys and their podcasts really are a great China resource and my only complaint is that we don’t get enough of them. More, please! (No, I get nothing for shamelessly promoting them.)But a couple of weeks ago I was stuck by the simple answers from a guest that seemed to be allowed without much follow up (except, of course, for Jeremy badgering the guest about how they were going to make money—we still don’t know). I couldn’t stop thinking about the conflict of interest presented and so I put my thoughts down in this short blog. Listening to [Gary Liu, the new Editor in Chief (EiC) of the South China Morning Post (SCMP), talk with the SupChina guys](http://supchina.com/podcast/gary-liu-ceo-south-china-morning-post/?ref=silkroadintl.net), it’s clear that he’s pioneering a new path through the mire that is Hong Kong-China relations. But it’s also clear that there are some real unanswered questions in his presentation of journalistic objectivity, independence, and integrity at the SCMP.Now I am not questioning the integrity of the paper, Mr. Liu, or any of the staff. But I am not sure I can comprehend his explanations about how the paper plans to navigate its complex relationships with China. Granted, I’m neither a journalist nor do I have to manage cross-border (cross-customs?) relations. But I’ve interviewed scores of people that do and I’ve also worked in China with an office in Hong Kong (and Bangkok) for most of the last 25 years. My “China-sense” is up when I hear somewhat vague explanations of how to manage professional/governmental relations.**First**, in terms of content that offends China, according to Mr. Liu there is an identified but undefined line that he explicitly said the paper wants to go up to but will not cross. He says they will not back down covering controversial content, but that there is certainly a line they are aware of. He states that this act of act of self-censorship (my term, not his) shows that the paper has both editorial independence and moral integrity. Come again? If the paper is willing to do, just to be polite, what it claims it will not do under duress, how is that being independent? Further, how can anyone go right up to a line, if it’s not clearly defined? And, if there indeed is a content-specific line that someone else (the CCP) has defined for the paper, then the paper is explicitly not independent, right? The integrity in the editorial process that comes from this awkward position is, at best, limited to accepting fuzzy standards set outside of their own boardroom (and country?). In the Mainland, Hong Kong is widely considered to be the spoiled step-child that will eventually be taught a lesson. That they still publish on topics that Beijing doesn’t allow Mainland papers to cover doesn’t mean they are independent, just not yet reprimanded.**Second**, the SCMP does not make a profit and doesn’t expect to any time soon (nor do they know exactly how they eventually will, if ever). All of their funding comes from their new owner, Alibaba, as does all of the physical hosting of their archives and content—which, by the way, has now been transferred 100% to the Alibaba cloud servers (in China). For the moment, lets ignore related news from just this last year that will likely directly affect this relationship: Online editing of historical and academic archives by the CCP. Tracking of journalists and citizens inside and outside of China by the CCP. Kidnapping of journalists/booksellers by the CCP. The CCP’s United Front’s desire to “tell a new story” for China. Demands by Xi et al that Hong Kongese and other overseas Chinese are loyal to China. And, of course, the new Orwellian Sesame Credit program of the Chinese government, pioneered by Chinese companies, including Alibaba. Back to the SMCPs cloud and money, or lack thereof. The purchase of and hosting of the SCMP by Alibaba means a couple of significant things. Despite what the EiC says, monetary control is editorial control. The SCMP is specifically controlled by Alibaba who is unapologetically influenced by and works tightly with the Communist Party and government in China to develop, ironically, systems to monitor the conversations and movements of Chinese citizens (which Hong Kong citizens are specifically considered to be). Chinese newspapers in Australia have been affected by China’s content control though they are not owned by Chinese companies (and are significantly further away than is Hong Kong). To think that this won’t be, at some point, a significant issue, is (imo) naive. While the EiC stated that as of yet, they have never been told what to write or not to write, there is a line that they will not cross and the paper is willing to commit it’s financial future to those that define that line, i.e. Ant Financial (Alibaba) and the CCP.Within the context of the government's desire to control media and rewrite history, that the SCMP archives is hosted in China, where it is also banned, should be a huge red-flag in the face of independence (pun intended).**Third**, the new EiC said that he and the BOD have want want to "tell a different Chinese story.” This is almost a direct quote from Xi Jinping’s United Front plans; and un-ironically, Xi’s words were directly targeted at the CCP’s guiding of the media’s presentation of China and China-related issues outside of China. The perception of China outside of China is the specifically identified audience of the SCMP. What does it mean that the paper wants to tell a better Chinese story? According to Xi, they want to present the PRC specifically in a light that is not (as) negative and that is not (as) critical. In other words, a presentation that is not (as) deeply investigative, but is more positive of the CCP’s version of Chinese history, politics, and other social issues. Saying that the SCMP wants to tell a different Chinese story than what they were previously telling highlights the CCP’s desire to challenge any independent coverage of China outside of China. Further, the fact that new ownership, directly or indirectly, has made a break from the prior China story that was told in the SCMP strongly suggests that we will explicitly not be getting the same quality/style paper—there’s a New China Story in town, and it’s being authored by Xi and the CCP.Let’s be honest, any agenda that is set by one’s own object of investigation is a conflict of interest. That the CCP is that subject and has its own explicit agenda for Chinese media outside of China means that the EiC is either not willing to publicly recognize the obvious conflict or worse—he believes it really doesn’t exist. It is folly to think that the SCMP can have Alibaba paying for the production of content, hosting all archives, presenting the same position as the CCP, agree to undefined content limitations, and still claim to be independent.**Finally**, the EiC says that he’s committed to serving the paper’s Hong Kong base and the interests of Hong Kong. But what happens when that base and those interests are in direct conflict with the idea of telling a “better” China story (i.e. the PRC is not infringing on Hong Kong’s independence or violating in anyway the 1997 agreement)? Yes, they have indeed covered protests in the past, but next time there are demonstrations, and the PRC weighs in (either with words or bodies) how critical or inquisitive or exposing can the SCMP be? That the EiC doesn’t know what will happen if this occurs highlights both the conflict of interest as well as the questionable independence of the paper in the face of a conflict with China. And this is the biggest concern I have: the EiC says that the BOD of the SCMP has not even prepared for a future “existential conflict” (when somebody from Alibaba, or higher up, calls and says that "xyz is over the line"). How can the SCMP be independent and truly have integrity but not have prepared for that specific call? If there is a chance that that call could come—don't they have to already have an answer ready? When the SCMP is supposed to be defending, or at least being loyal to its Hong Kong base, a base that is regularly in direct conflict with the Chinese mainland, the absence of even a discussion of what position the paper will take shows a lack of commitment to both integrity and to Hong Kong. ### Readings and other Conversations URL: https://www.silkroadintl.net/readings-and-other-conversations/ Last updated: 2026-07-18T14:48:20.000Z Over the last month in Shenzhen not only have I been blessed to have a very cooperative and generous host company allow me to observe their daily work, but I’ve had the wonderful opportunity to interview another 15-20 individuals, foreign and Chinese, about their own personal experiences with Chinese Business Culture (中华企业文化). People have literally given me hours of their time and shared personal and professional insights that I never would have considered on my own. I’ll share a couple of their insights from others, mingled with my own analysis.**On Govt. Chinese Engineer/Businessman, leading a publicly listed tech company.**You have to follow the money in China—and it’s all coming from the govt and being directed into specific places. The good part of this is that specific industry and sectors and regions that need help are targeted and develop faster then they otherwise would. The bad is that there are govt gatekeepers guarding the money (and making profit off of access) and that the there are limited funds in the economy for other developments. Uneven development, and over-interest in targeted sectors is the result. Corruption too.**On Chineseness. Taiwanese Businessman, working in a Chinese company (5+ years).**There is a certain cachet in being foreign in China—Taiwanese included. He can use his foreignness to get out of some difficult situations, but nothing like Westerners (occidentals) can. While he can get out some legal situations because it’s too much trouble for public employees to deal with a “foreigner,” at other times, especially in social situations (after hours work drinking activities) or informal business transactions (“gifts” to gain access) he is expected to be Chinese. Like a taxi drive told me yesterday, “You’re a foreigner, You just don’t get it.” I have a built in excuse for not participating in some activities. As a Taiwanese citizen of Chinese descent, he does not have the same degree of leeway.**On Tech. Ex-Chinese Military Engineer, leading a successful tech company.**Despite the fact that he’s spent his life in this company, he’s putting his money in foreign baskets—literally. He’s moved his family to the US and made sure that his investments and retirement are there too. He’s here to make money, but doesn’t expect this (the rapid growth of China) to last and is concerned about the instability and other issues here (pollution, corruption, censorship & control). He tells me that I don’t have any idea how deep the connections between the private sector and the military extend. Much of the tech industry in the country is originally “borrowed” from the West, improved and then re-copy righted (not new). But why it’s allowed, he says, is because it (“borrowing from the West) is supported by the govt so the tech can be sold back to the military via a vast network of related and intermediary companies.**On organizational culture and relationships. Chinese Educated Foreigner, working in a Chinese company (10+ years).**Rather than there being large differences in organizational structure here, this guy talked about how interpersonal relations color professional interactions here in significantly different ways. Ideas and methods for both dealing with relationships and problems are different—understanding what’s actually happening (vs what is being said) is the key to understanding Chinese corporate culture, he thinks. “Managers” are hired because they have connections and/or seniority, rather than professional skills. This works fine when they are in Chinese companies as the expectations are for them to “manage” relationships rather than “do” work. But foreign companies either don’t get the relationship management aspect of Chinese business or the need for “managers” to be hobnobbing with big-wigs more than creating spreadsheets. Conflict often ensues when expectations and reality do not align.**On Gender Roles. Foreign Professional Women, working in a Chinese company.**Chinese women's’ social and professional roles in China are different from both Chinese men’s and Western women’s, even though Chinese women are now equally well educated and many have not taken time off for children (no career breaks). Even among women, the expectations for other women is different than what is expected of/for men. For example, she noted that Chinese women can be “cute” for much later in life than can a man—and that she doesn’t fit this ideal-type is noticeably off-putting to superiors. Dress and hobbies can be relatively less (relative to the West) mature for women without impacting their social status in a professional office. This extends to different standards for dress as well. While the white/blue dress shirt, slacks and leather belt/shoes/bag combo for men is almost mandatory, almost anything goes for women—from shorts, to mini-skirts, to prom dresses, to club-wear, to casual dresses—all are common office attire.**Two of my own thoughts**The fluidity of the Chinese individual amidst so much seeming chaos. People, traffic, calls, family, work, more people, constant WeChat conversations, and still more people makes business here seem to me to be more overwhelming and fast-paced than it was just a few years ago when I was here full time. The concentric focus of priorities (recognizing both where power/influence comes from and what can actually be controlled/accomplished) is emerging as a key to managing time, relationships/hierarchy, and responsibilities. Without the ability to actively ignore much of the chaos that surrounds individuals in China, I think that distraction and inefficiency would result. Second, What are “Chinese values” today. This phrase is in the news almost daily. President XI mentions it all the time. Many think it’s the “cause” for Chinese business success (ironic since it was seen as the cause of China’s lack of economic success prior to the 80’s). It’s much easier, I think to list of what are not current Chinese values today than what are. If pressed, I can list off the traditional Confucian values of propriety, filial piety, thrift, patriarchy, and likely add in guanxi to manage external relations, as well as wuwie (or inaction) for dealing with conflict. But do those values resonate today? I’m seeing A LOT of change in current professional environments. How does conspicuous consumption fit into “Traditional Chinese Values?” How does the ubiquitous WeChat (distant and somewhat impersonal communications) mesh with the need for close interpersonal relationships? How has the population policies and increasingly western entertainment/professional environments affected the traditional family and persona roles? If you want to comment, I’d love to hear from you—what do you think of Chinese Corporate Culture (中华企业文化)?**Reading Recommendations:**Since I’m here doing research I’ve had and increasing number of people ask me for book recommendations. I’m not always sure that what I’m reading is of much interest to others but in case it is, here is a list that I’ve started to put together after multiple requests over the last month. These are mostly books that I have remembered I really like or have used in my own research (as examples and/or sources).**Books about the Chinese Business Environment:**Capitalism with Chinese characteristics, HuangWealth into Power, DicksonChina’s Cooperative Capitalists, DicksonMarketing Death, ChanCapitalism without Democracy, TsaiFactory Girls, ChangChinese Capitalisms, Chu**China history:**The Search for Modern China, SpenceChinese Lessons, PomfretChina: Fragile Superpower, ShirkThe Tian\*\*men Papers, Liang, Nathan & LinkAll 4 books by Peter Hessler (especially River Town)China goes West, BackalerChina’s Second Continent, FrenchAge of Ambition, Osnos**Chinese Anthropology:**Chinese Modernity and the Individual Psyche, KipnisSocial Connections in China, GoldAnxious Wealth, Osburg (“real,” on the ground stories/experiences)Chen Village, Chan (why I decided to study Chinese Anthro)Gifts, Favors, and Banquettes, Yang (my favorite book on China)Elite China, LuFrom the Soil, FeiChina’s Emerging Middle Class, Li**Other Social Sciency Stuff:**Golden Arches East, WatsonThe Geography of Thought, NisbettSacred High City, Sacred Low City, Heine (my FIU MA advisor)You gotta have Wa, Whiting (baseball in Japan, a fun read)Globalisation and Japanese Organizational culture, MitchellThe Structure of Scientific Revolutions, Kuhn (social science theory)The Constitution of Society, Giddens (social science theory)Lovelorn Ghost and the Magical Monk (Thailand), McDanielImpact of China’s Rise on the Mekong Region, SantasombatYou might also want to be listening to the Sincia Podcast (Supchina). Also, if these guys at Sinica and Caixin would put their business podcast on iTunes, I’d recommend that one too.**Fiction and US History** (really the only things I make time for other than research and family are Triathlon training, the NBA, US history, Crime fiction, Chocolate, and documentaries):The Girl with the Dragon Tattoo series, LarssonAnything by John Le CarreThe Monuments Men, EdselLost in Shangri-la, ZuckoffUnbroken, HillenbrandTeam of Rivals, GoodwinThe Book of Basketball, SimmonsEVERYTHING! by David McCulloughAnything by Malcom GladwellAnything by Michael LewisAnything by Joseph J. EllisAlexander Hamilton, ChernowALL Documentaries by Ken Burns (new Vietnam doc coming out this summer)Awfully Chocolate (dessert shop from Singapore, used to be in SZ, now 3 stores in HK and also GZ).**Current Summer Reading List (heavy on SEA):**Chinese Society in Thailand, Skinner (classic)Chinese Encounters in Southeast Asia, Nyiri & TanThe Overseas Chinese of Southeast Asia, Rae and WitzelNew Asian Emperors, Haley, Haley & TanUnlocking Leadership in Thailand, Roongrernsuke & LiefoogheThe Way Thais Lead, PersonsChina’s Disruptors, TseGlobal Body shopping, Xiang ### What's the Difference Between a Duck? (AKA: Nonessentialized Chinenessness) URL: https://www.silkroadintl.net/whats-the-difference-between-a-duck-aka-nonessentialized-chinenessness/ Last updated: 2026-07-18T14:48:21.000Z **What’s the Difference Between a Duck?**When I was a kid my dad used to always joke around and ask me this question. We’d be in the car or at dinner and he’d get serious and look me in the eyes and then say, without any hint of a smile, “What’s the difference between a duck?” For years I never said anything other than, “A duck and what else?” and he’d just repeat the question with a big smile on his face until I just gave up frustrated. When I was a teenager I realized that there was no wrong answer—and there was no right answer either—and any answer would stop the annoying questioning. I was reminded of this question as I had the opportunity to listen to a sales professional from Taiwan speak to a group of businessmen and educators about working in China last week. He’s a well educated professional and has done business in Shenzhen for a number of years. In his presentation he made a point that I’d never heard from a Chinese before, and it got me thinking. He said, “Foreigners have a racial/cultural excuse when they want to get out of something or want to say no to something here in China. We (Taiwanese) don’t have that option. We’re expected to be Chinese, just like they are.”This reminded me of the experiences of an ABC (American Born Chinese) woman that I knew that worked in here in Shenzhen about twenty years ago. She was born and raised in a Chinese immigrant family in the US and went to a PAC 10 school on an athletic scholarship. though ethnically Chinese, she was, in her own words, “more American than Chinese.” She came to China with an MBA and was fluent in Mandarin. She had a good job (title) and was excited to be here, the land of her ancestors. She originally hoped that this would be a real educational experience for her—she would learn about her family and China and she expected to learn to love her Chinese ancestry. Unfortunately for her, the opposite happened. She was frustrated that she was expected to play a very specific (and for her, limiting) role—one that she did not fully understand. Being seen as a (local) Chinese woman, meant that she was expected to be, “less than the men.” She told me that she had more education and more work experience than most people in her company but she was seen as not only a junior employee but a woman as well—meaning she was even less than the junior men. She was explicitly told that she was supposed to dress “pretty” (according to local standards) and that she should keep her head down and fit in, rather than stay to stand out and try to get ahead. As an athletic, rather tall, culturally American, educated woman, playing this role was too tall a request and eventually proved to be impossible for her. She told me that she “understood the words” that were being spoken to her, but she “didn’t get the hints” behind them. She looked and sounded “Chinese” and so was expected to play the role that she physically resembled. But she didn’t fully understand her part, and the more she learned the less she agreed with the expectations being placed upon her. She eventually left China and got a job working for a US company (in the states) and an interlocutor between Chinese and American businesses. The Taiwanese professional that I heard speak this last week had a similar point to make. He “looks” the part and so is supposed to play the role. Those that don’t look the part, foreigners, are given great leeway (read: allowed to bumble though negotiation protocols that Chinese are expected to know). It’s just assumed that foreigners don’t know what’s going on and so get a pass. For me at this time, this highlights a scale of Chinese and foreignness—it’s isn’t as simple as you are or you’re not Chinese. Ditto being or not being foreign—although this is a bit harder “not to be.” I have a buddy from the States that went to college here and has lived most of his adult life since age 18 in China. It’s been decades for him in China and he consciously recognizes that returning to the West is a “foreign” experience for him. While he’s occidental and will never be considered “Chinese” by the locals here, he himself feels more comfortable here in China. So what is the difference between a duck, or in this case, a Chinese? Culture isn’t a racial, or ethnic, or even geographic distinction—those it’s often used colloquially as such. It’s learned set of behaviors and ideals that are specific to a time and space. “He’s Chinese,” or “She’s Hong Kongnese,” or “He’s an ABC” point to location, a nationality or an ethnicity as the defining cultural markers that are often generalized across a large spectrum of people with a similar attribute. But this is not only essentializing but problematic to recognizing cultural differences and understanding how these differences in affect understandings and behavior. To see how this might look in another context, think about claiming that Americans all have something culturally generalizable and significant in common other than a common nationality—though even that would likely be understood differently. Generalizing third generation immigrant Cubans living in Miami, Bill Simmons from Boston, my ranching-family from Wyoming, multi-generation Mormons in Arizona, Japanese immigrants living in San Francisco, or someone of African-American descent in Atlanta would certainly be too general and/or completely inaccurate to give any real understanding of culture in America. China needs to be understood in a similar way to the diversity in the US or the EU—a collection of very different small countries and groups rather than a singular cultural and historic monolith. Chinese working in the company (where I’m conducting research) are from more than 12 difference provinces and speak 7 different “native” languages before their common-use language, Mandarin. Some are urbanites with educated parents, some are from (much) smaller hometowns, and some are first generation college grads from large east-coast cities. Within the employee pool there are stark generational differences, with some being graduates of the best colleges in the country and some who were forced to skip years of school due to politics. Of course there are economic differences as well—significantly influencing how life in Shenzhen (the highest per capita GDP city in China), as well as rapidly developing China, is understood and experienced. Back to the Taiwan professional, he finished with a final thought about economic development and how it’s changing the cultural habits of urban professionals in China today. He said that drinking and eating out are popular here because there isn’t yet a culture of other social activities. For the most part, he said, the middle class in Shenzhen don’t yet go to NBA games with buddies. They don’t go biking or running with neighbors. They don’t golf on weekends with their professional counterparts. Classes, church groups, home improvement projects or yard work are just not part of most urban lifestyles in China. While these types of activities are increasing as disposable income rises, they’re not yet anywhere near the norm. But food and drink are relatively cheap, are available everywhere, are extremely convenient and require no special training, have been culturally acceptable for generations, and can accommodate any size group or type of group. The point isn’t that there are problems with China, or that this Taiwanese professional’s and the ABC’s experiences are standard. Rather that there are likely as many definitions of Chineseness as there are Chinese. Many MBA types might exasperatedly exclaim, “Well what the hell’s the use in knowing that everyone different?! What can we generalize and apply across people and industries and cities? My answer? Difference. Each experience will be as unique as the people participating. Don’t overly generalize urban Chinese or the Chinese experience. Don’t assume that your experience in Beijing will be repeated in Guangzhou. I realize that this isn’t a new concept. I actually wrote about this years ago—the generational and regional differences in China. But I think that it’s still true, despite the standardization of education, the increasing control of the media and the seeming globalization (Westernization) of Chinese cities. There is much localization of neoliberalism that makes for unique adaptations to globalism. Diversity may not “look” the same here as it does in the West, but that doesn’t make it any less of a reality in Chinese businesses.**Post Script:** As I’m typing this blog up in a local Starbucks, there is a saleswoman pitching some electronics and her company to a client from a phone company in Zhejiang. The guy has just arrived in SZ and has been waiting for her here for about 1/2 an hour. They’re sitting in the seats right next to mine, him next to me and she across the table from us. They are talking about parts and standards and markets. About 15 minutes into the conversation, she pauses for effect and says, “The truth is that foreigners think differently and have different expectations than we do.” At this comment, Chinese guy on the other side of me, studying for some US graduate exam, and I both look up at her and I catch her eye, right as she continues to say, “Foreigners just don’t think the same way that we do.” And while I’m looking right at her, with a kind of surprised smile on my face, she says in Chinese to me, without skipping a beat, “Excuse me for that“ (buhaoyisi, 不好意思). In Chinese I say to her, “No need to apologize" (Buyongkeqi, 不用客气). She smiles and then just continues right on with the sales pitch to her client about how we think differently and how that makes our markets different. At this, the Chinese student laughs and smirks. The sales lady talks for another 20 minutes and then, despite me trying to start a conversation with her on her way out, she doesn’t make eye contact with me and continues with her client; and I’m left without the follow up questions that I was hoping to get. ### 5 Years Later...Back Home in Shenzhen. URL: https://www.silkroadintl.net/5-years-later-back-home-in-shenzhen/ Last updated: 2026-07-12T08:00:14.000Z After a few years in school, being back in Shenzhen, where I lived for almost a decade, has been an enjoyable readjustment. I moved back into our own home in Futian and now conduct PhD research in an office very close to where my own office was a few years back. My routine hasn’t change that much. But Shenzhen has. A couple of general observations. First, the pollution seems to be much less than it was before. There have been, so far these last two weeks, multiple days of clear blue skies. Streets seem to be cleaner and less covered with trash. To me this is major. As people are actively planning career moves away from Beijing because of pollution ([Doing Business in China: Pollution puts a Chokehold on Business Owners](http://www.caixinglobal.com/2017-05-10/101088265.html?ref=silkroadintl.net)) this is a positive for Southern China—which I’ve always claimed was better for Business than Northern China anyway (further from Beijing and it’s controlling govt, closer to HK and it’s legal rights and int’l connections, longer history of development and capitalism, a “freer” attitude, int’l business history, etc.). Of course this decrease in pollution can be seen as either a victory for govt regulations and clean-up efforts, or a sign of the slowing down of the economy and the shift of manufacturing away from Guangdong Province. It’s probably some of each. Either way, it’s cleaner. Second, in the last ten years the subway in Shenzhen has grown from 2 lines with about 20+ stops to 10 lines with more than 200 stops. I've had some [personal history with the subway](https://www.silkroadintl.net/the-joys-of-living-in-china/) that wasn't all that positive, but I have to admit that it's quite convenient now. I use it every day that it rains--which is a couple days a week right now--when I'm not on a bike. Third, when I lived here before bikes in the city were illegal. Now? You can’t get out your front gate without tipping over rows of public bikes—Mobike, Bluegogo, ofo, etc. There are literally tens of thousands of bikes parked on the streets—and thousands more moving through the streets at all times of the day. With a swipe of your phone and about 1RMB per ride, you can grab a bike off of any street curb and leave it at any other curb. [](http://silkroadintl.net/blog/wp-content/uploads/2017/05/fullsizeoutput%5F3a35.jpeg?ref=silkroadintl.net)They’re everywhere. Right now it’s “cool,” “new,” and trendy—not to mention convenient! Not sure how long it will last though. We’ll see what happens in 8-12 months when all these bikes start breaking down and rusting out; piling up on corners and against trees and buildings. There are already alleys that I pass when I jog in the AMs where I see piles of broken bikes. But there is real optimism as the smartest of these bike companies have already eliminated parking frames, tubes in the tires, chains, and other removable and breakable parts. Fewer things to break or steal means more use and fewer repairs. And of course, they’re selling advertising space on the bikes as well. Fourth, to paraphrase Fletch, “Awww. Come on, guys. It’s so simple. Maybe you need a refresher course. It’s all WeChat now days!” WeChat: all day, every day, until the sun goes out. On their bikes, while they do taiqi or run in the park, while driving, on dates, while eating, while talking on the phone to others—everyone seems to be using WeChat. It has become the norm for a billion people. It’s increasing a culture of atomization—as if Chinese citizens were not already atomized enough in cities (living next to others but without any connection to the people around them). Ironically, [foreigners seem to be using even more than Chinese!](http://technode.com/2017/05/17/foreigners-are-out-wechatting-chinas-most-active-wechatters/?ref=silkroadintl.net)The obsession with WeChat is understandable, because it’s SOOOOoooo efficient and convenient. You can do almost everything on WeChat—pay utility bills, pay for groceries, rent a bike, buy movie tix, chat, watch movies, use it as a facebook/snapchat equivalent, order coffee/flowers/books, order take-out food, check your bank balance, “see” a doctor, read the news, translate documents, park you car, take/edit/share photos, lock doors, monitor your kids at school, use maps, shop online, etc. It’s every single app on your US iPhone in one single app. That means there’re only one password and one bank account and one interface to EVERYTHING in your life. Every store you go into asks, “Cash or WeChat.” WeChat has replaced credit cards and is quickly replacing cash (except for in the subway). It’s amazing, and more than 1 billion people are using it everyday, all day long. As China grows, WeChat will too. Of course, it’s also very scary. The same company that has built WeChat (Tencent) is also working with the govt on China’s social credit system (Sesame). The govt is tapping into this digital resource to expand the enforcement of it’s new (started just last year) personal income tax. Not just everything you pay for, but everywhere you go, everyone you talk to, and everything you search for is recorded in one place. What could go wrong with that?!Fifth, the censorship is more extensive, but seems to be somewhat random. Sometimes my school email works, but most of the time it doesn’t. Ditto, but even more so for Gmail. Once or twice a week I can pull gmail. And google maps worked great last Sunday night but never before or since. A VPN works well, but that means that emails are not synced across devices—a pain, but better than not getting emails at all. I think that there is a real conflict in the hearts of Chinese people about this censorship. A good friend said to me last night, “There is only good news in China. Nothing bad. Only ‘China government blah blah blah.’ It’s really developed and convenient now but we don’t know any of the real news. We have lots of TV and internet but we really don’t know anything about China.”She’s right. It’s amazing how much news about China is blocked in here. Articles that are blocked that I’m linking to this AM include some foreign comments about China’s One Belt One road (OBOR) development in Thailand/Mekong region (Reuters), a questions about the slowdown of the Chinese service economy (Financial Times), all of the WSJ, Bloomberg, the NYT, as well as access to many scholarly document services. The entire Google universe is also blocked—maps, groups, email, search (but not google drive!?). Of course Twitter, Facebook, Snapchat, and Instagram are all blocked as well. Sixth, while the economic numbers are not bad, there seem to be a worsening case of under employment here. Younger people in “my” office are talking about how glad they are to have a job. For the first time in the PRC’s history millions of students that have been competing educationally since before first grade have now graduated. The result of that intense decades-long competition is highly qualified students going to relatively poor quality universities and increasingly getting degrees in fields that are not necessarily employable. China needs lawyers, engineers, accountants, computer technicians, and other technical people. And they can’t produce enough of those. And as they try to copy/compete with the West they're also starting to produce increasingly more history, philosophy, and area studies majors. The result is massive under employment in China right now--even for technical grads like engineers. Increased rates of college admissions and graduation combined with inadequate schools have produce too many poor quality graduates. Student with less-than int’l standard degrees can’t find full employment even in a good economy. Add to this the reality that economy has indeed slowed down (regardless of what the govt says) and what you get is coffee from 20-somethings with MA’s and foot massages from 20-somethings with BA’s. For example, I just got a foot massage in a shop next-door to a Starbucks in downtown Shenzhen. The guy working at the counter in Starbucks has a masters degree, but he's not the manager, and the girl that gave me a foot massage has a bachelors degree in Japanese. Both of these people spoke very comfortably with me in English. Neither of them are doing what they went to school for; both of them moved to Shenzhen for better opportunities after graduation but neither have been able to find degree-related work in more than a year of searching. The manager at Starbucks is completely frustrated. He doesn't know what to do or where to go—he can’t afford a car or house (read: can’t get married) on a Starbucks salary. The girl at the foot massage place, on the other hand, isn’t happy about her job, but couldn’t find anything else. She’s happily resigned though; she’s is making like $35 an hour with tips (yes, everything that she touches is below the knees). The money is so good now that she thinks that she'll continue to do foot massages for a couple more years before she goes to get a job in her major; and she only wants to find a job in Japanese so that she can “find a decent husband” and have face, because “nobody wants to marry a masseur.” I suggested to both of them that they start looking at jobs in other countries since there are so many businesses that are looking for educated Chinese/English (Japanese) speakers outside of China. It seems that China is still losing its best and brightest because it can't employ many of them domestically. Add to that most older people that are financially successful are actively moving their family and money out of the country (hence the govt’s limitations on the moment of capital abroad). Students with debt in China is also starting to become increasingly common event as well. Debt, underemployment, unrealistic expectations for marriage (a house and car), and the need to care for aging parents is going to frustrate an increasingly large number of young Chinese. I was talking with foreigner here and she mentioned that while she’s not working in her major either, she’s making good money and the opportunities and adventure in China are enticing enough that she wants to stay. ### Singapore as US Values Partner in SEA? URL: https://www.silkroadintl.net/singapore-as-us-values-partner-in-sea/ Last updated: 2026-07-18T14:48:21.000Z I had the very enjoyable opportunity to listen to two US Ambassadors to Singapore, Former Ambassador Steven Green who is a UofM alum and long-time resident of the Miami area, and also current Ambassador Wagar who lived/worked in SFL for a number of years prior to being posted to Singapore. Both were engaging, informed and interesting, not to mention willing to take questions and discuss regional issues concerning China/ASEAN/Singapore. Here are 10 things stood out to me from their more than 2 hours of comments and answers to questions. First, they are both absolutely pro-business and both see the professional and corporate world as a tangible extension of US foreign policy. Both were big TPP supporters as well. This is quite the contrast to the usual social science line that capitalism is THE reason for all the world’s problems. For these Ambassadors rather, capitalism is THE key to getting massive numbers of people out of poverty and promoting US interests abroad. And while there certainly are “quibbles about the number of ladders available,” as Amb. Wagar said, Singapore is example A-1 for the case that capitalistic meritocracy is the BEST option for the most number of people. Second, as democrats (both of them—political appointees of Clinton and Obama respectively) they openly pined for the “efficiencies of authoritarianism.” I really can’t keep up with most lefties as they switch from the values of a meritocracy to the advantages of unilateral policy decisions in getting things (notably, the Left’s social agenda) done. While both repeatedly took the relativist approach that “we can’t judge their brand of democracy or human rights” they also reminded us over and over that the US just doesn’t get things done like the Singaporeans do and should really learn a think or two from them. Now, I don’t doubt that Singapore has done many things successfully that the US could learn from. But, I really like my leaders (and academic speakers) to be a bit more consistent. Maybe this was the “gone native” part of the presentation that Ambassador Wagar warned us about? Third, Singapore was seen as THE strategic partner (but not Ally) in the SEA region. Most advanced air force, best education and economy, most transparent govt, best infrastructure, etc. But again, I found it more than a little questionable that Singapore’s “un-committed” political position was repeatedly praised as such an advantage to the US. While we certainly avail ourselves of the logistics available in Singapore, that they also facilitate transportation for NK and Iran and others makes me question the on-balance value to US interests of Singaporean neutrality (as opposed to housing logistical services out of the Philippines, for example). Isn’t the ease of mobility for transnationals of questionable intent one of the problems with BKK and Manila? How is the fact that it’s even easier via Singapore such an advantage? And of what value has Singapore’s air force and logistical support for the US been in the last year or so as China builds airstrips in the South China Sea (which both ambassadors condemned)? Exactly none. Because Singapore is trying to be politically neutral (and is 75% ethnic Chinese) they are actually limited in what they are willing to do (or allow the US to do from their ports). Fourth, “similar values” make the US and Sing natural partners. What values, you may ask, do the US and Singapore share? Why, transparency, efficiency, education, good governance, racial balancing and business success. According to the Amb's, these are traditional values (use you're own fingers for air quotes) that both the US and Singapore aspire to and these make us natural trade/political partners. When did any of these become national values to either country? Sure, they’re important business concepts….but national values? Further, these values that Singapore holds dear were placed in direct contrast to Indonesia and Malaysia (and I think you could add in the rest of ASEAN too) and their endemic corruption and “that’s how it’s done here” acceptance of bribery and cronyism. I agree that Singapore is indeed THE bastion of transparency in SEA, just about anyone would be compared with there other SEA countries—and this was their point: see how damn impressive Singapore is to pull this off in SEA!? But I’m just not buying that these are values held dear by either country. Or that other countries (Thailand, which means “free country,” or the mostly-christian Philippines, for a couple of counter examples) couldn’t work just as well as “value partners” if that really was the deciding factor in military-logistical decision making in SEA. Now if you just want to talk about business climate/infrastructure, then maybe Singapore does have the upper hand institutionally, but there are other issues to consider that I fear were glossed over too easily. Fifth, Singapore is a democracy but just not “our” kind of democracy; so those in the US that are a bit squeamish about HR abuses need to relax and stop being so judgmental. First, aren’t they our partners in values? I guess we should just forget about that whole “Asian Human (alternative) Human Rights issue? And second, whose claiming they should be a mini-US? Certainly no one at the presentation. And likely not any US businesses. Maybe conservative lawmakers would like to see more corresponding actual values between the two countries, but in general, I found this to be a straw man argument to allow for justification of Singapore's more severe politics and unique ideas about culturally specific “human” rights. It’s also a convenient way to mock an opponent by attacking a position that doesn’t really exist. Students won’t call these men on it and business people never want govt involved in the first place. This is likely a line that they’ve been using (successfully) for decades. Sixth, Singapore has gotten education and public housing and multi-cultural society right! And the US is basically just too parochial (stupid) to follow their lead. Oh, what could the US be with just a bit more Authoritarianism behind left-wing social issues?! (Did Thomas Friedman, village idiot, write their talking points?) While this may indeed be true, the accomplishments on education and what not, and that the US should overhaul it’s educational system, the finer point here is this: “what choices are made” to achieve 1.9% unemployment and almost universal post-high school education? I often chuckle that those who fault the US education system are products of the same (devaluing themselves and their own education with their comments). Further, when discussing Asia these same critics are often the ones who also point out how the US educational system is one of, if not THE draw for most Asians to the US. I don’t doubt that there could be MUCH more done to improve the system (K-12 specifically) in the US, but “what choices” are required to do so? Do you really like China’s system of nationalized curriculum and standardized tests? How about common core and or NCLB? If we make some college mandatory for everyone in the US, what does that due to wages? Political pandering is easy...getting things done either requires a majority vote, a "little more authoritarianism," or willingness to live with other outcomes. Seventh, China won’t take over the world any time soon. Or ever, actually. Demographics won’t allow it. They are running out of people. Combine that with their soft power failures and (massive) regional mistrust and you have waking giant that can't get out of it's own way. Both Amb's remarked on how the US was THE destination for education and retirement and rich Chinese because the standard of living, the freedom and “fun” lifestyle, the educational opportunities, etc., All these opportunities exist here and no where else, they proudly chest thumped. My question: how do you get all this freedom AND have a bit more authoritarianism? I don’t know either. When I asked about the values and keys to Singapores rise, I used the word "authoritarian" and they pushed back specifically on that word. They instead used words like “forced” and “mandatory” and “constructed” and repeatedly the phrase, “not our style of democracy.” Their view of the US and Singapore was summed up with this pithy remark (designed to show how stupid the US population is in general in comparison to the more advanced Singaporeans), “In the US, the people don’t trust the government. In Singapore, the government doesn’t trust the people.” Standard socialist (democrat) line: Trust me, I'm the government. (At least we supposed to trust you in the off-years when Dem’s are in the Whitehouse, right? You don’t want to trust the Govt with the GOP in there right? “Bush lied,” et al.)Seventh, the most interesting concept they presented was the idea that South Korea and Taiwan are virtually irrelevant to world politics outside of political debates in the US congress concerning US regional strategy. The Amb's claimed that both declining regional economic powers with little to no military power but are still strategic to US interests in the region. Neither provide any special access to other countries/markets (as Singapore does with ASEAN, they claimed). And the two countries have decided to focus on trade with China instead of investment (from the US and other more developed countries). This choice was, in the Amb’s opinions, the wrong horse to back for long-term growth. Eighth, Singapore is THE hub for all int'l business in SEA. Best government, best banking infrastructure, best education, best judicial system, etc. in the region. Better and more stable than any other metropolis in SEA. And since the demographics of ASEAN are growing (more youth than old people) the future of middle-class Asia is in SEA, NOT China or NEA, whose populations are all getting old. While I agree with the demographics argument visa vie China and NEA, there is no way that Singapore provides any advantage for entrance into the Burmese, Thai, Vietnamese or Philippine markets that couldn’t be had in spades in those home countries themselves. Yes, international law is likely to be better upheld in Singapore and so regional offices (that support multiple countries) are likely to be established in Singapore (or Hong Kong), but there is no cultural or linguistic advantage to being in Singapore over Bangkok for these other ASEAN markets. Just like you’re not getting more of the Chinese market in Sichuan by having an office in Beijing (their argument), you’re also not getting more of the Vietnamese market by having an office in Singapore. Actually, since I've done business in each, I would personally argue that yes, you are better off in Sichuan with an office in Beijing than you are in Vietnam with an office in Singapore. Further, that Singapore is less corrupt and more transparent than the rest of SEA is true, but these practices don't extend beyond the border. I've worked directly with Singaporean owned factories and Singaporean individuals in Vietnam, Thailand and China and they were just as willing to participate in kickbacks and other questionable ethical practices as any other locals. Ninth, 7 guys with a vision of hard work, transparency, good-governance and education are the keys to Singapore’s success and the wonderful second generation is now carrying the torch forward. I’m not sure how much of the job of Ambassador is promotion of US business interests into Singapore and the promotion of Singapore to the US business community, but it’s obviously the first or second (promotion of actual US foreign policy being the other) priority. If that’s their job, then their doing great. I’m all for making money, getting educated and getting govt out of my life as much as possible, but I’m not sure that promoting the Singaporean model is exactly “my kind of democracy.” The Amb's, close personal friends of LKY and his son (Green was one of three Americans invited to LKY's funeral), were unequivocal in their support for Singapore as THE key to business, logistics, regional military power and the future of US interests in Asia. Finally, both gentlemen were very polite, willing to talk afterwards and have been more than successful in their respective lives outside of public service (Ambassador Green was the CEO of Samsonite and has donated tens of millions of dollars to FIU—Thank you so much, sir.). They have more experience than I do in Singapore and in govt. And while I respect their opinions though I obviously don’t agree with, as they stated to me, “the premise of \[their\] argument” on a number of issues. But that’s kind of the point of education, isn’t it?! ### Xi vs the Pope URL: https://www.silkroadintl.net/xi-vs-the-pope/ Last updated: 2026-07-18T14:48:22.000Z President Xi and the Pope both arrived in the US this week. Landing on opposite sides of the country, their arrivals couldn’t have been more different. The Pope, great by President Obama with a bow and hand-kiss at the airport, was welcomed with all the pomp and circumstance usually reserved for, well, Presidents and Kings. President Xi on the other hand, arrived in Seattle and was met with both supports and protestors, but no White House level dignitaries. President Xi’s people released a tentative schedule of his actives, while the Pope’s “historic” visit has it’s own “Pope Tracker;” an app that follows his movements and allows you to upload your personal stories of meeting with the Pontiff. So, if you’re the Pope or President Xi, you don’t come to the US at the same time on accident. So what’s the message? What’s the agenda of this timing? The two of them are “almost” going to meet in DC on Wednesday or Thursday—at least one of them obviously nixed the opportunity to do so. Hmmm….which one? The Chinese press have made a living out of interpreting slights, perceived or real, in the visits and surrounding reception of Chinese dignitaries overseas. So you’d think that this week would an absolutely orgasmic occasion for them—a religious leader (one whom they do not allow to lead or select leaders for the Catholic church in China) is getting the full-blow red carpet treatment and Xi isn’t. This should offend the sensibilities of all Chinese on both sides of the straight, right? But what if President Xi planned it like this? He meets with business leaders in Seattle first; placing economics over politics is a veiled shot at the US political agenda. (And here's a great wrap up of how you force the hand of the US AND the int'l business community at that same time--[attend or face sanctions in China](http://thehill.com/policy/cybersecurity/254550-chinas-silicon-valley-power-play?ref=silkroadintl.net).)And with all the press focusing on the Pope has relatively protest free (at least press-coverage of protests free) visit for the first week of his trip to the US. The Chinese press gets all the comparative fodder they need to trash the US for receiving feudal superstitious splittists with more respect than the leader of the 2nd largest econ in the world. Why risk the image of the Pope getting top-shelf attention in the Chinese press by condescending to a meeting or even a handshake? No doubt completely unnecessary, from Xi’s perspective. China is not all the harmonious right now and one of the groups feeling the pressure to get inline are the Chinese catholics among other religious groups. Xi’s goal with this visit is two fold. First, look strong—take a more leading role in world affairs (or at least appear to do so for the folks back home) and take a stand against the running capitalist dogs in the US. And second, try to convince the US and China’s Eastern Pacific neighbors that while it’s strong, it’s not *that* strong. Cyber security and the South China Sea are the big issues, but neither are likely to be resolved, over even preliminarily agreed upon during this visit. China is playing the victim card in the cyber arena but considering that the US is considering sanctions against China for cyber espionage, offering to work together on cyber security is a gamble that likely won’t go over well with the US congress. And China’s hardline position on the SCS means that it’s a non-starter as well. This trip has been planned for months, if not years. No accidents, no mistakes. The only frustrations for Xi’s people being the freedoms enjoyed by protesters living in the US—something that the the Pope’s visit and rock-start like press following will more than likely overshadow. Mission accomplished. ### Chinese Middle Class Values...anyone? Anyone? URL: https://www.silkroadintl.net/chinese-middle-class-values-anyone-anyone/ Last updated: 2026-07-18T14:48:21.000Z This is an older post, from 2015, that I just found in a drafts folder today (2018) and thought I should post anyway. I wondered how much has changed in the ensuing 3 years? One of the things that continues to intrigue me about incredible rise of China is a seemingly mandatory desire for immediate wealth. Not that the desire to be rich is bad or that in China the desire is any different than anywhere else in the world; but that in China, because of the rapidity of development of the middle class, there seems to be a very identifiable desire to be rich NOW and to be rich solely for the purpose of being rich.(While I have certainly seen this first hand over the last 20 years in China, my opinion of this has also been influenced recently by the Chinese press's recognition of a notable lack of successful domestic charities, extremely competitive conspicuous consumption and a general lack of middle-class sociopolitical motivations (other than immediate housing issues). All of these issues have been documented about the new middle-class in modern urban China. For more academic works on these topics see: Li's China's Emerging Middle Class, Zhang's In Search of Paradise, Osberg's Anxious Wealth, Kleinman et al's Deep China, Kipnis's Governing Educational Desire, Chen's China Urban)This lifestyle, of course, leads many (Chinese and foreigners) to the realization later on in life that being rich for the sake of being rich is not really a value in and of itself. Yes, there is the 0.1% that is rich and happy. But after two and a half decades of work we are starting to see only a small minority of Chinese that are actually ending up rich, though often still unfulfilled, while the majority are not-rich and yet still unfulfilled and depressed that they've not met their goal of being rich. If they've "made it" financially, the Chinese that I know have expressed surprise that the end all be all of their work-existence has left them with little of real value outside of a couple of pieces of variable-value real estate. High rates of inflation, property bubbles, the one-child policy, no socialized medicine or education, increasing competition for grades and spouses, pollution and safety concerns and consumption for the sake of social status don't help people establish an identity that lasts beyond the next fad or fashion. Especially not the next generation. More than a few times over the past few years we've had employees leave for "higher salaries" or "better opportunities. " Certainly I hope that the majority of them worked out positively. But for those I've kept in touch with (5-8 that I still contact regularly), only one says that she is "honestly very happy" about the decisions she made. She left SRI to move back home, have a family and help take care of her parents. Her husband has a decent but not great job in their home town and they bought a small apartment near to other family members. They chose not to compete in the urban rat-race though they both had college degrees and opportunities. This was their choice and it worked for them. Congrats to them. But for many socio-economic reasons I realize that it would not work for many many others. Many other former employees are financially successful--all in jobs with more responsibility and higher wages that the previous example. And all have larger mortgages and loans, fewer kids, and less time than they'd like to have. Every single one lives farther from downtown than they think they should and are all saving the required $35K (or waiting the 12 years) to have their next child in Shenzhen. They have more face but less joy than they did 10-15 years ago. Each and every one has, at some point in our conversations and get-togethers, expressed to me some degree of disappointment with their current lives. Usually due to a lack of kids and money and too much time and energy spent at work. And none of them feel like they have any other choice. The[ wolf culture ](http://www.clb.org.hk/en/content/corporate-%E2%80%9Cwolf-culture%E2%80%9D-devouring-china%E2%80%99s-over-worked-employees?ref=silkroadintl.net)is a strong influencer in urban white-collar Chinese society. My wife used to always be frustrated with me because while I was the "boss" of the company I never dressed the part. She would tell me that as a Chinese boss I should be wearing the best clothes in the office, driving the nicest car and owning the latest phones and watches. She said that this was both expected by the factories I visited and also by my employees. It gave them confidence that I had the cash to pay the bills (their salaries). It gave them face to be working for someone that had "status" in the community. But as an American "boss," I made a different decision--I wore jeans and a polo to work each day. I never wore the Omega watch my wife bought for me (unless we were going out on a date or to church), I never drove the car to work, choosing to walk or bike instead, and I typically wore ball-caps too (never green). I was happy, partly because I didn't have to compete in the Chinese cultural face game and also because I realize that money is a tool, not an end. If I lost a project or an employee because I wasn't putting on the correct aires, I'm fine with that. To steal a phrase from a commercial, I'm comfortable in my own skin. Now don't get me wrong, I'm not rich nor am I saying that my choices are correct and others' are wrong or that the former employee that decided to stay home is right and other working-moms are wrong. I don't want to be called out as having China straight-man cancer (my wife works; I'm very fine with that). Each person has to make the choices that are best for their own situation. My wife, for example, would die if she had to stay home each and every day. It would drive her crazy. She has he own business and loves what she does. But she and I both recognized our roles and discussed our goals early on; because of that we know where we're going and what makes us happy. I really don't know of very many Chinese people who have had an honest discussion with their significant other about doing more with less: can we be happy with less time together or less money or fewer kids or less stuff? What if we don't have face, will we be OK? What do we really want? Obviously, many people don't have the luxury to ask these questions. Many that can have this discussion, either don't because they are "doing what everyone else is doing" or they (say they) are happy now or maybe they've just never realized they could. And some, of course, love the rat race and all accompanying lifestyle. To each their own! I'm no counselor, but when employees and friends get married or have a change in life I always try to at least raise these issues with them and help them understand that, from my perspective at least, it's probably wise to discuss these things with their spouse. And it's not just me pointing these these questions out either. Fortunately, some [Chinese are asking this of them selves.](http://www.economist.com/node/21556989?ref=silkroadintl.net) And those that are not yet are either [learning too late](http://www.science20.com/news%5Farticles/easterlin%5Fparadox%5Fchinese%5Fdiscover%5Fmoney%5Fdoes%5Fnot%5Fbuy%5Fhappiness-90074?ref=silkroadintl.net) that [they should have](http://chinadigitaltimes.net/2012/05/china-richer-but-not-happier/?ref=silkroadintl.net) or are having it forced upon them as growth slows and expenses rise and kids get older. It seems that this [lesson is being learned earlier in life for employees in Foxconn](http://sinostand.com/2012/10/24/trouble-at-foxconn-quick-to-the-bandwagon/?ref=silkroadintl.net). From the article: > Liu said about the factory, “I have entered a system, and the system can provide everything that I need for my body. We have gymnastics, swimming pool, exercise room… The only thing they don’t provide is time.”Because of the long hours (which remember, the workers desperately want and will seek elsewhere if they don’t get), it’s easy to lose touch with some simple human needs. Liu explained how roommates are always turning over or working different shifts, so it’s hard to make friends (or even learn people’s names). And because different departments are usually skewed one way or the other toward a single gender, it’s even harder to find a lover. He said the resulting emotional imbalance and conflicts over girls are often what spark fights in the factory.The thing that surprised Liu most though, and what he sees as the biggest problem, is how workers seem completely puzzled about their futures. Earlier he wrote: “They often dream, but also repeatedly tear apart their dreams, like a miserable painter who keeps tearing up his drafts. ‘If we keep working like this, we might as well quit dreaming for the rest of our lives.’”He says they’re almost all focused foremost on making a lot of money, but they don’t know how much is enough or what the next step is after making the money. They hope to move up in the world through their hard work, but they often don’t know where the path is, or if there even is a path. This, he says, could be a major problem in the future if society and the government can’t address it. > Workers probably don't realize the blessing it is to have a "mid-life crisis" at age 25 rather than age 45\. It's much easier to start over on building a career at age 25 when you're still single than it is with a mortgage, a wife, a kid, and culture that doesn't like to hire "older" (40+) workers. Remember, these kids now (everyone under 40) have never had anyone with white-collar job experience to be an example for them let alone anyone with money tell them the "facts of life" about money, happiness and success. They are an entire generation, an entire country that are learning on the fly and they're getting very mixed messages (from the West, from their own govt from their peers). What does all this mean for foreign companies that are working in China? It has a number of impacts on both how you understand and deal with employees as well as what you can do to better educate your employees (for your benefit as well as theirs).**First**, recognize that wages are likely the number one most important motivator to your employees. While this is changing a bit in the larger cities with the better educated white collar workers, it's certainly still the standard for 99% of all job seekers in China.**Second**, There is a huge gap in what's expected and what is being achieved and most are just not seeing it until they are decades into their lives/careers. Help employees with future planning and encourage education not just for promotions but in areas that will develop better people with life skills and talents and hobbies (rather than just job-training).**Third**, bring in other Chinese that have the experiences that younger employees don't have. Use the power of status and select successful people, articles and books to support the values/points you're trying to help them understand. We found out about 10 years ago that Steven Covey was both recognized and popular among business grads in China. His books became an opportunity for us to both teach what we wanted in business but also give back life-skills to employees that we cared about. Many of his books are available in Chinese (7 Habits and workbooks, for example).**Fourth**, encourage entrepreneurialism. Most Chinese employees have never had a job prior to graduation from college. They likely have never had extensive experience with hobbies or activities like sports, music, scouts, re-building cars, religion or other things that most westerners did for years growing up (and used to get scholarships to pay for college). They've never had part-time jobs while going to school. While they are very smart and very diligent they likely need a lot of support and encouragement to do anything that is outside of their specific job description. Entrepreneurialism breads personal responsibility and creativity. ### Ah, the memories; The Made in China Diary URL: https://www.silkroadintl.net/ah-the-memories-the-made-in-china-diary/ Last updated: 2026-07-18T14:48:21.000Z Wow. [Wish that I'd thought of this!](http://madeinchinadiary.com/eng/?ref=silkroadintl.net) (h/t [Wired Magazine](http://www.wired.com/2015/02/intimate-look-people-places-behind-made-china-labels/?ref=silkroadintl.net#slide-id-1724153)) Kudos the to (Swiss) authors/photog's that did though. Great idea. Some really good shots of "what it's really like to manufacture in China;" everything from shops set up in the living room to world-class tech. I've been to each of these places, and while I doubt they are the exact same factories, it seems like I've worked in so many of the factories as well. ### Is China a Threat? Part 20457948571-048571 URL: https://www.silkroadintl.net/is-china-a-threat-part-20457948571-048571/ Last updated: 2026-07-18T14:48:21.000Z Last month I was given a copy of an email from the local head of a national political party in the US with an all too common sentiment—China is a threat! We need to limit our international exposure via govt fiat ASAP. I won’t share the source or all the back and forth, but I’ll say this: In my opinion, anyone, political or otherwise, that suggests isolationism in any form is not only deluding themselves but is ignorant as well. Shutting the US off from the rest of the world will never bring prosperity nor keep the US “safe.” It hasn’t in the past and won’t now. Having said that, in my mind, this is the real China Threat: [The chilling effect on world business/news/politics ](http://www.newrepublic.com/article/115851/censorship-china-how-western-journalists-censor-themselves??ref=silkroadintl.net)as the Chinese giant starts to flex it’s (economic) muscles. But here are some of the issues and my responses from the original email. Q. Should the US be worried about the acquisition of assets by China? For example, Smithfield food (the largest pork producer and processer in the world), AMC Entertainment and other buildings, land and houses. A. There are really only three issues here. 1\. That the US should not sell domestic assets to any company/individual that is not a US citizen. 2\. That the US should not sell assets to any individual/company from any country that is anything but dyed in the wool capitalist/democratic. 3\. That the US should not sell to Chinese. The British are the foreigners with the largest amount of US asset ownership. The EU is second. Isn’t the current fear in the US that “we’re turning into a copy of socialist Western European states? Why is there no outrage at the British? The Auzzies? The French, Germans, Russians, etc? A Russian just bought the Brooklin Nets of the NBA—what’s more American than Basketball?! Putin is “safer” than Xi? Q. But what about investments in the “beachhead” industries in the US like copper in Alabama, the Triple H Coal Company in Tennessee and the “auto industry” in Detroit? The Chinese will export everything and take over the local economies! A. Ever hear of Rio Tinto? Look up their mining interests in Utah (and the world). As for coal, was there a problem when the Tennesseans themselves were mining and selling the coal to the Chinese? No. Then why the concern now? Who even uses coal anymore anyway? Sure, many places in the US and other countries still use a bit, but it's actively being phased out in the developed world. It's dirty and expensive and dangerous (even if you don't agree with environmentalism). If the US and the EU aren’t buying coal then who else is going to buy all the coal that those hard-working Tennesseans are mining? Of the top 10 coal using/buying countries China uses more than 3x as much as country #2 (the US) and more than all the next 9 countries in the world COMBINED!! China is also building more NEW coal plants EVERY YEAR than the US has total. If we sell coal, we must sell it to China--there is no other market. And finally, have you been to Detroit recently? Thank God someone is investing there. Q. But this is really a question of strategic assets, not one specific mine. (OK, that’s not a question, I know.)A. How much is the US dependent on foreign Oil? How much are we mining and going to war for in the Middle East? Are the isolationists mad when Tennesseans and Utahans themselves were blowing up their own mountains and selling their own coal and copper to the Chinese? Nope. Hypocrisy. Racism. And one more thing about physical assets, especially things like mines, land and buildings—CHINA CAN’T TAKE THEM OUT OF THE US. If push comes to shove, we just nationalize them. Hell, we just did that with 1/5 of the US economy with no concern for the consequences or even how it was actually supposed to work. Q. Well, what about all of the leverage that China has over us from buying up all our debt? A. Most people probably think that China own most of the US debt; but that’s not true. Not even close. China is only 15th on the list of largest owners of US debt most of the top 14 are actually Western European countries. Are you getting the picture? China is the straw man for every reactionary that can’t handle the fact that China is likely going to pass up the US and become the biggest \_\_\_\_\_\_\_\_\_\_\_\_ (fill in the blank) on the planet. But you know what? China should be the biggest! They should be, they have 5x our population. And if you’re really concerned about strategic defense, in all likelihood it’s safer for the planet if 1.5B people have enough to eat and options for growth. Here’s a few other issues that were listed as “problems” with China. China is now the number one trading nation on the entire planet. Smart! This is how Britain and US grew their economies in the past. The US is still the biggest economy (by almost 4x), so why can’t we capitalize on this—oh, wait we do. Not only do we have super cheap goods but those cheap goods have saved the US 2-3 percentage points in inflation over the past couple of decades. Overall, the U.S. has run a trade deficit with China over the past decade that comes to more than 2.3 trillion dollars. And all this while Chinese consumers are clambering for foreign goods. The problem isn’t trade policy per se, which is actually horrible on both sides, but the fact that the EU and other Asian countries have consistently beaten out the US in the Chinese markets. Yes, there are limitations, but to pretend that there are none here in the US is, again, delusional. China has more foreign currency reserves than anyone else on the planet. How is this something that the US can control or be responsible for? China now has the largest new car market in the entire world. China now produces more than twice as many automobiles as the United States does. After being bailed out by U.S. taxpayers, GM is involved in 11 joint ventures with Chinese companies. 1\. They should be the largest, they have the largest population. But the US has more cars per person than China does. 2\. China probably produces, with the help of US companies, more of just about everyTHING than the US does. Anything that GM does to actually make money should be seen as a positive. Investing in the largest and fastest growing market on the planet is smart! China is the number one gold producer in the world. The uniforms for the U.S. Olympic team were made in China. 85% of all artificial Christmas trees the world over are made in China. The new World Trade Center tower in New York is going to include glass imported from China. These are just emotional hooks to engage stupid people in the “China threat” mantra. “Christmas trees?! How dare the Commies buy up Baby Jesus’s birthday!” Next they’ll be buying up NASCAR. Give me a break. And with this logic, the Temple of Solomon should never have used the Cedars of Lebanon and we should give back the Statue of Liberty too (made in France). China now consumes more energy than the United States does. Um, it have 5x the people—how can it not? Not to mention all the manufacturing that is, by the way, massively energy inefficient. They’re wasting money buying more energy than they should if they were more efficient. They’re giving money to us unnecessarily! Damn those Commies!!! Being frustrated at that is like Global Warmists not being happy that we’ve got record cold this year—there is an agenda behind the histrionics. China uses more cement than the rest of the world combined. More roads, more buildings, etc… get used to it. China is now the number one producer of wind and solar power on the entire globe. So...does this mean that they aren’t as smart as we thought? What’s the point here? China produces more than 90 percent of the global supply of rare earth elements. Yes, they do. But as noted in the coal example above, a HUGE percentage of those are produced in mines in OTHER COUNTRIES! I agree that this could be an issue, if China pushed for exclusive sales and/or tarrifs. But again, can't countries just nationalize these mines if there are real issues? And if China is a threat, why are countries so eager to sell these precious assets to the Chinese in the first place? And isn’t the sale a domestic problem more than something to blame on China? Maybe we need to clean house before we throw stones (Caution: mixed metaphor!)In published scientific research articles China is expected to become number one in the world very shortly. Being published and being respected are two different things. China has 2 universities ranked in the top 200 on the planet (the US has more than 50 of the top 100!). Besides, journals the world over are [questioning Chinese scholarship](http://www.economist.com/news/china/21586845-flawed-system-judging-research-leading-academic-fraud-looks-good-paper?ref=silkroadintl.net) due to [rampant plagiarism](http://www.npr.org/2011/08/03/138937778/plagiarism-plague-hinders-chinas-scientific-ambition?ref=silkroadintl.net). ### When 5%-10% more is a bargin URL: https://www.silkroadintl.net/when-5-10-more-is-a-bargin/ Last updated: 2026-07-18T14:48:21.000Z The background on this great idea comes from [Wired Magazine](http://www.wired.com/design/2013/03/orapup-tongue-brush/?ref=silkroadintl.net). But more than the great idea, and a Utah company to boot, the look into their issues dealing with China are insightful. From the article: > Davis has run billion-dollar divisions of global conglomerates with integrated supply chains and the company has produced millions of Orabrushes, but they’ve still faced [factory setbacks](http://www.orapup.com/timeline.html?ref=silkroadintl.net). The Chinese manufacturer they selected was having trouble molding the critical microbristles and couldn’t properly mold the logo into the handle. > I'm sure that Davis is brilliant at what he does, but even people with a ton of experience still have setbacks in China--it's part of the reality of working here. But their solution is even more interesting: > This hiccup spurred the team to evaluate the entire overseas production model.”Producing the product in China, shipping it to the U.S., and then getting it to the retailers is a long cash cycle,” says Davis. “There are also negative rumors in the pet industry about having things manufactured outside the U.S.” Despite manufacturing in Utah costing 5 to 10 percent more in Utah, Davis and his team decided to contract with a local factory. > When timing and product quality are the major production issues, a higher production cost no longer becomes a barrier to production. And suddenly China is not as competitive as it was though to be previously. I have similar discussions with companies just about every week. Identifying what are the most important current goals and needs sometimes rules out China as a production center even before production can start there. I would much rather tell a potential client that they need to do their manufacturing in the US, and not use any of my services (read: not pay me anything), and get what they want than have them pay me to get them something that they'll not be completely happy with. Things that you need to have researched BEFORE you commit to production in China. > 1\. Time to market constraints2\. Cash flow timelines3\. Marketing and distribution in your home market4\. Product quality and industry/customer standards and perceptions5\. Mold and product design, production and protection > Just because you have a great idea and have decided that, for whatever reason, China is the place where you have to do your production does not mean that China is the best option once other factors are considered. Do your homework before committing to any production location simply because you've heard or decided that it's the best value. ### "Life, uh... finds a way." URL: https://www.silkroadintl.net/life-uh-finds-a-way/ Last updated: 2026-07-18T14:48:22.000Z > [**John Hammond**](http://www.imdb.com/name/nm0000277/?ref=silkroadintl.net): \[*as they gather around a baby dinosaur hatching from its egg*\] I've been present for the birth of every little creature on this island.[**Dr. Ian Malcolm**](http://www.imdb.com/name/nm0000156/?ref=silkroadintl.net): Surely not the ones that are bred in the wild?[**Henry Wu**](http://www.imdb.com/name/nm0000703/?ref=silkroadintl.net): Actually they can't breed in the wild. Population control is one of our security precautions. There's no unauthorized breeding in Jurassic Park.[**Dr. Ian Malcolm**](http://www.imdb.com/name/nm0000156/?ref=silkroadintl.net): How do you know they can't breed?[**Henry Wu**](http://www.imdb.com/name/nm0000703/?ref=silkroadintl.net): Well, because all the animals in Jurassic Park are female. We've engineered them that way.\[*they take the baby dinosaur out of its egg. A robot arm picks up the shell out of Grant's hand and puts it back down*\][**Dr. Ian Malcolm**](http://www.imdb.com/name/nm0000156/?ref=silkroadintl.net): But again, how do you know they're all female? Does somebody go out into the park and pull up the dinosaurs' skirts?[**Henry Wu**](http://www.imdb.com/name/nm0000703/?ref=silkroadintl.net): We control their chromosomes. It's really not that difficult. All vertebrate embryos are inherently female anyway, they just require an extra hormone given at the right developmental stage to make them male. We simply deny them that.[**Dr. Ian Malcolm**](http://www.imdb.com/name/nm0000156/?ref=silkroadintl.net): John, the kind of control you're attempting simply is... it's not possible. If there is one thing the history of evolution has taught us it's that life will not be contained. Life breaks free, it expands to new territories and crashes through barriers, painfully, maybe even dangerously, but, uh... well, there it is.[**John Hammond**](http://www.imdb.com/name/nm0000277/?ref=silkroadintl.net): \[*sardonically*\] There it is.[**Henry Wu**](http://www.imdb.com/name/nm0000703/?ref=silkroadintl.net): You're implying that a group composed entirely of female animals will... breed?[**Dr. Ian Malcolm**](http://www.imdb.com/name/nm0000156/?ref=silkroadintl.net): No, I'm, I'm simply saying that life, uh... finds a way.(Thank you, [IMDB](http://www.imdb.com/title/tt0107290/quotes?ref=silkroadintl.net)) Would you get [fake-divorced to save on your taxes](http://blogs.wsj.com/chinarealtime/2013/03/06/in-china-its-til-death-or-taxes-do-us-part/?ref=silkroadintl.net)? Apparently hundreds of people in China will. I'm not saying that this is right or wrong, it's just one way to play the system. But I am saying that even after 20 years in Asia, the extend that average people will go to make money still amazes me sometime. Ultimately this story is either a great example of how creative Chinese can be in overcoming political/financial obstacles thrown up in their pursuit of wealth. Or, with [a bit of context](http://thediplomat.com/china-power/the-curious-case-of-chinas-gd-figures/?ref=silkroadintl.net), it's another example of how that pursuit of wealth has made even the sacred fair game. Maybe it's both. The point being, This Ain't Kansas Anymore. While the "game" is the same (make as much money as you can ASAP), the way it is played is not always what you're used to back home. If you still dont' think that [everything you see is a show](https://www.silkroadintl.net/chinese-culture-for-the-frustrated-foreign-buyer/), you just don't get it. ### The more things change... URL: https://www.silkroadintl.net/the-more-things-change-2-2/ Last updated: 2026-07-18T14:48:21.000Z ...the more they stay the same.**Shocker:** [Official and unofficial numbers for China 2012 economy are not the same!!!](http://blogs.wsj.com/chinarealtime/2013/02/22/what-the-unofficial-numbers-say-about-chinas-economy/?ref=silkroadintl.net) And, hold your breath…..the official numbers not only aren't accurate they've erred on the side of making last year's downturn less dramatic and the upturn more impressive. Amazing how it always seems to happen that way for the govt. fighting for social stability. All irony aside, the numbers show that growth, while slightly better is not at the 7.5-8% levels that just 5 years ago Beijing was claiming MUST be maintained at all costs to keep employment where is needed to be (one of the arguments for not floating the currency). Growth at 5.5% this next year without significant reforms for the 400 million still not urbanized and poor job prospects for the recent college grads will mean continuing frustrations for the CCP (especially as housing prices start to tick back up again).**New Business Insight:** [Don't transfer Western business practices to China directly](http://blogs.wsj.com/venturecapital/2013/02/21/the-dos-donts-of-business-in-china/?mod=google%5Fnews%5Fblog&ref=silkroadintl.net) without some cultural/market specific adaptations. Do MBA's learn anything other than numbers in grad school? Surely they have to take a couple of OB or corporate culture classes, right? I'm no accountant, I'll be the first to admit. But if I needed one, I'd hire one rather than think that I could do it myself. Why don't accountants (not picking on accountants specifically, just making a point) hire Chinese consultants before moving to China?[**Amazing Thailand:**](http://www.eastasiaforum.org/2013/02/22/thailand-stalemate-and-accommodation/?ref=silkroadintl.net) A Buddhist country steeped in centuries of political corruption and a face-conscious culture chooses the middle ground to keep the economy going and wait out the end of the King's reign. ### Creativity--It's not that they can't... URL: https://www.silkroadintl.net/creativity-its-not-that-they-cant/ Last updated: 2026-07-18T14:48:21.000Z ...They've just never been asked to do it before.[Interesting article in the WSJ ](http://blogs.wsj.com/searealtime/2013/02/21/the-case-for-creativity-in-asian-schools/?ref=silkroadintl.net)about the lack of creativity in Asian graduates. But I think that the article misses the point. The conclusion is that Asian grads aren't creative because they don't have he soft skills that come from a liberal education. Ironic that this is the conclusion since the rise of the liberal arts education in the US is blamed for the demise of the US worker, the plight of the '00 generation, the worthless degrees being offered (at outrageous prices) at most US institutions, the lack of engineers, etc., etc. Having worked and lived in Taiwan, Thailand and China for almost 20 years, I don't think that this is the problem at all. The problem in Asia, like the real the recent problem in the US is the lack of any development of young people and development of practical skills OUTSIDE of formal education. Specifically, the first job that most Asian grads have ever had is the first job that they get upon graduation from college. Prior to that time they've done NOTHING but study for tests for 20 years. Here's a [great look at the life of the typical student in Asia](http://sinostand.com/2013/02/03/the-gaokao-highway-to-hell/?ref=silkroadintl.net). They are not only forced by their parents NOT to do anything but school work, they don't have time to do anything else even if their parents would let them. And most parents won't let them do anything else--because an education had traditionally been seen as the THE pathway out of poverty not just for the student but for the entire family (two to three generations prior as well as the future children). The onus isn't all on the parents, though--they are well intentioned and other factors play into this situation as well. The economy in most Asian countries is such that many or most of the menial tasks that kids do at home or in a family business in the US are done by (very) low wage laborers in Asia. Sometimes, kids are not even allowed to have jobs outside the home anyway. Kids never get to build a tree house, never get to work on a car with their father, never get to have an after school job, never build Ikea furniture (it costs 10Y to have someone off the street do it for you, so why would you?). The knock on the US education is that while it's broad and pushes independent thinking, kids spend time in the most stupid of majors. But kids graduating from college in Asia with their skulls full of more info than American kids could ever imagine don't know how to use any of that info because they've never had the chance to try. Stupid as basket weaving or X studies may be, the life surrounding the typical US high school and college campus forces most students to at least learn to budget their own time and money and often work at a job too. Internships in Asia are few and far between and not valued anyway. After school jobs are seen as both socially demeaning as well as a waste of time. This is why you can hire someone with straight A's from a great school and they can't solve practical work issues or won't do anything that isn't specified in their job description. Liberal arts classes might give them some thoughts about diversity but not practical application skills. My own personal theory is that this is why 20 something Chinese women still love Hello Kitty--they've never had the chance to "do their own thing" prior to graduation. And this doesn't even address the concept of work-place (and certainly school) pressure keep your head down and to follow the crowd and not promote yourself (at the assumed expense of others). Work and school in Asia just typically are not safe places to be creative. I do not believe that the education in Asia is the problem. Nor do I believe that Asians aren't creative. But I know that most of the kids I taught in High School in Taiwan, College in China and the recent graduates we've hired in China and Thailand had little to NO practical experience doing anything other than school work up to age 25\. They'd never been allowed to be creative before. When your entire developmental stage of life is managed by your teacher and mother, you can't be expected to be a "leader" in the workplace no matter what school and what grades you've achieved. ### Are you performing The Ferrari Test? URL: https://www.silkroadintl.net/are-you-performing-the-ferrari-test/ Last updated: 2026-07-18T14:48:22.000Z Don't let the fact that the companies in [this article](http://finance.yahoo.com/news/accounting-risk-clouds-big-u-172824111.html?ref=silkroadintl.net) are all large lull you into to thinking you're too small to get ripped or that you're too important a client for your factory to pull these kinds of tricks on you: > Despite well-known risks in China, auditors there often are not inquisitive enough or alert to possible fraud, some experts say.Auditors in China may pore tirelessly over documents and yet "fail to spot the red Ferrari parked on the doorstep and fail to ask who it belongs to, how it was paid for," said Peter Humphrey, founder of ChinaWhys, a Shanghai-based anti-fraud consultancy that has investigated white-collar crime and fraud at scores of multinational firms in China.China experts said it is difficult to do business there without encountering demands for gifts or kickbacks.Transparency International, a corruption watchdog, surveyed business executives who said Chinese firms in 2011 were second only to Russian companies in being most likely to pay bribes abroad. > As always, the key to being successful in any work in China is the Due Diligence done BEFORE the project begins--and don't fret if this DD takes longer than the production time of your project itself. It's time well spent. If you're spending more money than you can afford to lose (or can afford to pay double for the same qtty's) then you need to go to China BEFORE you ever start any work or sign any agreements. Visit factories/suppliers actual facilities, not just their trade-show booth. Go to at least 2-3 different cities as well (and I don't mean three neighboring cities like Dongguan, Songgang and Huizhou either). Spread your visit out over multiple provinces and cities so that you can really get a feel for the level of development in the surrounding area (likely where all the sub-suppliers will be located). A trip to multiple cities in China for 7-10 days can cost less than $5K. Compare that with the cost of being 14-30 days late or the cost of shipping incorrect, poorly produced and/or unacceptable product back home. There are things on the ground that you can never get from Skype, email, photos and even trade shows--you have to be there to know what it's really like. Spend the money now to be assured that you know what you're dealing with or spend it later on repairs, rejects, late-delivery and other hassles. Good luck! ### How to get off the negotiations carousel. URL: https://www.silkroadintl.net/how-to-get-off-the-negotiations-carousel/ Last updated: 2026-07-18T14:48:22.000Z [Great post](http://www.chinalawblog.com/2013/02/on-getting-a-fixed-price-from-your-china-supplier-dont-bother.html?ref=silkroadintl.net) by Dan over at [CLB](http://www.chinalawblog.com/?ref=silkroadintl.net) again today. Talking about the difficulty in getting your supplier/manufacturer to give you and then stick with a fixed price. Basically, it's not going to happen. But there are things that can be done about it to save both your bottom line and your sanity. Price changes happen all the time and it's a source of never ending frustration to just about everyone working in China. But there are other parts to the issue beyond just changes input costs. One that [Dan mentioned](http://www.chinalawblog.com/2013/02/on-getting-a-fixed-price-from-your-china-supplier-dont-bother.html?ref=silkroadintl.net) is the reality of changing nature of raw materials. But other companies in other countries deal with this all the time. Is China more volatile than anywhere else (Vietnam? Indonesia? India?)? NO. The real problem with changing prices is not that they change but that there is a serious lack of forecasting by any chinese supplier/manufacturer. Basically, this practice just does not exist in the Middle Kingdom. While changes in prices (due to a lack of forecasting) is partial understandable, what's not acceptable is the fact that prices will NEVER go lower than the contracted price. If the supplier gets a raw-materials windfall for some reason, there is no sharing of the profit. Price changes ONLY go in one direction. I think that this is explained/justified by the ideas that a) Chinese think of business as a relationship and not just a transaction. The contracts are never the most important part of the negotiations so there is no reason to not go back and negotiate again. b) Unless you're getting completely ripped off, profit margins are typically so thin in competitive industries that there isn't any room for raw-mateiral price changes and there is no way that a Chinese factory owner will lose money just because his salesman signed a contract with you. c) They think you can afford it. Another issue is that it's not just materials costs, but labor, electricity, taxes, transportation, holidays, water, etc. can be used to ask for a cost increase. Any current item in the news can be (and will be) presented as a reason for rising costs that were not considered before. The list of possible factors for price increases is practically endless, leaving the buyer constantly on the defensive and constantly on the look out for (conscious) product fade. I know that there are legitimate fluctuations in China that can't always be accounted for, but I also know that actively taking advantage of the fact that most foreign buyers are ignorant of the Chinese market is a conscious method to getting more money in many many deals. The only way to beat this is to have a well designed and informed plan BEFORE you get started in CHina. a) Have good contracts. Sure they may not save you in the end, but if you're bases are all covered before you start then you've got both ground to stand on and some amount of legal leverage if things go really bad. b) Try to have more knowledge about your industry (in China) than your supplier; or at least be as well informed as he is. This means that you have to do homework and you likely have to speak Chinese (or hire someone that you TRUST that can do it for you). This may also mean that you're slower to market than you previously expected. But, in my experience, you can take time up front and learn the road ahead of time or you can use at least as much and likely much more time later down the road in unprofitable re-negotiations, rejects/replacements and missed dates later. c) You must also have constant on the ground monitoring/testing to assure against quality fade. If you don't have a & b (maybe you're already into production) this can often make up for your lack of preparation--it won't solve any pricing or contractual problems but it can at least defend against poor quality due to a factory trying to save money when you won't pay the additional requested costs. ### Why do good companies stumble in China? URL: https://www.silkroadintl.net/why-do-good-companies-stumble-in-china/ Last updated: 2026-07-18T14:48:22.000Z This is a response to [a question by Dan Harris](http://www.chinalawblog.com/2013/02/on-dealing-with-the-new-that-is-china.html?ref=silkroadintl.net) of [China Law Blog](http://www.chinalawblog.com/?ref=silkroadintl.net) Fame. > why do some companies seem to just coast into China while others stumble in and never recover? What more should we be writing about to help those seeking to do business in China or to sell to China? > Dan, you’ve hit the nail on the head once again. The non-business aspects of business are so much more often the sources of business failure than the numbers/dollars/dates. I’m constantly amazed at how many foreign clients will say to me about their Chinese counter part, “Yea, they agree with how we do business, but our relationship is worth so much to them that we’re not worried about them doing X.” And then it happens and they're shocked that money wasn't the most important (actually it likely was, they just figured out how to make it without the foreign company). Like what you’ve read about in New Guinea, China to has different reactions to Westerization/modernization—not the least of which is the rise of (actually continuation of) [Chinese Nationalism](http://thediplomat.com/2013/02/05/chinese-dream-draft/?all=true&ref=silkroadintl.net), that often manifest itself as spats of anti-foreigner racism. These attitudes are very close to the surface for many Chinese and can be expressed in myriad ways that will affect business but never show up in any due diligence report. Experiences that we’ve seen over the years include: Chinese not wanting to see foreign companies prosper (relative to Chinese), Chinese managers/owners not willing to work directly with foreigners, openly admitted anger that foreigners marry Chinese women, and a number of other personal issues. While racism can be the worst case scenario, to say that it’s uncommon is a bit naive, I think. Less personally offensive, but no-less destructive to business success would be business goals and objectives of local workers, political leaders and/or factory management that conflict with the business goals of the foreigner partner/buyer. These are often never identified in any business meetings and are only understood after the fact as bits and pieces of previous experiences are revealed by individuals and the larger context is understood in greater detail. For example, how both groups of workers and factories managers deal with holidays, over-time demands, rejected product, and criticism of work quality are examples of things that happen on almost every project that are almost always at odds with what foreign companies expect. The ages, education and experience levels are radically different in various parts of China and so expectations for factories in Guangzhou cannot be transferred wholesale to Chongqing or Ningbo—yet many foreign companies are doing just that; “Going to China,” as if it’s just one big homogenous industrial zone. There are too many example to cite but in the last ten years, my experience has been that “non-business” factors are much more likely to sink projects than are the numbers/dollars/dates (as those are usually contracted out clearly before hand). As you continue to identify these cultural issues for your business professionals, you’ll save them time and money. Keep up the good work! ### Culture of Copy URL: https://www.silkroadintl.net/culture-of-copy/ Last updated: 2026-07-18T14:48:21.000Z The money quote from Bianca Bosker, the Author of [Original Copies](http://www.amazon.com/Original-Copies-Architectural-Mimicry-Contemporary/dp/0824836065/ref=sr%5F1%5F1?ie=UTF8&qid=1358267285&sr=8-1&keywords=original+copies&ref=silkroadintl.net), in an interview with the [WSJ China Real Times Reporter James T. Areddy](http://blogs.wsj.com/chinarealtime/2013/01/15/eight-questions-bianca-bosker-on-chinas-original-copies-in-architecture/?ref=silkroadintl.net): > "In the West there is a sense that copy is very taboo. It’s a terrible thing. It’s a sign of a lack of imagination."In China, copy doesn’t have the same stigma. You can have a copy and it can be a sign of technological achievement and cultural achievement and it’s not inferior."It’s not to say that originality is not prized; it’s to say you can copy something and that it can retain – more so than we think in the West – character and essence of the original. Likewise, to copy something can actually be to show mastery of something, both figuratively and literally. I talk about the imperial landscape where rulers would replicate the kingdoms of conquered people within their own domain to show their superiority." > The author is specifically talking about architecture but the cultural mentality applies to manufacturing as well. For years now, I've been trying to help smart people (with MBA's and lots of experience) understand just why their NDA's and other expertly written contracts continue to fail with China suppliers. They look at the words on the paper and can't understand what went wrong. They always come back with "we followed the law" or "our relationship is so valuable they'd never do XXX," or something of the sort. To be honest, they are likely right on both accounts, they did it the "right" way and their relationship is very valuable. But that's not all that is going on. As much as we'd like to think that everyone speaks the same language (money), there are often many other factors involved in decisions that contracts and straight-forward business deals don't account for; not the least of which being cultural demands (that most westerners don't even know they don't know about) and even more money (from other deals that you're specifically not being told about). Probably the biggest barrier that I have in working with western companies is the belief that "culture doesn't really matter that much" when compared to legal contracts, money, etc. I partially agree. You must have all your legal ducks in a row BEFORE you start working with a Chinese manufacturer (or any one, for that matter). And you definitely need to run the numbers on both your investment and the investment (time/money/opportunity cost) of your supplier in China as well. BUT when you're doing all of this you must realize that even the very idea of "doing business" likely does not mean the same thing to you as it does to you Chinese counter part. As I've said many times before, for most Chinese win/win is a panda bear, not a business philosophy. Sure the business offices look the same, the books (the copies you see) look the same, the software is the same (although it's a copy too), the suits are the same and you're likely all speaking English too. But the motivations, the responsibilities, the opportunities, the goals and the perceptions of who you are, what the deal means, who should get what, your ethnicity and country's history with China, etc. are all definitely NOT the same. The point being, just because you're dealing with an MBA in a suit in English in an office in Shenzhen does not mean that you have anything in common whatsoever--especially your motivations and values. To reduce your relationship down to signatures on a paper after chatting on line a few times and now meeting for the first time means that you'll likely not get what you want this time around AND that you'll be missing out on so many other opportunities to make money (and friends) in the future as well. If knowing really is half the battle (thanks, Joe) then knowing who you're working with (read: their cultural baggage) is or should be one of the most important parts of due diligence that you do when working overseas. On a related note, here's [some background](http://www.chinalawblog.com/2013/01/is-chinas-housing-market-heading-towards-a-crash.html?ref=silkroadintl.net) on what your Chinese counter-part is likely most worried about right now. H/T Dan Harris at [China Law Blog.](http://www.chinalawblog.com/?ref=silkroadintl.net) ### What happens when the miracle is over? URL: https://www.silkroadintl.net/what-happens-when-the-miracle-is-over/ Last updated: 2026-07-18T14:48:21.000Z Not sure yet, but it looks like it will be very very bad. And it's [coming sooner](http://www.zerohedge.com/news/how-chinas-rehypothecated-ghost-steel-just-vaporized-and-what-means-world-economy?ref=silkroadintl.net) than many want to believe. From the [article](http://www.zerohedge.com/news/how-chinas-rehypothecated-ghost-steel-just-vaporized-and-what-means-world-economy?ref=silkroadintl.net): > We now know that \[rehypothecated assets\] has been happening in China with the most critical component of its economic growth miracle: steel. We will soon discover that all other assets: stocks, bonds, commodities (*including gold and silver*) and finally cash (think deposits) have been comparably rehypothecated and criminally commingled. The end result will be the most epic bank run in world history, which incidentally is precisely what the central banks are attempting desperately to delay as much as possible by generating excess inflation to "inflate" away the debt, leading to rematching of **finite assets** and virtually **infinite liabilities**. Alas, in a world in which credit-money liabilities are in the quadrillions, and in which the real assets are in the tens of trillions, only hyperinflation can seal the deal.Or, in other words, lose-lose. > ### Sssshhhhh…. Don't tell anyone URL: https://www.silkroadintl.net/sssshhhhh-dont-tell-anyone/ Last updated: 2026-07-18T14:48:22.000Z From the [NYT](http://www.nytimes.com/2012/08/18/opinion/chinas-corrupt-food-chain.html?%5Fr=1&smid=fb-share&ref=silkroadintl.net): > "China’s food-safety problems highlight both the collapse of the country’s business ethics and the failure of government regulators to keep pace with the expanding market economy. Yet an excessive focus on poor government oversight often means that the much graver problem of disintegrating civic morality is neglected." > Add to that the fact that the [economy is likely at 1% and not the 7%](http://live.wsj.com/video/why-chinas-growth-is-worse-than-you-think/A18F14B7-57E0-4D02-A250-B8C56A37F6F7.html?KEYWORDS=chang+gordon&ref=silkroadintl.net#!A18F14B7-57E0-4D02-A250-B8C56A37F6F7) that is being claimed and you can see why FDI is down to 2009 levels and why unrest is more common than ever before. The culmination of these multiple events suggests that changes, and not in a positive-way, are coming to China's immediate future. I'm still a firm believer that China's economy will eventually be the largest in the world, it ought to with 1.5 billion people (and the Chinese will win more Golds/medals total than all others, etc. etc.). But I'm much more worried that the "Chinese style" of doing business will become the most commonly exported feature of both China's soft and real power. The combination of "disintegrating civic morality" and wealth (an no place to invest domestically) invites the spread of Chinese business, influence, practice and corruption to other parts of world and other industries. Now don't claim that I'm saying China is the source of amoral business practices. And don't think for a second that I'm naive enough to believe that there is corruption already (at China levels?) in other parts of the planet as well. But most, if not all of those other places, are limited in the influence their corruption can have outside of their respective locals--either due to significantly smaller amounts of money, people, resources or whatever. China has none of those restrictions at this time and a growing sense of both entitlement (we should be the worlds super power like we were before) and nationalism. ### S.N.O.R your way to China – Guide before you go. Guest Blog Post URL: https://www.silkroadintl.net/s-n-o-r-your-way-to-china-guide-before-you-go/ Last updated: 2026-07-18T14:48:22.000Z Snoring is a type of action we do when we are not aware of it (hopefully….), it happens when we are unconscious. I want to help fellow entrepreneurs here to get out of this unconsciousness and have a S.N.O.R plan. A VERY conscious 4 step plan to be ready to move to China.**Step 1: S for skills**Skills would be the 1st thing to develop and some would claim it would take the longest time developing it. What are the skills needed or at least recommended for a person who is moving to China.Cultural Change – Get ready for a cultural change in the way you live and the way people around you will be. It will be annoying, tough and frustrating sometimes. On the other hand it will be interesting, full of liveliness and challenging. Don't be one of these people going back on the next flight possible. Get accustomed to what's happening. I recall that on the 1st day of work in a Chinese company I needed to call my wife because we just moved to our new apartment the previous day and there was a lot to do. After making the phone call, I was told that no personal calls during work hours are allowed, only on lunch break or after work. This is something that western companies are more tolerant about and in China is a NO in many companies. This is one example out of endless Challenging, peculiar and misunderstandings happening all the time! My point is that you have to KNOW that you should suffer a cultural change. Have that in mind.Language – Tons and tons of posts/newspapers/websites are written about Chinese language. It's takes a couple of years to master it, which you probably don't have, but you should be prepared with some basics. I'll write a separate review on some of the options out there, but here are a few main ones, you should have a look, at least to start with:[Chinesepod](http://chinesepod.com/?ref=silkroadintl.net) – One of the most known websites out there today which gives podcasts on various subjects in different levels. It's thousands of podcasts that are ready for listening, you are talking about here.[Melnyk](http://www.melnyks.com/?ref=silkroadintl.net) \- Melnyk is also a popular website. Melnyk gives a long series of lessons you can listen to. The first few dozen lessons are free and get you to a basic level to start with.[Study more Chinese](http://studymorechinese.com/?ref=silkroadintl.net) – a website that cover news and findings of other readers about the Chinese language. It's a good resource to find more materials.[Chinese hacks](http://chinesehacks.com/?ref=silkroadintl.net) \- Cool website that brings all tips & tricks to learn the language. Try it out to find more tools to enhance your Chinese learning experience.**Step 2: N for Networking**Networking is an art, it's like a big game of connect the dots, and once you've connected then you get a nice picture of the environment that will be your play field. Generate meetings for networking. Go to conferences in your country/area got to do with China, in either industry you are at. It can be Tech, or sourcing or HR. Anything you can think of. The most important thing is getting those contacts and build your map in China. You'll learn a lot and feel more confident when arriving. These will also be the people that might help you to set in and perhaps your future business partners.Linkedin groupsA different kind of networking I recommend on is using LinkedIn. Before I decided to move to China I started networking in groups about China and got connected with people that have "China" on their profile. Some of them are good friends of mine right now. After finding them, I got in touch with them and asked them about the right way to arrive & help finding a job, Etc. To start with I recommend the following groups. There are many many more, but these are the ones I know and active at. There are valuable discussions there and more important people like you who have the same interest: **China**.Recommended Linkedin groups 1. [China Expats and Returnees jobs](http://www.linkedin.com/groups/China-Expats-Returnees-Jobs-%E4%B8%AD%E5%9B%BD%E6%8B%9B%E8%81%98-3686699?trk=myg%5Fugrp%5Fovr&ref=silkroadintl.net) 2. [Business in China](http://www.linkedin.com/groups?gid=39836&trk=myg%5Fugrp%5Fovr&ref=silkroadintl.net) 3. [China Business](http://www.linkedin.com/groups?gid=36656&trk=myg%5Fugrp%5Fovr&ref=silkroadintl.net) 4. [China networking group](file:///a.%2509http/:www.linkedin.com:groups:China-Networking-Group-41268%3Ftrk=myg%5Fugrp%5Fovr) **Step 3: O for Online**Wow, this step is exploding with info! When mentioning "Online" I actually talking about blogs, you just have to pick the right place for you and things that interest you the most. Blogs on China are endless (No, Really!) and you cannot cover them all. There are excellent blogs about [technology in China](http://www.chinablognetwork.com/tech-blogs?ref=silkroadintl.net) (Click [here](https://twitter.com/?ref=silkroadintl.net#!/StartUpNoodle/tech-blogs-china-asia) for a Twitter list with the major tech blogs in China and Asia) , [Business & law](http://www.chinablognetwork.com/business-law-blogs?ref=silkroadintl.net), [Language](http://www.chinablognetwork.com/learning-chinese-blogs?ref=silkroadintl.net), [local info & Daily life](http://www.chinablognetwork.com/city-life-blogs?ref=silkroadintl.net), [sourcing](http://silkroadintl.net/blog/?ref=silkroadintl.net), [negotiation](http://www.chinasolved.com/?ref=silkroadintl.net) and more, more &….more. This list of links is not to be treated as ultimate or the best one, it meant to give you a taste and a place to start explore from. Before I arrived I swallowed those blogs, I wanted to know everything that was going on. Almost every blog has a valuable blog role list, with which you can develop your interest even more. There is even a website the collects all these blogs into one place, [China blog network](http://www.chinablognetwork.com/?ref=silkroadintl.net). CBN, lists are organized by topic so it's easy to find what you need. In addition, with some of the bloggers I also made some networking. This helped reaching more contacts and information I needed. I encourage you to follow 5-10 blogs that you find interesting for you. Try following those bloggers on Twitter as well. [Send me a message](http://www.startupnoodle.com/contact?ref=silkroadintl.net) if you cannot find the right blog for you on the subject of your interest. I'd be glad to help.**Step 4: R for Reading**Books would open up China for you like you've never felt before. When moving and living in China, you see the culture all around you and wonder where things were originated from and which person people are talking about. I personally skipped this step before coming and I'm soooo sorry about it. It's not something irreversible, but I'm feeling I'm missing a lot. So as blogs, there are endless books about China. My wife on the contrary never stopped reading. She was reading more than a dozen books about China most of them of its modern history. So, I ask her a lot about current affairs and things I don't understand and I emphasize that you should do it yourself. Here is a list of HER recommendations. 1. **Wild Swans: Three Daughters of China** \- *Jung Chang* 2. **Mao: The Unknown Story** – Jung Chang & [Jon Halliday](http://en.wikipedia.org/wiki/Jon%5FHalliday?ref=silkroadintl.net) 3. **The New Emperors: Mao and Deng - A Dual Biography** \- Harrison Salisbury 4. **When Huai Flowers Bloom**: **Stories of the Cultural Revolution** – Shu Jiang Lu 5. [**The Chinese cultural revolution as history**](http://aleph520.huji.ac.il/F/7TBA1R2EX59KH8N3TL5KFSF2JPJGIBB9Y1NE4HPMVLLA6QPN48-25327?func=BOR-HISTORY-LOAN-EXP&index=0012&loan%5Fnumber=004844031&adm%5Flibrary=HUJ50&ref=silkroadintl.net) \- Studies of the Walter H. Shorenstein Asia-Pacific Research Center 6. **A History of Pain: Trauma in Modern Chinese Literature and Film** \- Michael Berry 7. **Wild Grass** – Ian Johnson 8. **Oracle Bones: A Journey Through Time in China** \- Peter Hessler 9. **i. The Corpse Walker: Real Life Stories: China From the Bottom Up** \- Liao Yiwu [Click here for reading more about this list of China Books.](http://www.startupnoodle.com/ChinaBookList?ref=silkroadintl.net)As my wife's' list is mostly related to modern history, please also check David's additional list for business books related to China [here](https://www.silkroadintl.net/books-to-read-if-youre-coming-to-china/).After taking all these steps, I believe you'll be more prepared and learn what's going on in the middle kingdom. Now, Go and S.N.O.R!\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_Shlomo Freund has just launched Start Up Noodle. It's a blog with practical information for entrepreneurs coming to Asia and China. It contains information, guides on Chinese social media, best tech blogs, where should you work while moving to China, and more. [Check it out](http://www.startupnoodle.com/SNORLP?ref=silkroadintl.net) ### Guanxi and Contracts--A Chinese explaination from the US. URL: https://www.silkroadintl.net/guanxi-and-contracts-a-chinese-explaination-from-the-us/ Last updated: 2026-07-18T14:48:22.000Z Some fantastic opportunities to learn about China are more and more available in the US. While in the US this month I attended a couple of sessions of the UVU Doing Business with China seminar in Utah. First, Andrew Hupert presented a great keynote address on Guanxi. All that needs to be said/known about this can be read in his great ebook: [Guanxi for the Busy American](http://www.smashwords.com/books/view/137026?ref=silkroadintl.net). You can buy it at [Smashwords](http://www.smashwords.com/?ref=silkroadintl.net). Some highlights include:1\. Relationships come before any contract (Guanxi as Due Diligence).2\. Relationships come after all contracts and work are completed (Guanxi Best Practices).3\. Get these relationships right or have never ending frustrations (Guanxi Myths and Realities). Second, in a follow up on this, in a break out session on working with Chinese in the US, the Chinese speaker said two things that I found very interesting.1\. There is a “misunderstanding” that Chinese don’t follow contracts. She said, this isn’t true, they just understand things differently.2\. To support this position her example was this: Chinese buyer signs a contract with the US supplier. Exchange rate changes dramatically and now the funds that were guaranteed just days prior are not longer available. Chinese client comes back and says that the contract must either be re-negotiated or cancelled. Chinese buyer is outraged that the supplier was not willing to change the order (that was already in place and financial commitments made on the supplier side). So the buyer disappeared and blocked payment. This example was supposed to show how both important Guanxi is and that Chinese do keep contracts but just understand them differently. Everyone in the room exchanged awkward glances and I don’t think that anyone of us made the same connection that the Chinese speaker had. It reminded me of something that my graduate professor said to me. In a moment of truth while talking about gift-giving in Thai business, she turned to me, dropped the academic façade and said something along the lines of, “It’s all just bribes, isn’t it? We can call it whatever bullshit we want. But it’s really just bribery.”In the same vein, Chinese can call it whatever they want, but if you sign a contract and make both financial and legal commitments and contractually obligate your counterpart to do the same and then want to change because it’s not convenient for you any more that’s called: "not following a contract. "Now sure, things change, money moves, opportunities disappear. That’s what due diligence is for. That’s the point of a contract—to confirm that each part has both what they claim to have and are willing to follow though regardless of the extenuating changes. Can true partners be flexible? Yes, to a degree. Can people with Guanxi make changes? Absolutely—but often after money is spent, you can’t just “call in a favor” from a buddy and expect a relationship (which the American partner doesn’t value nearly as much as the Chinese counterpart does) to cover those costs. Third, with both the [political](http://the-diplomat.com/2012/05/08/chen-exposes-the-communist-goliath/?ref=silkroadintl.net) and [economic](http://the-diplomat.com/2011/09/06/chinas-s-shaped-threat/?ref=silkroadintl.net) clouds Chinese with money (i.e. those with influence/education) are [leaving in greater numbers](http://online.wsj.com/article/SB10001424052702304203604577393841014313050.html?ref=silkroadintl.net). This can’t be seen as a good sign for the future of China. ### "Would you make the same decisions in a foreign language as you would in your native tongue?” URL: https://www.silkroadintl.net/would-you-make-the-same-decisions-in-a-foreign-language-as-you-would-in-your-native-tongue/ Last updated: 2026-07-18T14:48:23.000Z > “Would you make the same decisions in a foreign language as you would in your native tongue?” asked psychologists led by Boaz Keysar of the University of Chicago [in an April 18 *Psychological Science* study](http://pss.sagepub.com/content/early/2012/04/18/0956797611432178?ref=silkroadintl.net).“It may be intuitive that people would make the same choices regardless of the language they are using, or that the difficulty of using a foreign language would make decisions less systematic. We discovered, however, that the opposite is true: Using a foreign language reduces decision-making biases,” wrote Keysar’s team. Originally from [Wired Magazine](http://www.wired.com/wiredscience/2012/04/language-and-bias/?ref=silkroadintl.net), I'm wondering how does this impact doing business in China? My two cents (in English):First, it means that given the same sets of circumstances you likely will NOT make the same decisions in a different language environment. That’s HUGE for CSL speakers that are both learning Chinese (almost all of us foreigners) and working in China. Second, it means that understanding and decision making in ESL is also different for your English speaking Chinese staff. Third, there are limits to fluency and translation on the effectiveness of thinking through something in a second language. How many of us have, years after learning a second or third language had an epiphany about a word/concept that we use all the time when we hear it used in a new context? I know that this happens to me regularly in Thai and Chinese. I’ve “learned” and used a word for years, decades even, and then one day someone uses it differently and it hits me, “Oh, yea, it can mean that too.”Further, it likely means that when you’re not thinking in your second language you’re making decisions “normally” as are your Chinese counter parts (although each person’s “normal” is different). The research in the article point out that the second language literally gave people more pause and more deliberation, thus possibly allowing for better decision making. From the article: > "The researchers believe a second language provides a useful cognitive distance from automatic processes, promoting analytical thought and reducing unthinking, emotional reaction.“Given that more and more people use a foreign language on a daily basis, our discovery could have far-reaching implications,” they wrote, suggesting that people who speak a second language might use it when considering financial decisions. “Over a long time horizon, this might very well be beneficial.” > One other aspect I was considering is both the level of risk-adverseness in each culture/language and also what is valued (time, money, decorum, relationships, immediate success, long-term goals, etc.). I know that because of second/third language abilities I "reverse engineer" decisions and Chinglish or Thinglish sentences all the time. I've been doing it for decades now, it's second nature. (I'm surprised at times when non-Chinese speakers don't "get" what's going on sometimes, but then realize it's an acquired skill.) I've also come to realize that my counterparts are deconstructing what I'm saying as well--and over the years we've learned to hire for this skill/ability. This, I think, is very valuable in negotiations and problem solving, especially in High Context cultures like Chinese. I can see that thinking about things in a second language can have dramatic effects on decision making, both good and bad. Delays/thinking things through can be positive, but there certainly are limits to the value of analyzing a situation in a second language (while still based in your first language culture/values). After 20 years in China/Taiwan and Thailand I believe that the majority of foreigners that “love” China don’t (yet) speak the language. And oddly, those that have the most difficult time with the business/govt culture are those that have dedicated the years necessary to learning the language. The acquisition of a second language may allow for more deliberation on decisions, but those decisions not made in a vacuum and there are so many other factors that contribute to the final outcome in addition to just language understanding. What do you think? ### Un-Fair! URL: https://www.silkroadintl.net/un-fair/ Last updated: 2026-07-18T14:48:23.000Z You’re playing with a stacked deck when you go to fairs and trade-shows. It’s best to do some due diligence work beforehand and keep you cards close to your vest while there. Part of the problem is that you likely don’t speak Chinese, and English may or may not be good enough to negotiate quality or delivery issues. Sure, everyone speaks “numbers.” But quality, packaging and any degree of customization can be next to impossible to confirm without help. Another issue is who you’re really talking to. Often times groups of small suppliers (vendors, factories, trading companies) from a specific area (or even a group of classmates) get together and create a single “supplier” for a number of different items/services that they want to offer at the Canton Fair but otherwise couldn’t afford to do on their own. This means that the person you’re talking to may not even work for the actual factory that you’ll be ordering from. They likely will commit to just about anything you ask for as they don’t want to disappoint their “boss” from the other company in their group. Bottom line, it means that you often can’t count on the quality of info that you’ll be getting from many suppliers. In addition to that, the show may be good place to order stock-items, but it’s not the venue for discussing custom work with a potential supplier. Not only will you likely lose all your IP to each factory that you share your ideas with, but they don’t have time on the show floor to talk about future opportunities with you while other paying customers are waiting to buy current product. Here are some practical tips to getting the most out of your week in China. First, know who will be there and what they offer. There is nothing worse than getting into GZ and realizing that you’re attending the “wrong” week’s show! While you can avoid this with a little research, it’s much harder to figure out if the people that will be there will actually have what you’re looking for. For example, the craft and hobby industry in the US has shows that are specific to their industry. But in China, craft and hobby is NOT it’s own industry and the suppliers that would be at a craft and hobby shows in the US may be at any one of the three different weeks of the Canton Fair. If you’ve only scheduled 7-10 days in China, not following this one tip could ruin your trip and waste thousands of dollars. Second, talk with (via email/Skype) and set up meetings with potential suppliers before the show. Confirm what they can’t and can’t do, make an appointment to meet that at the show and also see if there will be anyone at the factory to meet you during show week. Doing all of this BEFORE you fly to China. Third, don’t walk the floor—the best way to waste time and be sure to miss some hidden gem is to just aimlessly walk up and down each isle to “see what’s new.” Unless your goal is to rack up miles on your pedometer, going just to go will likely get you few if any tangible results. Fourth, hire an interpreter and a driver. Your goal is to get to “PO” within a week. To do that you need to be asking very specific questions and getting full detailed answers. Most “sales-person English” will not give you this level of detail. And most sales-people will not give you all the info that you want. An interpreter will be able to ask the “other” people in the booth the more important questions and also be able to tell you (since they work for you) what’s really being talked about when you can’t understand. There will be more than ½ million additional people in GZ for the three weeks of the Canton Fair—it will be next to impossible to get a taxi, subways are packed to the hilt and there is no way that a hotel will have any free shuttles other than back and forth to the airport or Fair venue. Hire a driver and he can not only get you around town where and when you need to go, but he can also get you out to factories. Since he’s on your schedule you can leave early and stay late; you can even go out of the way to other cities (likely necessary if you want to see as many suppliers as possible). Fifth, take copious notes on conversations, who said what and get THEM to write down prices/dates and other important information that you don’t want to be “updated” after you leave. Also, make sure they have a copy of the same infor that they’ve given to you. If you have one set of notes, the sales person then leaves (goes back to college since they may not be a full time employee) and someone else has to then negotiate follow up with you, chances are slim to none that you’ll be talking about the same times two weeks later when you and they get back to the office. And remember, they’re following up with hundreds of buyers all about very similar items (and they may not have ever even met you in the first place). Included in the notes would be photos of both product and notes/prices written by the sales person—email them back what they gave you so there is less chance of misunderstanding. If you’re still looking for more info on the Canton Fair specifically, there is a [white paper](http://www.chinaperformancegroup.com/2012/04/the-canton-fair-an-overview-the-history-the-strategy-and-the-how-tos/?ref=silkroadintl.net) on the history and culture of the fair—While it’s a great resource, I think that it significantly whitewashes (sorry) the problems of the fair and the nightmare that is Guangzhou city for the months the fair is in session. Shows are shows. Taking notes, meeting them before and after and also visiting the actual factory are really the only ways to know with whom you’re working and if they can actually do what you want. My opinion is that you should be spending more time on vendor qualification and follow up before and after the fair than time traveling to China and actually being “at” the fair. If you’ll do this, you’ll likely have a much more successful experience. Good luck! ### Talk with People who really know (i.e. people who are here) URL: https://www.silkroadintl.net/talk-with-people-who-really-know-i-e-people-who-are-here/ Last updated: 2026-07-18T14:48:23.000Z Tivo is great. I can watch TV from the US on my computer in China. One of my favorite commercials from the US that I've seen while watching the NCAA Tourney at 4AM list last month is the direct TV commercial that ends, "[Don't have a grandson with a dog collar.](http://www.youtube.com/watch?v=c-zG5U0v3gU&ref=silkroadintl.net)" Yup, using the wrong service provider can lead to many unintended consequences. So choosing who you listen to and work with is of vital importance when you're new to China. It's pretty easy to tell the difference between people who really know about working in China and those who are just here for a trade show or a "drive-by" media visit. To me, defining characteristics of those who "get it" almost always include, some degree of fluency in China and extensive time (years) in country. What's great for those of us that work in and study China is that these people with *real* experience are writing some great books and articles. Some of the authors that I've really been impressed with in the last 5-10 years are include, Bill Dodson, Andrew Hupert, Leslie T Chang, Gordon G Chang, Michel Chevalier and Pierre Lu, Peter Hessler, Scott Tong and Frank Ching. I bring this up because of [this article](http://www.newyorker.com/online/blogs/newsdesk/2012/03/iphone-factories-chinese-dreams.html?ref=silkroadintl.net) in the New Yorker (h/t [WSJ China Realtime Report](http://blogs.wsj.com/chinarealtime/?ref=silkroadintl.net)). Ms Chang gets it right. China cannot be understood by people whose only point of reference is only the West (my interpretation of what she is saying). When your starting point, socialization, processes, lifestyle, education and end-goals are different, not to mention the fact that the social/political/economic infrastructure is different as well, the cross cultural comparisons and conclusions are almost always completely inaccurate. This means that "news" is usually agenda rather than fact driven and "in-depth" pieces are often more about connecting with emotional currents back home than actually doing "in-depth" research into China. I started my work experience in China in Thailand in "89--I learned the language as a missionary. I taught English at a University in Chongqing China in "95\. I went back to BKK in '97 and did graduate work and also translated for foreign consulting companies helping PTT and Shinowatra in BKK. When the Thai economy crashed in '98 I wanted to stay in Asia. So I moved to Taiwan and taught English at a high school in a small town so that I could learn Chinese. A couple years later I started SRI, again in Thailand, but within a year moved to China in 2002 to manage the SRI China office full time. What's the point of this little trip down memory lane? Two things. First, I've been a missionary, a teacher, a translator, a tour guide, a business owner, project manager, a QC engineer, a father and husband, a tourist and have lived in 4 cities in China/Taiwan in last 17 years (not to mention 6 cities for 4 years in Thailand). And while I lived in Asia for a decade before I started SRI, I wasn't a very useful source of business information while I was ensconced at a university or high school. When I tell you that missionaries are wonderful people whom I admire greatly but who typically do not have extensive business experience in China, I'm simply speaking from personal experience and a desire to direct people to a better source for business advice. Ditto English teachers. Foreign English teachers live in a parallel world that has little or nothing to do with the actual business world in China (unless they are managing their own schools/businesses). There are always exceptions and I'm not trying to be rude to these folks in anyway. I was "these folks" for many years (and I'll likely be them again after I'm retired--service is a good thing). I'm saying this to point out English teachers and missionaries (among others that you'll meet in airports, restaurants and churches) are not the people that you look to for advice when you want to start a business venture in China. When you don't even know China yet, you don't want to have to do due diligence on your due diligence sources! Second, the people that will be most helpful to you are people that are actually doing business in China. Like the people on the list above. Yes, you can learn a ton from the successful business person that flies to China a couple times a year for a show, but you can likely learn even more from the guy that lives, works and manages projects there. China changes quickly you need to be here to keep up with it. Maybe this all goes without saying--of course you wouldn't take advice on how to set up a business from someone who hasn't done it before, right? But my experience is that when coming to China (typically the very definition of "foreign" for most people) advice is too often solicited from anyone that can say 你好 or can use chopsticks. I'm not exaggerating. The two groups of people that most often come to SRI with projects that are in need of rescue (they've started but can't be completed correctly or can't get started or have been ripped off) are people that didn't do enough due diligence (with the right people) before they paid a stranger to start a project or people that ordered product online (paid in-full up-front) and can't understand why it doesn't work as well as Amazon.com. Another great source of practical and useful business information is the [FREE Global Sources Conferences in Hong Kong](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-ELECTRONICS/CONFERENCE.HTM?source=TSCHKCSFEC%5FTOPNAV%5FHONGKONG-ELECTRONICS) this next month. There are presentations on marking, testing, sourcing, project management, avoiding problems, finance and exchange, QC and audits, and all from professionals with decades of actual on-the-ground business experience in China. And no matter which GS show you attend, there are conferences [every day](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-SOLARENERGY-SAVING-PRODUCTS/CONFERENCE.HTM?source=TSCHKCSFSESP%5FTOPNAV%5FHONGKONG-SOLARENERGY-SAVING-PRODUCTS) of [every show](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-FASHION/CONFERENCE.HTM?source=TSCHKCSFFA%5FTOPNAV%5FHONGKONG-FASHION)!Oh, yea. I'm speaking there each week as well. ;) ### Who do you like to work with? URL: https://www.silkroadintl.net/who-do-you-like-to-work-with/ Last updated: 2026-07-18T14:48:23.000Z Probably who you identify most easily with. A year or so ago my then 5 year-old told me, in all seriousness, "Dad I'm like Kobe, not white like you. " Suppressing laughter I responded, "Actually, you're more like Yaoming than Kobe. " But he was insistent. He was "black like Kobe" he told me. Now he wants a Knicks jersey--bet you can guess which number. Yup, 17\. Jeremy Lin. My boys are all over him. Of course so is everyone else with any connection to China. Or the NBA for that matter. But it makes sense. Not only is he good, but generally people more easily like what they can identify with--educated, christian, Chinese, underdog story--he's hitting just about all the right buttons. Similarly, Obama gets 90% of the black vote regardless. Ditto Mitt Romney and the Mormon vote. And Lin and the Chinese community are the same. So it should come as no shock that Chinese people like to do business with other Chinese people. Or that foreigners often "just don't get" how things are done in China. One of the most telling examples of this was a young lady that I played basketball with in China a couple of times. She was an ABC (American Born Chinese) who had lived her entire life in the US. She is 100% ethnically Chinese and speaks fluent Mandarin--but for all cultural intents and purposes, she's American. She plays ball with the guys, wears pants not cute dresses to the office (her comment), talks like, thinks like and acts like a 20 something American. She hated living and working in China. Why? Because while she "looked" like all the other Chinese, she was not the same inside. People immediately identified her with "Chinese" and not "foreign" like can be done with white or black people. But she didn't "get" China and it drove her and the people she worked with crazy. Last time I spoke with her she was on her way "home" to the US.Whether it's the language barrier or the cultural differences, the are assumptions made on initial meetings that are often wrong and subsequently can take years to overcome (if they ever are at all). I'm a firm believer that you can't drop into a country and do business and expect to be successful without some significant language and cultural training. Of course there are exceptions to every rule, but the vast majority of experiences follows the rule. When SRI works with Chinese from Mainland in the US they have the same problems here that Americans have in China. They don't understand the extent of the law, the nature of the market system (in my opinion most Chinese don't know the difference between freedom and anarchy, but that's a post for another time), they don't realize how independent or religious or legally minded or linear (processes) American's are. They are completely blow away by the levels of trust and often confused when told not to "pay" for extra services. They often comment on how "different" it is from China. Most have commented to us something along the lines that since the US is "free" and a market economy that it would be more like doing business in Shenzhen (anarchy) and much less "legal. " > **SIDE NOTE:** One of the funniest things I've ever read on this was the anger of the Chinese government at the government of other countries during the 0lympic torch runs. The Chinese were insistent that the participating governments control the demonstrations against the Chinese that was making them look bad all over the world. When the governments told them they could not control free speech, the Chinese just couldn't/wouldn't believe that it was that simple. During the 2004 winter games in SLC, it was the same. The Chinese asked the SLC/Utah government to take down Taiwanese flags on balconies and windows in prominent buildings in the downtown area. Of course they wouldn't do it. > It's no surprise then, that foreigners that don't speak Chinese like to work with companies like SRI, or 3PQ and testing companies that have a "foreign" interface between the Chinese factories and the client themselves. Not just for translation of language but for a translation of culture. And even when great ESL is involved, an accent is still sometimes hard to deal with (it's embarrassing to repeatedly ask someone to repeat themselves, pretty soon you just stop asking and realize that you'll just have to deal with understanding 1/2 the information). Ditto for Chinese in the US, they want to work with Chinese that are here already, that have gone through the culture shock and acclimatized already. So how much of this is learned an how much is subconscious? I don't know. For my son, he recognized a difference between me and Kobe and despite the fact that I'm his dad, he identified with Kobe (I hope that he get's Kobe's bball skills instead of mine!!). For most adults doing business in a foreign culture for the first time, it's probably mostly a conscious choice based on past experiences (of other foreigners they know or directly with other Chinese). For now, I'm happy to be in the middle of business. I do wonder what my boys will grow up and identify with though. In the meantime, while I can't cheer for the Knicks yet, we certainly could do worse than someone like Jeremy Lin as a role model. ### The More Things Change... URL: https://www.silkroadintl.net/the-more-things-change-2/ Last updated: 2026-07-18T14:48:23.000Z The more they stay the same. From Michael May at the East Asian Forum, [Curbing corruption in China](http://www.eastasiaforum.org/2012/02/09/curbing-corruption-in-china/?ref=silkroadintl.net) > One of [Hu Jintao’s first addresses](http://news.xinhuanet.com/english/china/2012-01/09/c%5F131350444.htm?ref=silkroadintl.net) to party leaders in 2012 included an order to fight harder against corruption. The fight is crucial, but a poor record of success gives little reason for optimism. There are different views on why this battle is not being won. While some say it comes hand in hand with the benefits of an otherwise successful system, others say it is the legacy of extreme poverty during the Cultural Revolution. And others just believe it to be a part of Chinese culture. Be that as it may, the corrosive effects of corruption on government reforms, the economy and the reputation of the party are undeniable.China’s [previous efforts to curb corruption](http://www.eastasiaforum.org/2009/12/03/trial-at-chinas-soprano-city-and-campaign-style-justice/?ref=silkroadintl.net) have focused on toughening related penalties, even resorting to capital punishment. But this approach has proved unsuccessful. Rather, transparency and public accountability are more effective in fighting corruption. And while China’s authoritarian leadership provided fast and comprehensive reforms, which turned the impoverished state into a superpower, accountability has little place within authoritarian regimes. This is why reform in China is so difficult. > If you can't see the applicability to your own personal manufacturing in China, just replace party/government with corporate. It's the same people, the same history, the same environment, the same culture that is running the govt as is running the companies--often much more so than one may realize as the % of SOE's and state investment in business is growing. Almost any supplier (and sub-suppliers and secretaries and QC with dirty hands) in China that's making money is NOT excited about increased transparency. Sure, at dinner, factory owners complain about the "fees" they pay to local officials. But in the breath they extol the savings they gain from guanxi they have with the tax or safety inspectors. In the last week (that's just 5 days now) we've had 3 (count them 1-2-3) different companies, all selling large qtty's (multiple containers per order per quarter) into box stores, come back to us with the same story: "We talked with you last year, thought you were too expensive since China is so much better/easier for companies to manage directly now, and we started projects on our own. It's been a disaster! What will it cost for you to a) help us rescue current orders that are now delayed due to negotiation/price/other issues, b) do QC and fulfillment work on current orders to get them up to standard and out as quickly as possible, and c) can you source new factories for us and manage the re-orders? " Some of these companies are 2 or more orders in and assumed that the second order would be smoother sailing than the first. Never happened. One can't even get the first order off the ground. They did due diligence. They test, they have independent QC. They even have history/experience working in China. But they are not there full-time. They run a business elsewhere and managing China is not their core-competency. SRI is not a miracle worker, but we are on the ground. We speak the languages. We have experience in both negotiations and problem solving. You need to have these specific skill sets/logistical advantages if you expect to be successful in China (or any developing country). If you're not working with someone that specifically knows where the "corruption points" are going to be, you're going to get taken advantage of. If you're not working with someone that can answer questions immediately, you're going to be both delayed AND get less-than-expected-quality as the lag between communicating/sending samples to the US and getting feedback will give the supplier a window to do what whatever he deems best for himself (at that moment). This could mean replacing your approved components with something cheaper after the test, if could mean replacing your order in the production queue with one from another client. It could mean that your stuff sits outside in the rain for a week while samples are being approved and/or redone. As usual, due diligence, trust w/verification and a physical presence are still keys to getting things done right in China. And sorry for the lack of posting for the last few months. I've been blogging on an average of more than once a week since 2005 (and I don't have a "blog assistant" like some lucky guys I know). It's taken it's toll, I needed a break. ### Chinese New Year And Other Reasons Why You’ll Be Late URL: https://www.silkroadintl.net/chinese-new-year-and-other-reasons-why-youll-be-late/ Last updated: 2026-07-18T14:48:23.000Z If you’re starting projects this month chances are, unless you’ve already had very explicit conversations about delivery dates with your supplier, you may be shocked when your supplier (and everyone in his factory) goes on vacation in Jan and you’re left waiting around for two weeks for an update on production status. There are two months each year that are horrible to schedule around—the month before and the month after Chinese New Year. (I guess the month *of* Chinese New Year would be a third, but we’ve learned just not to schedule anything this entire month so I'm not counting it.) This year, the official Chinese New Year is the 23rd of January, but the traditional family-gathering days start a few days before that. AND…and with millions of people heading for home from the east coast provinces the holiday can start as early as a week before the actual day since people can’t get seats on plans, trains or buses back home. If you’re planning on anything getting done after the 15th of January you’re asking for trouble. The Holiday can last anywhere from 5 days (officially) to two weeks for some. Again, add in the difficulty workers face getting a train back to work and the vacation can stretch into February. While all that time off can be a problem, the biggest problem is the fact that many workers will stay home as long as they can afford to. And when they do come back many do not return to their same factory—at least they'll spend a few days looking at other options before making a commitment. All of this means a few important things for foreign buyers.1\. On Dec 1st you may place an order that usually takes 30 days only to find that it won’t ship until Feb 1st—a full 30 days later then you expected. The month of December is SUPER busy for most factories. They are taking orders like usual but all along knowing that they’ll not be able to finish many since their workforce slowly fades away as CNY gets closer. Over booking, under capacity, and the inability to schedule maintenance or raw materials (since their sub-suppliers and service people have the same labor issues) is typical at factories of this time of year.2\. Of course this means that the month of January, the actual holiday month, can be a complete wash. From the 20th to the 29th there will be nothing done. Sure factories will be open for 15 days of this month, but that doesn’t mean that they’ll be getting much done. Expats and overseas Chinese are also taking advantage of this too. These are the folks with vacation and sick days built into their packages—what better time to use them then the days before and after the official holiday when nothing is happening anyway?!3\. As bad as that can seem to buyers trying to order and take delivery on a deadline, February can be even worse. Why? Because it’s the great unknown. No one knows who is coming back or when/if they’ll actually be back. Some years there is a real glut of workers and factories start back up on time and are full quickly. The last few years though, there have been jobs vacancies at many factories stretching into March! The keys to Chinese New Year is patience and flexibility. There are a few things that your supplier honestly can’t control—a lack of labor around CNY is one of them. So you’ve got to be able to roll with the punches over the next 90 days. - Don’t place time sensitive orders in December or January. - Don’t change existing orders or ask for rush service during this time of year. - Plan ahead—it’s not like Chinese New Year is a surprise, you can plan for it each year. - Don’t get mad at your supplier when they tell you that production times are double what they were if the same project had been started in November. Likely, he’s pissed too, but he knows he can’t do anything about it (and he thinks you’re a jerk for not understanding that too). - If it sounds to good to be true (“Yes, we think we can just fit this in before the holiday starts”) it probably is. Only you’ll not find out about the soon-to-be missed delivery date until mid January when it’s too late to do anything about it. Most importantly, for 1.5 billion people this is the most important holiday (and also the only holiday, for some) of each year. No matter your order/emergency, it’s not as important to them as their time off with family that they haven’t seen since last Chinese New Year. ### What China's Really Like, A Chinese Perspective. URL: https://www.silkroadintl.net/what-chinas-really-like-a-chinese-perspective/ Last updated: 2026-07-18T14:48:24.000Z Here's [the link](http://www.scribd.com/doc/73185074/Murong-Xuecun-Oslo-Speech?ref=silkroadintl.net) (h/t [China Hope Live](http://chinahopelive.net/2011/11/22/in-my-country?ref=silkroadintl.net)). Here's [a great commentary/follow up](http://www.saschamatuszak.com/1488?ref=silkroadintl.net).And here's the complete text (from the PDF at the [link](http://www.scribd.com/doc/73185074/Murong-Xuecun-Oslo-Speech?ref=silkroadintl.net)). 把怪物关进笼子里Caging a MonsterMurong XuecunTranslated by Jane Weizhen Pan and Martin Merz我是一个中国作家,在这里向你介绍一下我的国家。正如你们所知,在过去的三 十年里,这个国家建造了无数高楼,修了无数机场,铺平了无数道路,它的GDP位居 全球第二,它制造的商品造销往全世界每一个角落。在伦敦、在纽约、 在东京,到处 可见身穿昂贵西装的中国游客,他们大声谈笑,出手不凡,他们占领了大多数赌场, 疯狂抢购LV皮包。人们惊诧于这样的场面,说中国强大了,中国人有钱了。可我要说 ,在这表面的强大和富足之下,中国还有许多不为人知的细节,而正是这些细节,让 中国变成了一个极为奇怪的国家。I am a Chinese writer. Allow me to say a few words about my country. Everyone knows that in the past thirty years China has built countless skyscrapers, commissioned countless airports, and paved countless freeways. My country’s GDP is the world’s second largest and her products are sold in every corner of the planet. My compatriots can be seen on tour in London, New York and Tokyo wearing expensive clothes, chattering raucously. My compatriots also fill up casinos and line up to buy LV bags. People exclaim in amazement: China is rising, the Chinese are rich! But behind this facade of power and prosperity there are details of which many people are unaware, and it is precisely these details that make my country a very strange place.生活在中国,就像坐在一个巨大的戏院里,随时可以看到荒唐的故事、离奇的情 节,超过每一个作家的想象。Living in China is like watching a play in a giant theatre. The plots are absurd and the scenarios are unbelievable—so absurd, so unbelievable that they are beyond any writer’s imagination.这个国家有含有三聚氰胺的奶粉、用避孕药喂大的鱼鳖虾蟹、用工业酒精勾兑的 假酒、用大粪熏制的臭豆腐,还有著名的地沟油,这是一种从下水道中提炼出的食用 油,它出现在每个家庭的餐桌上。My country manufactures powdered milk containing melamine, feeds fish and shrimp contraceptive medications to enhance their growth, uses industrial alcohol in fake wine, preserves beancurd with human excrement, and produces “gutter oil,” the product of a notorious practice in which waste oil from gutters outside restaurants is recycled for human consumption.这个国家的法律系统是这样运作的:先制定无数法律,然后制定无数精密的程序 ,然后制定无数实施细则,然后制定无数司法解释,最后......由领导决定案子输赢。在这个国家,有许多事不能起诉,即使起诉了,法院也不会受理,即使受理了, 也会毫无疑问地败诉。1In my country, the legal system works like this: countless laws are enacted, and then countless procedures are created, followed by countless enforcement regulations and detailed judicial interpretations, but ultimately it is up to the political leaders to decide who wins and who loses a case. In my country, many cases cannot be pursued in the courts. Even if legal action is taken, courts can refuse to hear a case. Even if the case is heard in court, the judgement is made well before the hearing starts.在这个国家,有一些人会无缘无故地消失,有一些人未经审判就失去了自由。还 有一些人冤屈难申,按照法律规定的程序寻求公平,这些人被称作“上访人员”,这个 词在中文里的含义是讨厌鬼、精神病人和恐怖分子。为了对付他们,我们的政府动用 了大量人力物力,有时把他们赶回老家,有时把他们关进监牢,最聪明的是把他们关 进疯人院。In my country, many innocent people disappear, and some people lose their freedom without ever being sentenced by a court. Some people attempt to have their grievances addressed at a higher level by following procedures prescribed in law. These people are branded “petitioners.” In my country, the word petitioner conveys the sense of a nuisance, a mentally ill person, a terrorist. To deal with these petitioners, the government mobilises a huge amount of resources to herd them home, jail them, and in a particularly creative measure, incarcerate them in insane asylums.最近有一位上访者引起了广泛关注,他是一位盲人律师,名叫陈光诚,他曾经为 了别人的利益呼喊奔走,而此刻,他正被严密地看管在自己的家中,任何人都不能接 近,许多人,包括我在内曾冒着危险前去探望他,可无一例外,全都被政府雇用的打 手打了出来。Recently a famous petitioner, a blind lawyer called Chen Guangcheng has attracted a lot of attention. Chen is an advocate for people’s rights and dignity. At this very moment, he is a prisoner in his own home. Many people, including myself, have attempted to visit Chen but all have been chased away by government employed thugs.这个国家有各种各样的离奇死法,在看守所内,如果有人无故死去,官方会给出 各种富有想象力的解释,说他们因捉迷藏而死,因做梦而死,因发狂而死,还有人仅 仅因为喝了一口水就会死,但是毫无例外,这些死去的人都带着满身的伤痕。In my country, there are many peculiar ways to die in detention and officials are more creative than a novelist like me in coming up with explanations: died playing hide-and-seek; died while dreaming; died of psychosis; died sipping water. But in all cases the bodies of those who die in custody are covered in bruises and wounds.在这个国家,每个城市都有拆迁队,他们的标准装备是铲车和棍棒,铲车用来拆 除别人的房子,棍棒用来殴打和驱赶那些不听话的人。为了保卫自己的家园,有人痛 哭,有人下跪,有人把汽油泼在身上点火自焚,但无论他们做什么,都不会影响到拆 迁队的工程进度。许多人因此而死,却从来没有人为他们的死亡负责。2In my country, every city has demolition crews equipped with bulldozers and truncheons. The bulldozers are for levelling people’s homes and the truncheons are for bludgeoning stubborn homeowners. To protect their homes, some homeowners beg on their knees, others cry, and some threaten to kill themselves or even actually self immolate. But nothing can stand in the way of the demolition crews and no official is ever brought to account when demolitions result in deaths.在这个国家,选举是一场奇怪的游戏,最终结果由上级决定,上级需要哪个人当 选,哪个人就一定会当选,很少出现误差。在很多时候,人们需要从两个人中选出两 个人来,还有些时候,这种选举甚至会违背数学原理,要求选民们从两个人中选出三 个人来。每过五年,会有一次全国范围的选举,选上的人被称为人民代表,而事实上 ,他们几乎不能代表人民,只能算政府雇员,也只会帮政府说话。In my country, elections are a charade—the government decides the results in advance. Their candidates are always elected. Very often people are asked to elect two out of two candidates. Other times, elections even defy basic math—three winners can be elected from two candidates. Every five years there is a national election and the winners are called people’s representatives but the majority of them only represent the government.他们的典型人物是一位七十多岁的老女士,她当了五十几年代表,从没反对过任 何提案,也从来不曾弃权,她的工作非常简单,只是举手,并因此过上了舒适的生活 。最近情况有所变化,有些人未经政府同意就想参选,但他们几乎全都失败,还有一 些人因此过上了悲惨的生活。One woman in her seventies, for example, has been a people’s representative for over fifty years and yet she has never tabled a motion, and never once voted against a motion. Her job is simple. All she has to do is raise her hand and she can live a comfortable life for performing this task. In recent years some people have attempted to compete in these elections without receiving government approval. These people almost always lose and often suffer miserably for their actions.在这个国家,政府开办的救济机构会公开地买卖人口,有智力智碍的病人会被当 成奴隶,在工厂和矿井中过着暗无天日的生活。在这个国家,怀孕的妇女会被强迫堕 胎,一些婴儿会被强迫送进孤儿院,如果他们的父母不能及时凑够钱把他们买回去, 这些孩子很可能会被卖到外地,甚至外国。In my country, government-run relief organisations engage in human trafficking; intellectually-disabled people slave away in factories and mines; pregnant women are coerced to have abortions and infants are taken by force to be handed over to orphanages. These infants then are sold to other regions and even foreign countries if their parents cannot come up with the cash to buy them back.在这个国家,报纸和电视的责任不是报道真相,而是为政府做广告。教育的目的 不是传授知识,而是教人愚蠢,教人效忠政府。这种教育和宣传,让许多人都活在未 成年状态,他们有成年人的身体,但在精神上,就像是世事懵懂的孩子,时至今日, 还有许多人在怀念文革,鼓吹个人崇拜,还有一些人认为那场空前绝后的大饥荒纯属3子虚乌有,只是某些阴险小人阴险的编造。In my country, the job of the press and electronic media is to promote the government, not to report the truth. The education system is tasked with instructing the people to be loyal to the government and keeping the people ignorant, not with disseminating knowledge. As a result, many people have never grown up intellectually even though they are adults. Even today, many people in my country still are nostalgic for the catastrophic Cultural Revolution that ended over thirty years ago and still promote the cult of personality. Some people still deny that the unprecedented great famine of the early 1960s ever occurred, and insist that the millions of deaths by starvation is a fabrication.在这个国家,每一种学问都必须为政治服务,政治需要什么样的历史,学者就会 创作什么样的历史;政治需要有什么样的经济学,学者就会发明什么样的经济学;大 人物可以随意发明真理,这些真理适用于任何一个领域,能够指导这个国家的政治工 作、经济工作、文化工作,甚至能够指导动物交配。In my country, every academic undertaking must serve the interests of the government. Academics must fabricate history in accordance with the government’s political interests. Economists must develop economic theories to support the government’s political agenda. In my country, leaders invent truths and their pronouncements are applied to every field of human endeavor, be it political, economic, cultural, or even animal husbandry.这个国家号称消灭了阶级,事实上,一个壁垒森严的阶级社会已经形成,上等人 吃特供食品,下等人只能吃肮脏而有害的食品。第一等级的人就读豪华而昂贵的贵族 学校,第二等级的人就读普通学校,第三等级的人就读简陋的民工学校,第四等级的 人基本没机会读书。In my country, the government claims to have eradicated classes, but in reality, class divisions are glaringly obvious. The highest class enjoys exclusively produced foods while the lower classes are left to consume contaminated and dangerous products. Children of the dominant class study at opulent private schools, while children of the second-class study at ordinary schools. The third class attend shabby schools for migrant workers and the fourth class, well, they don’t get to go to school at all.这个国家最喜欢干的事就是买飞机,经常慷慨地对外援助,但在自己的国土上, 乞丐四处流浪,许多人看不起病,许多孩子读不起书,还有许多人正活在可耻的贫穷 之中。My county takes delight importing the latest jet airplanes and providing aid to foreign countries, despite destitute beggars roaming the land at home, despite many of her people being unable to afford medical care, despite many children being too poor to go to school and despite a huge number of people living in poverty.这个国家鼓励告密,政府为每个人都建立了一份秘密档案,档案中记录了从生到 死的每一个变化、别人的评价以及许多当事人自己都不知道的事。在工厂、在学校、 在街头,密探们正秘密地观察每个人的言行。这里的空气压抑而紧张,民众不相信政4府,员工不相信老板,学生不相信老师,妻子不相信丈夫。In my country, informing on others is encouraged. The government has a secret dossier on every single citizen which records everything about us until the day we die—from innocent remarks about us to unsubstantiated accusations as well as many things we don’t even know about ourselves. Secret agents in factories, schools and residential neighbourhoods covertly record everything people say and do. The atmosphere is oppressive—people do not trust the government, employees do not trust employers, students don’t trust teachers, and wives do not trust husbands.这个国家有一种奇怪的制度,总是让说谎者得到奖赏,久而久之,每个人都对谎 言习以为常,每个人都主动说谎,说谎甚至成了一种美德。In my country, there is a strange system that rewards liars, and with the passage of time, people have become accustomed to lying. People lie as naturally as they breathe, to the point that lying has become a virtue.在这个国家,写作成了一种危险的事业-有人因为写文章而入狱,有人因为说了 某句真话而入狱。作家不能评述历史,不能批判现实,更不能幻想未来。许多字不能 写,许多话不能说,许多事件不能提及,每一本书的出版都要经过严格的政治审查, 许多书被查禁,然后它们就会成为国外的畅销书。In my country, writing is a dangerous occupation. People are sent to prison for writing essays, or saying a few words of truth. Writers are not allowed to talk about history, or to criticise the present, let alone fantasise about the future. Many words cannot be written, many things cannot be spoken, and many issues cannot be mentioned. Every book has to go through a rigid censorship regime before it can be published. Many books are banned in my country, and then become bestsellers overseas.这个国家可以把卫星送入太空,却造不好一座桥。这个国家可以把政府大楼造成 金碧辉煌的宫殿,却让孩子们坐在摇摇欲倒的危房之中。这个国家有无数豪华的行政 座驾,却没有一辆坚固的校车。就在两天之前,在中国甘肃,一辆只有坐9个人的校车 塞进了64个孩子,然后很不幸地遇到了车祸,19 个孩子因此而死。这些孩子大多来自 最贫穷的家庭,他们还没有吃过一次麦当劳和肯德基,还没有去过一次动物园,他们 的人生还没有开始,却已经过早地结束了。My country is capable of launching a satellite into space but not of building a safe bridge across a river. My country is capable of building palatial government offices yet condemns children to substandard schoolhouses. My country provides millions of luxury cars to government official yet few safe school buses for children. Only two days ago in Gansu province in China’s northwest, 64 children were crammed into a nine-seat school bus. Then there was an accident and nineteen of them died. Most of these children came from poor families. They had never been to a Mcdonald’s, a KFC, or a zoo. Their lives ended tragically before they even started.5这个国家最近几年举办了多次盛会,为此建造了大量美仑美奂的场馆,然而每 次开幕之前,都会有许多“危险分子”眼含热泪离开自己的家,官方发言人说:他们自 愿离开,没有人强迫他们。In my country, extravagant structures have been built one after another to host one extravagant event after another. However, many citizens considered “dangerous elements” are forced to leave their own homes in tears whenever such an event is held. Yet, government officials insist that these people leave their homes voluntarily.这个国家有全世界是庞大的官僚队伍,他们中的绝大多数都在贪污或受贿,每 一种权力都被污染,成为致富的法宝或伤人的利器。根据公开的报道,每年有大量的 财富用于这些官僚的吃喝、旅游和公车消费(每年九千亿人民币)。或许有人会问: 纳税人为什么不反对?抱歉,在这个国家,没有纳税人这个词,有的只是“人民”。My country has one of the largest bureaucracies in the world. Most of these bureaucrats are either bribing or taking bribes. Power is being abused in every way imaginable and turned into a money-generating tool. According to publicly available reports, enormous amounts of public funds are wasted on sumptuous banquets, luxury trips and expensive cars provided to these bureaucrats. We are talking about 900 billion yuan or over US$140 billion a year. Some may ask: Why don’t the taxpayers say no to this practice? I’m sorry, the concept of taxpayers’ rights doesn’t exist in my country. All we have is the term “the people.”有人会说,这些事不足为奇,任何一个国家都会有,任何一个国家都曾经有过。 我承认,但还是要说,如果腐败可以分度数,那么 5 度腐败和 100 度腐败的差别不仅 是个数字,前者还可以算是瑕疵,而后者已经成了灾难。我还要说,不能因为别的国 家有腐败,就认为中国人应该忍受这种腐败。Some may say, well, this is nothing to get excited about, because corruption exists in every country, at any time. I agree. But still, I want to say that if there were degrees to measure the rampancy of corruption, then the difference between five degrees and a hundred degrees is not merely a difference in readings—the former shows minor defects, but my country’s rampant corruption means disaster. I also want to add: It’s wrong to suggest my compatriots should put up with corruption simply because corruption exists elsewhere.难道因为中国人的素质太低,所以不配享有更美好的生活吗?请你相信,说这话 的人,他自己的素质就很低;难道因为中国的独特国情,所以不能给民众以太多自由 吗?请你相信,说这话的人,他自己就是国情;难道中国最需要的真的不是自由,也 不是人权,而是稳定吗?在这里,我请你相信,说这话的人,他自己就是不稳定的因 素。Chinese people don't deserve a better life because “the quality of the Chinese people” is low. Believe me, people who say this are themselves of low quality. The Chinese people should not be given too much freedom due to China’s “unique situation.” Believe me, people who say this are themselves perpetuating China’s “unique situation”. Stability is what China needs the most, not freedom, not human rights. Believe me, people who say this are themselves contributing to instability.62009 年底,我混进了一个传销团伙,在其中生活了一段时间之后,我发现传销团 伙几乎就是中国社会的缩影,一位中国学者曾经对此做过精准的论述,他把这种社会 称为“前现代社会”,主要有三种人构成:骗子、傻子和哑巴。不过令人高兴的是,中 国已经进步了,情况发生了深刻的变化,那就是:骗子越来越多,傻子和哑巴都快不 够用了。At the end of 2009 I infiltrated a gang of pyramid scammers. After spending some time living with them, I realised that the world of pyramid selling is Chinese society in miniature. A Chinese scholar once defined this kind of society as being in a “primitive state,” a society that is comprised of three kinds of people: liars, the deaf and the mutes. The good news is that Chinese society is moving forward —now there are more and more liars and we’re running out of the deaf and the mute.英国学者亨利·梅因先生曾把从身份到契约的转变视为现代文明社会的标志。按 这个标准,中国还有很长的路要走。The English scholar Henry Maine refers to the transition from individuals bound by social status or belonging to traditional social castes, to a modern world where people are independent entities free to make contracts on their own, as the progression of "from status to contract. " If this progression is the benchmark for entering a modern civilised society, then China is still a nation in a primitive state.就在二十多年前,中国还是一个完全的身份主导型社会,在那个社会中,一个 人能做什么,能做出什么成绩,不是取决于他本人的能力和素质,而是取决于他爸爸 是谁。如果某人是个王八蛋,他的儿子也必是个王八蛋,很多年后,他的孙子依然是 个王八蛋。My country was entirely a status-oriented society just over twenty years ago. What a person could do depended not on that person’s intelligence and competency. Rather, it depended on who that person’s father was. During the Cultural Revolution, if someone was deemed a “son of a bitch,” then his son would be deemed a “son of a bitch,” and many years later his grandson would also be deemed a “son of a bitch.”在二十多年之后,情况有了什么变化?我要说,有所进步,可是进步不大。Twenty years on, is there any progress? Yes, there is, but not much.在这个国家,政府官员的儿子、孙子依然做官,民工二代、民工三代依然是民工 。 到今天,中国社会已经成了一个以身份为主导的板结型社会,每一种权力、每一门 生意、每一项资源都被彻底垄断,平民子弟几乎没有希望,他绝对没机会能成为奥巴 马或乔布斯。7In my country, the sons and grandsons of officials are still officials while second and third generation migrant workers are still migrant workers. All power, all business and all resources are monopolised. There is almost no hope for the sons of ordinary citizens to move up. There is no possibility of them ever becoming an Obama or a Steve Jobs.在这个国家,人们即使只想过正常的生活也无比艰难。最近的几年,中国市民阶 层的生活正日益艰难,沉重的税负、昂贵的房价,日益上涨的物价和微薄的工资。在 这个国家,开出租车可就在几个月之前,有位司机亲口告诉我:他已经有几个月没吃 过肉了。当我们经过一片豪华住宅区,他这样感慨:这里的大楼越建越多,为什么我 的日子却一天比一天艰难?In my country, just striving for a normal life is difficult. In fact, in recent years life has become much harder for the urban population due to the heavy tax burden, exorbitant housing prices, high inflation and low wages. Driving a taxi previously provided a good income, but a taxi driver recently told me he had not eaten meat for several months. He sighed as we passed a luxury residential estate. “More and more skyscrapers are going up,” the driver said. “But why is my life getting harder and harder?”中国已经成了奢侈品消费大国,但更令人高兴的是,在这个国家,连死亡本身都 已经成了昂贵的奢侈品。有一首歌谣极为生动地描述了人们的忧虑:“生不起,剖腹一 刀五千几;读不起,选个学校三万起;住不起,一万多元一平米;娶不起,没房没车 谁跟你;病不起,药费让人脱层皮;死不起,火化下葬一万几。”My country has become the world’s largest consumer of luxury goods. And now, even living and dying in my country have become a luxury. A popular song encapsulates people’s anxieties:Can’t afford to have children—caesarians cost five thousand and more Can’t afford to go to school—a good school costs at least thirty K Can’t afford an apartment—more than ten thousand for a meter of floor Can’t afford to get married—no house, no car, no wedding, she’ll say Can’t afford to get sick—medicine costs an arm and a legCan’t afford to die—cremation costs are through the sky一个以身份为主导的社会,必然是一个缺乏创造力的社会,所以我们看到,无论 在工业、农业、商业还是在文化艺术领域,中国人都绝少创新,有的只是抄袭和模仿 。我相信,如果不改革这糟糕的制度,在未来的几十年间,中国仍将是一个缺乏创新 与发明的国度,它或许会有很多钱,但一定不会有太多文化;或许会有强大的武力, 但一定不会让它的国民感觉平安。Creativity never flourishes in a status-driven society. That’s why in every field of endeavor—industry, agriculture, commerce and culture—my country contributes few innovations and new ideas, but excels at counterfeits and imitations. I believe that without reforming this rotten system, China will continue to be a nation that contributes few innovations and new ideas to mankind. It may have a lot of money but there won’t be much8culture left. It may become a mighty military power but it will still be incapable of making its people feel secure.谈到中国的种种问题,人们有各种各样的解释,恋权者说那是因为中国人的素质 太低,保守者说那是因为伦理道德的缺失,某些宗教人士说那是因为中国人没有信 仰。People in China have come up with a multitude of explanations for my country’s numerous problems. Those who want to hold onto power say China has problems because the Chinese are just a “low quality people.” Therefore, they have to be controlled and managed. Conservatives say China’s current problems result from the Chinese people abandoning traditional moral values. Some religious groups say China’s problems result from the Chinese not having any faith, and consequently commit evil because they do not fear the wrath of god.但在我看来,这一切都是因为我们有一个糟糕的制度,在这种制度之下,权力不 受约束,只能渐趋腐败;法律形同虚设,它是权贵的利器,更是平民的枷锁;在这种 制度之下, 警察和军队最大的作用是维护统治,只会让人们感觉更加恐惧,而不是更 加安全;在这种制度之下,没人对历史负责,所以也就没人对现在负责,更不会有人 对未来负责。In my view, everything stems from the rotten system. A system with no restraints on power can only lead to corruption; a system in which the law exists in name only turns the law into a deadly weapon high officials use to oppress the citizenry. In this system, the primary purpose of the police and the military is to maintain the political rulers in power and inspire terror, not for making people feel secure. In this system, no one takes responsibility for the past, present and future.在这种制度之下,人们只关心眼前的利益。在这种制度之下,不守规矩成了最大 的规矩,不择手段成了最好的手段,在官场,在商场,大多数竞争其实都是底线的竞 争,总是让卑鄙的人胜出;在这种制度之下,人人都在犯罪,却没人需要忏悔;在这 种制度之下,每个人都会感觉屈辱,不管身边有多少“和谐社会”的广告,大多数人想 的都是同一件事:离开这里,到平安的地方去。In this system, people only care about short-term profits. In this system, not following the rules is the rule, and unscrupulous means are the only means in government and business so only the dirtiest players emerge victorious. In this system, everyone is a criminal so no one needs to repent. In this system, humiliation is felt by everyone, so no matter how much a “harmonious society” is promoted, the majority of people dream of escaping to a safe place.这糟糕的制度,斯大林—毛泽东主义和中国王朝政治的不伦之子,丛林法则、儒 家权谋和共产主义的混血产品,经过几十年的发育,已经成长为一个又大又丑的怪物 ,它虚荣、蛮横、自视甚高、从来不会认错,它打倒一个人是因为正义,给这个人平 反,还是因为正义。一切好事都是它领导的,一切坏事都是因为背叛了它的领导。它 主宰一切,只允许一种信仰,那就是信仰它;只允许一种感谢,那就是感谢它;它拥9有每一份报纸、每一所学校、每一座寺庙,没有它的允许,连花朵都不能随便开放。This rotten system is the mongrel of Stalinist-Maoism and Imperial Chinese political culture, a cross-breed of the rule of the jungle with traditional Chinese trickery and communism. Decades later, this creature now has become a monster. This monster is vain, tyrannical and arrogant. It never admits to mistakes. It destroys people in the name of justice and rehabilitates them, also in the name of justice. It takes credit for everything positive, and blames others for all failures. It wants to lord over everything and only tolerates one faith, faith in itself. This monster only allows praise to one thing, praise to itself. It owns every newspaper, every school, and every temple. Without its permission, even flowers may not bloom.这个怪物既强壮又脆弱,既身患重病,却有着强大的杀伤力;既异常笨拙,又有 着无比敏感的神经,一点风吹草动就能让它神经紧张,一件微不足道的小事就能让它 怒火中烧。这糟糕的制度,就像一个越来越大的毒瘤,毒害着每一滴血液、每一根神 经,并将最终把整个国家拖入可怕的灾难之中。This monster may be frail, but it is still resilient. It is terminally ill, yet it still possesses lethal power. It is dumb yet is also extremely sensitive—the slightest breeze can set off anxiety attacks, trivial matters can ignite a towering rage. This rotten system is like a festering tumor that is poisoning every drop of blood and every nerve cell of my country, and will ultimately drag the entire nation towards catastrophe.几千年的战争和杀戮之后,人类终于明白了一个道理:权力如同猛兽,随时可能 暴起伤人。因此,必须把它关到笼子里。但在中国,大多数人总盼望迷信明君贤相式 的统治,总希望有一只不那么残暴的猛兽来统治他们。我觉得这是不可能实现的愿望 ,因为猛兽的野性尚存,随时准备择人而噬。Wars and man-made catastrophes over thousands of years have taught people one thing: Power is a monster that kills. Therefore, it must be caged. But rather than striving for a better system, many Chinese people are still dreaming of a wise and kind-hearted ruler—a not-so-vicious monster. I believe this dream will remain a dream because a monster will attack as long as it is not caged—it is the nature of the beast.当权力的野兽在身边咆哮,人们会变得格外谨慎,只要日子还能过得下去,他们 就绝不会多说一句话。他们漠视自己的权利,也漠视别人的权利,邻居的房子被拆, 他们若无其事地看着,等到他们自己的房子被拆,邻居们也在旁边若无其事地看着。When this powerful monster roars, people become timid. They are content to be mute as long as they can survive. They neglect their own rights, and the rights of others. They stand by idly when their neighbour’s home is bulldozed. When their own homes are bulldozed, other people stand by idly.一个月前,我在一次演讲中谈到中国人的责任。我说,作为现代公民,我们应该 知道,这国家有你的一份,它好,有你的一份,它不好,也有你的一份,我们不能假 装自己可以避开了这些问题。人类社会是一个整体,没人可以置身事外。一人不自由10,则人人不自由。一人不安全,则人人不安全。有人说,中国是一个没有底线的国家 ,这话不对,这国家并非没有低线,它以你我为低线。这糟糕的制度能够运行,是因 为我们都曾经为之出过力,我们就是制度。如果它越来越好,是因为我们都曾为之努 力,如果它越来越坏,也是因为我们的努力。In a speech I delivered a month ago I spoke about the responsibilities of the Chinese people. I said: As citizens of our country, we must know that every one of us is an owner of our country. We are responsible for both its goodness and its flaws. We must not pretend we have nothing to do with China’s problems. We all live on the same planet and no one can stand by idly. When one person’s freedom is deprived, no one is free; when one person’s safety is jeopardised, no one is safe. Some people say China is a nation that behaves as if it doesn’t have a bottom line. I disagree. I believe there is a bottom line—we are the bottom line. This rotten system persists because we all have contributed to it, in one way or another— we are the system. If the system improves, that’s because we have worked on it. If the system gets worse, that’s also because we have contributed.要想这个国家变好,首先要做的是让自己变好。一个美好的国家不是一群奴隶 能够建成的,她需要许多聪明而有担当的人,这就是“公民”二字的含义。他们不仅爱 自己,还爱国家;不仅关心自己的权利,也关心别人的权利;不仅捍卫自己的自由, 也捍卫别人的自由。不仅捍卫自己的房子,也勇于捍卫邻居的房子。他们在大众沉默 之时敢于发出声音,他们在大众踟蹰之时敢于迈出脚步。把自己变好是一场光荣而艰 难的事业,注定要经历挫折和磨难,但我们看到,有越来越多的中国人开始明白自己 的责任,他们从沉默中走出,诚实地说话,温和地建言,有些人因此而遭受不幸,但 他们还在坚持,坚持在黑暗中发出孤独的声音。To make this country a better country, we first must make ourselves better. A group of slaves can never build a great nation, but modern citizens can—citizens who are intelligent and responsible. They not only love themselves, but also their country. They not only care about their own rights but also the rights of others; they not only defend their own freedom, but also the freedom of others; they not only defend their houses, but also their neighbour’s houses. They will never evade their responsibilities and will speak out when everyone else is silenced; they will never stop advancing when everyone else halts in hesitation. To make ourselves better is an honourable process and we are bound to encounter setbacks and hardship. Despite hardship, more and more Chinese people now are aware of their responsibilities. They break the silence, speak the truth, and calmly make suggestions. Some are suffering for their actions but refuse to be cowered or silenced.两千多年前,孔夫子说过一句话:邦有道则仕,邦无道则隐。但作为一个现代公 民,我们更应该这么说:邦无道,我们应该批评它,监督它,使之有道。邦有道,我 们应该批评它,监督它,使之更加有道。这是我的理想,也是我的事业,我将终生为 之努力。Over two thousand years ago, Confucius said one should only serve the state if it is righteous, otherwise one should eschew serving the state. However, to become citizens of a modern society, I say we should criticize the government if it does not do the right thing, and we should also keep an eye on the government even if it is already doing the right thing. This is my belief and this is what will I do for the rest of my life.11最后我要说,我不是阶级敌人,不是颠覆分子,我只是想把怪物关进笼子里。 没错,我是在批评自己的国家,但这并不表示我恨这个国家,相反,我爱我的祖国, 我爱她壮丽的山河、辉煌的文明,也爱她的苦难,并将因为这苦难而加倍爱它。没错 ,我是在批评这糟糕的制度,但在这个制度变好的过程中我绝不希望看到流血,我只 希望可以使这制度温柔地变好。我有一个梦想,希望在不久的将来,花朵能在我的祖 国自由绽放,中国的孩子可以尽情欢笑,中国,这古老的国家,苦难钟爱之地,能够 变成富足、和平而自由的国家。Finally, I hope you believe me that I am not a class enemy, nor an over-thrower of governments. All I want is to cage the monster. Yes, I am criticizing my country, but that doesn’t mean I hate my country. Rather, I love my country. I love her splendid mountains and rivers and her great civilization. I appreciate the suffering she has experienced. In fact, I love my country even more because of the suffering she has been through. Yes, I am criticizing her rotten system, but I do not want to see bloodshed while my country is improving herself. I hope the system will improve gracefully. I hope in the near future, in my country, flowers of freedom will blossom and children will smile without fear. I hope in the near future, my country, an ancient civilization, a land of suffering, will become a nation of prosperity, peace and freedom, for all. ### Bribes, Returns and Enforcing Chinese Legal Decisions URL: https://www.silkroadintl.net/bribes-returns-and-enforcing-chinese-legal-decisions/ Last updated: 2026-07-18T14:48:23.000Z **17/11/11 UPDATE** FROM THE [WSJ TODAY](http://blogs.wsj.com/chinarealtime/2011/11/17/china-%E2%80%98where-the-bribes-are%E2%80%99/?ref=silkroadintl.net) : "China poses a high corruption risk. No secret there. But did you know it also poses **the broadest risk of any country**?" And [this too](http://the-diplomat.com/china-power/2011/11/17/when-chinese-hack-chinese/?ref=silkroadintl.net): > "...almost anyone could be a target. I heard this when I was in Germany and Switzerland, where there’s deep concern about protecting the manufacturing competitiveness of small and medium-sized enterprises. If you have any type of market or price advantage based on intellectual capital, there may be a small company targeting you. And given how hard it has been for the big companies to develop effective cyber security, the small companies are going to be even more vulnerable." > \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_Before the Q&A, a quick follow up on some of the content from [last week's webinar](https://www.silkroadintl.net/david-dayton-working-in-china-webinar-thursday-nov-3rd/). Here is a [link](http://www.chinabusinesswebinars.com/china-business-reading-resources/?utm%5Fsource=getresponse&utm%5Fmedium=email&utm%5Fcampaign=shlomof&utm%5Fcontent=%5B%5Bfirstname%5D%5D%2C+this+one+is+a+must.) to both the book and blog list that I shared in my presentation about "[Preparing to work in China](http://www.chinabusinesswebinars.com/events/4/webinar-preparing-to-work-in-china-%E2%80%93-what-you-need-to-know-before-you-get-here/?ref=silkroadintl.net)." There is supposed to be a limited-time posting of the audio content and the Power Point presentation up sometime soon too. I'll link to that when it's available.\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_**Q.** Do I need to give gifts (pay bribes) to get done what I really want in China?**A.** Let me start by saying this, after 15 years of business in Asia, I personally have never knowingly paid or approved of paying a bribe to get a project done or to by-pass a standard or get around something that was expected to complete in China or anywhere else. [But I have heard](https://www.silkroadintl.net/starting-your-own-business-in-china-some-additional-comments/) that to get an official to come give approval that a newly built-out office space in SZ meets fire code you’ll be asked to pay thousands of USD just to get the jerk to come out for 5 minutes. I was recently talking with someone doing a multi-million dollar a year business in SEA and he was just resigned to the fact that he couldn't do business without paying up. He had even hired someone to be the runner and pay for him so that it wasn't actually him making the physical pay offs. I'd don't buy this at all. You don't have to participate if you don't want to. At almost all times and in almost all situations you do indeed have a choice.[China Law Blog](http://www.chinalawblog.com/?ref=silkroadintl.net) has [a great answer to a similar question here](http://www.chinalawblog.com/2011/11/bribe%5Fpaying%5Fcountries%5Fchina%5Fis%5Fsecond%5Fworst.html?ref=silkroadintl.net), but from a different perspective. One of the things that I like about [Dan’s post](http://www.chinalawblog.com/2011/11/bribe%5Fpaying%5Fcountries%5Fchina%5Fis%5Fsecond%5Fworst.html?ref=silkroadintl.net) is that he points out specifically that bribe paying is so much a part of the Chinese culture that when some Chinese business people are told they don’t have to do it in other cultures they flat out refuse to believe it. In my experience, this incredulity goes both ways. Most westerners that have no experience with this level of corruption (and usually ones that don’t speak Chinese and/or are here doing business for the first time) simply can’t believe that it’s as common as it really is. China consistently ranks low on any [list of corruption](http://bpi.transparency.org/?ref=silkroadintl.net). And whenever I point this out, I get all the China apologists ignoring the fact that China is corrupt in a very different way than is the US and saying to me things like, Yea, well what about Eron or Madoff or the recent banking scandal?! Yes, there is corruption everywhere, but as the studies show, the corruption in the US is the exception, not the rule. [In China corruption is the rule](https://www.silkroadintl.net/almost-everything-you-see-is-planned/), not the exception—that’s why Chinese can’t believe it when they’re told they don’t need to pay. I completely agree that the US is NOT perfect, but I’m not saying that it is. What I am saying is that I’ve done business in the US and in Asia for almost 20 years and I’ve never had anyone in the US offer me an envelope of cash to NOT QC a project. I’ve never fired anyone in the US for using their position to get cash, favors, dinners, hotel-stays, etc. in exchange for not doing their job correctly. When I do business in the US, I expect it to be difficult but I expressly do NOT expect someone to offer me an expensive way around the difficulties. But in China—I’m used to saying no to these “[opportunities](https://www.silkroadintl.net/the-chinese-working-environment-part-347/)” to make my business life easier. In the US I’m not used to local low-level government officials asking for exorbitant payments just to come out and do their jobs—but in China, it’s part of the [business planning](https://www.silkroadintl.net/corruption-and-the-price-of-coffee-in-china/). **Q.** One of the best questions that I received at the latest show in HK was from a buyer that was trying to get some actual enforcement of a legal judgment against a Chinese factory. He was wondering: “Outside of the explicit legal channels, what were \[his\] options for getting a judgment enforced?”As this guy’s experience showed, and Mike Bellamy and I have both noted in different presentations, that the Chinese courts are getting better and you can win in China. The problems arise when you realize that a decision in your favor isn’t much good if you can’t enforce it. So how do you know who is following up and if anything will ever be done about your Chinese judgment? Honestly? No one and you can’t—meaning, no one is really responsible to enforce it and you’ll never really know if anything at all has been done. So, are there any enforcement options available to private individuals or companies? I’m not a lawyer but here’s what we’ve seen.**A.** **First**, who is supposed to enforce your judgment? This is where you need to go first—the local authorities whether it be a local police or other government bureau, these folks should be your first stop. Problem is, these folks are the least likely to benefit from taking action (actually doing their job) and helping you. It’s work for them, it’s a local vs foreign issue, it’s likely both new and not exactly clearly defined and having a foreigner call them out to do their job isn’t exactly endearing either.**Second**, you need to work through your legal rep’s to see what they can do. The threat of legal action should now (after a successful trial) have more impact. You can also contact both the customs and the buyers in foreign countries and make them aware of the court’s decision and try make it difficult/expensive/illegal for the buyer to do business with this Chinese partner.**Third**, there are all sorts of extra-legal options available to you to encourage the Chinese supplier to follow though. Everything from taking out ads in local papers, contacting suppliers to contacting HKTDC and other trade groups, posting complaints on online search engines (Alibaba, Global Sources, et al). We’ve even seen people contact other clients directly when they come to the factory. **Q. (Letter from a friend of a client)** > “A Europe-based buyer entered into a contract for, and purchased manufactured products, from a PRC-based manufacturer. The orders were partially filled and shipped to buyer. Buyer asked for orders to be completely filled as per contract. Manufacturer did not. Buyer terminated contract due to manufacturer’s breach.“Buyer now seeks to bring parties back to pre-contract position, including return the products shipped to buyer.“Any insight into such an effort? Any suggestions on resources that can offer insight to such an effort? Obvious concerns include: can such products be cleared through PRC Customs; what happens if manufacturer refuses to accept return (e.g., envision truck idling outside of manufacturer’s premises and the baoan refuses to allow truck entry to premises); etc.“Best regards,”N. > **A.** > Dear N.,Thanks for the email and thanks to John for the kind referral.Without knowing what the product is, the current balance of payments and other relationship contractual details I can’t really give you any specific advice. But I can tell you what I’ve seen and what I’d bet will happen next. Before I even get started I’d ask first—can you 100% confirm that your supplier is actually a factory and actually the factory who made the product? And is your contract with that factory?Now to my thoughts on what will happen.First, partial orders were fulfilled by the Chinese supplier—if the payments were “partial” as well, the Chinese supplier will see this as fine and not feel any obligation to complete the orders. If everyone involved is “just about” equal with payments/product regardless of the contract, the Chinese will not want to get back involved in the project that could cost them more. If the Chinese came out ahead, again, no reason to even talk about it.Second, if the buyer cancelled the contract (for legitimate but still somewhat punitive reasons) the supplier will have written off the relationship completely and will have no desire to work with the buyer again. Typically Chinese see anyone that is willing to so easily terminate contracts/relationships as a very risky partner.Third, if the buyer wants to actually return product to China to be replaced/repaired at their cost there is absolutely no incentive whatsoever for the supplier to talk. Chinese suppliers do NOT believe in “potential orders” and have very little concept of “moral obligation” especially if there (their) money is involved.Fourth, even the Chinese government is working against you in this case—the ability to get rejected/defective product back into China is not just difficult but next to impossible. There is no VAT available, there are costs involved to the original supplier just to get in back to their factory, Customs has limited processes to deal with returns/rejects, and so no one other than the buyer (and maybe their shipping company) wants to see this accomplished successfully. Even if you could get it back into China (which you probably can, eventually) there is no reason why the factory would open their gates and accept the truck/container into their facility.Fifth, if you send product back to China and do not plan on having that exact product sent back to you it will, I promise, be sold to someone else. No way a supplier takes a hit on usable product.Sixth, your whole premise is based on the concept that the contract means something to both parties—you’re half wrong. The contract means nothing to your Chinese supplier. Why should it? IF it’s actionable in China and IF you could take them to court (in China) and IF you won and IF it could be enforced and IF the penalties were significant and IF you could follow up on that enforcement and IF you could enforce any subsequent contract and IF they had any cultural legal history/context to refer back too then they might take it somewhat seriously—but they have none of that. And chances are neither do you.Now, having said all that, if there is tangible financial incentive for the supplier (buyer still owes them money for product; supplier can re-sell rejected product) to work with the buyer you’ve got a better than average chance that you can at least have the conversation about this. But I’d be surprised (shocked, actually) if you could get this done. If the buyer doesn’t have significant financial leverage over the supplier I doubt that anything will ever happen.I’m not a lawyer and I suggest that you talk with one. But if your contractual ducks were not lined up correctly from the very beginning I doubt even a lawyer can help you.Sorry for the negative response, but that’s what I’ve seen/heard over the years. Once product is paid for and it’s left China, it just ain’t comin’ back!Thanks,DD > I’ve written about this before: [Returning Products to a Factory in China. ](https://www.silkroadintl.net/returning-products-to-a-factory-in-china/) ### "None More Black" URL: https://www.silkroadintl.net/none-more-black/ Last updated: 2026-07-18T14:48:23.000Z **Happy Nigel Tufnel Day!** [**11.11.11**](http://movies.yahoo.com/blogs/movie-talk/11-11-11-nigel-tufnel-day-185526454.html?ref=silkroadintl.net) “*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](http://www.imdb.com/title/tt0107048/?ref=silkroadintl.net) 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](http://www.realclearmarkets.com/articles/2011/11/04/john%5Fmaynard%5Fpotemkin%5F99349.html?ref=silkroadintl.net), they will likely [not make it out of this recession](http://blogs.wsj.com/overheard/2011/11/10/reasons-not-to-be-cheerful-about-china/?ref=silkroadintl.net) standing up. [More here](http://pointsandfigures.com/2011/11/08/the-market-is-focused-on-europe-what-about-china/?ref=silkroadintl.net).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](http://blogs.wsj.com/chinarealtime/2011/11/01/chinese-shoppers-seek-second-opinions/?ref=silkroadintl.net): “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:](http://the-diplomat.com/china-power/2011/10/24/the-death-of-good-samaritans/?ref=silkroadintl.net) > 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](http://www.nytimes.com/2011/11/06/education/edlife/the-china-conundrum.html?pagewanted=all&ref=silkroadintl.net) any time in the near future. Read [this report](http://www.nytimes.com/2011/11/06/education/edlife/the-china-conundrum.html?pagewanted=all&ref=silkroadintl.net) 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. > ### David Dayton--Working in China Webinar--Thursday Nov 3rd URL: https://www.silkroadintl.net/david-dayton-working-in-china-webinar-thursday-nov-3rd/ Last updated: 2026-07-12T07:59:52.000Z David Dayton will be speaking at 9:30 AM EST on Thursday Nov 3rd (tomorrow) for [China Business Webinars](http://www.chinabusinesswebinars.com/?ref=silkroadintl.net). This the presentation will focus on preparing to work within Chinese culture and with Chinese suppliers in China. You can register [here](https://www3.gotomeeting.com/register/182409166?ref=silkroadintl.net) (it’s free!).[](http://silkroadintl.net/blog/wp-content/uploads/2011/11/DD-Fixing-Problems.jpg?ref=silkroadintl.net)David Dayton is the owner and manager of SRI. David has been working and studying in Asia since 1988 and he leads SRI from our Shenzhen, China office. Besides Shenzhen, David has lived and in Thailand, Taiwan, and Chongqing. David is a regular presenter for Global Sources’ New Buyer Training seminars in Shanghai, Dubai, Hong Kong (and Johannesburg in 2012). He has also spoken for Global Sources’ Supplier Education program and Metering China's Xi’An and Guangzhou Sourcing Shows. David has been published in Euro Biz magazine, Right Sight Asia, Garden International, The China Sourcer and other trade publications and on numerous sites online including the China Economic Review, the New Zealand government’s international trade information website and China Success Stories. He has been interviewed by the BBC, CBS 60 Minutes, The AP, the CBS Evening News, the Hong Kong Trade and Development Council and by NPR on China related education and business issues. SRI's blog has been listed on multiple lists as one of the top 10 business blogs for China and David's blog postings have been featured on the WSJ China blog “best of” lists. David is also a founding member of the [China Sourcing Information Center](http://chinasourcinginfo.org/?ref=silkroadintl.net).David has a Master’s Degree in Southeast Asian Cultural Anthropology, focusing on Comparative Chinese and Thai Corporate Cultures and a BA in International Relations and East Asian History. David has worked as a consultant, manager, trainer and translator on both sides of the Pacific and he speaks both Thai and Mandarin. ### Show follow up, next steps in China URL: https://www.silkroadintl.net/show-follow-up-next-steps-in-china/ Last updated: 2026-07-18T14:48:23.000Z Link update: Registration Link was broken--[here's the new one](https://www3.gotomeeting.com/register/182409166?ref=silkroadintl.net).**Perfect timing:** I've been invited to speak at [China Business Webinars](http://www.chinabusinesswebinars.com/?ref=silkroadintl.net) on Thursday Nov 3rd at 9:30AM EST. In my own humble opinion, this is a must for anyone that is planning on coming to China to work, the presentation will focus on preparing to work within Chinese culture and with Chinese suppliers in China. You can register [here](https://www3.gotomeeting.com/register/182409166?ref=silkroadintl.net) (it's free!). After trade show month, October, in China and Hong Kong it’s time to ask **how to best to follow up with the potential suppliers you've found**. At least 2-3 different people at each presentation asked me about service providers in China that they could use once they were back home. The reality is that even if you’re multi-talented (quite possible), flush with cash (doubtful in today’s economy) and have tons of extra time on your hands (not-likely) you’re going to need some help from people that have both experience and are on the ground in China. Here is a list of people that I have personally worked with over the years and can highly recommend. 1. Project Management: [SRI](http://silkroadintl.net/?ref=silkroadintl.net) (of course) 2. Independent Quality Control: [Asia Quality Focus](http://www.asiaqualityfocus.com/home.html?ref=silkroadintl.net) 3. China/Foreign Legal Representation: [Harris and Moure](http://www.harrismoure.com/?ref=silkroadintl.net) 4. Mediation Services: [Southern Perspective](http://www.southernperspectivesz.com/?ref=silkroadintl.net) 5. Product, Packaging and Graphic Design: [Pete Jones Design](http://peterjonesdesign.com/?ref=silkroadintl.net) 6. CAD and Technical Design: [San Seriph Design](http://ssdfirm.com/?ref=silkroadintl.net) 7. Factory Auditing: [BV](http://www.en.bureauveritas.cn/wps/wcm/connect/bv%5Fcnen/Local?ref=silkroadintl.net) 8. Product testing: [STR](http://www.strquality.com/en-US/Pages/default.aspx?ref=silkroadintl.net) 9. Financial payment/auditing and business registration: [Fiducia](http://www.fiducia-china.com/?ref=silkroadintl.net) Maybe you think that you’re too small to use third party services or that they’ll add too much cost to your bottom line, and to some degree you’d be right. But there are really only three options: you can either use someone else, you can do it yourself or you can just trust that nothing will go wrong (an eventually get ripped off). There is no 4th option. So how small is too small? Well, that’s your call, but if you think that you’re too small to have problems, let me tell you this: working in China is the same if you’re a small buyer or a huge MNC. This [article, form the WSJ](http://blogs.wsj.com/chinarealtime/2011/10/14/news-hub-wal-mart-why-china-has-the-upper-hand-with-u-s-business/?ref=silkroadintl.net) is about the heavy-handed response to mislabeled pork in Chongqing. Now you might say, “Hey, that’s Wal-Mart. I’m nothing like that.” But my personal experience with both suppliers and westerners that work for Wal-Mart in China is that the problems they have are EXACTLY the same problems I have, just on a larger scale. You can learn from my experiences (and Wal-Mart’s) or learn on your own, but learn you will. One more thing to be aware of before you just start sending money to random bank accounts, **you need to be doing due diligence on each product supplier** you plan on buying from. If you don’t, likely there is no recourse for lost or stolen money. As I’ve noted many times before, Chinese people don’t trust other Chinese they don’t know personally and so as a complete stranger to China, neither should you. So the first thing you have to do is to verify everything you were told and everyone you met BEFORE you send them confidential art, spec’s or especially money. Once you’ve confirmed that they are indeed who they say they are, you should be onsite—visiting them to both build relationships and confirm capacity. Only after you’ve visited the factory and personally confirmed capacity can you place an order with any degree of informed confidence.**Next, I was asked about component QC** if you’re just buying completed product from a single supplier. You’re right to be asking as your products are only as safe as the component materials. Thing is, people don’t ask this question enough. And it can be the real kicker in any given project since very very few suppliers in China actually do any incoming-materials QC (other than to confirm internal profitability). If it’s such a big deal, why don’t suppliers do incoming QC? Guanxi. Most factories work on a “guanxi” basis with their sub-suppliers—meaning they work with other people/suppliers which whom they have history/personal relationships. Because they have personal relationships they get good deals, they have informal terms, they share in problems/changes and they accept relatively larger tolerances in quality. Since the relationship is relatively informal, they will not require formal 3PQ on incoming materials or both parties will lose face (and so probably not do business with each other and so lose an opportunity to make money). And that’s the bottom line for Chinese business—what’s the best possible way to make money over a long period of time? Have good personal relationships in a constantly changing business environment. Strict rules and standards, if enforced, will only hurt personal relationships.**Finally how to follow up on legal decisions in China?** This is a great question—and one that I don’t really have an answer for. The unfortunate situation in China is that while the laws and courts are both getting better at being blind (treating foreigners fairly) there is little to no enforcement of the laws/court decisions in China for anyone, let alone foreigners. Best case scenario you win and the judgment is enforced, justice is done, the future of your product is protected and you are adequately compensated. Usually though you win but get very little compensation and spotty or limited enforcement. Worst case scenario, and one that I’ve heard multiple times, is that you win a case against a supplier but that supplier is a large employer and/or has better connections than you do in the local civil administration. Who’s going to put the interests of a foreigner (and one who is likely not coming back to do business in the area again) ahead of the local company? Answer? No one. At this point your options are very limited. You can drop it, you can try to get someone to enforce it for you, you can even try “public” enforcement (taking out ads in papers, adding the supplier’s name to a black list, notifying other suppliers, etc.) ### And now for something completely different.... URL: https://www.silkroadintl.net/and-now-for-something-completely-different/ Last updated: 2026-07-18T14:48:24.000Z We've never had a post from anyone that was not an SRI employee. Today is the first.**The most trusted source of Asian suppliers!**October 20, 2011 by [Global Sources](http://www.globalsources.com/?WT.mc%5Fid=3001020&ref=silkroadintl.net)Many buyers don’t do business with China suppliers because they think most of them are unreliable. Well, [Global Sources](http://www.globalsources.com/?WT.mc%5Fid=3001020&ref=silkroadintl.net) has got the sourcing help to find trustworthy suppliers, not fly-by-night shops. Each verified supplier on our site and in our magazines is visited at least three times to make sure that their company is a real, export-ready, with real products and real offices. Some of the specific tools we offer buyers to source more confidently, with less risk are:**Online sourcing directory**[GlobalSources.com](http://www.globalsources.com/?WT.mc%5Fid=3001020&ref=silkroadintl.net) lists millions of products from hundreds of thousands of suppliers. Use our search functions to sort and filter suppliers by business type, location and more. Contact suppliers directly using our convenient online inquiry form to get answers to questions on product specifications, pricing, shipping and more.**Industry-specific sourcing magazines**[Subscribe](https://login.globalsources.com/sso/GeneralManager?action=RegisterEmagCheck&validate=false&WT.mc%5Fid=3001020&ref=silkroadintl.net) to free e-magazines and receive new issues monthly by e-mail. Every month buyers get updates on new products, news on market trends and accurate contact details for hundreds of verified suppliers. There are 18 industry-specific titles, so each magazine provides targeted information. Clicking on a supplier ad in the e-magazine lets buyers contact that supplier directly or go to their websites to learn more about them. [Print subscriptions](https://www.globalsources.com/GeneralManager?design=clean&language=en&page=subscription&WT.mc%5Fid=3001020&ref=silkroadintl.net) also available.**China Sourcing Fairs**Meet thousands of suppliers in-person at Global Sources’ specialized tradeshows, held in seven key locations in Asia, South Africa, the US and the Middle East. Buyers can sit down with suppliers to see all the latest products available. Check out upcoming tradeshows at [China Sourcing Fairs](http://www.chinasourcingfairs.com/?WT.mc%5Fid=3001020&ref=silkroadintl.net). And if you can’t visit in-person, look at our [Online Sourcing Fairs](http://www.onlinesourcingfairs.com/?WT.mc%5Fid=3001020&ref=silkroadintl.net), which allow you to “virtually” visit the fairs (both past and future).**New product updates in your chosen categories**With [Product Alert updates](http://www.globalsources.com/gsol/GeneralManager?&design=clean&language=en&page=prodalert/PAMarketing&WT.mc%5Fid=3001020&ref=silkroadintl.net), buyers know when new products in their selected categories are posted online. On the same day, in fact. Fine tune the types of products you’re looking for by choosing from over 6,000 categories. And receive industry news in your areas of interest too. Save time and effort with these free product & news updates.**In-depth information on key China industries**[China Sourcing Reports](http://www.chinasourcingreports.com/?WT.mc%5Fid=3001020&ref=silkroadintl.net) offer buyers detailed profiles of key manufacturers in China and elsewhere in Asia – plus information on best-selling export products, pricing forecasts, industry trends and more. See all 99 sourcing reports currently available. Prices range from $75 to $400.**PLUS…**learn how to avoid common pitfalls when you’re sourcing from China. Check out the "[What Every Buyer Should Know](http://www.globalsources.com/SITE/BUYERGUIDE.HTM?WT.mc%5Fid=3001020&ref=silkroadintl.net)" page. This is where we’ve posted proven best practices, insights from experts in the field and first-hand advice from experienced China buyers.[Global Sources](http://www.globalsources.com/?WT.mc%5Fid=3001020&ref=silkroadintl.net) has been helping buyers make more confident, more informed China sourcing decisions for over 40 years, through its online directory, trade shows, research reports and monthly magazines. [Learn more](http://www.globalsources.com/SITE/BUYER/MAIN.HTM?WT.mc%5Fid=3001020&ref=silkroadintl.net) about Global Sources’ products and services. ### Location, location, location and other suggestions for selecting the best supplier URL: https://www.silkroadintl.net/location-location-location-and-other-suggestions-for-selecting-the-best-supplier/ Last updated: 2026-07-18T14:48:24.000Z **1\. Location counts**—Sure the price may be better, but you need to factor in how long people have been doing business both in that factory and in that area (sub suppliers). The rule of thumb is this: the most advanced suppliers are found in HK/Taiwan, then Guandong, then other East Coast cities, then the rest of China.. Sure there are different types of factories in all places. And no doubt there are different types of bosses in each as well. But in general the different locations will give you a general idea of the quality of the industry in the area--Guangdong province opened up for business 10-15 years before anywhere else in the country and so the depth of managerial experience is better there than anywhere else in the country. Ditto for larger more experienced range of sub suppliers. [QC stats bear this out](http://silkroadintl.net/blog/wp-content/uploads/2011/04/Slide1.jpg?ref=silkroadintl.net). Remember, China may be cheaper, but it’s also [measurably more difficult](http://blogs.wsj.com/economics/2011/10/19/emerging-economies-have-long-way-to-go-on-business-climate/?ref=silkroadintl.net).**2\. Price does not equal cost.** Let's be honest, most people are coming to China to save money. And so that's why people work with horrible factories and take stupid risks with bad suppliers--they think that the cost savings will be worth it. People would like to think that profit margin will take a small hit in the name of "cooperation. " But my experience is this: when prices go down, quality will be affected first. Competition is VERY high in China, so the incentive to cut prices (quality) to increase margins is VERY high as well. People still have to have a set level of income to stay alive and if getting your business means lowering the price, things OTHER than profit are going to take the hit. The reality is that profit is the very LAST item that will be cut. Ask your self these three questions about your supplier. Do they have the right capacity (techniques, processes and machinery)? Do they have the right people (enough workers, experienced mangers professional communicators)? Are they using/have access to the right raw materials (can they pass your independent testing)? If you're getting a “cheap” price, that probably means that you’re not getting 1 or more of these three questions answered satisfactorily.**3\. A lot of things are out of your supplier's control**—and if they can’t control it, they will not take responsibility for it (even if they didn’t tell you they wouldn’t). The dirty little secret in Chinese manufacturing is that EVERYONE is a middle-man, EVERYONE sub’s out some % of their work. But nobody will tell you this. The problem is that they're usually subbing out to friends and family and they would lose face if they required a 3PQ check on the raw materials they bought from people they were close too. So you have to do it your self. If you do not step in and QC your suppliers sub suppliers NO ONE ELSE WILL. And, when there are problems, the factory will not be responsible for product they didn't make (even if they bought it and didn't tell you).**4\. Always be prepared to (re)negotiate**! Everything.**5\.** More love for SRI—we’re in the **top 10 of China Business Blogs for the last decade**! Great mag on [China’s ex-pat culture](http://www.chinaexpat.com/2011/09/30/china-expat-book-launched.html/%20?ref=silkroadintl.net) to boot!**And finally**, for the next two weeks I will be **speaking in HK and online 3 more times**. Most of the presentations will be at the [Global Sources China Sourcing Fair](http://tradeshow.globalsources.com/TRADESHOW/CSF/INDEX.HTM?source=GSOLHPNav) held at the [Hong Kong Asia-World Expo](http://www.asiaworld-expo.com/html/en/default.html?ref=silkroadintl.net) out by the [Hong Kong Airport](http://www.hongkongairport.com/eng/index.html?ref=silkroadintl.net).**First presentation**: [Buying from China: What new buyers need to know.](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-ELECTRONICS/CONFERENCE.HTM?source=TSCHKCSFEC%5FTOPNAV%5FHOME#Buying1)Oct 27th at the [Fashion, Garments and Accessories Show](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-GARMENTS-TEXTILE.HTM?source=TSCHKCSF%5FCENTERWELL%5FLANDING)**Second presentation**: [Improving your sourcing performance](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-GIFTSPREMIUMS/CONFERENCE.HTM?source=TSCHKCSFGP%5FTOPNAV%5FHOME#Improving).Oct 28th at the [Fashion, Garments and Accessories Show](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-GARMENTS-TEXTILE.HTM?source=TSCHKCSF%5FCENTERWELL%5FLANDING)**The third presentation** will be on online webinar hosted by [China Business Webinars](http://www.chinabusinesswebinars.com/?ref=silkroadintl.net). Nov 3rd online,[ Preparing to work in China, what you need to know before you get here.](http://tinyurl.com/DavidDaytonWebinar?ref=silkroadintl.net) You can register [here](http://www.chinabusinesswebinars.com/events/4/webinar-preparing-to-work-in-china-%e2%80%93-what-you-need-to-know-before-you-get-here/?ref=silkroadintl.net). ### So what’s China really like? Part 62704 URL: https://www.silkroadintl.net/so-whats-china-really-like-part-62704/ Last updated: 2026-07-18T14:48:23.000Z Like I've said before, this is probably the question that I get asked the most—and the answer, today from the WSJ, is: “it depends on which part of the elephant you’re touching at the moment.” From the [article](http://blogs.wsj.com/chinarealtime/2011/10/17/of-blind-men-and-elephants-%e2%80%93-grasping-china%e2%80%99s-economy/?ref=silkroadintl.net), “He said he didn’t think corporate transparency was any worse now than before, but “I don’t know why people believed \[the numbers\] so much in the past.””Yup, while China is a complete different place than it was 20 years ago, China isn’t really any different today than it was 16 years ago when I first arrived. Yes, the infrastructure is MUCH better, but it’s not safer (high-speed rail). Yes, there is much more money especially in cities, but crime and poverty are still dominant daily issues for most Chinese. Yes, the standard of living has gone up for many, but the quality of life (food in particular) is horrible. And connections are still the way the game is played. Sometimes living in China can be great, sometimes scary and if you’re a buyer—you need to be doing QC 24/7 (eating, sleeping and dreaming about QC). Here are a few different versions of China all from today's inbox.1\. [Selling US-made chopsticks to the Chinese](http://slidesha.re/pSYVBq?ref=silkroadintl.net).2\. Chinese buyers in SEA—locals beware. > Hi David,I came across your post on why a buyer should always do QC. I have a concern about a potential business deal and would be grateful if you could offer me some advice.I am a buyer from SEA who has access to product X. My friend introduced me to a Malaysian company who has a buyer from China. The buyers from China want to visit the actual facility in X. I'm glad to take them and I suggested them to meet at our company office to see samples and videos, sign Non-comps and then proceed to the location. But they disagree and want to come to the supplier site without any agreement in place.What do you suggest I do? I am afraid they will by pass me and go straight to the supplier.Thanks,\_\_\_\_\_\_\_\_\_\_\_\_If they won’t sign anything, you’re right not to take them. You’re also right that they will probably find someone else if you don’t take them. You have to choose—do you want to work with them or not already knowing that they will probably not follow any contracts or agreements that you sign together.If it was my choice I wouldn’t do it. Sure you might be passing up some money, but the problems and the potential to get stuck with a client that won’t pay or will lie to you/cut you out is just not worth it.DD > 3\. US [Citizenship](http://www.senatesite.com/home/columbusday/?ref=silkroadintl.net) for my Chinese wife.4\. Scared to eat. If you can read Chinese, you can regularly read about chemicals in chicken feet, pork, [bad oil](http://opinion.cn.yahoo.com/jdgz/digouyou/index.html?ref=silkroadintl.net), etc. Here’s a look at some of the [issues around the Chinese food industry](http://online.wsj.com/article/SB10001424052970204479504576636672280533768.html?ref=silkroadintl.net) highlighted by the recent pork issues in Wal-Mart.4\. Molds again and again. You didn't think I could get through this blog without a good (bad?) production-problem story, did you?!We've had more than our share of mold issues with a project that we're working with a factory in Fujian--so many in fact that the client asked me today, "Is it just our bad luck or are there serious issues with this factory and/or our product? " My answer--just our bad luck. Sometimes things really do just go wrong. We've had a number of temp molds break and the final mold, because of some imperfections and changes was brittle and broke as well. Each brake requires time to build another mold. The good news is that the factory has been very good at accepting responsibility for both the problems and delays. The project isn't huge, but the factory has been good about working with us. So which China is it now? Or more importantly, which China is it going to be to be for you? [This one](http://blogs.wsj.com/chinarealtime/2011/09/15/beijing-economist-laments-folly-of-china-planning/?ref=silkroadintl.net), or [this one](http://www.foreignpolicy.com/articles/2011/09/06/red%5Fdawn?ref=silkroadintl.net)? I’m decidedly on the fence. Actually I think it will be more of the former, but a really rich and arrogant and petulant version of the former. Like the last two options in [this article](http://www.eastasiaforum.org/2011/09/21/nationalism-and-where-it-might-lead/?ref=silkroadintl.net).Just know that [it’s always changing](http://www.eastasiaforum.org/2011/09/19/rare-earth-metals-export-ban-a-chinese-own-goal/?ref=silkroadintl.net)—that’s probably the only think that you can count on in China. But [watch out for the pop](http://blogs.wsj.com/chinarealtime/2011/09/21/imf-a-little-more-worried-about-china/?ref=silkroadintl.net)! ### A Chinese Steve Jobs? Also: SRI Speaking Schedule for Oct URL: https://www.silkroadintl.net/a-chinese-steve-jobs-also-sri-speaking-schedule-for-oct/ Last updated: 2026-07-18T14:48:24.000Z First my speaking schedule for October. I will be speaking in HK and online 7 times in the next 4 weeks. Most of the presentations will be at the [Global Sources China Sourcing Fair](http://tradeshow.globalsources.com/TRADESHOW/CSF/INDEX.HTM?source=GSOLHPNav) held at the [Hong Kong Asia-World Expo](http://www.asiaworld-expo.com/html/en/default.html?ref=silkroadintl.net) out by the [Hong Kong Airport](http://www.hongkongairport.com/eng/index.html?ref=silkroadintl.net).**First presentation**: [Buying from China: What new buyers need to know.](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-ELECTRONICS/CONFERENCE.HTM?source=TSCHKCSFEC%5FTOPNAV%5FHOME#Buying1)Oct 12th at the [Global Sources Electronics Show](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-ELECTRONICS.HTM?source=TSCHKCSFEC%5FCSFLOGO%5FCONFERENCE)Oct 20th at the [Gifts, Premiums and Home Show](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-GIFTSPREMIUMS.HTM?source=TSCHKCSF%5FCENTERWELL%5FLANDING)Oct 27th at the [Fashion, Garments and Accessories Show](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-GARMENTS-TEXTILE.HTM?source=TSCHKCSF%5FCENTERWELL%5FLANDING)**Second presentation**: [Improving your sourcing performance](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-GIFTSPREMIUMS/CONFERENCE.HTM?source=TSCHKCSFGP%5FTOPNAV%5FHOME#Improving).Oct 14th at the [Global Sources Electronics Show](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-ELECTRONICS.HTM?source=TSCHKCSFEC%5FCSFLOGO%5FCONFERENCE)Oct 22nd at the [Gifts, Premiums and Home Show](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-GIFTSPREMIUMS.HTM?source=TSCHKCSF%5FCENTERWELL%5FLANDING)Oct 28th at the [Fashion, Garments and Accessories Show](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-GARMENTS-TEXTILE.HTM?source=TSCHKCSF%5FCENTERWELL%5FLANDING)**The third presentation** will be on online webinar hosted by [China Business Webinars](http://www.chinabusinesswebinars.com/?ref=silkroadintl.net). Nov 3rd online,[ Preparing to work in China, what you need to know before you get here.](http://tinyurl.com/DavidDaytonWebinar?ref=silkroadintl.net) You can register [here](http://www.chinabusinesswebinars.com/events/4/webinar-preparing-to-work-in-china-%e2%80%93-what-you-need-to-know-before-you-get-here/?ref=silkroadintl.net).\_\_\_\_\_\_\_\_\_\_\_\_Now for the good stuff! Why do you have manufacturing problems in China? Why can’t “simple” changes be made on the fly? Why can’t problems be discussed openly and directly in China? The Chinese interviewees in [this article](http://blogs.wsj.com/chinarealtime/2011/10/07/chinas-internet-why-china-has-no-steve-jobs/?ref=silkroadintl.net) indirectly answer these questions while talking about why there isn’t a Steve Jobs from China (yet). 1. The economics of China inhibit innovation. 2. The politics of China inhibit innovation. 3. The educational system of China inhibits innovation. 4. The lack of a autonomous and effective legal system inhibits innovation. Sad on so many levels. I would add another answer: China has only been able to even start asking questions like this in the last decade. Give them 50 more years (assuming growth and progress can continue as have the last 30 years, a major assumption that I won’t make). I’ve been saying these same things for 10 years—Chinese are as smart and capable as anyone else and there is both great capacity and opportunity in China. But there are social and structural barriers to innovation, problem solving, negotiations and intellectual protections. Sure there are various levels of these same problems (and others) everywhere else too. But in China, the point is, that you’ve got to be aware that even though “it sure looks like they’ve got a lot of money” and they use the same iPhones and even have better/newer/cooler office buildings than we do in much of the west, business is not understood or managed the same. The goals and processes are not the same. The legal/political/historical/social/cultural environments are completely different. And that means that “business” is different. So what works?1\. If you’re going to be manufacturing in China for China, then do the market adaptations in China. Closely related to the reality of China knocking off everything on the planet is the fact that they are at the same time making the market specific adjustments necessary to be successful in China.2\. If you’re manufacturing in China for export then stick to your guns on your product spec’s but allow for changes in the manufacturing process that will maximize the local advantages (labor or materials or weather, etc.)3. Make serious investments into you suppliers and their processes. This will improve both the product/services you receive but will increase the quality of everything the supplier (and eventually the industry) produces.3A. Understand BEFORE you set deadlines that manufacturing in China will require more time, more rounds of pre-production samples and more QC during production than you’re probably used to budgeting for. Pad your dates and plan for more full man-days of QC during production.4\. Accept the fact that China is or soon will be the largest \_\_\_\_\_\_\_\_ on the planet . As such it will soon have an inordinate amount of influence in just about everything that goes on in business (if it already doesn’t). Learn to work with it instead of against it—for (a lack of) innovation, this means that much of your pre-production work will have to be done abroad. This new reality isn't exclusively a good or bad thing, it just is. There's some of both for sure. Other interesting items from the article. 1. The successful Chinese are counted as “Chinese” regardless of where they were born/raised (all from Taiwan). Mainland Chinese assume that anyone that is “ethnically” Chinese has a blood/cultural/inherent tie to “China” regardless of if that person has ever lived/studied about/can speak the language of/or even cared about the current PRC. Once Chinese always Chinese. Interesting implications of that for national security [here](http://the-diplomat.com/2011/09/19/chinas-growing-spy-threat/?ref=silkroadintl.net). This causes more than a few uncomfortable situations as groups of Chinese get together overseas. Typically the mainlanders get a crash course in global politics at their first social setting--Chinese and (PR)China are not synonymous. 2. There are successful Chinese and Chinese companies, but the article notes that they are either group efforts in China or individuals outside of China. Jack Ma (Alibaba) is raised as a notable exception. ### What to ask for at a tradeshow (and afterwards too) URL: https://www.silkroadintl.net/what-to-ask-for-at-a-tradeshow-and-afterwards-too/ Last updated: 2026-07-18T14:48:23.000Z I recently received this email from someone planning on going to a show this fall and I thought that it would be a good blog since I get multiple similar requests each year about this time. > Good-day David,I read your piece on "[It's just a little bit more. They can afford it, right?](https://www.silkroadintl.net/its-just-a-little-bit-more-they-can-afford-it-right/)" I enjoyed your straight- forward opinion.It also made me aware to be "cautious" when attending the China Sourcing fair in November. It is my first time I am attending, seeking business opportunities. With the economic struggles we still feel the pain as we are small fish here.My question to you here is: could you give me any suggestions on what questions to ask the suppliers and what to look out for? Also what products do you suggest I should look at for our market here.Anything else you think I will need to know?Thank-you for your input and help in this regard.Linda > Thanks for your email questions. Yes, there is a lot that you’ll need to ask suppliers to make sure that they are both who they claim to be and are appropriate fit for you. First questions to ask the suppliers at the show. 1. Where is the facility and can you go to visit (this week while you’re in the country)? 2. Will the person that you’re speaking with at the show be in the factory when you go to visit (so you don’t have to repeat everything you’ve gone through today)? 3. Do they have business documents that they’ll let you see? 4. Will they let you talk with engineers and other managers? 5. Will they allow 3PQ? 6. Can they give you referrals? 7. Will they sign (and keep) NDA’s and other agreements? 8. Can you meet and even QC sub-suppliers? 9. Do they have the correct export documentation? 10. Have they exported to your country/region on the world before? 11. How much of their production do they outsource? 12. How do they deal with non-conforming product? Second, questions that you need to ask to understand if they are right for you. You need to realize that just because you find a great factory that doesn't mean that it's a great fit for you and your project. You need to realize that if you're too big/too demanding/too advanced or if you're too small for them you'll not get the service that you really want or need. 1. What is there average order qtty? Is your order similar? 2. What is their average order time? Is your lead time sufficient? 3. Have they done similar projects (similar levels of customization, similar components)? 4. Can you communicate with them effectively and do you feel comfortable working with them? Third, questions you’ll need to ask when you visit them. I would never advise anyone buying from China to pay cash to a factory that they hadn't personally visited. You need to confirm everything that they've told you at the show--remember, it's a tradeSHOW (emphasis on SHOW). Who they really are and what they really can do may be very different from what you see in the booth at the show venue. 1. What are their current conditions (social compliance, environment compliance, etc)? 2. Do you approve of the processes that you see (what you see them do for others is exactly what they’ll be doing for you)? 3. Is their physical capacity what they told you/enough for you? 4. Do you feel confident that they can make your product? Fourth, There are then things you’ll want to confirm before you place an order (even for samples). 1. Can you verify their business documents? Did you pay for business information from a 3rd party? 2. Is their level of English (or your level of Chinese) good enough to resolve the problems that will come up in production? 3. Can you trust them to keep their commitments and work with you like you expect? 4. Do you own and can you pull all your molds and dyes in case you’d like to move to another facility? Finally, let me share with you some things that you need to do yourself. I know that I regularly bash on factories that are not honest about what they can do, but I've had just as many bad experiences (and lost more money with) Western clients that didn't keep their end of the deal. So realize that even though you should rightly be worried about the supplier you'll potentially be working with, you too have a MAJOR responsibility to be both wise (don't pay with out doing QC) and honest (keep you contracted agreements too). 1. Always keep you word concerning dates and monies and anything else that is your responsibility. 2. Always take into account the reality that if you’re late with art (or money or answers) it will cause production delays (usually longer than your delay). 3. There will be problems so take notes and keep records and follow up on anything that you’re not clear on. 4. NEVER MAKE ANY ASSUMPTIONS. 5. Never make any changes from you spec’s or your contract. 6. File all legal work in your home country and in China BEFORE you start passing out spec’s to anyone (even at the show). 7. Spec out all your details and present them in a consistent and clear format. 8. Meet FACE TO FACE with your factory as much as possible. 9. Admit when problems are your fault and take responsibility for them. 10. There will always be problems—usually you can work through them. But always find a back up facility just in case. I will be speaking at shows for Global Sources in HK 6 times this month. [Oct 12th, 14th, 20th, 22th, 27th, 28th.](http://tradeshow.globalsources.com/TRADESHOW/CHINA-SOURCING-FAIRS/HONG-KONG.HTM?source=TSCCSF%5FLOCATION%5FGS) ### 7 Days in China-years can seem like a lifetime. URL: https://www.silkroadintl.net/7-days-in-china-years-can-seem-like-a-lifetime/ Last updated: 2026-07-18T14:48:24.000Z Some weeks are better than others. Some are just down right awful. This last week was one of those weeks, where everything goes wrong.1\. A Fight! A Fight! One of our factories has been complaining since we paid the deposit that we are too strict with our QC. We’re not doing anything out of the usual (for us) but the factory is just not doing what they agreed to before we every paid them a deposit. This isn’t new, we have this argument all the time. What is new is the fight that our QC manager and the factory got into—actual fisticuffs! I’ve seen many a screaming match. I’ve seen gang fights on the streets. I’ve seen brawls on the bball court and I’ve seen people get chased out of town with machetes or butcher knives. But I’ve never seen factory professionals in white shirts and slacks go at each other with their bare knuckles. Luckily, we had a second QC engineer in the factory that got in the middle and broke things up and mediated the immediate situation. But we still have an active project. So what to do? We are always very clear that we support our QC people so that there never is a question as to who defines what acceptable quality is. Also, we also try to be honest and fair with factories—we need them to do business. And since we make money on re-orders, it make sense to keep them happy during/after the initial is being produced. So we have to balance these to things by not sending our manager to this factory again, but also not giving in to any of the lower quality standards that the factory is trying to get away with. This way both parties save face. Someone else comes in to negotiate the argument for us and the factory manager gets face.2\. We had an employee take off for maternity leave. Of course we knew that this was coming and so three months earlier we hired her temporary replacement—thinking that we could keep both once the new-mom returned. So after a three-month investment into the new lady and only three weeks into the 2-month maternity leave the replacement tells us that she’s leaving too. “This job is not what I expected it to be. It’s too hard.” You didn’t realize that 1 or 2 or even three months ago?3\. After a couple of frustrations, we decided that we need to have a back up for our international shipper. For the most part, we’ve had a good experience with the old company, but they’ve made some changes in their staffing of their China office that have cause a few problems and made us a bit uncomfortable lately. So we’ve been shopping around. Well, of course the old company realizes what’s going on as we try out other companies’ services. But instead of calling us to see what they can do about the relationship and see how they can keep our business, they go the opposite direction. They call us, tell us that if we’re going to be using someone else they not only wont give us terms on any new shipments but that ALL shipments currently in transit will be held in the port of entry at $150 a day until all outstanding bills are paid in full. This amounts to more than 10 container loads worth of shipping bills (current shipments and shipments still under payment terms), so it’s a substantial number. We’ve had this happen before—twice as a matter of fact. Because of the rules regarding shipping companies in China, they are usually set up independently or at least relatively autonomously from their foreign “home” offices. This means that they have independent billing and collections, customer relations rules/norms, service centers, etc. It also means that when it comes to where you’ll be paying your bill they are basically competitors with their own companies in other countries. The China office always want you to have a “China” account and pay in China, that way the get more of the money. Sometimes they make up some story as to why we need to change our billing to China. Other times they are just flat out honest about their dishonesty—“You pay in China or we won’t show up for package pick up or delivery.” One large shit-colored company has a rather bad reputation for holding shipments hostage until companies with offices in China change their billing to the China company’s billing system. Good thing we had a couple of back up 3PL’s ready to go!4\. Different price, different quality, different sizes—same PO. Yup, that’s what we got when we ordered a small qtty of stock items for a larger project. They shipped less qtty, larger sizes and at a higher price than what we ordered. When we called they said, “Sorry we were out of what you ordered.” We asked if we could send it back and we’d wait until they had what we ordered. They said that since it had already been shipped to us (from one Chinese city to another) that they wouldn’t take it back. Of course we argued that we didn’t ask for it (the wrong order) to be sent to us, but that went no where. Yup, we had to order it again, from someone else.5\. Factory refuses QC visit. We use Asia Quality Focus for specific engineering-QC needs in locations across China where we don’t have our own employees. We order man-days and they show up and do a great job. Sometimes, too good. Last week we had a factory call us and say that the 1\. The independent testing company (not AQF) that rejected the product because it didn’t meet spec’s is wrong and that the pipes are correct. And 2\. The AQF QC engineer was too strict (boy, never heard that before) and was “trying to find problems” rather than “approve the order.” Never mind the fact that we do not hire QC to either find problems or approve orders—just check orders. Or that pipes are tested electrically and the process is standardized. Or that the QC and testing company are not related. Or that the same QC engineer never goes back to the factory twice. Or that they get paid salary, not by the day. Or that the factory agreed to repair/replace/finish everything that was marked as “fail” on the QC report anyway. The factory says that they won’t do any orders again that require independent testing or 3PQ—that pretty much means they don’t want any more orders from us.6\. Factory says that if we don’t change to better materials, they won’t do the re-order. Factory is complaining that there are too many rejects because the quality of the materials are poor. Of course, they sold us the “best” quality materials when we placed the first order and that’s why the costs were higher. Now, we’d be glad to upgrade as long as new materials pass the same tests as the previous materials. And as long as the new materials match the same look as the previous product that has already been sold. But, while tests have been passed, “look” to match previous production runs is NOT the same. The factory can’t figure out why different colors of the same SKU number are a problem. Client can’t understand why the factory thinks that this is acceptable.7\. Rejected materials equal retaliation. A new buyer called us this week with a problem—production is done, but the quality is not acceptable and so the buyer doesn’t want it. But the factory won’t do anything for them unless they buy it or pay about 2x as much for a re-order. As much as I rail on factories for not doing what they agree too, this is not the factories fault (well, the poor quality is but finding out about it when the shipment is ready to leave China is NOT)—checking product for the first time only when it’s already done is just not a smart way to buy product from China. The longer you wait in the production process to do QC the more difficult it will be. We never advise any clients to just do a single day of QC at the end of the production process—it’s just a waste of money. At that point, when everything is completed and ready to ship, you really only have two choices—accept or reject. And if you reject product that is completed it will be sold to re-coup costs, you’ll probably not be able to get any of your deposit back and you won’t be offered a re-order since they don’t trust that you’ll accept it or pay for it. From their point of view, there is no security in working with you if you’re not going to “partner” with them—which means that you recognize their investment and make one yourself (pay the balance and take the product). From a safety perspective you just don’t ever want to be in the position of seeing your product for the first time when it’s already completed. ### Sometimes Contracts are Not Enough URL: https://www.silkroadintl.net/sometimes-contracts-are-not-enough/ Last updated: 2026-07-18T14:48:23.000Z Sometimes contracts just don’t work. Sometimes you not only don’t get what you ordered but you’re left with no viable options for exit or resolution. Even ”if you can’t do it, just return my money and we’ll call it good” gets you nothing. This is rarely ever successful. In China, just because you can identify the problem that does not mean that you have a workable solution. The reality is if you have guanxi and an MBA-system, as opposed to just having a contract and critical thinking skills, you can get anything you want done. If you have a contract and critical thinking skills (and a western MBA) you will be able to detail (flowchart, graph and summarize) why you can’t get done what you want. You’ll even be able to go to court—but that doesn’t mean you’ll get what you want. One example I know of is Coffee Company X—like many others they tried to come to China and “do things the right way,” e.g. without any personal relationships—straight MBA numbers and efficient processes. What they found was that they couldn’t get things done without “knowing people” as well as knowing how to do things. They struggled to get registrations done, get spaces in prime locations and keep stores open. Then, they consciously shifted their approach and now they are everywhere. Did their foreign headquarters decide to do this or did managers that wanted to keep their stores open do it on their own? That, I don’t know. But I do know that selling coffee isn’t about beans, it’s about relationships and real estate (location, location, location) and you don’t get the prime spots in China without connections. This last month two suppliers for completely different products confirmed stock qtty’s of goods, delivery times and quality standards. Within the same work-week we placed orders with each. Both came back to us and said, “Oh, sorry. We don’t have the size, the price, or the qty’s that you requested (3 days ago). But we’ll give you less, worse quality and charge you more. OK?” This type of “business” begs my favorite un-useable question: “Are you stupid or just dishonest?!” But of course that doesn’t help. We did all the usual due diligence on these factories—paid for info, talked with buyers, checked out their physical facilities via a partner company in their areas and confirmed (or so we thought) available qty’s. But nope, within a day of receiving the deposit, they didn’t have a damn thing. “Demand” and “Govt rules” and “season” magically changed the entire project in less than 48 hours. We played the game, called, begged, threatened, screamed, visited the factory, and adjusted expectations but we still were not going to get what we wanted. So we called a friend with connections and had him get involved. He wasn’t able to completely solve the problem, but once he was finished with the factory, “meibanfa” (no options) turned into some palatable choices. Not great choices mind you, but choices, which is more than we had before he called. We were able to substitute approved options for the same prices and keep the same delivery dates—really probably the best we could have asked for. So what do we pay for help like this? Well, we have a person in our company who ONLY does this work for us. And when we go outside for help we never pay. Well, we never pay cash and never “pay” immediately either. Usually the help is “repaid” with favors later, most typically, help with a factory with whom we have some guanxi. China is both different and risky. You can ignore the risk and tell yourself that “numbers are numbers” no matter what country you’re in. Or you can admit that it’s different, scary, uncertainty here and deal with it consciously. I think that there are three ways to deal with the risk in China. First, Chinese style—no due diligence or contracts, only Guanxi. Until deep into 2009 and the collapse of the Western economies we’d never seen Chinese factories do any due diligence on buyers. Even now, after so many factories have been stuck with product from buyers that have gone out of business before paying for their orders we rarely ever see anyone asking us for any corporate info/security that we’ll actually be paying our bills. Even with large SOE’s it’s surprisingly still “business as usual” for Chinese in China—work with whom you know or build relationships before you order.[This is about education](http://the-diplomat.com/china-power/2011/08/16/chinas-incognito-parents/?ref=silkroadintl.net), but it’s describing the belief of parents of teens in China (e.g. 40+ year olds—the very people you’re doing business with). > here’s what our programme’s parents really believe: ‘I succeeded because of my ability to maintain and manage *guanxi*, not because of critical thinking skills and creativity. My child will succeed based on his ability to conform to Chinese society and to obey me. My child will study in the United States to meet other rich and powerful Chinese. That my child crams for the SAT rather than read books and that he lives in a Chinese bubble will prove to me and to Chinese society that he’s a loyal and obedient Chinese, and that will ensure his transition back to China after he’s bored with the bright lights of New York and the blackjack tables of Las Vegas. Why should my child learn English and American cultural values when China is superior to the West? Creativity and critical thinking skills are Western imports, and ought to be distrusted as dangerous influences.’ > Second, Western Style—no Guanxi, only due diligence. If you’re going to have only one, this is the one that most people choose. And with [this line of advice from CLB](http://www.chinalawblog.com/2011/08/a%5Fconversation%5Fwith%5Fchinese%5Flawyers.html?ref=silkroadintl.net), I don’t blame you. > “The point is this. In China, you never know if you are dealing with a legitimate company and a legitimate representative of that company unless and until you investigate on the ground in China. Any foreign company that enters into a contract in China without this knowledge in hand is taking a risk that the Chinese companies themselves will not take.” > But the reality is, tons of DD and a great contract will NOT solve problems for you. It will not force people to do their jobs and it will not guarantee quality product on time. You’ve got to know who you’re working with. You have to know that who you’re working with is used to getting paid to do what you’re asking. I’m not suggesting that you pay them to do what they’ve contracted with you to do, but you must realize that you’re starting out with negative social credit since the supplier knows that you’re not going to be giving anything extra to them. So when push comes to shove and you’re more strict than their other clients and they have more rejects than they accounted for you’re I a hole that a contract and numbers will not solve. Third, the best of both worlds—lots of research and probably as many dinners. You’re doing business in China because it’s cheaper, right? So realize that it may cost you some in dinners, trips to the factory and additional time working both the personal relationships and numbers to get what you want. I do NOT believe that you should “go native” and I do not believe that a western MBA is the key to making things work in China either. You’ve got to have a lot more patience and willingness to work with your suppliers to get the same level of quality that you’re used to back home. I guess that a fourth style would be to do nothing and just wire cash to a personal account of someone you met online—but if you’re going to do that, you could get better results (or at least have more fun) by going to Macao, or buying a Russian bride online or responding to the dying lady in Africa somewhere that needs your help, my dear, to get $15m out of her late husband’s account. Write good contracts, run all the numbers, meet all the people involved and keep close contact with them, pay for a few dinners, spend time understanding the limits and abilities of the factory, hire someone (a trusted Chinese employee) to manage the relationships and negotiate the problems for you. Use the best, not the worst of both cultures to find success. ### Endangered Species: Chinese Middle Managers URL: https://www.silkroadintl.net/endangered-species-chinese-middle-managers/ Last updated: 2026-07-18T14:48:24.000Z I’ve been telling people for years that China doesn’t have enough mid-level managers. Most factories have the one or two guys that started the company with 10 years of experience and then a bunch of line workers and college grads all with either no education or training and/or only a couple years of practical work experience. This phenomenon means that there are limited numbers of people that have both actual production-floor experience AND managerial experience (problem solving/scheduling/QC’ing/forecasting). Most people have not been trained in anything other then specific jobs/processes. The two guys at the top are running the factory, counting money, managing relationships with govt officials, trying to find employees and being dragged into solving problems (since no one else can). And now the problem is becoming acute. In the last couple of years so many people have left the east coast factory cities to work closer to home in the inland provinces that factories are losing what little management they had in the first place. Entire QC staff (anyone other than complete novices) at multiple factories have just left or not returned after CNY. There is now such demand for people with experience in the new inland factories (and jobs that are “good enough” closer to home) that not only are the newbies not coming but the guys with experience are leaving too. This means three things, first, prices are rising quickly to entice workers to come and/or say. Second, factories are having more problems meeting deadlines (with fewer people). Third, they are also having a harder time meeting quality standards (with fewer experienced QC). To compensate for these problems they are becoming defensive about buyer participation—they just don’t have the time/resources that are being demanded by increasingly connected buyers. More and more factories are telling us that they don’t want to accept 3PQ. They are using the “3PQC are all corrupt” line to refuse to follow QC reports (doesn’t this mean that someone in their factory is paying the QC?). We’re being told, “QC will just find as many problems as possible so they can come back.” Or, “Every QC is corrupt, you just have to offer them something to pass.”Now I’m not going to try to defend QC because we’ve fired more QC people than all other people in our company. We know that this is a real issue. But you can fire QC and/or hire a replacement fairly quickly. If you’re using 3PQ and you’re wondering about their honesty you can get a second day of testing with a different QC engineer or an entirely new 3PC company in 24 hours. Much easier than finding a new factory half way into production. The reality at many small and medium sized factories is that they actually my not even have the people necessary to resolve the concerns that are identified by 3PQ. Of course they can’t tell you that. And if you’ve ordered from them before they don’t want to tell you that they can’t even do what they’d done for you in the past. Another result of the new economy is that more and more guys with some experience in a particular industry are starting up their own “trading companies.” Often times this means that they “borrow” a few photos of products they recognize from other websites and set up an Alibaba “store.” There are a few guys that know what they are doing and have valuable experience—these are the guys that should be middle managers but their factory went out of business and they don’t have the guanxi to get an appropriate position in another factory. But you need to be checking out these guys BEFORE you hire one/use one just like you would a factory (because you may be paying him directly and/or relying on him to assure product quality for you). So what can you do to compensate for a lack of managers?**First**, you’ve got to be very clear about requirements before you start (pay) for anything. This is not just confirming with a sales person that they understand what you’re talking about and can show you similar products. Ideally, you should visit (or have someone visit for you) the site and confirm that they really can do what you want (with the equipment and to the standards you want too). You will never know that they can do what you expect just by talking with a sales guy (that is fresh out of college and was hired for her English skills not her understanding of manufacturing). You can buy professional audit services to confirm capacity and/or social compliance too. These services are affordable ($800) and can be scheduled easily online.**Second**, once you’re convinced that they can do what you want, you need to be painstakingly clear about the standards and requirements that you’re expecting. Typically this means that you send them testing standards for your product and request confirmations that they’ve both meet these standards before and have the facilities and personnel to meet them again.**Third**, confirm with them that 3rd party testing and QC services will not only be allowed into the facility but that the factory will agree to follow the reports/results. This may seem like a no brainer but we’ve had multiple factories that, like I mentioned above, that do not want to live by the standards that are returned by these third parties. The most common thing we hear is “QC is corrupt. If we paid them these would have passed.” We’ll yea, maybe the report would have said “passed” but the product is still sub-standard and it will come out in subsequent tests (off site) or if different QC personnel.**Fourth**, pull samples yourself to send to testing facilities. There is no reason to believe that your factory will not send “golden” samples to be tested.**Fifth**, when you have problems, and you will have problems with no managers and inexperienced line workers, you will need to participate in the solutions. And by participate I mean visit the factory and devise a solution that works for both you AND the factory. Remember, the factory mostly likely doesn’t want you involved and since you’re asking for things that are going to cost them money, they really don’t want you to be proposing the solutions too. Here’s what works for us. 1\. Let them propose solutions and then accept or tweak to get done what you need. If they are the ones that are taking responsibility for the problem and offering the solutions there is more onus on them to get it done right. 2\. Have someone from your company working with managers/owners of their company that understand Chinese culture and the face that is associated with mistakes/lack of managers/paying for rework/having clients propose solutions. 3\. Don’t wait for the entire thing to be redone. If you wait, and the solution doesn’t work or is completed incorrectly you’ve now got to fight with them to do it a third time (more money, more time, more loss of face for them) and even if it’s their fault you will likely lose this fight. So follow up on each step, each milestone in the rework procedures.**Sixth**, since you’ve visited the factory already you’ve hopefully developed some sort of rapport with people other than the English speaking sales rep. You now need to call on those folks to help you out. Sure their loyalties are to the factory, but having someone that is at least willing to listen to your issues is helpful. Also, if you have someone on your team that knows how to work relationships in China they now have a contact point to work with. Don’t underestimate the importance of having someone fluent in Chinese culture working for you.**Seventh**, track everything. This is where your MBA can be very valuable. As amazing as it may sound, you may know before your factory if you’re going to be missing dates or short on product. Sure each department may have better numbers than you do and certainly more experience in their own factory, but you’ll be able to extrapolate more quickly, be able to combine data from various departments and project much earlier than they will. We can almost always tell long before our factories if they’re going to meet qtty’s and deadlines. We always know if they’re going to have to do an extra run or if they’ll have extras. This data can only come from being on site. And this is very helpful not just for rework but for any project where colors or pieces must be consistent (fit, match, testing, etc) across an entire production runs. Often (way more often then you’d know unless you are here) factories will have a larger number than expected rejects and so need to add additional qtty’s to the order to meet the order totals. This means that they’re literally doing another run without any of your QC or oversight and adding the product into your existing (already tested) order qtty’s. As you can imagine there are tons of problems with this happening—quality may not be as good, product is not tested, raw materials are likely not from the same (tested) batches, colors and other features are not the same, chances are larger qtty’s than were needed for your order were made to save money and so (fully functional) extras will be sold by the factory to someone else. Basically, you’re going to become a defacto manager—but one without any defined position. People will defer to you because you’re foreign (and they are polite). You’ll be allowed to watch and comment, but likely not given much information. You’ll have no seniority but access to the higher ups that no one else has (since you’re a paying customer). Don’t abuse, but use your foreignness to your advantage. Don’t step on toes, but definitely go up to the owners/admin people that have the authority to make decisions. Don’t cut responsible parties out of the loop on the production/QC lines, you need these people on your side (if for no other reason than to give them a slight reason to care about your product). But step in and offer suggestions/make changes/point out issues and mistakes. China is risky. China is changing. China is a lot of opportunity but it’s also fraught with pitfalls—mostly stemming from a combination of lack of oversight and corruption in the factory and the client both not being in the factory and assuming that “business is business.” It’s not. And now there are fewer and fewer managers to help you make a successful transition to the Chinese style of doing business. ### It's just a little bit more, they can afford it, right? URL: https://www.silkroadintl.net/its-just-a-little-bit-more-they-can-afford-it-right/ Last updated: 2026-07-18T14:48:24.000Z A couple months ago I ran across a very interesting piece about working with suppliers. The story was that suppliers are no longer willing to work with buyers that are “difficult.” Typically the “we don’t make much profit” line is part of the give and take of the pre-order negotiations. But this time, when the buyer pushed back the sales rep imediately got “very angry” said they should trust them and then ended with “we don’t want to work with you anymore.”What’s odd is that I bet that we’ve had a similar situation happen to us 5-10 times in the last 6 months. It’s odd because it’s completely new; we’re still shocked each time it happens. Like the buyer in the story, we push factories for better quality or lower prices (or even just to meet contracted standards) and they instantly give up and offer our mold fees or deposit money back. Yes, offer to give us our money back, just like that. We’re not putting inordinate amounts of pressure on them, like in the buyer’s case, we’re just following the typical pre-order dance routine. Before we get into what I think is happening, I will admit that margins are small now--this is true. And they are smaller than before so there really is less room to negotiate. But there have been tight margins in many industries for a while and no one went to Def Con 4 that quickly. It's more than economics for both sides. I think that I’ve been here long enough now to see that China has changed in more ways than just the infrastructure. The Olympics, the Sichuan earthquake, the Western economic meltdown vis a vie China’s continued growth, increasing inflation (and the accompanying dissatisfaction), the college graduation of the first wave of “little emperors,” millions of new cars, millions of under or un employed college grads and many other social other events have changed the dynamics of the Chinese psyche. Entry-level employees (newly minted college grads) who typically have the English skills that put them into factory sales offices are not the 30 and 40 somethings that grew up in hard times of the 70’s and 80’s. These two generations look at foreign customers completely differently. Foreigners aren’t only “normal” for the younger kids (who probably had foreign teachers in high school and college), they are probably a pain in the ass—stricter standards, more demanding, and all in ESL—much more difficult to work with then domestic clients. Order frequency and qtty’s from foreign buyers are all less then they were three years ago too. And as “everyone on both sides of the \[pacific\]” knows, this is the Chinese century, so foreigners should take their attitude down a notch or two, right? (Don’t let [this](http://contrarianedge.com/2011/07/05/the-chinese-black-swan/?ref=silkroadintl.net), or [this](http://the-diplomat.com/2011/07/05/china%E2%80%99s-ticking-debt-bomb/?ref=silkroadintl.net) or [this](http://www.amazon.com/gp/product/0986803502/ref=s9%5Fsimh%5Fgw%5Fp14%5Fd0%5Fi1?pf%5Frd%5Fm=ATVPDKIKX0DER&pf%5Frd%5Fs=center-2&pf%5Frd%5Fr=01KB2K61MMXCAKFP14GV&pf%5Frd%5Ft=101&pf%5Frd%5Fp=470938631&pf%5Frd%5Fi=507846&ref=silkroadintl.net) ruin you red-tinted dream.)I completely 100% agree that you’ve got to let your supplier make some money. In fact I’ll go so far to say that if you as a buyer are getting exactly what you want for your expected target price you shouldn’t even care how much your supplier is making, even if it’s 1000%!But, I don’t agree with the article’s conclusion. The author said that Chinese suppliers really are not “asking for much” and so foreign buyers shouldn’t worry about paying “a little extra.”To me, “a little extra” is Pandora’s box—you open the door a little and you’ll never get it shut again. Especially when the person getting the money is the one making the decision about what both disclosure and the amount of “a little extra” are. And I don’t think that it’s true either, that suppliers aren’t asking for too much. In my experience in China, suppliers ARE asking for too much. And often after contracts have been signed. Anything over contracted prices is too much in my book. And suppliers are typically asking foreigners (as opposed to other Chinese buyers) for more of the "too much" as well. In my opinion, anyone that tells you that Chinese and foreigners get the same price are either a large MNC (volume/leverage) or they don’t speak Chinese and so don’t really know all that's going on. This conclusion is dangerously close to the xenophobic argument of “foreigners are rich, so of course they should pay a little more.” (Or conversely, “Chinese are poor and have been oppressed by the West for 100 years so we and you both deserve this.”)I’ve been here in China since the days of two official prices at hotels, airports, train stations, supermarkets, etc. And, while working for a Chinese company (e.g. getting paid Chinese wages) back then and paying Chinese taxes now, I’m of the same opinion: Why should it matter to the price where I’m from or what I look like? It shouldn’t! Just because I’m getting the quality I want does NOT mean that I should be willing to pay more for it than what we’ve contracted for or higher than market price. This argument is based in the fallacy that “it’s fair” for those with relatively more to be (secretly forced to) pay more for the same things that others are getting for less simply because they look or sound different. But you can’t even read that sentence without realizing that it’s certainly not fair, not to mention that the standards are so subjective that it could never be “fairly” implemented. Especially when the other party involved in the agreement is the one determining “fair.” It’s all about one party’s justifying getting a bit more than they agreed to. The other end of this is that right now most foreign buyers are working in a depressed economy where every “little bit” is more than they may be able to honestly handle. Many Chinese suppliers don’t realize that while there may indeed be a 100% mark up from COG to wholesale prices, R&D, design, higher costs for labor, professional services, warehouse space, transportation and other things eat that margin up much quicker in the West than in China—which means that a supplier’s clients maybe working on equally thin margins. I personally know of many companies that are doing the exact same things that Chinese suppliers are doing, namely working on little to no margin to keep the company going and the brand alive in the recession in hopes that it will be profitable a couple of years from now. (No, I’m not claiming that westerners are poor. I’m saying that recently the margins on both sides are very low to non-existent.)The common response by Chinese (and other SEA people I’ve talked with about this) is three fold. 1\. Yea, but I don’t do it like that. 2\. It doesn’t happen as much as you think, you’re exaggerating. 3\. You’re just bashing the Chinese. You’re lying to make China look bad. First, “Yea, but *I* don’t do it like that” is usually followed by some convoluted version of “yes, but they still get what they want, I just get a little bit more than we agreed.” I’ve never been clear how these two positions (“they get what they want” and “it’s different than we agreed”) co-exist. You either follow the agreement or you don’t. The typical problem is when the supplier can save money and then doesn’t feel that there is any reason to pass those savings along (or even share that there were savings in the first place). I would agree with the supplier (like I said before) if the contract was for a fixed price/fixed costs/fixed quality and all those could be met without additional issues or even additional disclosure. But, so often the costs savings come at a price—lower quality—and the question of disclosure if left up to the one benefiting from not disclosing (if the client says “I want to share the savings” the sales guy gets less). Oftentimes the dip in quality isn’t noticeable (but it certainly would be found in testing—if you’re not testing, it’s you, the buyer’s, fault). The real issue here is the standard “If no one knows, then why is it wrong?” Just because this is common, and many say, “It’s just the way it’s done here,” this isn’t “Chinese culture.” I don’t care how many people are willing to claim that it is. It’s wrong and illegal here and in the US and just about everywhere else too. Suppliers at some point have to be responsible for what they sign up for: contracts with specific standards for quality, prices, everything. So where is that point? When is the “difference” too big and the “little extra” money that could be made irrelevant? Obviously, there isn’t a acceptable sliding scale for quality/prices—and it’s never acceptable to the buyer if the supplier is the one make the decision independently. Second, “It’s really not like that, you’re exaggerating.” Just like I can’t speak for what it must be like to be a Chinese or an ABC or a woman or any number of things, Chinese people can’t tell me what it’s like to be a foreigner (or a foreign buyer, for that matter) in China better than my own personal experiences over the last 12 years can. So from my experience let me say this: I KNOW that this happens almost daily and I’m sure that there are other times when I don’t catch it as well. I do not think that I can underestimate the degree to which is CONSCIOUSLY happens—and that’s just based on the events that I’ve been able to confirm! I have had multiple Chinese (and Thai) friends go shopping with me and after a while get embarrassed at how many times it happens and they have to keep sticking up for me. I can’t count the number of times in the last 16 years I’ve had shop or factory owners/workers tell the Thai/Chinese friend next to me that they’ll just charge a bit more since I’m a foreigner. And when I bust them, since I speak the languages, there is always a laugh (cover up for a loss of face) and the honest retort—“You know, that’s how we do it. You’re a rich foreigner, just a little bit more won’t hurt you.”Again, anyone that tells you this doesn’t happen either is naive or ignorant. And when it becomes personal to those that are naive, all of a sudden they see it more often than they did before. I’ve had Chinese family members and employees almost get into fights with people over this issue. It’s uncomfortable the first couple of times, but when they’ve see it for the umpteenth time they get frustrated with it too. When you’re buying food on the street it’s obnoxious, but when you’re ordering tens of thousands of dollars worth of product from a factory it’s neither ammusing nor acceptable. My wife has had to stop taking clients and family visitors shopping because she was continually getting in fights with shop owners because it was happening every single time they went out—you take a couple foreigners out shopping and the price goes up. Automatically. But it happens other places too—not just shops and factories. I’ve had people tell me different prices than what is listed on menus, on fare charts or what’s written on signs or not give me a sale price that’s advertised. When I was making Chinese wages, it would make me angry, but there was nothing I could do (other than beg, which worked sometimes) as this was the legal standard for hotels, buses, trains and airplanes in China. But now it’s technically illegal. But changing the law is easier than changing traditions. Hell, Chinese charge other non-local Chinese higher prices based on their different accents too. The only place I’ve found that it never happens is in the supermarkets. Third, “Liar liar pants on fire.” A number of times people have basically gone ballistic on me. A number of people that comment on this blog, people that overhear foreigners complaining in a pub or people with just a little to much patriotism to let foreigners share real experiences have tried to either shut me up or argue that I was lying about China for some other personal/hegemonic agenda. Sorry. No agenda in talking with friends in a pub and no agenda in asking factories to be honest (other than getting my contractual prices and standards). Admittedly, mine is one of many versions of the reality of doing business here. There are certainly other opinions. But to claim that mine is somehow less valid because it’s “foreign” is exactly why there is a problem—bad habbits will continue until they are confronted and discussed and replaced. ### Corruption and the Price of Coffee in China URL: https://www.silkroadintl.net/corruption-and-the-price-of-coffee-in-china/ Last updated: 2026-07-18T14:48:24.000Z I had a very interesting lunch last week with some foreign (overseas-Chinese) investors, the manager of one retail location of a int’l coffee chain and one of the lawyers that does some work for the same. The discussion was centered around opening up a new western franchise food venture in southern China. I was asked to participate and comment on foreigners managing supply chains and dealing with regular purchase negotiations in China. The interesting part of the conversation to me was not the coffee shop numbers (although those were staggeringly high for a single coffee shop on a monthly basis), but rather the open and very matter-of-fact discussion of all the “additional expenses” that the lawyer (ironically) and the manager said it cost the coffee shop both to set up and just keep their doors openIntellectually I know that corruption is everywhere here. And I’ve seen a lot of [corruption first hand](https://www.silkroadintl.net/starting-your-own-business-in-china-some-additional-comments/) too; I even wrote about it in this month’s [China Sourcer magazin](http://chinasourcinginfo.org/category/china-sourcer/?ref=silkroadintl.net)e. But I seemed to be the only one that was taken back by the amount and the frequency at which corruption affects their coffee business. Afterwards, the investors focused simply on how the new numbers could be managed and how to deal with the accounting—no one even batted an eye at the stories or points where corruption would affect their potential business. Just for perspective, the numbers they were talking about to pay for corruption were comparable to their total start-up costs for a 70-80 square meter shop in a mall in downtown Shenzhen (rental contract and deposit with additional “gifts” to the mall owners/management office, build-out, equipment, etc.). That's DOUBLE their actual costs for the first year of business!!Here is a list (made after the meeting was over from what I remember) of the specific issues that were discussed.**1\. Govt corruption/cost of bribes.** Inspections were seen to be the most expensive. Not only do you have to have a series of pre-opening governmental inspections that will not happen without appropriate sized “gifts” (read thousands of USD per square meter) but once the officials do come out you’ll have to “take care” of them while they are there (and whenever they come back too). These aren’t fees paid to get things done illegally, these are red-envelopes that you give to govt officials or they just won’t do their job.**2\. Cost of goods/extras.** Apparently there are specific requirements for patented logos and other items and those cost premium prices—meaning, “a chair that should cost 100Y costs them 800Y.” Signage was more than 500% more than typical market price as well. > **Side Story:** At least twice that I can remember, I've seen police drive up to street food vendors, take everything they are selling and drive off. I've never been fast enough to get it on film. Once when I was trying to get a quick pic of the action, my wife physically pushed my camera away and told me very directly to never ever do that (film police) again. Another time I was actually buying fruit and the police came and took everything. I was trying to pull the basket back and was yelling at them and they just let me keep the basket in my hand and took everything else and quickly rode off. No one else either time ever tried to help or stop what was going on. Afterward a friend told me there was nothing I could do but get myself in trouble so I'd be wise just to let it go. > **3\. Lack of consistent quality.** Managing suppliers is probably the hardest part of the job. The quality is never the same and qtty’s vary from day to day—some days orders don’t even show up! In addition to cultivating and maintaining great guanxi with your main suppliers you have to have immediate options for back-ups if your small. Busy holiday weekends, even for big famous brand stores, can be hit or miss on qtty's.**4\. Employee dishonesty/finances.** No way you can trust any employees to track both goods and money. You have to separate the two and you have to have someone else that you trust completely to do the accounting. Multiple versions of the accounting records are also needed for various interested parties. (Meaning that along with actual cooking, cooking the books is an additional full time job--see what I did there? Cooking?)To my way of thinking there are two different kinds of corruption in China: Institutional and Systemic. What I mean by Institutional corruption is the kind that’s noted in point one above and in my own experiences with setting up an office. It’s not paying under to the table to get things done illegally, it’s not cheating on paperwork or hiding taxes with some “official” assistance. It’s simply “paying/gifting” extra just to get officials to come do their job—if you don’t pay, they will just “forget” their appointment or be “out of town” whenever you try to meet or just flat out tell you no unless they see an envelope. This is a HUGE problem for most Chinese citizens as well as for anyone trying to start a new business. Passports, hukous, school placement, registrations of any kind all require stamps from specific govt officials. And when the enforcers themselves are corrupt, there is absolutely nothing you can do. To deal with institutional corruption I’ve consciously stayed away from getting entangled in anything do with government regulations and procedures. Outside of annual company registration work and setting up our office we stay as far away from the govt as possible. Systemic corruption is the other kind—payments made to factories to get access to restricted IP or to get in-production sooner or to fake testing standards. It’s the under the table deals with govt officials to get around laws or to avoid the enforcement of penalties. It’s kickbacks or payments for “guanxi” to pay for past help or payments to ensure the lack of problems in the future. And even though corruption is [endemic](http://www.cnbc.com/id/43419991?ref=silkroadintl.net) both types of corruption are, in my opinion, almost completely avoidable . It’s not culture, it’s not Chinese and it’s not right. You don’t have to participate and usually you can actively avoid most of it. When it’s going on around you, you can do independent testing and QC and avoid much of the problems caused by the second type of corruption as well. My fear is that as the US economy continues to decline and China continues to rise what’s normal in China will slowly become normal everywhere else too. China is #78 out of 178 countries ranked on the [2010 Corruption Perception Index](http://www.transparency.org/policy%5Fresearch/surveys%5Findices/cpi/2010/results?ref=silkroadintl.net). And, as everyone now knows China is also the world’s second largest economy and world’s second or third largest manufacture (Japan, Germay and the US other top manufacturers). So their lower status in transparency has an inordinate (negative) affect on world business. And I fear that that effect is growing. Two other reports that confirm my fears in round about ways. One from a Chinese blogger on Weibo via [This is China blog](http://thisischinablog.com/2011/07/27/best-weibo-description-of-the-state-of-china/?ref=silkroadintl.net): (actually quoting from a [WSJ](http://online.wsj.com/article/SB10001424053111904772304576470032914726402.html?KEYWORDS=train+weibo&ref=silkroadintl.net) article): > “When a country is corrupt to the point that a single lightning strike can cause a train crash, the passing of a truck can collapse a bridge, and drinking a few bags of milk powder can cause kidney stones, none of us are exempted,” wrote another Weibo user. “China today is a train traveling through a lightning storm. None of us are spectators; all of us are passengers.”“Egads!” I thought to myself, “I’m one of those passengers!” > I’ve had this thought myself many times in the last 3 years. Corruption is not just wrong and a pain in the ass, it's actually dangerous. Is living in China worth the risk to my own life and my family members? And the second from a video clip on [The Wall Street Journals Realtime Report](http://blogs.wsj.com/chinarealtime/2011/08/01/asia-today-making-sense-of-chinas-numbers/?ref=silkroadintl.net). In an interview about his book and Chinese official statistics Tom Orlik basically says: in a country where the press and the courts are not independent and the govt’s processes for creating/reporting statistics are not transparent you have international investors questioning the veracity of the statistics themselves. I would add that in a country where [entire ministries](http://www.chinadialogue.net/article/show/single/en/4438?ref=silkroadintl.net) are massively corrupt and government offices tell people to [shut-up or they’ll be arrested](http://silkroadintl.net/blog/2008/06/18/the-joys-of-living-in-china/?ref=silkroadintl.net) how can you trust anything/anyone?!Related articles on fakes in China [here](http://blogs.wsj.com/chinarealtime/2011/08/03/photos-chinas-new-generation-of-copycat-stores/?ref=silkroadintl.net) and [here](http://www.chinalawblog.com/2011/08/china%5Fscam%5Fweek.html?ref=silkroadintl.net) and [my previous post here](https://www.silkroadintl.net/fake-money/). ### Getting to "I Don't Know" URL: https://www.silkroadintl.net/getting-to-i-dont-know/ Last updated: 2026-07-18T14:48:25.000Z Beyond doing things correctly (correct materials, correct standards, correct processing, correct completed product) when working with suppliers I really only have three other expectations. 1\. We're going to be very strict about QC and testing. 2\. I need to have a schedule--I know things change, but I need to manage other venders and clients' expectations and so a schedule is paramount. 3\. Good or bad, I just want to know the truth. I want to know what the problem is and what can and can't be done now (and what can or cannot be done with more time and/or money). As we set up projects I try to be very clear with factories about these things too. I know that my staff warn new suppliers that we'll be strict about these things too (to which the suppliers ALWAYS respond, "Don't worry. Our clients are Japanese so our standards are already very high. "). But even with suppliers that we've work with before, we tend to have the same issues over and over again--little or no transparency, missed dates (usually its us telling them they are going to miss their dates and then them coming back later and confirming what we already figured out), and complaints about us being "too strict. " **Story #1\. Printing.**I’ve spent the last three days printing with a factory that has worked with us for years now. They know how we work. They know that we’ll come out at any time to fix things. They know we won't take bad product. They know we pay our bills (that's why they've worked with us for so long). We even have the magical pixi-dust (guanxi) with these guys. But today, when we get to a print that is very obviously different than all the other 12 SKU’s we’ve printed in the last 36 hours the manager’s response to the question “Why?” is a slap in the face. “Well it must have sat too long—this sample is bad. You can’ use it for a print standard.” I'm not sure what to say to him. I start with asking him about all the 15 other samples that we’ve used for the last 3 days. And then I move to the print proofs from the supplier themselves that match the sample; Not good either, eh? How did we get all the production of the other SKU’s to match and have the same colors? His answer is obviously complete BS—he doesn’t know what the problem really is. But why do that to me now? What could be possibly be gained by lying about the real problem (or the fact that you don’t know what the real problem is)? He knows I'm not going to accept it. Is he just looking to make conversation? Am I not supposed to answer (call him on the BS)? Is this some Chinese secrete code that I've not figured out yet (possible)? Of course I point out how none of those things are the problem. And so he says, "This one is RGB and the other's are not. " OK, now that may be true. Let's check. Last order, same file--no problems. A call upstairs to the computer/film lab confirms that nope, its not RGB. I don't say anything, but everyone on the floor knows the manager just got busted. So I try it again, this time I ask the engineer instead of the manager. “Why?” His answer is: “The pixels are not the same. It must be that you changed your file.” Again, how can we be using the EXACT same files as last time—and all the colors for all previous 11 SKU’s still match perfectly except for this one? Of course, it can’t be the fault of the supplier--they didn't change anything, they maybe don't have the skills to repeat what was done before (it is a new engineer). Not only did we not change the file ourselves (we won't change clients' artwork) we don't have anyone in our office that knows how! I don't accept it and they take off the screens, wash the machine and start over on the next one. They're pissed that they are "wasting time" because it was "close enough for the Japanese. " By the way, who the hell are these amazing Japanese with incredibly high standards and yet horrible QC? And what about my time they're wasting right now!?But who really cares about details or right or wrong, when you have a schedule to keep to? They want to finish this ASAP.The desire/push to get finished quickly is certainly understandable. They’ve already had 2 film issues in the 15 previous print runs that we’ve done this week and they don’t want another one on the second to last run. While we’ll quickly switch screens and do the last remaining run, this mistake will most likely mean they’ll have to stop the machine and wait for the problem to be resolved (can’t switch out inks for other client projects without losing even more time switching back again). They really just want me to approve it and move on. They want to get this project off the machine as quickly as possible so that they can make money on other clients’ work without having to fix anything or do this again. But just because it’s understandable doesn’t mean it’s acceptable. I don’t accept sub-par production just to move things along. If I did, I’d be no different than the hundreds of other project managers/trading companies trying to make money off of the uncertainty and unprofessionalism of China. The difference is, I'd have to pay my client back for rejected product while no factory west of Taiwan would ever even consider doing that. Turns out that the lady upstairs that was making the files for the print screens also “adjusted” the files (which she wasn’t supposed to do). She changed one of the blue colors to make it match the other items that she was putting on the same screen. Didn't tell anyone. Didn't check with the order to see which pieces were supposed to match. She was just trying to get everything "close enough" so that it would be faster. No one else has a clue about this—she just changed one shade of blue on this one file—she told us as much as we worked back up the line to get this problem resolved. **Story #2\. Samples.**We’ve been making iPhone cases for a number of clients for a few years now. We’re sampling a few new ones right now for a new client—the samples are not coming out well. We go to see them before they are sent and every time we’re rejecting them—6 rounds of rejects. For the first few, every time one problem was fixed there was another new problem. Then the old previously fixed problems start coming back on new samples. After two rounds of bad samples I was on the phone with the manager asking, “Why are we’re having problems with samples? " His response is: “We’re really busy right now. And your order isn’t our biggest one.” Not sure what that means... you’ll take my money but you don’t want my business? It’s not like I twisted his arm to do this. OK, I tell give me my money back and I’ll take my business elsewhere. Of course, that option is quickly refused and he tells me that they are busy but they’ll get it right for me this time. After the 4th sample I call again—“What’s going on?” He says, “We’re just too busy but we’ll get it right this time, I promise.”A month later and finally sample #7 is correct. Apparently the factory was “so busy” that doing it half-assed 6 times and once correctly saved them more time than doing it right once. Wow, that’s really busy. Of course we already took the project to someone else, after sample 4\. (Yes, the last three samples were us trying to get what we’d been promised (6 times) and what we’d already paid for. But it wasn't just done completely for spite, we now have a confirmed backup.)Turns out, the person that manages their sample department for them was on maternity leave. Manager didn’t know what we wanted and was basically stalling for time until she came back. Congratulations! She's back. Too bad we're paying someone else.\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_Why is “I don’t know” so damn near impossible for Chinese people to say? It certainly has to be easier than making up a lie and then trying to remember it for the next time you meet, right? Or maybe lying is easier precisely because you don’t have to remember it for next time because no other Chinese person will call you on it in public. He's my belief window about working in China: You will not lose face if you tell me you don’t know. In fact, if you tell me you don’t know but that you’ll find out for me I’ll probably be more impressed with you (not less). You will not lose my business if you tell me you don’t know. In fact, if I know that I can trust you to actively solve problems I’ll give you more business, not less. Saying I don’t know doesn’t make you look less professional or stupid or unprepared or anything negative whatsoever. Everyone is hit by surprises sometimes and everyone has things they are not sure about. I know that in China there is lots of dishonesty--meaning there are tons of situations that you could never know about before hand (like the changes the film lady made to the blue color or the order details that the lady on maternity leave usually deals with). Not knowing about these things is completely understandable. Lying to me about what you don't know is not. What makes you look stupid and foolish is lying about little things. What makes me want to take my business elsewhere is you trying to pass off less-than-I-paid-for quality just so that you can hurry up and do something else. If I know that there will be delays I can manage expectations. If I know what’s really wrong I can help with solutions. If I’m told the truth, chances are I’ll be much more forgiving and understanding. But flimsy stories that I can see through immediately make me ask more questions. Delays and cover-ups immediately make me look for other options. Lies (from "[friends](https://www.silkroadintl.net/before-we-just-did-business-together-but-now-now-were-friends/)") are insulting and just piss me off. Guanxi too often seams to mean that Chinese suppliers think they can can lie to me and I won’t call them out in public. Guanxi too often seams to mean that a supplier can screw up and they still think that I’ll share the costs of their mistakes AND I’ll pay for the late delivery penalties on my own. Guanxi too often seams to mean that suppliers think I will share in their quality/product lies to the end client (as if there is some value in that for me too). To this date, I've yet to see guanxi used to fix problems and have someone other than me pay for the expenses of it. I'm sure that guanxi has been used to "save my face" on multiple occasions. But I'd much rather be rich and embarrassed than paying for someone else's mistakes while everyone stands around and smiles at each other. My advice? "[Never lie to Foreigners. It’s just not worth it.](https://www.silkroadintl.net/ancient-chinese-secret-dont-lie-to-foreigners-its-just-not-worth-it/)" ### Just Suck it up and Learn Chinese! URL: https://www.silkroadintl.net/just-suck-it-up-and-learn-chinese/ Last updated: 2026-07-18T14:48:26.000Z **Update 30/07/11:** Another reader sent me this link: [daily news article in Chinese and English](http://www.ebusinesschinese.com/chinese-business-news-rss?ref=silkroadintl.net) with highlighted terms for study.-----------------------One of the points I make in my presentations at various shows around Asia ([Buying From China](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-ELECTRONICS/CONFERENCE.HTM?ref=silkroadintl.net), [What New Buyers Need to Know](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-GIFTSPREMIUMS/CONFERENCE.HTM?ref=silkroadintl.net)) is that regular China buyers should learn Chinese. This suggestion is usually met with laughs, rolled eyes and versions of “Yea, right!”But after they stop laughing I ask them, "Why not? " Over the years I have really only heard three answers, 1\. I don’t have time, 2\. I don’t want to, 3\. I don’t think that I can/I’m not good at language learning. Basically they are all the same: I don’t think that it’s important enough to really try to learn and/or I don’t want to put the time and effort into learning Chinese at this point. Fair enough. It’s not for everyone. I understand. But for those who come to China often or who are working with Chinese suppliers regularly (or who are married to a Chinese!!), it should be a priority, if for no other reason than to save your money and your sanity. (Do you really need any other reasons?!)In 1998 when the Thai economy collapsed I lost my job as a English-to-Thai translator in BKK. I realized then that I wanted to stay in Asia and the best way to do that was to learn Chinese. So I moved to a very small town in Taiwan and worked as a curriculum director (glorified teaching position) and an English teacher at a local high school while I spent as much time as I could studying Chinese on my own. With a full time job, a family, and some other responsibilities within 2 years I was still able to get to the point where I could use Chinese for business negotiations, factory visits, to understand much of the TV news and peck-out simple letters in Chinese characters. I focused on speaking and character recognition and have really never practiced any writing at all (Who needs it?! With computers, text and Skype I rarely hand-write anything even in English any more.). You can do it too. Back then I had a couple of books, some flash cards, a friend or two in the same boat and a dictionary. Sure I lived in Taiwan, but I also worked in an exclusively English environment and went home to a completely English environment as well. > **Side Note:** Let me say here also, my Chinese isn’t great--upper intermediate. That's what living and working here (but not studying will get you). After studying the basics on my own in Taiwan, I have just learned the rest of what I know as I work/live each day here in China. I have a pretty good ear for tones and a decent accent; it helped to learn Thai first for sure. But since I never really went through a formal course/manual my vocab is broad but not deep and I so I still can’t fully read a newspaper—but I can read QC forms, spec sheets and email; I can send messages in and emails in Chinese too. I can do negotiations and problem solving in factories exclusively in Chinese. I can understand movies and TV in Chinese. But I can’t do contract work and book reading is difficult. I can drive in Chinese too--watch out! > Here’s a great example of how [anyone, anywhere can do it](http://blog.makezine.com/archive/2011/07/why-every-maker-should-learn-chinese.html?ref=silkroadintl.net): (And if [this one app](http://plecomirror.com/ocrdemovid.html?ref=silkroadintl.net) doesn’t convince you that you want to learn Chinese then there’s really no hope for you.)I found that there are two keys to language learning. One is to have a thick skin—you’re going to get laughed at, your going to get frustrated, you’re going to get served the wrong food. So what?! You have to learn that “I don’t understand” and “what did you say?” are some of the most useful phases you’ll ever learn. Second, the real trick to learning a language is to force yourself to do something new every day. A stack of cards, listen to the news, order a bowl of noodles, talk about a sporting event, read an article, tell directions. Something, anything at least once a day. 10-15 minutes of something that is honestly difficult for you. There is real value in learning Chinese, not just esoteric value to additional knowledge. [This article ](http://tucsoncitizen.com/usa-today-news/2011/07/12/latest-export-to-china-the-american-dream/?ref=silkroadintl.net)points out that one of the things that all of these VERY different but successful American entrepreneurs in China have in common is that they all speak Chinese and understand Chinese culture. With that said, let me make this plug for anthropology and history studies (Yes, I'm waving the flag for all of us who defied logic, received social science degrees and found a way to actually make money). I can’t think of a better degree/background for understanding the Chinese language than Chinese History/Anthropology. The culture has SOOOOOOOOooooooooooo much to do with the language (and vise versa). Being able to speak Chinese doesn’t make you fluent by any measure. More so than in English, the high-context nature of Chinese requires to understand the culture to understand the words. So not only is it possible for just about anyone at any age, it can be fun, you can save money, you could meet a nice Chinese girl/guy and there are other advantages too:Learning Chinese will save you time in communications. Learning Chinese will save you money in hiring translators. Learning Chinese will save you time and money on projects as you’ll be able to be involved directly in negotiations and problem solving. Learning Chinese will increase your value to your employer (or your own business). I can't tell you how valuable knowing the language has been for my business--more important than any other one thing I've done besides physically being here. I'm sure there are tons more reasons too. Plus with all the new tech available, learning Chinese shouldn’t cost you much money—as a matter of fact, everything that I had to learn Chinese you can probably access online for free (except the environment, but you can probably manufacture that now too). There are sites like [Pop-Up Chinese](http://popupchinese.com/?ref=silkroadintl.net) (very cool online personal services), [CSLPOD](http://www.cslpod.com/One/Pod/Default.aspx?ref=silkroadintl.net), [Melnyks Chinese](http://www.melnyks.com/?ref=silkroadintl.net) (great help and easy to use lessons) and this [great online dictionary](http://www.zhongwen.com/zi.htm?ref=silkroadintl.net). And I love the articles and comments from the guys over at [Beijing Sounds ](http://sinoglot.com/bjs/?ref=silkroadintl.net)(check out their “Most Commented” posts). There are hundreds of free (and for pay) iPod/iPhone/iPad apps too. You can watch Chinese movies (with or without subtitles) and you can listen to Chinese news (NHK world radio has a free 15 minutes of by-natives-for-natives news twice a day in multiple languages--iTunes) and Chinese music anywhere in the world. Of course the counter to that would be what people have always told me at the trade shows, "I just don't have time. " And they may be right. [Learning Chinese will take time—a lot of time.](http://voxy.com/blog/2011/03/hardest-languages-infographic/?view=infographic&ref=silkroadintl.net) If we’re being perfectly honest it will be more like a second job if you’re really committed. Plan on at least a couple of quality hours a day for 3 years to get to a lower-intermediate level. And if you’re tone deaf don’t even waste your time—learn Spanish and work in South America. Hola, Senorita! But except for the few hombres that really can't, just about anyone can learn Chinese. And there tons of other reasons why you should learn Chinese that are not related to your specific business too—Chances are, with somewhere between 1.2 and 1.5 billion Chinese you’re going to have Chinese neighbors at some point. You’re probably going to soon, if you don’t already have Chinese co-workers/friends/social acquaintances. If you travel you’ll probably have to push your way though a Chinese tour group sooner than later. And if you’re reading this, you’re probably either dealing now with or will be dealing with China soon.**加油!** ### When your supplier is not arguing to "win" URL: https://www.silkroadintl.net/when-your-supplier-is-not-arguing-to-win/ Last updated: 2026-07-18T14:48:25.000Z **UPDATE 20.07.2011**: Same [conclusion](http://the-diplomat.com/china-power/2011/07/19/china-and-migrant-workers/?ref=silkroadintl.net), much larger scale. > Is China becoming a country where rioting is the best way to get anything done? > \_\_\_\_\_\_\_\_\_\_\_\_One of the things that I’ve learned (through painful experience) while working in China over the years is that Chinese and Westerners (Americans at least) don’t argue for the same reasons or in the same ways. Americans tend to argue to resolve specific points (words, dates, statistics, etc.). Ideally those individual points will be acknowledged and eventually the argument will reach a “logical” conclusion—each side’s specific points have been resolved to some mutual agreeable level. I guess you can say that you “win” an argument by getting as many of your specific concerns resolved to your satisfaction as possible (without giving up too many to the other side). This interpretation doesn’t preclude win/win either—you still want to get as many of your personal issues resolved as you possibly can, you’re just going about it by allowing the other side the same goal in the hope that it’ll actually get both of you a better resolution in the end. But in 12 years in China, I can honestly say that I’ve only had this progressing-to-a-logical-conclusion type of argument a couple of times (and no, I’ve NEVER had a win/win type factory relationship—even when we’ve consciously tried to structure it—there just isn’t enough mutual trust on either side). It seems to me that both the point of and the process of arguing is completely different in China. If you’ve ever argued with individual Chinese about non-business related issues (car accidents, personal issues, politics) they are almost never about specifics (unless it’s historical dates of when “the West” abused China). I think that the point of arguing for Chinese is to get a reaction. After decades (centuries?) of dealing with layers of frustratingly inert bureaucracy that typically don’t want to do or be responsible for anything this is the best course of action; just getting someone to acknowledge your issue is half of the fight. Because of the lack of attention, a specific resolution is not the point, rather just getting some action taken is the best that can be hoped for. Arguing with a factory that has your money and your product is similar—you may have no leverage whatsoever, you’re just hoping that by making a big enough stink, you’ll get something (anything!) done—we see this all the time with employees who think they’ve been wronged by an employer. The way that many Chinese women (and children) argue is also similar—they throw a loud emotional fit, and often throw things too. In a male dominated culture that tends to devalues both honesty and commitment, women are asked to hold up ½ the sky but certainly don’t get half the benefits/accolades. Another example. Trying to argue points in the law about the responsibility of a traffic accident, for example, is near futile. Neither the other party involved nor the police know the law and neither want to point fingers if they can avoid the loss of face, piles of paperwork and still reach some level of resolution (a lowest common denominator usually) that gets both parties out of the middle of the road as quickly as possible. And besides, why argue who’s right and who’s wrong if you have more friends (standing in threatening poses) and a language advantage over your foreign antagonist?!Certainly for westerners this not the ideal climate for business to be conducted in: sweeping emotional generalities and a loose adherence to details. And while I realize that not everyone is dealing with a behemoth state-run bureaucracy all the time, tradition dies hard. > **Side Note:** I was once negotiating the final benefits in the end of a contract with my employer in Taiwan. I wanted to talk about specific dates and compensation. But before we even started to talk about the specifics, in Chinese and right in front of me (they didn't know I had been studying Chinese) the boss asked his assistant if they had any dirt on me--when was my visa due, did I drink, sleep around, have anything illegal that they could exploit in these discussions. When I answered their questions they both lost face and I got all that I wanted (more than I expected) and the discussions ended almost immediately. I'm not saying that all Chinese are like this. But this is an example of what I'm talking about. Their first response was to look not at the details but what leverage they had outside of the details--they wanted to use emotional power/shame to resolve the entire discussion in one fell swoop rather than look at each specific date/amount and run the numbers.We've also had the complete opposite experience in China where we've argued with manufactures about specific measurements and they've decided that we were just being jerks. Their ploy then was if we're going to check this one item then they have to have us check everything. This of course will cost them some more money but it make us late too. (The assumption being that being late will be more expensive to us so we won't take the deal and they can get out of the discussion on specifics.) We almost always agree to these tactics knowing that within a day or so it will be so onerous in terms of man hours and customer relations and costs that eventually a higher-up will hear about it and call it quits. > Yet despite the fact that the specific business environments have changed, the same traditions that inform arguing with bureaucracy manifest themselves in project management with private companies (no one reads your contract but you, no problems are ever shared, no QC, nothing is fixed/done right unless you pitch a fit). So it’s not a stretch to see a strong cultural influence crossing over into business negotiations. Specifically, these are some cultural issues that we’ve repeatedly seen in discussions with private factories—some small or large—all seem to have many of the same habits.1\. Chinese talk about problems in circular, non-direct inferences. This means that when you say “I’ve never heard anything about this problem before,” it’s not exactly true. And while you’re saying this, your Chinese supplier is thinking, “We told you about it a couple of times, you just never followed up so we didn’t think it was a big deal to you.” Honestly, they probably did mention it. Chances are they dropped a comment about something similar that happened to another client/project and you just didn’t get that they were ALSO talking about your project. The combination of ESL or CSL and hints/innuendos means that there is a great deal of information that most westerners are just not even aware that they are missing. If you were Chinese you’d get it and the fact that you’re not picking up on their hints is either never even a consideration to your Chinese supplier or they know you don’t get it and they’re too embarrassed (because of the of or the individuals involved in the problem or because of your lack of understanding) to bring it up directly. Which leads to point number #2.2\. Never underestimate how much information is being kept from you to save YOUR own face. And assume that at least that much info is also being kept from you to save someone else’s face. Face isn’t just being polite and it’s more important than anyone from a non-face-saving culture can imagine. Just know that there are very strong reasons for hiding mistakes and these reasons will trump personal and business relationships as well as money. When you realize this, your arguments with factories may not make any more sense, but you can at least consciously try to figure out what the other motivations are.3\. The corollary to this is that there isn’t ever any one to blame. Either the materials were bad/wrong, or the weather affected the production, or “we’ve never done it like this” or whatever else can be used to not have any one person take the fall. If push comes to shove, a sub-supplier is usually the first one hung for problems (regardless of if he had anything to do with it) followed next by a low level line individual. As the specifics go unresolved and the argument drags on the finger pointing will climb up the factory hierarchy.4\. Because there is no one to blame, no one has to be responsible. The truth is, most employes are not paid enough to care as much as Westerners are used to have "customer service" people care. And in addition to the lack of assigned responsibility, most employes are not supposed to deal with problems. Job descriptions are VERY VERY narrowly defined. The authority to resolve concerns is limited to a very select few (since it usually includes financial commitments). Further, most employes are not used to resolving concerns or problem solving anything! They never learned these skill sets in school and are definitely not hired to do this job now.5\. Unlike the West that has 250+ years of legal culture to ingrain the idea that specifics and details mater, China has less than 20 years of this “culture” and almost no personal level experience with the law. Most Chinese business people have never worked with a lawyer for any reason and even fewer have any experience with contractual agreements of any kind. Only a few people in any given factory will ever work with sign contracts with foreigners and certainly there are even far fewer contracts signed with Chinese clients. Chances are the only “legal” activity anyone in China has ever had was the signing of a mortgage.6\. Instead of the legal, laws-are-more-important-than-people environment of the West, China for the last 100 years has been a radically changing uncertain environment dominated by competing armies, political parties and political movements. Not to mention the fact that there wasn’t even a functioning legal system until sometime in the last decade. You don’t rely on the law if that law changes (180 degrees in some cases) regularly. You work with people you know (and can hunt down when things go south).7\. There is no trust. You can't resolve concerns and fix issues if you think that your counter part is actively trying to rip you off. Everything becomes either a fight or a conscious exercise in doing as little as physically possible to appease the other person without actually doing anything. If you're convinced that the other party is lying to you even before you start negotiations, the chances of a healthy relationship and a mutually beneficial outcome are slim to none. We usually get to a "trusting" relationship with factories during order 3 or so.8\. A massive and overwhelmed bureaucracy. In China most people can’t even honestly hope to get what they really want, but maybe if they put up enough of a fuss, if they annoy enough people for long enough, you might get some one to do something. Like a single child with 6 adults caring for him, if he makes enough racket chances are one of the adults (ironically) is going to give in. Or, equally effective, if you pay a single well-place individual enough you’ll get (some of) what you’re asking for. Either way, you have to make your case un-ignorable. Not right, not technically exact, not morally overwhelming, not sympathetically compelling. Just not ignorable.9\. Lack of individual rights. It really goes without saying that individuals don’t matter. The all too common “there are too many people in China” sentiment, I think, affects the attitudes of everyone here. The reality is that there are literally so many people waiting in line just behind you that no one really has time or desire to treat anyone well. Ditto for factories with thousands of customers from all over the world trying to order. If there is a problem and you’re throwing a fit and threatening contractual penalties, it’s just much easier for them to wait to have you leave than deal with you. If you’re already threatening to make it a legal issue then ignoring you is better than talking with you and acknowledging your concerns (only to have those acknowledgements used to apply legal penalties later).10\. China is both an immature and fast-growing market. This is true for factories as well as retail. The general attitude in China, except for a few exceptions (Starbucks, some hotels and a limited number of first rate suppliers), is: “So what if you never come back and order again?! That’s just one less person with problems that I’ll have to deal with!” And neither the retailers nor the factory owners believe they can operate in China the way their counter parts operate in more mature markets (with many times fewer potential and actual customers)—they all claim they would lose money here because of the unsophisticated clientele. I agree. All of these factors contribute to the response that you’re given when you try to argue about contractual specifics. The reality is that you have to win the cultural, emotional and relationship battles with someone in authority first. Once you’ve won the support from the top then you can start talking about the details with the people actually working on your project. ### Why you should learn from others' mistakes in China... URL: https://www.silkroadintl.net/why-you-should-learn-from-others-mistakes-in-china/ Last updated: 2026-07-18T14:48:25.000Z **12 July 2011 UPDATE:** Very [interesting post by Steve](http://www.chinalawblog.com/2011/07/a%5Frecent%5Ffraud%5Fbeware%5Fthe%5Ftoo%5Fgood%5Fto%5Fbe%5Ftrue%5Fchina%5Fprice.html?ref=silkroadintl.net) at CLB on Foreigner on Foreigner Fraud in China. I've never had any clients come to us with this specific type of case, but I agree with Steve that it's surprising that business people from well developed business economies are still falling for tricks like this. It seems that when people come to China, and the potential is so big they lose all sense of caution. It's like when (that much!!) money becomes the most important, all of a sudden it no longer matters how you make the money as long as you do. So all Due Diligence and caution goes out the window. The best advise I ever heard on working in China was from my friend Mike, formerly with BV who said: "Because China IS risky, you need to take MORE precautions, not less. "\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_Really, it's either read the news and learn what not to do and what to be aware of, or learn the same lessons yourself--the expensive way. By the way, here's a free way to learn a lot--the latest issue of [CSIC's](http://chinasourcinginfo.org/?ref=silkroadintl.net) The [China Sourcer](http://chinasourcinginfo.org/2011/07/07/issue-eleven-getting-started/?ref=silkroadintl.net) magazine. Almost daily, I read the China new and blogs (what's not blocked, that is) and then save news articles that I think I can use myself or share with others. I'm always intending to comment on this collection of articles and tie them into blog pieces too. But I never get to it, usually opting to write a long expose about an (horrible) experience with a factory while I’m still caught up in the emotion of the debacle. But there are so many pieces on the same topic recently that wanted to at least put them together in a quasi-list format. The final push to posting this was this piece by [Dan Harris at CLB](http://www.chinalawblog.com/2011/07/when%5Fshould%5Fyou%5Fdeal%5Fwith%5Fyour%5Fchina%5Fethical%5Fissues%5Fyesterday.html?ref=silkroadintl.net) about a piece by [David Wolf at Silicon Hutong](http://siliconhutong.com/2011/07/02/business-ethics-and-culture-clashes-in-china/?ref=silkroadintl.net)—both bloggers that I read regularly and whose opinions I respect. I need to say that I often feel guilty, like I only point out bad news about China. But I'm really not a panda hugger (don't think that China will rule the world) and my job is really just finding and fixing or trying to avoid problems in a very opaque business environment. True, I do choose to live here, so there are certainly redeeming factors about China. But what I love about China has nothing to do with business (or govt, or education, or traffic, or food quality, or crowds, or medical care, oh never mind). Corruption happens in China (yes, and everywhere else too). We know that no one is surprised about this; it’s not a revelation, right? But despite the obvious, many buyers every week talk with me about how they started a project (read: paid money and/or shared IP and tech) and then were completely shocked when they were later screwed by their supplier who they "felt so good about. "So, because some people obviously need another reminder, "in a word," this is the theme of the following links: Speaking about China Enzio Von Pfeil, CEO of [the Economic Time Bond Fund told CNBC on Thursday.](http://www.cnbc.com/id/43419991?ref=silkroadintl.net)”…unresolved problems such as endemic corruption and the lack of rule of law were heightening concerns over rising prices, bringing things to a head.”\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_In another piece, [Dan Harris](http://www.chinalawblog.com/?ref=silkroadintl.net) recounts some comments he made in an interview about the legal implications of the recent Alibab/Yahoo!/Alipay situation. But what is generally applicable from his specific analysis is in the last couple of Q&A’s that he provides: > **Is this sort of thing unprecedented?** Not at all. My tiny law firm has been involved in probably a dozen similar matters. The only difference here is that we are dealing with extremely well-known companies. This sort of thing goes on all the time with small and mid-sized companies and nearly every time it is due to a fault in the initial structure of the business. The Chinese company took advantage of the legal ignorance of the foreign company and set things up so that it would eventually be able to shut the foreign company out, purely legally. Is this what happened to Yahoo? I do not know.**Will this lead to a decline in foreign investment into China?** To a large extent it will depend on how it is finally resolved. But probably not.**Are we going to hear more stories like this in the future?** Yes.Foreign company ignorance, pushing too far and making Chinese counterparts lose face, and then realizing that you’ve messed up but don’t have another option so you’re forced to keep working with China (maybe even with the same supplier). > Yep, this is pretty much what I see every week in China. At least ½ of my clientele is working with me because of some version of this same story. Now, it’s not always the client's fault. Indeed, many of the problems are a result of blatant dishonesty on the part of a supplier. But the cause of the problem, like in the Alibaba/Yahoo! story is not the point—you are ALWAYS going to have problems managing a project in a developing country from 10,000 miles away. The point is how you react to it.\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_And really, how could you expect anything different? Corruption in China (like debt in the West) is inspired/instigated/accepted from the top-down.[Washington times.](http://www.washingtontimes.com/news/2011/jun/14/senators-want-china-assist-probe-counterfeit-weapo/?ref=silkroadintl.net)[Wall Street Journal.](http://online.wsj.com/article/SB10001424052702304259304576373391101828876.html?mod=WSJASIA%5Fnewsreel%5Fopinion&ref=silkroadintl.net)[East Asia Forum.](http://www.eastasiaforum.org/2011/06/21/the-role-of-cyber-security-in-us-china-relations/?ref=silkroadintl.net)It’s a never ending battle between whose understanding will be the correct interpretation of what’s really going on. And while that might be fun for policy wonks, it’s not fun when the argument is between you and your supplier. If possession is 9/10’s of the law, chances are you’re going to lose unless you've prepared BEOFRE you start. So what to do?1\. You need to believe (and then act on those beliefs) that Chinese understanding of business is fundamentally different that what is understood “back home,” wherever that may be. No, the numbers, spreadsheet, computers and office buildings may not be different, and no maybe even many of the technical processes of production may not be different. But how the processes are both understood and undertaken, what the expectations in business are, what the baggage of each country and individual going in is, what the external legal/political/social/historical/cultural influences are will be COMPLETELY different. [See this interview with Tom Doctoroff for some recent reinforcement of this concept.](http://advertising.chinasmack.com/2011/the-people-of-chinas-ad-industry-tom-doctoroff.html?ref=silkroadintl.net)2\. You’d better have someone in China working for you (insert [shameless plug for SRI](https://www.silkroadintl.net/) here)—QC, Inspections, testing, audits, project management—as much as you think you can afford (and probably more than that, to be safe). Indeed, you should have [someone working for you](http://www.chinalawblog.com/2011/06/how%5Fto%5Fdetect%5Ffake%5Fchinese%5Fcompanies%5Fpublic%5Fand%5Fprivate.html?ref=silkroadintl.net) before you start working.3\. From my experience, regardless of what level of manufacturing you're working in in China, the rules (or lack there of) and culture are the same. Don't make the mistake of thinking that due diligence isn't necessary because you've heard that "the higher end of Chinese manufacturing is so much different/better than the mid-level suppliers. " If that's your logic, you might want to [read this](http://www.bbc.co.uk/news/business-13624798?ref=silkroadintl.net): > Some observers say Foxconn has come under greater scrutiny than other manufacturers because of its high-profile link with Apple, but its working practices are no worse than the vast majority of factories in China's manufacturing heartlands."They pay workers on time and for overtime according to the regulations, and that's why workers always queue to work there," Geoffrey Crothall, a spokesman of China Labour Bulletin told Bloomberg Businessweek last year. > So for all the deaths and supposed labor violations, it’s one of the best options over here—what does that say about the rest of the manufacturing industry in China? Nothing good.\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_In addition to corruption affecting government and business, it's basically being [taught in schools too](http://www.foreignpolicy.com/articles/2011/06/10/the%5Fbig%5Ftest?page=0,0&ref=silkroadintl.net). > Talking about alternatives to Chinese schools’ testing system, the Gaokao. FP said:That's what a lot of people tend to forget: that given the complete lack of trust in each other and in institutions, given the stifling poverty that most Chinese find themselves in, and given China's endemic corruption and inequality, the *gaokao*, for better or worse, is the fairest and most humane way to distribute China's \[scarce\] education resources.That sentiment is fairly widespread. In a country where corruption and suspicion are endemic, many believe that everything has a price, even favorable teacher recommendations and grade-point averages. The test, for all its brutality, does produce a clean numerical score -- and those scores can be ranked. As a recent graduate of Beijing Language and Culture University, a midtier school, told me: "If there was no *gaokao*, there would only be *guanxi*." > So to recap: “[Endemic](http://www.reuters.com/article/2011/06/24/us-china-accounting-idUSTRE75N19J20110624?ref=silkroadintl.net)” corruption in education, accounting, manufacturing, politics, investing and legal issues and Chinese think that this is probably the best they can do, given the circumstances. And please remember, it's not me (a foreigner) saying this, the [Chinese themselves talk about the lack of trust they have for other Chinese.](https://www.silkroadintl.net/ancient-chinese-secret-dont-lie-to-foreigners-its-just-not-worth-it/) ### How cutting costs can actually cost you more. URL: https://www.silkroadintl.net/how-cutting-costs-can-actually-cost-you-more/ Last updated: 2026-07-18T14:48:25.000Z We work with a client whose buyer chronically asks for us to lower their costs. Every order, every item, every time, multiple requests. It’s their MO. It’s like they were taught in MBA school that “if you don’t try to cut the price, you never now what you can save.” And while I agree with the logic, pushing it so often, as they have, means that their costs are actually rising. Specifically: 1. Factories quote higher original prices. It is actually expected that you will cut prices to a certain degree, but once you are a “known quality” any additional cuts will cost you somewhere else. 2. Factories pursue conscious quality fade to save money. If you’re intent on cutting the prices up front (especially on first orders) you’ll get bitten in the end, guaranteed. 3. Even if you do cut the cost, to be safe from quality fade you have compensate on your own too. Meaning, other costs go up, namely any 3rd party testing, QC or management company involved to deal with issues 1 & 2). 4. Replacements/failures rise when standards are high but costs of materials are not raised accordingly. 5. Inflation and rising RMB are two additional factors that change the costs before ever even getting to the factory. If you wont’ allow your factory to compensate for these real increases in the PO your quality will take the hit to cover the costs. 6. Overly-strict QC standards. I know, I can’t believe I’m saying this either. But if you push too hard on the first order, re-orders prices will go up accordingly. More time, more re-do/repairs, more labor, more rejects all cost the factory money on the first order and they’ll “learn” what you really cost them before they let you place a second order. Stick to your QC guns, but don’t be punitive. I realize that there is very fine line to be drawn here between getting charged too much, getting lower quality, maintaining your standards and allowing for the real changes in prices and expenses. I also understand that many of these issues will exist when working with suppliers regardless of if you’ve pushed too hard on price points or not. So, what to do? First, learn your market. Know the prices of labor and materials, inflation rates, the status of currency rates. If you know as much or more than your supplier you’ll never get taken advantage on prices. Second, schedule and enforce purchase and production dates. If you know what market rates and prices are, and you know what your schedule is supposed to be you can enforce the purchase of materials and the amount of time that is (supposedly) spent on your product according to the dates/qtty’s you were given in your contract. Third, accept real increases. Since you know the market, you can agree with legitimate increases. This not only avoids fights but also builds trust—your supplier knows they can come to you with hones issues and you’ll be accepting/understanding about them. Fourth, QC and test your guts out. Even though you know the prices of the goods your getting and you’re on-top of all that’s going on in the market, that doesn’t mean that you’ll not get ripped off via (intentional) quality fade. There is nothing else that protects your investment like regular QC and product testing. ### Arab, Indian and African complaints about product from Chinese suppliers. URL: https://www.silkroadintl.net/arab-indian-and-african-complaints-about-product-from-chinese-suppliers/ Last updated: 2026-07-18T14:48:26.000Z First, for those who attended the presentations and couldn't receive the email with the PDF of the presentation, here are downloadable files of presentations from the Dubai show. Parts [One](http://silkroadintl.net/blog/wp-content/uploads/2011/06/New-Buyers-to-China-GS-DU-0611.pdf?ref=silkroadintl.net) and [Two](http://silkroadintl.net/blog/wp-content/uploads/2011/06/Improve-Sourcing-Performance-GS-DU-0611.pdf?ref=silkroadintl.net).Second, this is another follow up on the “feeling” of the Global Sources show in Dubai. And while I’m not sure that this is good news—it now means that our worst fears are confirmed, problems in China are systemic—it is nice to know that “[it’s not just me.](https://www.silkroadintl.net/chinese-culture-for-the-frustrated-foreign-buyer/)” Literally every one of the hundreds of buyers that I talked to last week in Dubai had issues with their Chinese suppliers. > **SIDE NOTE:** Out of the hundreds of buyers that I talked with, the percentage of traders/ wholesale buyers in Dubai was close to 90%. Different from the Hong Kong shows, which are about 50/50 new start-ups or companies trying to go direct for the first time vs experienced buyers, the Dubai crowd was almost all buyers that had significant experience in China. I’ve been working in East Asia for more than 15 years and I met more people with more years of experience in China than have every met at any other show before. Also, there were buyers representing more than 100 countries at show as well. If you’re looking for a single market place that services millions of people from three continents, Dubai is the place for business for Northern Africa, the Middle East/Southeastern Europe/India. > Buyers that have been working with China for 2-3 generations were asking me about dealing with supplier issues—most were just living with a very high rate of rejected product in each order. As I mentioned [last week](https://www.silkroadintl.net/its-a-small-world-after-all-come-on-sign-it-with-me/), so many buyers had issues in fact that I started keeping notes on their issues. Here are some more details on their list of concerns: 1. **No respect for contracts.** I say this in my presentations as a “caution,” that buyers should expect rounds of price negotiations from their Chinese suppliers. When I said this time in Dubai, for the first time I received knowing-laughter from a large number of the attendees. 2. **No honesty.** Please don’t shoot the messenger. I’m not saying that Chinese are not honest, I’m saying that both Westerners and Middle Easterners have issues with the ethics in China—and, if you’re a long time reader you know that [Chinese themselves have this concern ](https://www.silkroadintl.net/ancient-chinese-secret-dont-lie-to-foreigners-its-just-not-worth-it/)about buying from other Chinese as well. This isn’t exactly new or news and it certainly shouldn’t be seen as me being xenophobic or racist. As the Chinese themselves say, “it’s cultural.” 3. **No commitment to quality.** [Quality Fade is one thing](https://www.silkroadintl.net/thoughts-on-avoiding-quality-fade/), but the conscious and consistent attempt to lower quality to save money is another thing entirely. One buyer that has been working with the same supplier for decades now shared with me that every other order or so he has to review and reiterate and re-test for the same quality standards. Despite the fact that it’s the same product, the same standards and the same supplier, he’s found that if he doesn’t have the “standards discussion” at least once a month the quality will immediately and noticeable go down until the conversation is had again. 4. **Always want to cut you out of the agreement.** More than one businessman talked with us about the fact that large Chinese companies come into Yeman, SA, UAE and other areas here, start to work with locals, refuse to sign onto anything other than single-deal-contracts and then as soon as they knew the details of the end buyer they cut out all the locals and drop the prices to make sure that no matter what happens the locals can’t get back into the deal. 5. **Not willing to share info about problems/delays.** Contrary to the old adage, “No news is good news,” no news from you Chinese supplier usually means that they are either having issues and don’t want to tell you or trying to get substandard product on a boat ASAP so that it can’t be rejected. Or both. Most buyers are just expecting 10% or more of their container of good to be sub-standard and either have to discount it or trash it. 6. **Willingly break the law to get a good deal.** While there are ethical issues everywhere, in China where there is not even a history of any type of religious standards outside of the law, Chinese are seen to be all about the current deal and nothing else. Many from the Middle East said that with any of their other suppliers and buyers a handshake sealed the deals. But with Chinese there wasn’t anything that seemed to be more important than getting the deposit. I’m sure that it’s true that (almost) everyone has their price, but it seams to be the consensus that the “price” for most Chinese suppliers is very very low. 7. Not to belabor the point, but mentioned many times was the very nefarious practice of **faking testing standards to make a deal.** Not only is this dishonest, but it’s potentially very expensive and possible deadly too (depending on the test that’s being faked and the actual raw materials used). I was told that [you can buy any testing document](https://www.silkroadintl.net/product-testing-are-you-sure-that-you-didnt-pass-are-you-sure-that-you-did-how-do-you-really-know/) that you could ask for for about 1200RMB. When real tests can cost thousands of USD, this is just one more reason why you do NOT want to give you Chinese supplier too much control over the final quality of your goods (or any more of the negotiations process than you absolutely have to). The point is that when buying from China (and sure, probably other places too) buying problems exist regardless of where you’re coming from. But hopefully this post helps a bit; [when you can name the game, you don’t have to play](https://www.silkroadintl.net/recent-chinese-negotiation-tactics-translated/), right? Good luck! ### It's a small world after all (come on, sing it with me!) URL: https://www.silkroadintl.net/its-a-small-world-after-all-come-on-sign-it-with-me/ Last updated: 2026-07-12T07:59:42.000Z One of the stories that my father always retells to others is about the time that I called him from the top of the Great Wall. He was in Utah on a quite Sunday AM and I had just climbed to the top of the Wall at Huanghua, near Beijing. I think that it blew his mind to get a call from out of the blue from so far away (this was before my parents had ever visited Asia and still thought that I was living in a Quonset hut out in a rice paddy somewhere).[](http://silkroadintl.net/blog/wp-content/uploads/2011/06/CSIC-Small.jpg?ref=silkroadintl.net)Today, I am in Dubai speaking about doing business in China. At about 4AM today my dream of a belly dancer (jk) was interrupted by a phone call from Salt Lake City asking for more information concerning [an AP interview about Foxconn ](http://www.sltrib.com/sltrib/money/51893096-79/apple-factories-production-china.html.csp?page=1&ref=silkroadintl.net)that I gave last week while I was still in China. I'm always amazed at the more places I travel to, the more people I meet that I have connections with, or the more "home" can find still find me no matter where I am. I've never been to Dubai before--amazing. Rich, hot, clean, busy. The [Global Sources China Sourcing Show ](http://tradeshow.globalsources.com/TRADESHOW/DUBAI-GIFTS.HTM?ref=silkroadintl.net)is the reason that I'm here. [I spoke three times](http://tradeshow.globalsources.com/TRADESHOW/DUBAI-GIFTS/CONFERENCE.HTM?ref=silkroadintl.net) today, to three different groups of mostly Middle East and African buyers: new buyers to China, current China buyers looking to improve their margins and over-all experience in China and then individual buyers who needed help with specific on-going projects. More than 300 people attended the seminars and I spoke for hours afterward with individual buyers about concerns with Chinese suppliers.[](http://silkroadintl.net/blog/wp-content/uploads/2011/06/Tower-small.jpg?ref=silkroadintl.net)It's no coincidence that the problems that these buyers have are the same as what buyers from other areas of the world are having in China as well. So this seems a good time to address some of the major ones. Top concerns with suppliers included the following.**1\. Suppliers not meeting quality standards (partially buyers' fault).** “I placed an order online and the quality of the goods that showed up was horrible/didn’t match the samples/was unsellable/never showed up.” My favorite quote recently came from a watch buyer who said, “We buy components from China and have them assembled in Switzerland. Swiss standards and Chinese manufacturing? That’s an impossible combination.” I think that I should have gone into the business of just listening to this story—it’s the most common thing I hear working in Asia (second place would be, in Chinese, “Oh, your production standards are just too high.”)[I’ve stated before](https://www.silkroadintl.net/whos-responsible-for-a-container-full-of-worthless-product/) that if you, as a buyer, receive a container of anything that is less than what you ordered it’s mostly (if not completely) your fault. Yes, the supplier is to blame for shipping you crap, but you should never order, never ship and certainly never pay for anything that you’ve not inspected (3PQ). I can’t really blame the Chinese suppliers for meeting the LCD, especially when the buyers don’t (seem to) even care enough to pay $250 for a day of QC before they wire thousands or tens of thousands of dollars to a personal account. Sure, it’s not honest. Sure, the supplier is not going to get any repeat business. But what else is going to happen to them? Nothing. Remember, China is basically amoral (not immoral) and so there is no guilt about taking advantage of a great opportunity. So if it’s the buyers own fault, what can be done about it? We’ll first, before you ever order anything, in your contract or PO you need to specify that you’ll be hiring 3PQ to inspect before you pay for anything. Second, have ALL samples sent to you (and your then to you 3PQ) before you confirm that the supplier can start production. Third, have someone confirm your container loading—to make sure that the product you’ve QC actually makes it into the container that is shipped to you.**2\. Suppliers raising prices after the order is placed.** Whether it’s true or not in each individual case, prices do go up—and recently they’ve honestly been going up a lot. So is this a case of a lack of forecasting or a disregard for signed contracts or real uncontrollable changes in the COG’s? Actually, it’s some of each. Prices are changing quickly as China manages both the valuation of the RMB and quite high inflation. Add into those facts the increase in rents, labor and decrease in exports and you have an environment for radically changing prices—all true. But just because prices are going up does not mean that your price increase is both legit and your responsibility. Many a time, factories take orders, wait for prices to change (in their favor) and get burned and then make up and excuse for asking for more money. Many times they bid out a project and then find that their costs have changed and so they just pass the costs along to you (“Hey, it’s not my fault the prices went up.”) The mentality in China is, if the costs change the price changes too, regardless of contracts. Unless you have both enough leverage and time/money to fight this, you’re probably going to lose something. But, as I’ve said before many many times, Sometimes the best deal is to pay a little bit more for a little bit less than you originally contracted out for. That’s not ideal, and it’s not justification for factories to not forecast better, but it is often the hard reality.**3\. "Suppliers" disappearing after a deposit or full balance is paid (partially buyers' fault, again).** Let’s be honest, while this does happen, it’s rare. I’ve heard more “I’m afraid of this” stories than I’ve ever heard actual firsthand experiences—but I do know of a number of real experiences. And I've lost more money from buyers from "moral," "developed," western countries not paying their bills than I ever will from Chinese suppliers. So…what to do?**First**, don’t buy from anyone you find online without doing some DD first. Hire someone to visit (or visit yourself) the factory. **Second**, buy legal/business documentation about the company you’d like to work with. **Third**, talk with their other buyers—get referrals from them or call the owners of the products you see in their showroom. The more you know about your supplier before you pay any deposit, the less likely you are to be taken advantage of.**4\. Traveling to and finding suppliers in China.** For me, this is a no-brainer. I believe that the more time you or your representatives spend in a factory the better quality product you’ll get out. This starts with the very beginning visit—BEFORE you ever order. Making this trip is, I suppose, difficult for many who either don’t speak Chinese, aren’t adventurous, are on a budget or who already have job back home and can’t leave for weeks at a time. But with the literally scores of shows in Hong Kong, Macao, Zhenzhen, Dongguan and Guangzhou during the months of April and October, you can visit both thousands of booths and as many actual factories as you can take the time to see all in one trip. No need to worry about hotels, food, transportation either—you can arrange all of it, in English, through a travel agent, your hotel concierge or even with a couple of factories that you’re planning on visiting. Don’t expect to see more than 1-2 factories a day, but especially in the east coast provinces, you should be able to see whatever you want and do so in relative comfort and convenience. Besides that, there is so much value is really seeing what’s going on in China—not online, not in a show (“…not in a house, Sam let me be!”). It both changes (confirms? corrects?) your perspective of Chinese manufacturing and helps you made better decisions about suppliers. Being in the factory also shows commitment to the economic relationship and concern for the value of your product. You build a personal relationship with people in the factory and learn and understand what actually can and can’t be done. You personally participate in the problem solving and know what to expect before the product is every shipped.**5\. Is QC a 100% guarantee?** If not, what good is it? The fly in the ointment—what good are days and hours of QC if there is still a chance that you’ll get screwed? Think of it like this. If I told you that there was a 90% chance that you’ll get killed if you walk through traffic across a busy intersection but only a 5% chance if you took the bridge, which would you choose? That’s QC—sure the bridge could collapse. Sure criminal could stab you while you crossed the bridge. But it’s not likely. QC dramatically raises your chance for survival (aka, getting sellable product). Not only do you know that some of the product has been checked, but that statistically your order is all correct AND your factory knows that there is a good (contractual) chance that you won’t pay them if the product isn’t correct. For my money there is nothing that affects the quality of your product more than a few days of QC (tied to the balance payment, of course). ### Guanxi is "a Critical Factor in Business Success" in China. Who Knew?! URL: https://www.silkroadintl.net/guanxi-is-a-critical-factor-in-business-success-in-china-who-knew/ Last updated: 2026-07-18T14:48:25.000Z [According to a recent survey](http://the-diplomat.com/whats-next-china/george-orwell%E2%80%99s-china/?ref=silkroadintl.net) by YouGov and London’s Legatum Institute, "93 percent of Chinese entrepreneurs cite *guanxi*—connections with government officials—as a critical factor in business success. "I had a client email me this article and ask me, "Is it really still like this? I thought that China was much more developed" than this. My response, “This is exactly what China is like.” But there is more to it than just “connections” as we like to think of it in the West. You can interpret this survey in one of two ways. First, “Of course guanxi is important! It’s not what you know but who you know in the US too. Stop picking on China.” Or second, “Doing business successfully in China requires you to have someone in your organization that is well connected and can play the games, pull the strings, motivate in culturally appropriate ways and host the dinners and other events necessary to both keep the doors open but keep others from coming in too often.”Here is what I’ve seen personally and/or been told first hand about in the last decade in Chinese business: 1. At an official’s request, factory gives multiple pages of signed blank letterhead to govt offical to get all the proper permits completed. 2. Office must pay a cash bonus of thousands of US dollars simply to have govt officials come out and do their job. 3. Any and all testing documents can be purchased and have “official” stamps on them for set (and quite publicly known) prices. 4. Any shipment can be passed through customs if you’re willing to change some of the details on the export documents and pay a price. 5. Anything can be imported into China, for a price. 6. Worker protests and wage demands at one factory are affecting the attitude of works at neighboring factories. A call to the local security bureau brings out armed police and attitudes are quickly and forcefully returned to normal. 7. New factory that is being built and it will compete directly with other factories in the area which are owned by the local gentry. New factory can’t get the permits, inspections or certification for workers that it legally qualifies for. After a 1 year delay, factory is open and then shut down twice in the first 8 months for “violations” of the local health and tax codes. 8. Factory pays off QC to approve shipment which is then paid for in full by foreign client and then rejected by foreign customs for not meeting legal standards. In my experience there are a few things that are "still" true in China. **First**, The “gray market” and “gray economy” are probably as big as the real market and real economy. Ditto for Thailand and probably every other developing Asian/African/South American country. What that means for the foreigner doing business here is that what is public and what is on the table is really only ½ of the story. Yes you can certainly stay out of the gray areas and maintain your principles, but if you refuse to participate in the “gray” areas or refuse to allow your factories to participate your prices will reflect your lack of participation. Doing business legally in China costs more. Period. One of the most ludicrous comments that I ever heard made by foreign businessmen in China was the comments of a man with 2 partial years experience in a large company in SZ, no Chinese language ability and no direct contact with suppliers or anyone outside of his English speaking administrative staff. He said to me, in all sincerity, “There is no one in our entire company that has ever even been offered a bribe or has offered anything to a vendor or official. Our standards are so high that everyone we work with knows that we just won’t do that.” I've picked on this guy for this comment before. I can't believe that he is right, but I know him personally and I do believe that his personal standards are indeed this high and he would not do this (or consider that anyone working for him would either, obviously). I know very few other people with this level of commitment to high moral standards--and many of the people I've meet in China think that is position is, at the very least, unwise if not flat out crazy. For his sake, I hope that he’s right. But I’m pretty sure he’s missing some of what's "really going on. " > **SIDE NOTE:** The second most ludicrous statement every made to me was from an recently divorced foreign English teacher who had just come to Asia for the first time in his life, had been in China for 3 months, couldn’t speak Chinese, had self-admittedly recently read his first 3 books on China, had just “fallen in love” with a local that couldn’t speak a word of English and who said to me with more than a little pride in his own intellectual achievement, “I don't know what the big deal is. I think that I’ve got China figured out.” I laughed out-loud in his face (he got offended and left). > **Second**, the only long-term relationships that suppliers have are with local officials, their sub suppliers and their bank accounts. Don’t delude yourself into thinking that anyone in China cares or even believes you when say that your order is “really big” or your “next order will be huge” or your company has “tons of potential” . Buyers come and go—usually hundreds a month asking for quotes and “fishing” for the best price. Suppliers know that most buyers will leave for cheaper pricing at the drop of a hat. Where’s the value in investing in a long-term relationship if it’s really only one sided? IF you actually place and order and IF you actually pay your bills and IF you order with the same supplier a few times, things will change. But don’t expect them to treat you special right off the bat.**Third**, government officials’ job performance is directly tied to economic growth and tax revenue is related to land and housing prices. What that means for you is that if you’re not directly adding substantially to economic growth then you’re not important. Of course this means that you can most likely fly under the radar for years in China. That’s good. But if, for whatever reason, you need more, the only way to compensate for a lack of status is to pay money directly to officials (maybe just to get what you are should have access too and/or are legally required to have in the first place). This will most likely put you in direct violation of your home country’s laws. But it doesn't have to just be working with govt officials that requires good connections and a knowledge of local "customs. " You have to know your business partners too. For example, we try to work exclusively with factories that we have either audited first or have read reports from others that have done audits. Despite that precaution we've seen the following, multiple times each. 1. Factory refuses to ship product until we pay for "additional costs" that they did not anticipate. 2. Factory makes mistake(s) in production but refuses to redo the product unless they are paid more. 3. Factory agrees to meet their own internal standards but then doesn't do it and expects us to pay for all substandard product anyway. 4. Factory parks large trucks in front of their gates so that we either can't leave or can't get in or get molds/tooling out. 5. Factory subs out all/most production and then refuses to either do QC or take responsibility for the product. 6. Factory commits to production standard that they know they can't meet and then spends a couple weeks/months trying to figure out how to fake it. 7. Factory doesn’t think that the standards in the contract they signed are fair so they hold our QC hostage until we either change the contract, pay more or both. **Third**, there are really too many stories to detail in a single post--but THE solution to all of these experiences is having the right person HERE dealing directly with factory owners and managers. This is *the* person that negotiates with your factories. Like the person that deals with the govt on your behalf, this person must be both local and entirely loyal to you--they have to know what you don't know you don't know, they have to have the ability and permission to negotiate and they must be completely transparent with you. At the same time they have to have enough chutzpa and experience to be able to navigate the the industrial and governmental labyrinth that is China. In other words, you need someone with great guanxi.**Fourth**, as a foreigner you’re different, you’re a target and you’re in the minority. As much as I and others complain (about real problems) in China, we’re not going to change China. We’re never going to be accepted as “Chinese” no matter how long we live here, now matter how much Chinese we learn, no matter who we marry or what our kids look like. This affects EVERYTHING you do—on a professional level, it absolutely changes the price of goods you buy and nature of business relationships you have. And this isn't necessarily a bad thing either. It just is.**Finally**, China will be exactly what you make it (up) to be. It can be Shangri-La or hell on earth. It can be one of the most exasperating experience of your life or a trip through the proverbial tulips. I’ve found that it’s usually some of both. But what China will not do is change for you. Especially now with the bad western economy, you’re not special and your “potential” will not get you any special treatment. You are coming to China to do business and China doesn’t need you, at least they don’t think that they do. You have to both do business in China they way Chinese do business and figure out a way to keep your own principles at the same time. ### Chinese, Masters of the No-Look Pass! URL: https://www.silkroadintl.net/chinese-masters-of-the-no-look-pass/ Last updated: 2026-07-18T14:48:25.000Z 10 more reasons why driving in China is like doing business in China. While some don’t like this analogy, the more I drive the more appropriate I find the analogy. [My first installment of Driving and Business is here.](https://www.silkroadintl.net/its-not-all-their-fault-really/) And more on [driving tests in China here.](https://www.silkroadintl.net/what-a-driving-test-youve-got-to-be-kidding-me/)My theory here is that people have personalities that become obvious in routine events—like driving or working in the same office/factory each day. We’re creatures of habit. People don’t drive different on Thursdays than they do on Tuesdays. And we don’t make business deals differently on Wednesdays as opposed to Fridays. We all do the same things over and over and when we think that the situations are similar we tend to do what’s familiar. Even when we’re in different countries, unless we’re told differently, we act just like we would back home.**1\. Local drivers know where the speed traps are.**Most driving is done between the two cameras. When you drive in China, you don’t need to know the laws to stay out of traffic-cop trouble, you only need to know where the traffic cameras and check points are. As long as you’re not speeding past a camera or driving the wrong way down a street that’s monitored, then you’re OK. 99% of driving is done in where there are no cameras. I think that business here is much the same. As long as you aware of whom the government is looking for today or where the “check points” are set up, then you can pretty much do whatever else you want. How many Chinese factories are afraid that Governmental Agency X is ever going to show up and check on what they are doing—as long as they keep their heads down (and their wallets open), they won’t get them chopped off no matter what they do. I think that this fits in with the larger cultural issues of shame (vs. guilt). There is no absolute right or wrong, only shame if you get caught.**2\. Driving in the middle of the road, in two lanes at a time, is the best way to keep all your options open.**Why limit yourself to just one lane (or one line of business) when you there is no one else on the road? You’ll move if you have too, right? This isn’t bad driving or inconsiderate, it’s smart. On a road that may be under construction and un-marked, or an off-ramp that may not be marked until after the exit, this is often the only way to stay alive! Business is no different. Consider rules that change, laws that are just now being enforced for the first time, new international products and standards. Laws about business (hell, real, enforced laws in general) are relative new to China. And the legal culture that is so common in the West is just not here. In this changing environment—where the signs of change are often posted AFTER the off ramp—you have to leave all your options open. Driving down the middle of the road means nothing hits you coming from the blind sides. It means you move when you have to, when you see an on coming car, but the rest of the time the roads yours.**3\. Ignorance is an acceptable excuse, and sometimes it’s the truth!**Most people that are driving in China (I read this I swear, but I can’t find it now) have only had their licenses for less than 2 years. That means, for those of you counting at home, most drivers here are as about as experienced at driving as your average high school senior. Yup. They really don’t know what to do yet. Throw in the fact that a ton (who knows the number?!) just bought their license and never took Driver’s Ed or even a test at all and you can see why driving here is taking your life into your own hands. But hey! Not knowing how to drive is no reason not to get behind the wheel, right?!Business changes so fast and there are so many new opportunities coming to China that much of the factory personnel are in the same boat—they just got their factory or their college degree and they’ve got to hit the ground running. Actual experience is optional. Sure they’ve heard of your product. Sure they make something similar. Sure they have some of the same machines that you’ve seen back home—but that doesn’t mean that they can do what you’re expecting. Remember, outside of Guangdong province China has only been open for business since the early ‘90’s (and Guangdong only started to open up in ’81 with Shenzhen). Almost no one in this entire country has been doing business here for more than 20 years—no one!! > **Side Note:** Ignorance works for foreigners too. I’ve been stopped while driving in Taiwan, China and Thailand. In each case I spoke anything BUT the language that the policeman spoke—So in Thailand I spoke Mandarin and in China and Taiwan I spoke Thai. Works like a charm. I shrug my shoulders, act completely ignorant of whatever is being said and pretty soon they get so frustrated that they can’t communicate with they let me go. > **4\. Just back up and try it again!**When drivers have missed a freeway exit, no problem, just back up (into on coming traffic) and try it again. Of course it’s stupid to go miles out of your way to keep going to the next exit and loop around (remember rule #1—no one’s looking)! And if you’ve gone to far to back up, just turn around and drive against traffic for a few km. Just go slow and honk a lot and you’ll be fine. How many times have factories just figured, “We’ll just adjust fix the current (rejected) product.” They don’t want to remake molds. They don’t want to throw out product and do it (right) again. They want to just “fix” what they’ve got completed already. Just go back and do as little as possible to get it as close to “right” as possible without doing it over again. One of my biggest frustrations about working here is that there doesn’t seem to be any point where suppliers are willing to say, “You're right, it can't be fixed,” or “You're right we'll just have to do it all over again.” Sometimes you can't fix it--a pig with lipstick is still a pig. Sometimes there just isn’t “one more chance” to try to get it right. Sometimes opportunities are really just gone.**5\. The infrastructure is to blame.**I used to get mad at all the traffic problems. Then I started driving myself—now I know that it’s not all their fault. For example, how can people know to get off on a specific exit if the sign for that exit is physically posted at or even after the exit itself!? You can’t be a good driver if they signs are working against you. Just like line workers who may know what you really want but usually can’t make any changes themselves unless everyone from the top down approves the change first. Social infrastructure can be just as limiting as physical infrastructure. Often one person, usually a manager, that misunderstands or wants to save money can sabotage a project even though everyone else knows what’s right.**6\. If you never make eye contact you don’t have to stop, slow down or admit that you did something wrong.**If you don’t make eye contact with the guy you just cut off, who cares if he’s screaming and giving you the finger?!It’s the same for working with the government—if you never interact with them, you’re never going to get punished by them. If you keep your head down and don’t actually embarrass anyone (in public) then you’ll be just fine, no matter how many rules you break. I think that this is often the attitude with clients as well. Just get the product on the container without too much info/emails/photos/contact with the client and there will be little or no time for them to complain/reject/change the product before it’s done.**7\. Just break the rules so egregiously that no one can believe it.**This is the guy driving the wrong way down the left lane of the freeway with his hazard lights on to get back to his exit. Everyone honks and says “I can’t believe that guy.” But nothing happens to him. In business, this would be “Chaodan” (Jordan) brand shoes or the Chinese “Sony” brand of electronics or the guys that sell all the knock off movies from actual store fronts. Or the entire Shenzhen Louhu Commercial Shopping Center (at the train station) that is owned by the government, run by gangs and filled to the top floor with fake and/or illegal products. Or the factories that are selling molds that belong to other clients, or selling product from their client’s molds to other clients.**8\. If you have a really really nice car then you don’t have to follow the rules at all.**Until the laws changed just a few months ago, all anyone had to do was to pay all their tickets and they could keep their license and keep driving. So rich people just ignored all laws, speed around as fast as they wanted and then paid the fines each month. Now it’s a bit different, if you get too many tickets you lose your license—but what are the chances that you’re going to get stopped and arrested for driving without a license? Something close to 1 in a million, no doubt. So now people are driving without their licenses. This is still the way that it’s done here. Make payments and you’ll stay in business. We’ve had factories tell us that they are not worried about pollution, labor violations, tax evasion and other issues specifically because of the “check-points” they’ve already passed prior to the point of actually doing business. One factory told us when they built their new building they set up an official company bank account and put a specific amount of money in it each year but then gave all access to a local govt official. One company told us that they gave officials sheets of signed but otherwise blank company letter head and had no idea what they will ever be used for. These are extreme examples, but they are true. Less fantastic examples are factories that are set up especially for clients and inspectors and to meet govt regulation while most of the production is done somewhere else. Or middle men that set up a tour of a factory that is great, but will never make your product once you’re gone. Or product that is specifically selected to meet testing standards but then production doesn’t meet these standards.**9\. If everyone breaks the law, is it really illegal?**When driving it’s illegal to enter a crosswalk when there are pedestrians there already—does anyone in Guangdong province follow this law? No. Here the “culture” is cars have the right of way—probably because of rule #8. “This is how it’s done in China,” I hear all the time from foreigners who are breaking the law and Chinese that don’t want to keep their contracted commitments. For some reason, “illegal” and “culture” are often considered to be synonyms. And when I have the gall to point out that it’s illegal in China too, the foreigners usually say I’m being ethnocentric and the Chinese just shake their heads and tell me I don’t get it.**10\. Getting forgiveness is much easier than getting permission.**Why ask if you can drive the wrong way down a one-way road or park on the sidewalk?! Just do it. Probably someone will yell at you. The worst that can happen is that maybe you’ll get a parking ticket. But likely you’ll get nothing but the best parking spot in the lot—for free! Similarly, if you don’t ask if you can do something or not, chances are you won’t get caught or told no. Why ask if some great deal is illegal if you can at least get the first round paid for and then just pay your way out of any complications that crop up in later orders? There are personal habits and general cultures that people follow regardless of if they are driving or working. People don’t magically change their respect for the law after they’ve parked their car in the garage and entered the office door. You think Chinese traffic is crazy? You should try doing business! ### Q & A about Importing, Part II URL: https://www.silkroadintl.net/q-a-about-importing-part-ii/ Last updated: 2026-07-18T14:48:25.000Z **READER QUESTION:** > I have been approached by some Chinese businessman who are requesting that I source and import some items from Europe. I do not have a registered company, but I am able to orchestrate the affair. I am currently in China, but I would really appreciate some insight into how one should perform operations above board. I have a connection in the Port Authority - how do I use him? Any information regarding the import of luxury products into North China would be appreciated. > .**MY ANSWER:**Thanks for the comment/question on the blog. In general, I think that if I was going to start a company related to China now (or any time in the last 5 years) I’d be doing importing (as opposed to exporting), so you’re on the right track. The glory days of exporting are over here and for the next decade at least, China will be buying more and more. [I’ve talked about importing on my blog before too](https://www.silkroadintl.net/q-a-about-importing-into-china/)\--read this for some of the other things to consider when getting started on your own.**First**, if you have a connection in the Port Authority, carefully gauge how helpful he will be willing to be with you, what exactly he can do for you and of course (very important) how much it will cost you for that help. Unless you already have an open invitation to use his services/position for your own business/gain, feel this out very carefully and don’t tell anyone else what you’re doing. A night out over drinks or dinner is the best way to approach this so that it’s not in his office or home. Having said that...**Second**, When [I speak in HK](https://www.silkroadintl.net/trade-show-wrap-up-useful-links-and-a-big-thanks/) for [Global Sources](http://www.smartchinasourcing.com/?ref=silkroadintl.net), I always caution people with connections AGAINST using them. It's just asking for problems on multiple levels. First, it's likely illegal in both China and your home country. Second, it's dishonest--you should have personal issues with this. Third, it's temporary at best. If your connection leaves, get’s arrested, get’s fired, dies, anything, your business folds as soon as you can’t use his personal position any more. Fourth, it means that you're dependent on a single individual and he can, at any time and for any reason (his kid gets sick, his wife loses a bet, he gets greedy, you name it) take advantage of you (or expose you). But if he can help you do the LEGAL processes more quickly and smoothly, by all means, take advantage of his willingness to help. But remember, even if it’s a great deal, if it’s illegal you can never know when it will end and you can never know if you’ll get busted and your entire business will be wiped out.**Third**, you need to get someone with an import license to help you if you’re not planning on getting your own. To get one on your own, it will probably take a month and (I think) about $250,000 in a bank account—you’ve got to set up a WOFE. Ask Dan at [CBL](http://www.chinalawblog.com/?ref=silkroadintl.net) for the specifics. Or you’ll have to use someone else’s import license and pay them a % for all that you import. Again, if you're using someone else, do all the DD that you can to find someone that you can really trust, as they will have copies of ALL your documentation and could easily copy your business model. For the boot-strappers, I know that the even the guys at CLB have suggested that you just get started anyway you can and then form your Chinese company later when you have the cash (Here's [link to their latest](http://www.chinalawblog.com/2011/05/forming%5Fa%5Fchina%5Fwfoe%5For%5Frep%5Foffice%5Fnot%5Fso%5Feasy%5Fthe%5F90-10%5Frule.html?ref=silkroadintl.net) on WOFE's.) That is what many do.**UPDATE**: I told Dan that I'd point out in the body of the post that his firm does NOT advocate doing anything illegal in any way, even if it's "just to get started. " See his complete comments below.**Fourth**, I would suggest that you talk with EVERYONE you can find that will talk to you about how to LEGALLY import things into China. I’m sure you’ve got neighbors or friends (or neighbors or friends with relatives or friends) that are importing right now. See if you can hook up with locals and foreigners in at bars, clubs, church groups, social activities, etc., that can help you out. There is more than one way to skin a cat, and while you can know every single legal step to take, you still may be starting without enough real experience on your side (this is also where your port connection may come in handy). In talking with others you’re going to get told every way to do it illegally that you can imagine. And you’ll probably hear a bunch of ways to avoid the law that you could never imagine. But remember, you’re different—you stand out, your foreign. You’re easier to follow, easier to kick out, easier to check up on, easier to blame than others. BUT you can learn a lot of tricks from people in the business already. Just because you’re doing it honestly does NOT mean that you have to be stupid about it. Just like paying an accountant to help you get out of all the taxes you can in the US, you want to do the same things here. Because you really are competing on an uneven playing field—all your Chinese competition isn’t going to be paying what you are. (Just read the first paragraph of [this post](http://www.chinalawblog.com/2011/05/china%5Ffines%5Funilever%5Ffor%5Fmentioning%5Fprice%5Fincrease%5Fwhat%5Fthat%5Fmeans%5Ffor%5Fyou.html?ref=silkroadintl.net) if you need a second witness.).**Fifth**, unless you have unlimited amounts of time and no life, you’ll not be able to manage EU suppliers, shipping, importing into China, sales and distribution in China all by yourself. So start thinking about hiring a Chinese person that you trust (or a foreigner that you trust that speaks Chinese). This may be very very hard to find as people with experience either already have a job and/or know enough about business in China (e.g. more than you) that you’ll have a hard time trusting they’ll keep your best interests in mind. There is a reason why owners of even the largest Chinese companies usually have a relative over their accounting departments.**Sixth**, Once you know that you've got all your ducks in a row, meaning: logistically and financially you know that you can do what you want to do, you need to involve a lawyer to help you set up your company in China. Maybe the lawyers will say you need this first, but if like I mentioned above you don't have the cash to start off with a WOFE, then you'll want to be talking to a lawyer through-out and then finalize and legalize things later on. But you do want to do this sooner than later.**Finally**, you’re in luck! There are two books written specifically about importing luxury goods into China. Read both (I have), they are definitely worth it. Here’s [my review of the first one](https://www.silkroadintl.net/elite-china-luxury-consumer-behavior-in-china-book-review/). They are:[Elite China](http://www.amazon.com/Elite-China-Luxury-Consumer-Behavior/dp/0470822678/ref=sr%5F1%5F1?ie=UTF8&qid=1305206169&sr=8-1&ref=silkroadintl.net), Pierre Xiao Lu[ Luxury China](http://www.amazon.com/Luxury-China-Market-Opportunities-Potential/dp/0470823410/ref=pd%5Fbxgy%5Fb%5Fimg%5Fb?ref=silkroadintl.net), Michel Chevalier & Pierre Xiao LuGood luck and thanks for the question. ### Trade show wrap-up, useful links and a big THANKS! URL: https://www.silkroadintl.net/trade-show-wrap-up-useful-links-and-a-big-thanks/ Last updated: 2026-07-18T14:48:25.000Z Over the past three weeks I've had the opportunity to speak to hundreds of people at 8 different shows in Guangzhou and Hong Kong--that's significant because it means that even over Passover/Easter weekend there are more buyers coming to the HK shows than we've seen in the past two years. While the economy is still not great, it seems to be getting better. And the audience seems to be changing too. Many more Aussie, South American and Middle Eastern Buyers than I've worked with in the past. The majority is still Western Euro and North American buyers, for sure. But the % are probably 1/2 what they were 3-4 years ago. Here is a sample of the positive response I've received from buyers. **Thanks so much!!** > Dear David,Thank you for the presentation. And thank you for your speech. It was the most helpful conference at the \[Global Sources China Sourcing\] Fair. Our company is looking into starting doing business with China, and the amount of questions that rise with that proposition is immense. And I believe you answered practically all the questions that were overwhelming my thoughts in the past few months. And for that I am truly grateful to you.Truly yours,Vladimir \*\*\*\*\*\*\*\*Project Manager > And to try to help others that did not have the opportunity to attend the show here are some links to the presentations.1\. Link to video file for Global Sources, "[What New Buyers Need to Know](http://silkroadintl.net/blog/wp-content/uploads/2011/04/VID00155.mp4.mp4?ref=silkroadintl.net)."2\. PDF version of slide presentation of Global Sources, "[Buying from China: What New Buyers Need to Know](http://silkroadintl.net/blog/wp-content/uploads/2011/05/New-Buyers-to-China-GS-HK-0411.pdf.zip?ref=silkroadintl.net)."3\. PDF version of slide presentatation of Global Sources, "Advanced Sourcing Strategies: [Improving Sourcing Performance](http://silkroadintl.net/blog/wp-content/uploads/2011/05/Improve-Sourcing-Performance-GS-HK-0411.pdf.zip?ref=silkroadintl.net)."If you can't attend the shows, or if you'd like a postview of what was there, Global Sources now has a new service called: Online Sourcing Fairs. Actual photos/video of the booths, products and items in the shows here in HK. Three of the shows are online now, [Security Products](http://bit.ly/izCCCj?ref=silkroadintl.net), [Garments and Textiles](http://bit.ly/jQhwic?ref=silkroadintl.net), and [Gifts and Premiums](http://bit.ly/lrlWsc?ref=silkroadintl.net).And the [latest version](http://chinasourcinginfo.org/china-sourcer/pdf-editions/?ref=silkroadintl.net) of the [China Sourcer](http://chinasourcinginfo.org/china-sourcer/past-editions/?ref=silkroadintl.net) magazine from [CSIC](http://chinasourcinginfo.org/?ref=silkroadintl.net) is out today too. ### Who's responsible for a container full of worthless product? URL: https://www.silkroadintl.net/whos-responsible-for-a-container-full-of-worthless-product/ Last updated: 2026-07-12T07:59:38.000Z As I’ve meet buyers at the recent tradeshows I’ve been hearing some stories about buyers being shocked at containers showing up with bad product from their supplier in China. In addition to the truth that each has a sad story and they all have indeed been lied to, most have a couple of other things in common as well--things that they did not do. But before I tell you what those commonalities are let me be very clear about my position: I’d be the first one to tell you that there are a LOT of dishonest suppliers (all over the world). You can, and probably will, get ripped off just about anywhere. But in my experience there are two things that buyers can do that will positively affect the quality of product that you’ll be able to get out of China. Surprisingly, choosing which supplier you work with is not one of them. Sure, choosing a decent supplier is important, but it’s not the “most” important or even the second most important. I say this because I’m assuming that buyers are at least smart enough to choose suppliers that have been vetted to some degree (meaning you didn’t get them off of Alibaba, baidu.com or a simple google/bing search). The two common (missing) characteristics in every “poor buyer” story and the also most two important things that buyers should be doing (but are not) are:**1**. QC throughout the production process, and**2**. Sample Approval/Product Testing. These two things are more important than anything else buyers can do. And the good new is that these are two steps in the production process that are COMPLETELY within the buyer’s control. Buyers are absolutely not dependent on the factory in any way to get these two steps completed. As I've said [before](https://www.silkroadintl.net/returning-products-to-a-factory-in-china/), I believe that there is no excuse for buyers being shocked at what they receive in their containers.If you ever hear a story of how some buyer received a container of worthless garbage from their supplier in China you immediately know a couple of things about the buyer:**First**, the buyer didn’t participate in the production process. (No, emails back and forth to ask about production dates do not count.) I’d be willing to bet that anyone that is surprised at a container’s content didn’t do anything other than wire money and accept a (golden) sample sent by the factory just before or right after production was started. There is almost no way that you should be surprised at what shows up in your warehouse if you’ve had any responsible degree of participation in the process up to that point.**Second**, you also know that the shocked buyer choose to save a few hundred dollars instead of verifying product quality before they wired money. It’s ironic, but the people that are going to China purely for financial reasons (lowest COG) are the ones that typically are losing the most money by allowing dishonest factories to ship unsellable product. No buyer should ever be agreeing to let product be shipped, let alone paying for product, if they have not had some independent verification that what they ordered and what’s to be shipped match exactly. > **SIDENOTE**: A man-day of QC costs about $275-$300; a couple days of which should be well within the budget of anyone buying from China. If this is too expensive for you, if it’s too large a % of your China budget, you probably shouldn’t be buying from China. What many new buyers to China don’t want to believe is that there is a threshold for buying in China—and if you’re below that qtty China will NOT save you any money even if the COG is lower than what you can buy the goods for in your home country. Remember, going factory direct means that you’re cutting out many essential services that you have to replace your self. These services (QC, testing, logistics, fulfillment, warranties, returns, banking, warehousing, customs duties, domestic distribution, etc.) all cost real money and add to your cost of goods. One container of “cheap” product that can’t be sold for as much as you expected (either because you didn’t do QC and it’s crap or because you miscalculated all the additional costs per item) could destroy your small business. > And before you fire up that I-really-did-get-ripped-off email, I hope that you noticed that I called the factories that are filling these containers with crap “dishonest,” because that’s exactly what they are. I have NO tolerance for being lied to about what a factory is doing or can do. The Golden Sample, or the opposite, the we’ll-get-it-right-in-production sample, are two versions of the same lie. Yes there are many dishonest suppliers in the world (not just in China). Yes there are many dishonest buyers in the West too (I’ve lost more money to buyers not fulfilling their contracts with me than Chinese factories will ever cheat from me). But that’s the point—you do due diligence back home so that you can be protected and buyers should be doing even MORE due diligence in China since it’s more “foreign” and more risky than the business environment back home. To do less DD in China for any reason is just stupid. Bureau Veritas has what they call the Iron Wheel of Inspection. This wheel lists out about 8-9 different points in the pre-production and production process where QC and testing should be done.[](http://silkroadintl.net/blog/wp-content/uploads/2011/04/Iron-Ring.jpg?ref=silkroadintl.net)Now I can hear your fingers typing already. Here it comes: “Hey! I go to China to save money. If I spend thousands of dollars on QC and testing I lose my advantage. I might as well not even go to China if I have to pay that much.” Um…yea. That’s right. If your qtty’s are so small that you can’t afford to be responsible about the quality of your product then you shouldn’t be buying from China. So what should responsible buyers do? Testing, QC, project management, more testing and more QC. And then they pay to do it all again for EVERY re-order. For example, to meet CPSIC 2008 standards, one of our clients that was going direct to Asia for a complex product spent more than $20,000 on testing for a single order that totaled about $250,000\. Testing alone cost them and additional 10%+ of their COG. And then additional expenses they had to pay for included QC, shipping, returns, insurance, duties and some significant project management fees (as there were more than 20 sub-suppliers from 3 countries involved). If you think that you can get away without doing QC or testing, I’ll be honest, you’re probably right. I’ll bet you can. I’m guessing the odds are in your favor that one or two orders will be good enough quality that you can justify not doing any QC or testing. But remember, when gambling the house always wins. Always. Not doing QC is like gambling—and my advice is if you like risky fun with a slight chance of victory then you should go just go to Macao and make up a story to tell your boss about why product didn’t show up. Chances are you’re not going to get decent product either way. And, if you go to Macao you’ll also have a cool weekend to brag about (just don’t post the photos on facebook). Bonus! The question you have to ask yourself is this: what will it cost in terms of time/money/reputation to your company if you have to either completely re-work the product in your home country or go through the entire sourcing/order/testing process again with a new supplier in China? Are those potential costs larger than the cost of a few days of QC? Unless you yourself don’t care about product quality they will absolutely have to be. So how to can you do all the as cheaply as possible.**First**, when you’re asking for certifications and testing documents don’t get sucked into the old factory ploy, “Here are our test results from our last project. See? We can do exactly what you want.” In the immortal words of Nancy Reagan, “Just say No!” This is not your product so the testing results from previous products are COMPLETELY worthless to you. Look at the papers for what they are, examples of what can be done, but no guarantee that what you’ve ordered meets your standards.**Second**, don’t buy the recent but no less nefarious ploy, “It should only cost about $150 so we’ll get the testing done for you ourselves.” Never allow your supplier to also be your testing agent (kind of like you should never allow the factory sales person to be your translator—that’s right, you’re worried now, aren’t you?). For about RMB1200-1500, factories can buy fake testing documents for any test imaginable. And of course, no matter what materials are used, the factory passes the tests, so what incentive do they have to get it done correctly? Answer: Little to none.**Third**, pay for multiple days of QC at strategic points in the process. You need to have a complete and chopped (stamped) production schedule that includes the arrival and QC of raw materials, 3rd party supplied components, production goals, fulfillment, etc. Once you have this schedule you can arrange dates for QC at sensitive points in that timeline—some of the visit dates you’ll tell your factory about and some I suggest that you do NOT tell them about. Just show up and see what’s going on.**Fourth**, if the schedule is not being followed (so QC can’t see what they were sent to see) or if the QC rejects the product—have the factory pay for the return/make-up visit. This is a standard practice and most factories will agree to this. But get it in your contract up front so that there are no arguments about it later. (You do have a contract, in Chinese, right?)**Fifth**, have all samples pulled from production by a third party and not by the factory (either to be sent to you or to a testing company). This can be expensive. Usually having someone go out just to pull samples costs the same as having someone spend an entire day doing QC for you. But, if you don’t want the Golden Sample sent to the testing facilities, you need to pull these yourself. If you don’t want the sample that the factory sent just to make you happy, then you need to pull these yourself.**Sixth**, don’t pay a deposit or start an order until the samples are 100% correct, especially if tooling is involved. If you believe the “We’ll get it right in production” line, I’ve got some oceanfront property in AZ for sale, interested? Really, if you agree to this line you’ve got no standard to QC against. You’ve got no assurance that they can even meet your contractual standards. Now maybe you’ll just get a Golden Sample, you say. And you’d be right, maybe you will. But what would you rather be fighting for, a standard that has never been met before or a standard that has been meet but turns out to be very difficult to duplicate? For my money I’d rather be fighting to get the Golden Sample duplicated rather than hoping against hope they’ll figure out a way to do something they’ve never ever done before.**Seventh**, pay for container loading confirmation. What good is approved product if you’re not getting the product that you verified? Not much.**Finally**, tie all payments to the passing of independent tests and 3PQ. Contract for this. No matter what your supplier says, do not ever pay for any product that did not pass your independent QC/testing. ### Video & Notes from The Global Sources Hong Kong Electronics Show URL: https://www.silkroadintl.net/video-notes-from-the-global-sources-hong-kong-electronics-show/ Last updated: 2026-07-12T07:59:38.000Z For those of you not able to attend the HK show, here is my presentation from the Buying From China: What New Buyers Need to Know show last week.[What New Buyers Need to Know](http://silkroadintl.net/blog/wp-content/uploads/2011/04/VID00155.mp4.mp4?ref=silkroadintl.net) (video link). Once I get out of China, I'll post it on Youtube so the video can be in this post and not just a link. I'll be presenting this same presentation on Wednesday the 20th in HK at the [Global Sources](http://www.globalsources.com/?ref=silkroadintl.net) [Gifts & Premiums](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-GIFTSPREMIUMS/CONFERENCE.HTM?ref=silkroadintl.net), [Dental](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-MEDICAL-HEALTH-PRODUCTS/CONFERENCE.HTM?ref=silkroadintl.net) and [Home](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-HOME-PRODUCTS/CONFERENCE.HTM?ref=silkroadintl.net) Shows at the Asia World Expo out by the Hong Kong Airport. A complete [April '11 SRI speaking schedule is here](https://www.silkroadintl.net/sri-live-and-in-person/).A couple of things from Asia Inspections QC presentation were also worth passing on:First some info about China. While the benefits are well know, it bears mentioning since many people are now looking at other options. China’s advantages include: Low cost overall production (including labor), a mature supply chain and less regulations and more competition than most other markets. For me the most significant of these three is the mature supply chain. Probably no other place that we’ve managed production in the last 10 years has what (Southern) China has--a mature, deep and very broad supply China. Taiwan, Thailand and Malaysia have mature supply chains too, but they are not as deep or as broad as what can be found in Southern China. Vietnam, India, Indonesia, Cambodia are all decades behind. And don’t even get me started about the infrastructure advantages China has. Even though southern China is not the low cost leader any more, it still has significant advantages over northern China and South and Southeast Asia. I’m always complaining about the quality and problems that we have working in Northern China vs Guangdong province and people who are not here are on the ground often question my logic (because of course “China” is all the same, right?). But Asia Inspection has the numbers to back up my concerns. It’s a statistical reality, Southern China is better--lower failure rates over thousands of 3PQ inspection visits across hundreds of industries. What does that mean for you? When you combined better quality production with a deeper more experienced supply chain you have lower over all costs even if the COG is actually higher. We see this with almost every project we’ve ever done in Zhejiang or Vietnam--COG are lower, but the cost of doing business there (QC, logistics for components, dealing with difficult “management,” repairs/replacements/returns) is so much more expensive. [](http://silkroadintl.net/blog/wp-content/uploads/2011/04/Slide1.jpg?ref=silkroadintl.net) Second, “don’t believe anything that’s told to you from a factory.” Couldn’t have said it better myself. If you’re just taking your factory’s word and not buying third party business information, testing certificates, and QC reports, you’re asking to be ripped off. There is no reason for a factory to tell you the truth if they think that they will lose your business by being honest. If you require 3PQ or CPSIA or ISO or a bank account with the actual company name on it and they don’t have or can’t meet these requirements just about everything can be faked for a few hundred Yuan. Third, a comment by HSBC about the RMB was shocking to me. They said that by 2020 the RMB will be fully convertible. While technically this could be true, this means that in the next 8 years the banking system in CHina will have to go through a RADICAL upgrade and the government evolvement in that system will have decrease significantly. I don’t know that I believe that that can/will happen. I’m sure that HSBC is correct in their understanding of the banking world (and I know nothing) but if they are indeed right then we can expect major changes (for the good) in the financial system in China. Woohoo! ### SRI, Live and in Person! URL: https://www.silkroadintl.net/sri-live-and-in-person/ Last updated: 2026-07-18T14:48:25.000Z Once again, it's time for our bi-annual shameless self promotion event, otherwise know as the SRI Spring Public Speaking Schedule. Below are links to where you can find me and also new SRI content over the next 30 days.**First**, the latest issue of the [CISC](http://chinasourcinginfo.org/?ref=silkroadintl.net) [China Sourcer magazine](http://chinasourcinginfo.org/china-sourcer/pdf-editions/?ref=silkroadintl.net) is available for free download here. This [magazine is monthly](http://chinasourcinginfo.org/china-sourcer/past-editions/?ref=silkroadintl.net), it's free, it's digital and "it's a damn fine \[magazine\], if I do say so my damn self" ([Fletch](http://www.imdb.com/title/tt0089155/?ref=silkroadintl.net)).**Second**, this month I'm speaking Hong Kong for the [Global Sources China Sourcing Fairs](http://www.globalsources.com/?ref=silkroadintl.net). There are two sessions each week for the next three weeks, all of sessions are free to the show attendees (shows are free too!). All the shows are held at the [Asia World Expo](http://www.asiaworld-expo.com/html/en/UsefulInfo/TransportationByLand.html?ref=silkroadintl.net), right next to the [Hong Kong Airport.](http://www.hongkongairport.com/?ref=silkroadintl.net)The first module is: **Buying From China: What New Buyers Need to Know**.**April** [**12th**](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-ELECTRONICS/CONFERENCE.HTM?ref=silkroadintl.net)**,** [**20th**](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-HOME-PRODUCTS/CONFERENCE.HTM?ref=silkroadintl.net) **and** [**27th**](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-GARMENTS-TEXTILE/CONFERENCE.HTM?ref=silkroadintl.net) **2011, Panel Discussion:**2:00 Mike Bellamy, [China Sourcing Information Center](http://chinasourcinginfo.org/?ref=silkroadintl.net): Managing Expectations: Opportunities and Pitfalls.2:30 D. Feig, Asia Inspection: Qulaity Control Essentials.**3:00 David Dayton,** [**Silk Road International**](https://www.silkroadintl.net/)**, Qualifying Suppliers and Communications.**3:30 B. Chan & T. Ng, HSBC: RMB Trade Settlement4:30-5:30 Ask the Experts (Open Q&A)This session will be repeated at the same times and locations two more times--on April 20th and 27th. The second module is: **Improving Sourcing Performance.** **April 14th:**2:00-3:00 [David Dayton](https://www.silkroadintl.net/blog/about) Improving Sourcing Performance, Tips and Practices for Better Results. This session will be repeated twice, on the 22nd and the 29th, at the same location beginning at 1:00\. **Third**, I'll also be speaking at the [METERINGChina Global Buyers Congress ](http://www.meteringchina.com/event/meteringchina2011/en/?ref=silkroadintl.net)Event in Guangzhou on April 20th. This workshop presentation caters to small groups of buyers that are new to buying in China. April 20th:11:00 David Dayton, [What New Buyers Need to Understand when Buying from China.](http://www.meteringchina.com/en/images/2011/gbc%5Fcn20110314.html?ref=silkroadintl.net) **Finally**, I'll also be speaking in Dubai at the Global Sources China Sourcing Fair in June. More info to come. ### Same Story, Different Day URL: https://www.silkroadintl.net/same-story-different-day/ Last updated: 2026-07-18T14:48:25.000Z Just this last week we’ve had a few events that I considered fairly typical for China but that each shocked our clients and sent them panicking (the price for telling the truth is the “damage control” necessary afterwards). Heres what happened and what we did.**First, The factory totally used the wrong art on the sample** (after careful and specific discussions about correct art) but they wanted us to accept the sample anyway. They assured us, “We’ll get it right when you place an order.”While we hear this almost daily, frequency does not make it any more acceptable. We never place orders for products that have not been sampled correctly. Of course, we’re probably feeding suppliers’ belief that the “Golden Sample” is the only way to get orders, but I’d rather know that it can really be done and then fight for it to be duplicated than approve something that is not up to standard and have to fight for something that I’ve never seen before. We get our negotiator on the phone with them and work things out--let me tell you, having one person who’s job it is to just fix problems has been well worth any expense. Someone that knows how to play the Chinese games, how to host, joke, argue, blow smoke, kiss butt and use names in multiple Chinese dialects has been invaluable.**Second, “Your standards are too high. We don’t want to do your project any more.”** This factory even offered to return our money--course, they have our molds and could then knock us off with cheaper stuff now too. We have the standards-are-too-high conversation all the time. But, of course they made the “Golden Sample” and we’re asking for that to be re-created in mass. Now they see the conflict of interests that the Golden Sample creates. Of course, we’re going to force this issue every time. On this we just can’t give in if we ever hope to work with the factory again. That may sound like an oxymoron but establishing standards from the beginning (as opposed to making friends at the expense of standards) is the only way to do long-term business. Like Audrey Hepburn in Charades said, “I already have too many friends. Until one dies, I can’t possibly add any new ones.” I know that it's sacrilege in China to say this, but I'm not here for friends, I'm here for business.**Third, Even though we claimed we started the molds ($1200 each), we’re now claiming that we didn’t get your deposit and we don’t want to do your project and you don’t get anything back.** This requires some Sherlock Holmes. Bank receipts, some email conversations and some discussions about “the real reason” why they don’t want to do the order. Turns out that they just got another big order and they don’t think that they have the machine capacity or the labor to do both. So we get our money back (“We just found it in our other account.” Amazing, since we never had another account number.) and move to our back-up factory. This resolved surprisingly quikly. It could have been much much worse.**Fourth, we’re late and you can deal with it or cancel the order and we’ll just stop now.** Once punitive contractual penalties are threatened there is actually less, not more incentive for factories to complete projects on time. So being able to back up your threats with actual substance is very difficult. In this case, we have terms with the factory, so we can apply the penalties to the balance payment and they don’t have the luxury of leverage. What sucks though, is that while everyone will agree that the contract says this, and that penalties are complete legal (and even agreed to), the factory will re-coup those loses in the next project we do with them. Just because a factory agrees to terms and conditions in a contract does NOT mean that they expect that you (or they) will actually strictly enforce any of them. In fact, it’s been my experience that no one but you even has any clue at all what’s in the documents that have been signed.**Fifth, no labor, no product, what you going to do about it?!** I’ll be honest, here, we have no solution for this one. Once again, after Chinese New Year, millions of workers didn’t return to jobs in Guangdong province. When a factory goes from 700 to 400 laborers, there isn’t much that can be done. Labor prices and help wanted signs go up, but where there aren’t any people there just aren’t any people. Incredible, I know. China doesn’t have any people. Well, south-east coast China anyway. We have just had to back up all our completion/ship dates.**Sixth, only 1/3 of the work was completed, but everything was packaged and staged for shipping.** Sometimes there are mistakes. Sometimes there are extenuating circumstances. And then sometimes there are just flat out lies. Like this time when the bottom half of every carton that was boxed and ready to be loaded on the container was not finished. 1-2 packs per box (6 packs per box) on the top of more than 500 cartons were correct, but nothing deeper than 2 packs had even been touched. 4-5 of every six packs were incorrect. Fortunately we had on-site QC to catch this before it was too late to do anything about it. Their explanation? “We thought you wanted them shipped out on time.” Well, yea we did, but we wanted them correct too. Solution? Drag in as many people as we can round up, manage the production line ourselves and get it done ASAP. Rebook truck/ship and pay the factory less (for being late and for requiring our QC to be there more days than scheduled). ### You Think China's Weathered The Storm? Wait for it... URL: https://www.silkroadintl.net/you-think-chinas-weathered-the-storm-wait-for-it/ Last updated: 2026-07-18T14:48:26.000Z A factory owner related to me the reality of the current situation in China--we were complaining about quality, nothing new here. They were complaining about how strict our QC was, also nothing new. But what was new was the request from the owner--he said: "you need to teach your QC that China is changing and what worked a few years ago doesn't work any more. " Specifically, our QC was on the floor directly criticizing people for mistakes. Apparently a few people actually quite, or so the boss said. They don't need to put up with this any more--laborers are the scarce commodity nowadays. They have their choice of jobs and if they don't like where they are, they can walk. This conversations fits into a larger context of a Changing China. Two things stood out to me this last week that highlighted the "new" China. First was the lowering of the annual grow rate that the Chinese govt would accept as 'enough' to keep the economy running. This is public recognition that things are changing, and not for the better. Second, (finally) the public warnings about the lack of credibility in the Chinese Banking System. The banking system is as corrupt as the rest of the bureaucracy, maybe worse. Which means that it will, at some point fail. But regardless of if the system is in crisis today or if it will be in a few years or not for 10+ years, it’s not the same China that existed even 5 years ago. And while the economy is growing the changes coming to China are not going to be good. Some are saying that Banks in China are currently at a [60% Risk of Crisis](http://www.businessweek.com/news/2011-03-08/china-at-60-risk-of-banking-crisis-fitch-gauge-signals.html?ref=silkroadintl.net). But maybe 60% is [over stated](http://the-diplomat.com/china-power/2011/03/11/chinas-coming-banking-crisis/?ref=silkroadintl.net).Some say that the Dollar will be [replaced by the RMB](http://online.wsj.com/article/SB10001424052748703313304576132170181013248.html?ref=silkroadintl.net). But, [then again](http://mpettis.com/2011/03/the-dollar-versur-the-rmb-and-the-euro/?ref=silkroadintl.net), maybe[ not](http://online.wsj.com/article/SB10001424052748703560404576188981829658442.html?ref=silkroadintl.net).I’m firmly in the looming crisis camp. Three books that I’ve read that would at support the Crisis-is-Coming-Soon position:The Coming collapse of China--Gordon G. Chang. This is a few years old, but is a detailed report on the horrible state of the Chinese banking system. Capitalism with Chinese Characteristics. [ My review here](https://www.silkroadintl.net/three-book-recommendations/).Red Capitalism--Walter, Howe. [WSJ review here](http://online.wsj.com/article/SB10001424052748704132204576190864046071514.html?mod=WSJ%5Fnewsreel%5Fopinion&ref=silkroadintl.net)\--I’m reading it now. But what does this all actually mean for foreign SME’s doing business in China? Practically, it means a change number of things that you may or may not realize are part of your business in China now. 1. Fewer Govt subsidies to export oriented factories. As cash becomes scarce and policy priorities change, export subsidies will dwindle so prices will rise. 2. Fewer Govt subsidies to employ more people in lower end manufacturing so prices will rise. We’re already seeing this now, especially on the east coast. 3. Fewer easy loans to export factories so prices will rise. 4. Less savings in banks, less capital in the economy to work with so money will be more expensive (interest rates will rise) and so prices will rise. 5. More money in real-estate, a traditional “safety net” for Chinese, so housing prices will continue to rise. 6. More an more suppliers are moving to other countries (fewer options in China). You already know that higher wages, higher gas/logistics prices, higher materials costs, increasing inflation all are combining to slow down growth and make China less and less competitive. If you’re a small buyer you’re going to find it harder and harder to find willing suppliers that can both accept your small orders are can allow for strict QC.Larger buyers are going be find fewer (but probably better quality) factory options to choose from. This coincides with an [article in the China Economic Review](one. http://www.chinaeconomicreview.com/industry-focus/in-the-magazine/article/2011-03-01/Farewell%5Fto%5Fthe%5FChina%5Fprice.html) last week too, a post by [Steven Dickinson of CLB](http://www.chinalawblog.com/?ref=silkroadintl.net) fame. Steven knows China like no one else I’ve ever talked with--noThe question isn’t “if China is Changing,” and it's not even if that change is good or bad (it'll be bad for both Chinese consumers and foreign businesses), but how bad it will get for everyone. We're all ready seeing the rise in wages putting factories on the edge out of business. These increases are/will drive foreign factories out of China too. Labor in China is inefficient in China, but traditionally it's been cheap--so everyone put up with the inefficiencies. But why will companies stay with no more cost advantage? They won't. Further, to the domestic side of things, if labor in China is inefficient, how will Chinese brands compete with int’l brands and more equal wages? And if consumers are growing more sophisticated and they have more money, are they going to be satisfied with Chinese brands? The answer to both is they won't. ### “Don’t ever be famous person in China” URL: https://www.silkroadintl.net/dont-ever-be-famous-person-in-china/ Last updated: 2026-07-18T14:48:26.000Z **23/02/2011 UPDATE:**[Full text](http://www.globalsources.com/NEWS/Buying-from-a-supplier-online.html?ref=silkroadintl.net) of article that I wrote about Alibaba-Gate for [Global Sources](http://www.smartchinasourcing.com/?ref=silkroadintl.net) can be read [here](http://www.globalsources.com/NEWS/Buying-from-a-supplier-online.html?ref=silkroadintl.net). Excerpts from my article and others' articles about the issue are [here](http://www.globalsources.com/NEWS/Supplier-verification.html?ref=silkroadintl.net).And another piece by my friend and partner at [CSIC](http://chinasourcinginfo.org/?ref=silkroadintl.net), Mike Bellamy can be seen [here](http://www.globalsources.com/NEWS/What-online-buyers-should-learn.html?ref=silkroadintl.net) and [here](http://www.globalsources.com/NEWS/Supplier-verification.html?ref=silkroadintl.net).\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_Some very interesting new stories over the weekend. First, The firing and investigation of China’s Railway Minister for corruption [here](http://blogs.wsj.com/chinarealtime/2011/02/18/will-massive-debt-derail-chinas-high-speed-trains/?KEYWORDS=train+china&ref=silkroadintl.net) and [here](http://online.wsj.com/article/SB10001424052748703843004576141410503664794.html?KEYWORDS=Liu+Zhijun&ref=silkroadintl.net) (subscription required). Fraud, gambling, corruption, contracts for favors, faked safety standards it’s all there. (And how about the money quote from the Japanese engineer?! Paraphase: The Chinese copied our technology, built it with inferior components and are running it (too) faster with fewer safety measures.) The longer I'm in China the more I think that the biggest threat to China is China itself. Sure it's getting richer and we even saw Chinese shoes and refrigerators during the NBA all-star game this weekend, but until Chinese people learn to care about other Chinese "strangers" it's never going to get past melamine-in-the-milk like situations and become a great power. The out-pouring of charity during the Sichuan quake was a great leap forward, but how many steps back has China taken since then? Second, after reading about Alibaba today, I was torn between entitling this post: “Alibaba and the 40 thieves” or “Elvis has left the building.” No doubt a google search for either one will lead you to the same stories. [Here](http://online.wsj.com/article/SB10001424052748704476604576157771196658468.html?mod=djemalertAsianews&ref=silkroadintl.net) are [two](http://www.techeye.net/business/alibabas-ceo-resigns-after-fraud-case?ref=silkroadintl.net). More on this below. At their request, I wrote a piece for another site yesterday and will link to that when it goes up (or just post the entire thing here if they don’t use it). Third, in case you, like I, still imagined that econ growth was going to be bring democracy to China some time soon, I offer up this [gem from the WSJ](http://online.wsj.com/article/SB10001424052748703498804576156203874160350.html?mod=WSJ%5Fnewsreel%5Fworld&ref=silkroadintl.net): > The only sign of protest came from a young Chinese man who was detained by police after laying some jasmine flowers outside the McDonald's and trying to take a photograph of them on his mobile phone, witnesses said.The lackluster popular response, however, demonstrates how much harder it would be to organize a sustained protest movement in a country with a well-funded and organized police force, and with the world's most sophisticated Internet censorship system. > So much for Engagement Theory (of which I have considered myself to be a strong believer for a long time now). As always you can read the news in China in multiple ways. You can say about the train story, “See! Look how serious China is taking corruption--they even fire people that are high up.” You can read the Alibaba story and say, “How responsible of the CEO. He quit even though the company line is that he had nothing to do with it.” And you can read the protest story and say, “See how happy the Chinese are? Even when foreign trouble makes try to stir the pot, nothing really happens.”Or you can read with the more jaded I've-been-in-Asia-for-20-years perspective. When I read some additional articles I find a few things that made me question the reality of the harmonious society.**1.** The debt of the railway ministry is more than the govt can afford. To have a leader rack up this much debt and put other leaders and entire sections of the economy in trouble at the same time as the new trains are not being used as much as expected (too expensive) and you have more than enough excuse to sack the official and change the previously announced (grandiose) plans to more than double the total length of high-speed rails in China. Look for less, not more, railworks from China next year.**2.** The “resignation” of the Alibaba CEO for 1100 fraudulent tractions the value of which was less than $1200 each is as ridiculous as Alibaba’s claim that they stand for values and “honesty online.” Anyone that has worked with Alibaba knows a couple of things: 1\. Unless you visit the factory yourself, you have no idea with whom you are really dealing with--there is no way to know outside of Alibaba’s own “gold supplier” status since you can’t get complete supplier info without paying for it (or ordering). 2\. If you are a supplier, you can BUY gold status as well as “factory” status even if you are just a trading company. 3\. The membership fees payed by the fraudulent companies were worth more than 3 times what the fraud receipts totaled. So we can assume a) both Alibaba and others are making a ton of money off of these types of companies, b) it’s a safe bet that it’s happening a lot more than these 1100 transactions, c) the employee that caught these “problems” is probably scared for this life right about now. Full Disclosure--A few years back I was asked by Alibaba to spend 6 hours a week to be a third party moderator in an online buyer forum on Alibaba. They asked me to work with buyers that had had problems with suppliers but were still interested in getting the problems resolved and completing their orders (as opposed to filing a formal complaint with Alibaba and/or suing the supplier). I got online once and was immediately overwhelmed with complaints from buyers that had been ripped off in some way. Not only did they all want some sort of immediate resolution but they assumed that I was part of Alibaba and expected me to both commit to getting their money back but also to censure the supplier in some way. I had no power to give them what they wanted, most of the buyers were furious at the lack of help from Alibaba (and me) and quickly removed my name from the list of moderators. That was 4 years ago and I still get emails from people that want my help with their Alibaba-introduced supplier problems.**3.** The lack of protesters for this specific event doesn’t negate the reality that 2010 saw a huge increase in urban protests all across China for the same reasons called for at this time, namely: rapidly increasing food prices, inflated housing costs, under-employment for college grads and corruption by government officials and the nuvo-riche. Again, China raised the number of college spots available (good) but not the number of jobs for college grads (bad). Throw in the world recession and you've got millions of underemployed smart people. I'm very afraid that this won't end well. Talking about all of these stories with some Chinese friends over lunch on Monday elicited this observation: “Don’t ever be famous person in China.” Hearty agreement from the other Chinese present included these pearls: Money makes you a target. Success makes others jealous. Being famous can hurt your family and business. ### Best of the Year, 2010--Happy Chinese New Year! URL: https://www.silkroadintl.net/best-of-the-year-2010-happy-chinese-new-year/ Last updated: 2026-07-18T14:48:25.000Z **Happy Chinese New Year!**Yup, Chinese New Year is now officially over, but no not everyone is back to work yet. We still have multiple suppliers that have seen less than 1/2 their previous staff return to their jobs (in Guangdong Province, mostly). So while you're waiting for everything to get back to normal, here's a little reading material that will not just help you pass the time, but hopefully be of value to your efforts in China as well. Good luck!**Most Popular Posts 2010**[Another Day Another Interesting Conversation](https://www.silkroadintl.net/another-day-another-interesting-conversation-headache-with-a-factory/)[China is Different? Really? How?](https://www.silkroadintl.net/china-is-different-really-how/)[Face, What?](https://www.silkroadintl.net/face-what/)[Guanxi, Trade Shows and the CLB](https://www.silkroadintl.net/guanxi-tradeshows-free-stuff-and-the-china-law-blog/)[Chinese Education](https://www.silkroadintl.net/chinese-education/)[Chinese Culture for the Frustrated Foreign Buyer 1](https://www.silkroadintl.net/chinese-culture-for-the-frustrated-foreign-buyer/) and [Part II](https://www.silkroadintl.net/chinese-culture-for-the-frustrated-foreign-buyer-part-ii/)[Working in China Where to go, What to Expect](https://www.silkroadintl.net/working-in-china-where-to-go-what-to-expect-and-how-to-do-it/)[Reasons Why a Factory Doesn’t Want You to Come See Things](https://www.silkroadintl.net/reasons-why-a-factory-doesnt-want-you-to-come-see-things/)[Leverage, if You Don't Have it, it Doesn't Matter What Else You do Have](https://www.silkroadintl.net/leverage-if-you-dont-have-it-it-doesnt-matter-what-else-you-do-have/)[This Project is More Difficult Than We Originally Thought](https://www.silkroadintl.net/this-project-is-more-difficult-than-we-originally-thought/)**G.O.A.T SRI Posts (2006-2009)**[Fake Money](https://www.silkroadintl.net/fake-money/)[Starting Your Own Business in China](https://www.silkroadintl.net/starting-your-own-business-in-china-some-additional-comments/)[Q&A about Importing](https://www.silkroadintl.net/q-a-about-importing-into-china/)[Read Very Very Carefully](https://www.silkroadintl.net/read-very-very-carefully/)[QC Blog](https://www.silkroadintl.net/qc-blog/)[Quarantined! AKA Never Tell the Truth to Anyone But Your Parents](https://www.silkroadintl.net/quarantined-aka-never-tell-the-truth-to-anyone-but-your-parents/)[Being a Boss in China](https://www.silkroadintl.net/being-a-boss-in-china/)[Another Trip to the Healthy Department](https://www.silkroadintl.net/another-trip-to-the-healthy-department/)[The Joys of living in China Part I](https://www.silkroadintl.net/the-joys-of-living-in-china/) and [Part II](https://www.silkroadintl.net/the-joy-of-living-in-china-part-ii/)[Returning Products to a Factory](https://www.silkroadintl.net/returning-products-to-a-factory-in-china/)[Books to Read if You're Coming to China](https://www.silkroadintl.net/books-to-read-if-youre-coming-to-china/)[Ancient Chinese Secret: Never Lie (to Foreigners), it's just not worth it](https://www.silkroadintl.net/ancient-chinese-secret-dont-lie-to-foreigners-its-just-not-worth-it/)**Most Links**[China Law Blog](http://www.chinalawblog.com/?ref=silkroadintl.net)[China Alltop](http://china.alltop.com/?ref=silkroadintl.net)[Smart China Sourcing](http://www.smartchinasourcing.com/?ref=silkroadintl.net)[China Sourcing Information Center](http://chinasourcinginfo.org/?ref=silkroadintl.net)[China Quality Inspection](http://www.qualityinspection.org/?ref=silkroadintl.net)[New Dynasty](http://newdynasty.com.cn/?ref=silkroadintl.net)[New Zealand Govt, China FTA](http://www.nzte.govt.nz/explore-export-markets/north-asia/doing-business-in-china/communication-relationships/pages/negotiating.aspx?ref=silkroadintl.net)\--how to negotiate, advice from an experienced negotiator[Shanghai Expat](http://www.shanghaiexpat.com/?ref=silkroadintl.net)[This is China](http://thisischinablog.com/?ref=silkroadintl.net)[Silicon Hutong](http://siliconhutong.com/?ref=silkroadintl.net)[China Success Stories](http://www.chinasuccessstories.com/?ref=silkroadintl.net) ### Then and Now, a China Watcher’s Tale, John Pomfret. URL: https://www.silkroadintl.net/then-and-now-a-china-watchers-tale-john-pomfret/ Last updated: 2026-07-18T14:48:26.000Z These are my notes from a speech by [John Pomfret](http://www.johnpomfret.net/?ref=silkroadintl.net) today. I got just a moment afterwards to talk...so many more questions that I wanted to ask. It was a nice talk but I wanted more on his book and more on his personal experiences in China. I tried to ask questions that were directed toward practical business issues (rather than academic/political leaning questions). I hope that you can follow the note structure. There are a couple of highlights that I've highlighted.**John Pomfret**I've tweaked the outline today to include Why Things like Egypt haven’t happen in China. There are a number of reasons that what’s happening in Egypt have not happened in China. Yet.**First** economic reforms.1980-2011 has seen HUGE changes in the lives of average Chinese.1989-- When China had it’s “Egypt” moment and subsequent crackdown, Deng and the other leaders in his camp gave three options to China’s elite:1\. They could remain involved in politics (Basically they could go to jail.)2\. They could go abroad, leave China and live elsewhere.3\. They could stay and keep quiet and get rich; but their future is their own responsibility from their on out. This “self responsibility” option was a serous mental change for many. Also, at this time was the opening for FDI which China realized that it had to have. And this led to the employing of the lower classes (which Egypt has not done).**Second**, housing reforms.1990s was start of housing reform and now about 60% of urbanites own their own home and car. This is linked to #3 as well. In the past people couldn’t divorce because they couldn’t move out! NO houses for rent or sale, so one slept on the couch and one in the bedroom. Of course, now the divorce rate is much higher than it used to be.**Third**, personal freedoms. It’s gone from 1980’s and all having assigned jobs to today, personal choice, freedom from bosses/teachers etc. Jobs are easier to get (and lose). Passports are not as tightly controlled. Of course that’s let to other social ills such as: mistresses, fake contracts, divorces, overpriced rental units, polluting cars, etc...**Fourth**, Expansive Educational opportunities. In the last 30 years there has been a quadrupling of educated Chinese. You’ve now have the first college graduated generations who are making much higher salaries than their parents or grandparents ever dreamed of. Of course they all have had serious “Patriotic Education” via the CCP’s post ’89 campaign. After ’89 all were considered “too western.” Since then the govt has actively taught that the West is NOT China’s friend and that only the CCP is the answer. Partly this is justified through the growth of the past 3 decades but it’s also partly a manufactured political tool.**Fifth**, the Security Bureau in China is as tough and more of a significant presence now than it’s ever been! NO political dissent is tolerated at all. Religious and media repression are worse than the 80’s. The “Golden Age” of Chinese media was 15 years ago, and getting worse. The major misconception about China is that it’s getting freer as well as richer. The reality is that it is NOT becoming freer politically. Economic growth has not equated to political development. SO.....Can China avoid what’s going on in Egypt? Medium term, it’s unclear--there are some serous problems coming up. **Demographic issues**\--fastest aging poorest country in the world. They are old and not yet rich and have no health care system to speak of. They face **HUGE environmental problems**, like lower crop yields, lack of water (dust bowl concerns), major pollution. Yes, they are investing in green tech, but they are not solving their current problems fast enough.**There is no moral compass in China.** Tradition was destroyed in the 1950-1976\. Then Deng told them to forgot communist ideology and thought reform and they went straight into making money. This back and forth tradition-money-values now (confucian tradition now) has served to disenfranchise generations of Chinese and now people are tired of being told what to think.**Q&A.Gender imbalance?** Military is shrinking in size and increasing crime and cross boarder wife stealing/sales is a very worrisome trend.**How does the new freedoms and the political controls work together? Where’s the line? Are business cases different than criminal and political cases? (my question)**I think that independence of the Chinese legal system is a dream of western lawyers and its clearly NOT a priority of the party. All decisions are, to a degree, political. So the party monitors everything. And fewer and fewer Chinese want to be defense lawyers because they can be arrested at the desecration of the prosecuting attorney! Yes, indeed, foreigners are using business law to a larger degree than Chinese are. And whither they like to admit it or not, the business decisions are still political decisions and are tracked and later used for political purposes by the government with the US embassy or others--like having a “chit” that you can toss into the ring and ask someone to pay up or to help us out later.**What’s the health status in China?**Heart disease is rising quickly, cancer is growing and lung cancer is HUGE. Tobacco is a source of major state revenue so stop-smoking policies have been half hearted, at best. Also there are major pollution problems. They’ve made huge efforts to clean up in BJ, for example. But now auto is replacing coal as the major pollutant. We’ve all heard that 17 of the 20 most polluted cities in the world are in China. It’s becoming a priority for local govts and even the national govt. But still not as important as growth.There is still a get-rich-quick mentality and a State with a serious lack of resources and that means that China is VERY UNSAFE.**What about income disparity?** As bad as in the US? The economic disparity is MUCH wider now than in the 80’s and now even greater than the US and just getting wider. They’ve lowered taxes in the countrysides and have starting to set up medical systems--but it’s still slow and mainly urban. Inflation is HUGE now too.**What is the view of Tiananmen?**Teens won’t even know anything about it. BJU students had never seen the “tank man” photo before. People that know and tell are fired from jobs and/or imprisoned so a whole generation does not know. People that know and are rich are very cynical (too much skin in the game to be radical anymore), they say: “Chinese morals are so week that we can’t have political change now in China.” If you have money you’re less revolutionary. People today mostly say: “Maybe in the future. ’89 was bad, but less bad than chaos.”What people forget is that the reality is that the CCP is the SOURCE of the instability, not the cure. People weren’t crazy and then the Cultural Revolution started--the CCP lost control and allowed it to happen.**Do you see a change coming in moral freedoms?**Historically, there were not a lot of real christians in China. Pre-49 not many christians at all. But in the 80-90s there was a christian explosion! Other sects too (falungong) and the traditional Chinese religions too--it's obvious that people are looking for something to believe in. Estimates are that there are 60 million Christians in China now. And they are not really rice-bowl christians anymore either but rather something homegrown, a Chinese version of Christianity. But the Party is very schitzo about religion. A few years ago they thought that you could believe in God and the Party. Jiang Zemin had a much mellower view of religion. But now with a weaker leader they are backing off of this; the party is trying to mollify this change with a return to confucian ideology (of course, respect the State is the #1 value). How this will work will be difficult, to say the least. Most important thing to remember is that China is not static. CHINA IS RAPIDLY TRANSITIONING and it’s hard to tell where it’s going.**Why Mao still so revered?**Well, the constant state sponsored propaganda is the main reason but also he was successful in unifying the country. There is a ton of really good scholarship coming out of HK right now--better than the research into Mao that’s being done in the US.**Explain about the China’s foreign policy, specifically with Brazil but also with others.**Brazil exports the most Soy, iron ore, and a few other things to China; their largest suppliers in the world. 10 years ago B and C were high on their relationship, China wanted to bring money and workers--B said no to the workers plan (“not another Africa”). So then China hired away all the mid managers from shoe companies in B and gutted their industry. But they C is buying iron-ore and soy, and those are billion dollar deals so the relationship is strained. Also, in manufacturing, C is not B’s partner, rather their competition. C is taking over B’s relationships in Africa too. B now sees C as both a competitor and partner--this is the same as with other developing countries. African poorer countries with experience with C they are not as hot on China as they were in the past. Both corruption and development of the economics will all hurt China’s relationships--New Colonialism.**How is the freedom within arts and film industry. Are they a source of morality teaching? How tight are the controls?** **First**, there is still massive censoring going on. But in some areas (kissing) there is more freedom.**Second**, in the 70‘s and 80’s dissident painters were big in China and they also became popular in the West--so much of Chinese dissent was commodified. Now it’s reached art-house movies and visual art too. For example, Fengxiaogang has a new movie, Let the bullets fly, it’s a coeh brothers-esque movie and it pushing the boundries. Fortunately for him, humor allows him to get away with it. He’s still relatively independent. But Zhangyimo is now a totally co opted “state” filmmaker. Chinese culture is the most retarded in terms of development. Culture is still viewed as a tool of the CCP.**The CCP, flexible to survive and able to prosper--how do you explain the ability of the CCP to be effective and reexamine itself?** **First**, yes, in 1989 they killed a lot of people, but then the USSR collapsed and those two things were a GREAT negative example. So they printed up a study guide and EVERYONE could read all 12 volumes of the study--and they all did, for years.**Second**, since then they’ve also looked at other color revolutions (and Egypt now for sure too). They’ve adapted their strategy according to the mistakes of others. The fall of the USSR was fundamental to their development, Deng switched instantly in the mid 90’s from the Stalinism of the ’89 reactions and went for econ development--that probably saved them. They bought off the business elite and academic elite too. ALSO 1000’s of Chinese have studied in the US, more than 1mil total and about 20% have gone back to China and are in the govt. They brought western tech and management skills.**What is the status and restrictions of foreign correspondents?**You can go to events and places but they control the info tightly. They bug apartments and phones still. They don’t directly threaten foreigners any more, instead they threaten your assistants and friends (Chinese). They’ll take out the Chinese friends to “tea.” Friends pay the price for foreign press “mistakes.”**What’s the future of Tech coming from China?**They are pouring massive amount of money into this. Uof Biotech (sp?) is the only Uni not controlled by CCP. But the question is, will it spark innovation? UofSD is studying the rise of innovation. China is a 2nd level and moving to the 3rd level of innovation now. They are not at the 4th level where it the US has been for decades. But UofSD thinks that they will be there soon. I DON’T THINK SO. The system structure is still top down and so controls resources. For example, the State mandated the development of 40 marketable pharma products in 5 years--you just can’t do that. China’s only had 1 in the last 60 years! So it’s still a top down system--but that said, there is desire to focus on tech. They do NOT wan to be a low cost labor country any more. I had more questions that I didn't get to ask.1\. How does the Hukou system still limit housing/bennefits etc? Will it ever be abolished?2\. Is there a housing bubble? All the excess building--will there be a crash like '97 in Thailand and South Korea?3\. Investment and increased education has lead to both increase in corruption and scholarship? How is this affecting the rest of the world?4\. How is business being changed by China? Or is China being changed by western business standards?5\. Does the combination of corruption, pollution, the lack of brides, the age demographic and lack of health care and a slowing of growth result in "Egypt" in China in the future? ### Cold War 2.0 URL: https://www.silkroadintl.net/cold-war-2-0/ Last updated: 2026-07-18T14:48:26.000Z I meet with one of the speech writers for Secretary of Defense Rumsfeld on Saturday. We had a nice lunch and good discussion about China. One of the things that we both shared in common was the idea that China, at least militarily, is not really a threat. Yet. He had a couple of specific insights into this reasoning that I’d not heard before. First, The Pentagon had received reports about the new China stealth fighter from the Russians that it was a deconstruct of a number of things, but mostly old (1980’s) US stealth tech and Russian jet engine technology and a number of other planes all cobbled together. Sure, they have a new stealth fighter, but it’s already twenty years out of date, it uses Russian jet engines and it’s not even theirs (all reversed or stolen or purchased tech). Second, a lot of people are scared of China’s new “naval power.” But many people in DC think, if they want to build an aircraft carrier, let ‘em! It costs 2-4 billion dollars to build one and then tens of billions more to build the flotilla that it takes to cover it when out at sea. And those are just the start up costs. For one boat! Then they have to staff it, maintain it and build planes for it. Not only that, but they are borrowing old tech for this too. Third, they still can’t project power past the ring of islands to their east (Japan--Taiwan--Philippines--Indonesia), the mountains to the southwest or the deserts to the northeast. And who is going to invite a Chinese aircraft carrier and the accompanying destroyer fleet into port for a visit outside of a few African nations? Fourth, for some reason they still can’t build their own jet engines. The US learned this when a deal with Russia to buy some new engines went south prior to China unveiling their new stealth fighter. But there were two thing that he said that the US and others still needed to be vary wary about. First, Chinese nationalism is like the most virulent nationalism you’ve ever personally experienced, on steroids. Very few other countries on the planet are infecting their people with such a rabid degree of nationalism as is China. I’ve seen the text books myself and they teach children that nothing (no one) is more important than the Chinese nation. This is a power that sometimes leaks out in small doses (tightly controlled pressure releases), for example when the Japanese embassy is attacked or the US embassy is stoned by protesters or when you hear Chinese commenting that all minorities should be either kicked out or locked up (or worse). It’s expressed by the government in statements like “the Chinese have been oppressed” or other countries want to “keep China down.” The govt actively supports and promotes this for it’s own purposes. Labels like “banana” (Yellow/Chinese on the outside, white/Western on the inside) and “friend of China” are more benign examples. But sometimes the govt can’t control how far the people go with their nationalism. Ethnic clashes, for example. The anger and shame spewed at Liu the hurdler when he pulled up lame in the Olympics, is another example. Or things like “get the F out of here” yelled at me and other foreigners in China. If you’ve never actually personally lived through a “anti foreigner” moment, then this sounds just like the political trash that's broadcast everyday on US TV. But I can attest that I’ve never feared for my life, never had any one of my family threatened or been publicly hated because of my nationality in any other country (and I’ve lived in 5 other countries besides China). But I have felt this in China.1 billion angry Chinese people is very scary. Think about the power of an entire nation that has never been taught any other value other than the superiority of the Chinese State. Second, while the cold war may have ended in 1989, 2.0 is here now. Now it's the theft of info and the threat of non-military war. IP theft is not just something that happens in rogue factories, it’s an active policy initiative for both the government gaining new tech and a way for industry, e.g. China, to catch up with the Western powers that have oppressed them for so long. Sure, courts are getting better at legislating against Chinese companies--they have to to continue to be a safe haven for FDI--but there is very little enforcement of these court decisions. So, yes, you can sign a contract, take a violator to court and win, but then chances are you’ll get nothing out of it. Few if any companies that are not forced to do so under penalty of death (e.g. Foxxcon) are taking IP seriously. Theft is considered patriotic. The most recent government example that my friend shared with me was the last trip that Rumsfeld took to China in Jan. Since Rumsfeld is in the Chain of Command for the US he is required to have both instant “hotline” access to the Whitehouse and the Pentagon and also he travels with basically a “cone of silence” so that he can communicate 100% securely wherever he is. And of course he has scores of support and media people that travel with him. Well, when the entourage arrived in Beijing they were denied the ability to unload ANY of their secure communication equipment. Not only that, but ALL work or personal phones, cameras and recording devices for ALL the support personal had to be handed over to the Chinese military and all people were issued “new” blackberries to use while they were in China. The US govt, when it goes to China, just assumes that EVERYTHING that is said and EVERYWHERE ANYONE goes is monitored. Of course this isn’t new. I was told that this was true about my activities in Chongqing 15 years ago while I was teaching at a university--one student in each class was assigned to spend time with us and monitor our conversations and activities. Our apartment was bugged and our travel was controlled. This what I know for a fact--they told us this while we were there. My then brother-in-law who studied Chinese for the DoD confirmed this and much more about the surveillance of foreigners in China. Now I was just a teacher at a lower level university. If you have a product that is valuable/unique or if you have a significant amount of money to invest, if you teach, if you have a popular blog or are famous in the least, you can bet that you’re being monitored in China--to what degree, I have no idea, but you can be assured that it will happen. But I know that my small company has had our blog shut down, we have had people follow us (after we were published in the NYT for opposing the SZ City govt over the subway), and I’ve been stopped and asked for ID when driving my car out of the city. This is all in addition to the “normal” controls on $ exchange per passport, entry control, house registration, internet censorship and TV news black outs. The point isn’t to scare anyone away from doing business in China. Rather I believe that if you know what’s going on around you you have a better chance of being successful no matter what you’re doing. In China you need to know that even though “they are not really communist any more” they were all educated in a very nationalist, very distrusting society. They were taught to both be polite and to hide their true agendas. They were taught that foreigners are evil, liars, cheaters and just want to take advantage of China and keep it down. You’re not trusted and often you’re not liked or even welcome (yes, even if they take you out to dinner). The bad western economy and banking collapse has just exacerbated these feelings. The playing field is not level. Subsidies are being made to just about every factory to export as much as possible, and those subsidies are worth more than your IP agreement. There is no incentive to tell you the truth--and they’ve told me this directly too (most recently in public at the recent Global Sourcing conference), so do don’t expect to be treated honestly. Don’t get me wrong, I’m not bashing individual Chinese people, I’m just saying the system is not “fair.” Your “potential” business means nothing to your supplier (and that’s a generous assessment). Over the past 8 years, far too many westerners have come to me saying they can’t believe that the factory was so nice, and their English was so good, and they signed all the contracts but they still got knocked off! Deal with it. You’re not going to change it. Expect this and move faster or get totally taken advantage of. My biggest fear of China is not the military, but that as they expand their economic power the world will more and more do business in the “Chinese way.” That’s the China threat that I’m most worried about. ### Answers You Don't Really Want URL: https://www.silkroadintl.net/answers-you-dont-really-want/ Last updated: 2026-07-18T14:48:26.000Z “You know you don’t want the answers, so why do you keep asking the questions?” That was the question that I was asked last week. These are some of the questions that I was asking: 1. Why did you sign the contract if you didn’t agree with it or even read it? 2. Why did you give me a bid for this price/time if you knew you couldn’t do it? 3. Why did you tell me you could do it before you confirmed that you could? 4. Why did you take my deposit if you can’t do the project? 5. Why did you demand CAD drawings if you knew you weren’t going to be able to use them? 6. Why did you give us QC standards if you can’t/won’t even meet them yourself? 7. Why did you tell me you had all the raw materials purchased already if you didn’t? 8. Why did you sign one contract with me and another different one with the factory? 9. Why did you use one process/material/factory for the sample and another for the production? 10. Why did you tell me that I could come do QC and that you were finished with X% of production when you’re not even close to that %? 11. If you can’t match the sample quality in production, why did you make a sample like that? The list could go on and on and on and on. But the answer is always turns out to be the same: “I wanted to catch the opportunity.” And that’s what business is all about is scarcity-driven China: Did you catch the opportunity when it flew past or did you let it go and miss your (one and only?) shot? The good news is that the is slowly changing--and not just with a couple of big suppliers, but across the board. Last month while speaking for the Global Sources supplier meeting I head some very promising new comments from the suppliers themselves. Basically the suggestions centered around the following: The “lowest price” is no longer in China--suppliers here MUST differentiate themselves some other way or go out of business. Chinese suppliers have 10-20 years head start on India, Vietnam, Indonesia, Cambodia, some places in South American and Africa--what are they doing with that experience? Some factories that were led out as success stories share these ideas with the audiance: 1. Be honest about prices, problems, delays, etc. 2. Add value (especially if you’re a trading company). 3. Be transparent in procurement, processes and problem solving. 4. Improve service quality, be “professional.” 5. Make the buyer feel “safe”/improve the buying processes. 6. Acknowledge and accept the “info age” and it’s implications. There were over 700 suppliers present. This is either a good sign that there is a desire for education that was not present before; GS averaged about 300 at previous show. Or this means that the economy is still so bad that suppliers are grasping at straws. I’d like to think that it’s more of the former, but it's probably some of both. For my part, I tried to stress that the opportunities to keep clients rested in the ability to improve the buying experience, not just lower the price. There were indeed a lot of suppliers that were taking careful notes and asking questions (of me and the other successful Chinese suppliers on the panel). Most of the suppliers wanted to know specifics about how to improve or how to deal with specific situations. There was a lot of discussion around the idea that China has to build on the successes of the past and evolve into a more info and services oriented model of doing business. But there were still a number of suppliers that just out-right didn’t believe that being honest would help them retain clients. More than a few even came up to me afterwards and in completely unbelieving and almost mocking tones asked if I was serious when I said that being honest about problems would help them retain customers. They argued that if they let clients know that there were problems they would lose trust, get mad and leave for another supplier. My contention is this: after 10+ years of working in Asia I’ve learned a couple of things. 1. There will be problems. Every time. So don’t lie to me and say they’re won’t be or there aren’t any. There will be issues. You know it and I know it. I want the 3 AM phone call--really, I do. I want to drive out and talk through it with you--really, I do. I do NOT want you to change something just to meet a date. I do not want to find out there was a problem that will delay delivery just 12 hours before the container shows up--I want to know days or weeks in advance so that I can manage expectations. So the best thing to do is... 2. Let me be involved in the process. Tell me what’s really going on. Not only will I be glad to help fix it, I’ll honestly be happy that you let me know. Remember, It’s my money, my project (and my ass if it goes wrong). I want to be involved in the process, for multiple reasons. I care about the quality more. I know what can and can’t be sacrificed. I’m responsible for any and all changes. I know what I want and it’s my call on what is and is not acceptable. I'm not going to leave just because the price goes up. In fact, I almost never do if I can get the quality and other aspects of my order correct. But no matter how many factories have realized that this is indeed the expected way to conduct international business (with foreigners or even other Chinese) there are the hold outs that are not really interested in meeting expectations. And with them you really only have one option--don’t start doing business with them in the first place. ### Working with China, Tim Stratford's Ideas/Experience (and some of my own thoughts too) URL: https://www.silkroadintl.net/working-with-china-tim-stratfords-ideasexperience-and-some-of-my-own-thoughts-too/ Last updated: 2026-07-18T14:48:26.000Z At the request of the Office of the President, I work with a local university in Utah as they implement a new Chinese program. As part of that, I had the opportunity to listen to and then chat with Tim Stratford for a few minutes this week as he spoke at the UVU China Initiative luncheon. His topic was: [Building Trust in US-China Economic Relations.](http://www.uvu.edu/ethics/events/stratford.html?ref=silkroadintl.net)While he spoke at a very high level and in generalities, there were a couple of specific themes that apply to individuals doing business in China.**1\. “Trust is the most elusive thing in US Chinese relations.”** Part of me was pleased when he said this. I thought, “See, it’s not just me.” But then I realized that this is a systemic problem and is not going to get better any time soon. In answering a question about people doing business there, he furthered the point by noting that “trust is lacking at ALL levels” of the US China economic relationship. And that people doing business in China need to be very cautious. Part of the problem is completely differing agendas. While we (US/China) can agree on many high level ideals, getting to “yes” is another ball game completely. And it’s not just that the US doesn’t trust China. The mistrust goes both ways. My thought here was this, it’s been my experience that a lack of trust comes from two different places. First, history of being scammed or taken advantage of. Second, from being untrustworthy; people naturally assume that others do business just like they do, until they are shown otherwise. Both China and the US are learning that business is NOT done the same way in each country. While both are out to make money, how they get to “profit” in very different ways.**2\. “It’s often hard to distinguish between a lack of capacity vs lack of commitment.”** In almost every business venture I’ve ever been involved with in China, not a truer statement could be said. Add in the golden sample and you often can’t know that there will be problems until is much much later into the production process. So often an “ability” problem is actually an attitude issue (or vis versa). Sometimes you’ll never know. Some of the best ways to determine which type of problem you’re dealing with is to eliminate one of the variables and see what the result is. If you can isolate a specific technical problem, and then throw more money/time/options at that one piece to see what can be accomplished. Admittedly, this can be an expensive/time consuming rout to take. But if you’re demanding results and not getting anything other than empty promises, you may have to help you supplier realize a way out (and get yourself some satisfaction). Never throw “incentives” at a problem unless you can control both the proposed solutions and the results. Another option, if you’re an engineer is to get into the production processes yourself. Check the tooling on your own, follow one item from raw material to fulfillment and see where the issues are--then isolate the problem steps in production and make the necessary changes. Of course, this requires that you’re actually in China.**3\. The other party’s leverage is perceived to be limited by both sides, (but the US/foreign side is usually wrong).** Even if your qtty’s are “big” for you, they are probably not that big for the factory. Even if you’re paying cash (30/70) the factory can probably cover their butts by selling your product to others if you don’t pay for it. If you are not more than 30% of your factory’s orders/capacity then you do NOT have the leverage to dictate to them changes or even enforce contractual demands.**4\. China is willing to do anything that it can be convinced is in it’s own best interests.** Ditto every other country, and of course ditto just about every factory I’ve ever worked with. IP, you may say, is in their best interests to protect, right? Nope, not yet. They can make more money than they will lose (be forced to pay) by selling your designs. And, furthermore, they know that even if you take them to court, you’ll have a hard time enforcing anything. But wait, isn’t in their best interest to treat their customers well, so they’ll come back? No, not really. They don’t know you from Adam. They don’t believe all your talk of “potential” and they probably have no idea who you are or what your market is. So no, they don’t know how much money they are leaving on the table by going after as much as they can get on one order.**5\. China is willing to opt out of the world’s current rules and make their own (they have both the ego and increasingly the power to do so too).**Ever thought to yourself, “China just works on a different model than the rest of the world. Well, you’re right. They do. One of the characteristics that Tim pointed out was the guiding principle of Deng Xiaoping to not show your cards too early. This is, in hie view either a show of modesty or more cynically a way to hid things. I think that it’s both. Chinese are for the most part honestly very modest. But that doesn’t mean that they are in deed hiding things from you. And in manufacturing or in negotiations, ignorance isn’t just expensive, it will kill you. Test, QC, monitor, be there or you do not know what’s really going on. On a related note, from [Julian Assange](http://economictimes.indiatimes.com/tech/internet/china-is-the-technological-enemy-of-wikileaks-assange/articleshow/7277524.cms?ref=silkroadintl.net) (yes, the WikiLeaks founder): > “The "technological enemy" of WikiLeaks is not the US - but China, according to Assange."China is the worst offender," when it comes to censorship, says the controversial whistleblower. "China has aggressive and sophisticated interception technology that places itself between every reader inside China and every information source outside China. We've been fighting a running battle to make sure we can get information through, and there are now all sorts of ways Chinese readers can get on to our site." > **6\. Develop a whole new way of communicating with the Chinese.** This was the most practical of all his presentation. He noted that from the beginning of his time in BEijing working with US/Chinese trade commission he was very specific in his method of communications with his Chinese counterparts. He said that when they had a potentially difficult discussion, after outlining the situation he would then give them potential options for resolution and discussion. Of course the Chinese were neither very happy about either the difficult situation or limited number of options, but the information was invaluable. Then, with each option he detailed the consequences for each of the these options and the potential reactions from the US. This was almost too much--predetermined reactions and limited options. But after a history of being correct in the options and reactions, the Chinese knew what to expect and could plan accordingly--and that was the key to a successful relationship. So how do you duplicate that? You follow the same plan. Maybe you’ll have to allow for more input into the scope of the options that are available for problem resolution, but the forecasting (which Chinese factories, in my experience do not do well) will be very much appreciated, even if the results are not pleasing. Finally, here are some questions that I had, that I didn’t get answered. Maybe you know the answers. How do you discuss competence issues with a power that distrusts (US/China) and a power that is extremely face conscious/insecure (China/US)? I was particularly interested in the fact that he said in working with the WTO they were able to compartmentalize issues and contain the fall out on both sides. I have found this, in China, to be very difficult. Compartmentalizing in a holistic society is next to impossible. How can you really compartmentalize econ issues not make them political? Or in the case of production, how can you compartmentalize quality/production mistakes and not make them personal/financial? One point that I’ve used effectively many many times is the 3rd party scapegoat. He mentioned that both the US and China use the WTO as the whipping boy for media spin often. This is a GREAT way to save yourself forma fight and give you factory a way out--offer up someone else to take the fall. Very effective. I wanted to know more about how this worked at the country level--I guess just the same as it does at the production line level. Lastly, “Are you a Friend of China?” I hate this question almost as much as I hate the question “Do you have free time?” Because of the baggage and the implications and expectations of these questions, there is really no good answer. If you answer, “Yes, I am a Friend of China” you are then expected to act the part. Meaning, you are supposed to do what’s best for China (or the Chinese you are dealing with at the moment) usually at the detriment of your home country or your current personal business interests. Tim answered this in two parts, “Yes, I am a friend of China, but I am also a representative of the US government and I’m required to look for for their interests first.” What do you say? ### Illegal vs. Unavailable URL: https://www.silkroadintl.net/illegal-vs-unavailable/ Last updated: 2026-07-18T14:48:26.000Z Skype is now technically illegal in China. Read [here for more details](http://www.geekosystem.com/skype-china-illegal/?ref=silkroadintl.net). But that, like just about everything else from religion to prostitution that is also technically illegal in China, doesn’t mean that it’s not still available. The two lines from the article that can be applies to many things in China are these. 1. “The likeliest motivation for banning Skype and other cheap-as-free-internet-calling services that are not owned by the government is that it is trickier to monitor phone calls if you don’t actually own the service.” This, and of course, if you don’t own it it’s that much harder to make money from it as well. 2. “Of course, with the Internet, making the law is one thing, and enforcing it is another.” This is quintessential China--the “best laws in the world” and absolutely no enforcement whatsoever. It’s always been like this--kill the rooster to scare the chickens. The goal is just to scare “most people” into staying in line. Business in China is often the same. Possession is nine tenths of the law, meaning: only if you’ve bought the means of production (anything and everything from the art to the molds to the actual factory) you will have a much better chance of getting what you want. And even then it can be a struggle. This one thing is for sure, without that ownership very clearly “yours” you can be assured that someone else will be controlling it and making a profit from it. In China there is a severe lack of respect for the individual and subsequently the individual ownership of the methods of production. I don’t know if it comes from the collective society, the overlay of government socialism, the scarcity of opportunity or just a lack of understanding of (western) individual rights. Regardless, if you “partner” with your factory to develop molds, or if you have your factory design a product for you they will often feel (or at least act like) they have at least some ownership of the product. That means that if they’ve spent time or money on “your” product and they are not satisfied with the ROI (and let’s be honest, who ever is?!), you will see “your” product elsewhere. The second point hits directly to the heart of production in China--if you’re not there monitoring or, at the very least, doing spot checks via 3PQ you cannot with any good faith be assured that you’re going to be getting what you ordered. You can have the most detailed and finely finessed PQM ever made, but if you’re not there to make sure that each step is followed, it won’t be followed. You have to devise step by step incentives to make sure that the important processes are followed. > SIDE NOTE: “We won’t pay if it’s not correct” is not really an incentive. It’s actually the opposite, it's a disincentive--motivation to cut as many corners as possible. If from the beginning you’re threatening to not pay, what incentive does the factory have to invest in everything you’ve requested? They would rather hedge their bets and put in the cheapest possible components out of the fear that you’ll not pay (they’ll then sell the product to another client or into the local Chinese market). > So... assuming that you're not in China to do it all yourself, what do you do? Scheduled third party testing gives you significant presence in the factory but only if you’re testing both before you start production and during production. Leave either of these two testing times out and you’re in for a serious fight. If you only test samples before production you’ve not only wasted your money but you’ll never know if the factory has meet those standards in Production. If you only test during production and you have previously approved, but non-tested samples to start production you’d better pray things pass. If they don’t the factory will tell you that they meet the approved standards and it’s your fault for not testing the samples before approving the start of production (which is true). Third party management can be a huge value if you’re out of the country and expecting things to be done correctly. Not only do you have the value of fluent English, but someone that is responsible for the quality of the product outside of the factory but inside China! The key to 3PQ, testing or an outside manager is to tie the PO payments to the reports/results from these 3P agents. For example, QC is of little value if the factory will get paid regardless of the info in the QC reports. Similarly, if the factory can “work with you” directly and can ignore the requirements of the project managers you’re going to get exactly what you can see over Skype and not what you’re paying your management company to do for you (i.e. you’re not going to get what you ordered). ### SRI: Live at the Kempinski Nanshan! URL: https://www.silkroadintl.net/sri-live-at-the-kempinski-nanshan/ Last updated: 2026-07-18T14:48:27.000Z Tomorrow in Shenzhen, I'll be the Keynote speaker for the [Chief Executive China annual forum: New Export Strategies, sponsored by PayPal](http://www.ceconline.com/2010paypal/?ref=silkroadintl.net). The audience is expected to be 300-400 major suppliers from all over China and will be held in the afternoon at the Kempinski hotel in the Nanshan district of Shenzhen. This is, I think, going to be a very unique presentation--a foreign buyer telling Chinese suppliers what expectations are on the other side of the negotiations/buying table. To put this together I spoke with buyers from all different kinds of companies/industries/countries--from the largest retail chains in the world to contract manufacturing middle-men. From very large electronic's wholesalers to regional furniture buyers. From trading companies to individual product buyers. What's was most interesting to me as I put this together was how surprisingly similar the feedback was despite the diversity of the buyers. And while by no means a comprehensive survey of global buyers, these 15-20 guys are, I think a very good sample of what most people are experiencing in China. Some of their suggestions to suppliers included:First, honor and respect contracts and IP.Second, there is a lot of uncertainty because of the economy so provide a secure environment for business. Third, Develop transparent processes and allow clients/buyers to participate. Fourth, The quest for ever lower prices is driving buyers to other countries (and other inland Chinese provinces). Quality product and professionalism will keep them with you. Fifth, Learn from the past and embrace change or die trying to hang on to what you did before. What would you tell suppliers if you had this chance? Also, the [videos](http://chinasourcinginfo.org/2010/12/12/global-sources-new-buyers-conference-hosted-by-the-china-sourcing-information-center/?ref=silkroadintl.net) of my presentations at the October Global Sources Hong Kong Trade Show, [What New Buyers to China Need to Know](http://chinasourcinginfo.org/2010/12/12/global-sources-new-buyers-conference-hosted-by-the-china-sourcing-information-center/?ref=silkroadintl.net) are now available on the [CSIC](http://chinasourcinginfo.org/?ref=silkroadintl.net) website. ### Leverage, if you don't have it, it doesn't matter what else you do have. URL: https://www.silkroadintl.net/leverage-if-you-dont-have-it-it-doesnt-matter-what-else-you-do-have/ Last updated: 2026-07-18T14:48:27.000Z Two great articles on the Chinese Economy. 1. [NYT](http://www.nytimes.com/2010/11/28/magazine/28China-t.html?%5Fr=1&ref=magazine) 2. [Blog](http://www.theneweditor.com/index.php?/archives/12192-Is-China-the-Next-Bubble.html&ref=silkroadintl.net) Two new clients came to SRI this week requesting help with basically the same problem. First was a company that had contracted out for some custom manufacturing of a stitched bag. They had done a bit of due diligence and had even visited the factory. They had paid for samples, approved materials and samples prior to production, negotiated good contracts that allowed them to keep a bit of the final payment until they had received production. They had done almost everything correct. But they didn’t have on-sight QC and when their product showed up incorrect, the small percentage (10%) they had retained for just this kind of situation was not enough to compensate for an entire order of unusable product. Second was a company making a molded plastic fashion accessory. They had visited a number of factories prior to contracting production with one. They had ownership of their molds and had specified that they sign off the quality of all component parts prior to the start of production and fulfillment. Their problem was that they paid for 100% of the tooling costs up-front and now that the samples were not correct they had no leverage with the factory to get the mold repaired. Both companies had the same basic problem--without some sort of physical presence in the factory neither of them had any leverage. Once there were production problems (that cost time and/or money to resolve) the factory had no incentive to fix or replace anything. And since neither of the companies had a presence in China they had no means of enforcing any of their demands (or even their originally contracted standards). I’d like to say that this is unusual and these two companies just had bad luck. But the reality is that this is more common that not. We deal with this all the time--especially when factories outsource part of the production that they’ve told you they are doing themselves. Subcontracting with out transparency causes many major problems, not the least of which can be financial. Delays, incorrect molds/production, incorrect orders and the inability to every demand any consistent level of quality are all to be expected if your “factory” won’t tell you were things are really being made. Besides the fact that factories don’t usually do any due diligence on their sub-suppliers, they don’t usually do any QC on components they buy either. The problems arise when they pay for goods with cash and don’t do QC or have a personal relationship and so can’t do QC because the other party will be offended. Unless you arrange for your own QC, most components are not checked by factories and that can turn into a problem that cannot be resolved without a lot more money (to replace the entire component order). But without some sort of either contractual agreement AND the ability to confirm that it's followed, the factory has no real incentive to "insult" their sub suppliers by doing QC (and really, asking to do QC on components that they buy all the time from their personal network is just that, an insult) for your little order if you're not there or didn't stipulate in your contract that you see the inspection reports. Once molds are done, once production has started the problems only get worse. As the factory invests time and money into projects there is more and more push back on strict QC standards and rejected project, not less. Tying payments to QC inspection reports helps a ton. As does being in the factory for critical production points (or having someone represent you there). Remember, if you're not doing your own QC or at least tying payments to QC reports, you've got no reason to expect that you'll get what you've contracted for--you have no way to enforce your standards and the factory has no incentive not to save as much money as possible. This isn't just a mold and production issue either. It's the same thing if you're sourcing product or asking for samples. If there is no incentive other than your word that "I'm going to place a really big order--there is so much potential here for us to make a ton of money! " then there is probably no chance that you'll be anyone's priority project. You don't give them your express mail account, you've never ordered from them before, they don't know your company then they will wisely manage their risks (samples and shipping cost money) and tell you one thing ("We're going to send something out to you today. ") and do another (do nothing!). Remember, foreign clients are now a serious RISK. The tables have turned in the last three years and you are now seen as a liability not an opportunity until you prove otherwise. Without significant leverage, budget-conscious risk-adverse Chinese factories will just not take the gamble. ### Living in China URL: https://www.silkroadintl.net/living-in-china/ Last updated: 2026-07-18T14:48:27.000Z This is the third posting from SRI's current Intern, Eric Luker, from [BYU's Kennedy Center for International Studies](http://kennedy.byu.edu/?ref=silkroadintl.net).**Living in China**Having been here in china for several months, I now feel that I am getting used to some of the cultural differences that make living in China hard, at least for many people. That said, I was in China for a few months last year studying and have also spent several years dealing with the Chinese people, which has made it easier for me. However, since my trip to China last year I have gotten married and this is a whole new experience for my wife. When we were preparing to come to Shenzhen for this internship we were surprised by how much attention was given to her, as I was the one that would be working. After the first week I realized how much of a culture shock it was to move here and why she was given such attention. So I’m going to try and talk about the largest obstacles that we have faced trying to live here and a few things to do to feel a little more comfortable.**Language**: The most abrupt change that occurs as you get off the plane and which makes everything else that much harder is the language. We are better off than some because I speak Mandarin, but that doesn’t help my wife much when I’m at work and she needs to go shopping or do some other errand. During the first few weeks it was not unusual for my wife to come home with some new story about the language difficulties she encountered during the day. One such experience happened when she was trying to meet a friend at Walmart. When she walked out of the apartment complex, there were hundreds of police and military men all over the streets, blockading most exits. She kept trying to ask people what was going on and why the buses were blocked but everyone just laughed at her. Helpless, she returned home and rescheduled the trip for a different day. My wife is generally a pretty capable woman and can handle her own, but in China she has found that not being able to speak the language creates a vulnerability that can be quite frustrating and even frightening at times. So spending some time everyday to pick up a little mandarin will make China a much more enjoyable place.**Driving**: The first time I got into a taxi here I thought I was going to die. It was night and all I can remember was weaving in and out of traffic at high speed with neon lights quickly flying by the window. I did make it to my hotel without any incidents and since then I have had the same experience many times. Driving in China is not like driving in the US or Canada, the only other countries I’ve been to. First, in my opinion, the taxi drivers are actually some of the best drivers on the road. I have never seen a taxi stop in the middle of a fast moving road to switch lanes or to cross three lanes of highway to get to a freeway exit they almost missed. I’ve been told that most of the population with driver’s licenses has been driving for under a year. In essence, that’s like a city full of stereotypical high-school drivers. The only difference is that instead of being too aggressive they just don’t move. Thus, I have yet to see a bad accident but once while driving home from a factory I saw three fender benders in five minutes. So if you want to get a license and drive in China, good luck. If want to take a taxi, don’t freak out when see that you are three inches from the car next to you. Because of these reasons and price, I don’t want to spend twenty dollars each time I go across town, we have found that public transportation, such as a bus or the subway, is the best way to get from point A to point B.**Subway**: My wife and I are not the biggest explorers, but we have found that the subway will take us to most of the places we want to go. Yes, there are lots of people that use the subway, but I have never been unable to get on the subway due to it being overcrowded. Also, there are few places that you will go in China that don’t feel “crowded”, whether it’s the grocery store, side walk or the road. It shouldn’t take long until you know which stops to get off at. The bus is almost as convenient but you do need to know how to tell the attendant on the bus where you are going. Usually the same attendant will also let me know when to get off, which is a perk of being a foreigner. It will take longer to figure out the bus system than the subway but when used together they can get you almost anywhere.**Food**: Everyone always wants to know about the food. In my opinion, authentic Chinese food is better than any rip off like Panda Express or even P.F. Chang’s, but this is one thing my wife doesn’t always agree with me on. I like the variety of flavors regardless of what it is, but she is more of a boneless person and everything has bones. Textures can also be very different from what the west is used to like tofu and artificial fish balls, which are common for hotpot. So to each his own but going out on a limb to try something may pleasantly surprise you.**Cooking**: There are lots of things that have prevented us from getting the hang of cooking at home. The first is the lack of ingredients for western food and the price of dairy products. Also, it can be nauseating to walk around the meat section of the local grocery store and see stacks of goose heads, piles of ground meat that you scoop into bags and lots of body parts you won’t see anywhere else. Our solution to this is simply picking a different store, since there are three within walking distance of our complex. One of them is much milder in content and even has boneless chicken breasts, a rarity in China. Most stores will have an import aisle where you can find a few types of pasta and sauce but that is about where the average store stops, and some don’t even have that. We have started looking up simple Chinese recipes online to fill out our weekly menu and I have also found that there are many general sauces for beef, pork and even some vegetables that make cooking a lot easier. There are lots of other cultural things that will take time to get used to, if it is even possible. There is a book that I just read about Chinese business culture by Scott D. Seligman that has some great information about why the Chinese do things the way they do and some advice on how to work within the culture. I would recommend it to any new comers and wish the best of luck to all foreigners who wish to make China a place of residence. ### "This Project Is More Difficult Than We Originally Thought..." URL: https://www.silkroadintl.net/this-project-is-more-difficult-than-we-originally-thought/ Last updated: 2026-07-18T14:48:27.000Z One of the most frustrating things that I hear on a regular basis from suppliers in China is some version of this: “This project is really difficult.” I agree. Most things of value in life are. What’s the point behind the words, though is the real issue? It’s a complaint. But there is a point; some hidden meaning in the sentiments. What it means is: “This is going to cost you more (time and/or money) than I originally estimated. We won’t be able to do what we agreed to.” Notice I didn’t say “we can’t do” but rather said “we won’t do” it. That’s the real point--what the supplier is willing to do. For example:1\. “These molds are really difficult to make. We usually don’t make them like this.” Just about any tooling is expensive and detailed tooling takes both time and skill (aka money). When factories agree to do projects that require new tooling they often do not do a lot of research into the details of the new product if it’s similar to items that they are doing currently. There are often, we found, sight design details that affect the look or the functionality of a product that have not been included in previous products. Thats not a profound statement, I know. But the follow up is that many of these unique design details have been excluded for a very good reason--they can’t be done with normal everyday mold/tooling technology. This means that once an engineer (as opposed to a sales guy) really gets into your tooling designs they quickly realize that there will be additional monies, time and maybe even a new factory involved in getting things done correctly. Or you can change your designs, eliminate the unique functions and pay the original bid price. So who eats the costs for the under-researched bid? Unless your order is HUGE or your a major client, you do, of course. Your supplier will not be willing to do pay these additional costs just because you tell him about your products “potential” or how big your next order will be. What happens is you refuse to pay? With tooling you may not even have this choice. More than any other production step, deposit money for tooling can be returned fairly easily since it’s a) not usually more than a few hundred to a few thousand dollars, and b) they haven’t invested in any raw materials that may have already been delivered. If you don’t want to do more expensive tooling (which usually means going to a different mold & die factory) then you typically have to start all over with a new supplier or with new art.2\. “This packaging is really hard to do. Wow, it’s taking us tons of time.” Time is money--it’s true in the West and more and more it’s true in China. Gone are the good old days of extremely-cheap, never-ending labor supply. Now you’re going to be paying a piece rate or a price per action rate. Problem is, accurate forecasting is not yet as urgent a skill as is finance. So bids for labor are often too low and do not include enough time to actually get things done correctly. And of course, bids never include extra time needed to ramp up to full capacity, correct problems, or re-do any mistakes. But when you find out that the costs are higher than originally bid, you’re usually 10-15% into the fulfillment, you’re committed, you’re within 1-2 weeks of your ship date, you can’t back out. Your supplier knows this too. Unfortunately, this often means that unless you’ve detailed out every step in the packaging process (and photographed and translated them and had them signed by the factory) you’re going to be asked to pay more just to get what you thought you already had agreed too. What happens if you refuse to pay? This is much more complex than the the situation with tooling. At this point not only have your invested money and time, but your supplier is into the project even more than you are (they’ve paid 100% of the project costs already). If you refuse to pay you better have a) unlimited time to wait them out, or b) the ability to both let your projects die (and lose your money and see your product sold on the black market), or c) have a great local negotiator that can get you what you want with either a manageable or no price increase. ### "Hug a Vet! Yea, I said it!"* URL: https://www.silkroadintl.net/thank-a-vet-yea-i-said-it/ Last updated: 2026-07-12T07:59:21.000Z I’ll be the first to admit that I’m addicted to Asia--I love the people, the history, the art and architecture ,the languages, the beaches, the massages, the food, the religions, the hustle and bustle of huge cities, the calm countrysides, beautiful mountains. But even though I’ve lived in Asia for more than 16 years now, I’m red, white and blue through and through. My great grand parents were immigrants to the US and I remember learning Danish songs from my Nana when I was little. My grandfather was active Air Force in WWII, Korea and Vietnam. My father was active duty in the Air Force. Currently I have one uncle and 6 cousins serving in the Air Force--four of whom now serving in or rotating tours through Afghanistan and Iraq. I regularly cry at presentations for Memorial Day, Independence Day, Veteran’s Day, Olympic victories and just about anything else that involves flags. I just wanted to use this public forum to thank those that sacrifice to make the US better, free and safe. Thank you to all the veterans. If you know a Veteran, even if you don’t agree with the politics of wars, thank him or her for all that he/she was willing to do to make your life what it is today.[](http://silkroadintl.net/blog/wp-content/uploads/2010/11/P4-11-50-121.jpg?ref=silkroadintl.net)\*Apologies to [Fletch](http://www.imdb.com/title/tt0089155/?ref=silkroadintl.net) and the LA Police Department. ### Some times nothing is better than something. URL: https://www.silkroadintl.net/some-times-nothing-is-better-than-something/ Last updated: 2026-07-18T14:48:27.000Z Sometimes getting something is just not better than getting nothing. For example, 60% of your order on time and the rest weeks later not only isn’t helpful if you have to deliver 80-90% on-time to a single distributor, it can be downright disastrous for your future business. My experience is that most factories in China just don’t get this—they don’t understand the strict nature of delivery dates and wholesale responsibilities in the west. AND, they don’t want to give you bad news either. The thought process is that some product on time will help you (or at least pacify your anger). They don’t know that if you don’t get what you ordered on time, sometimes there is no “later” opportunity. AND they usually hide as much of the problems as they can from you and either keep asking for more money (a sign that there are problems) or keep promising delivery on-time despite the fact that your own numbers are saying otherwise. When the ship date arrives and they can’t ship qtty’s even close to 100%, they’ll have a great story, “Your QC was too strict,” “Component X was much harder to work with than we expected,” but they won’t have what you ordered. At the Global Sources New Buyer Shows I tell first time buyers: if you've mortgaged your home and expect to deliver product from China within a window of less than a week, you're going to lose your house. If you have to deliver to a single location, if you have a delivery window of only a few days or if you are paying more for multiple shipments, it’s often better to delay shipping partial qtty’s and wait for the entire order to ship at once. But this can be a double edged sword. Yes, it means that you’ll get it all at one time. But once you tell a factory that 100% qtty has to be completed and shipped on the same date--any delay means that they now have permission to miss the original shipping date for the entire order. But unless you’re very clear, demanding 100% on a single day can mean that “the day” may be a long time in coming. Where you have some leverage is in the fact that factories don’t want to wait or hold product. Factories don’t want to be responsible for product or for re-do’s or for additional shipping charges or give you time to renegotiate. They want to have you book the containers and then they fill them with as much as they can on the ship date, regardless of if it’s what you’ve requested or not. Once the container has left their facilities they can’t call it back and they (nor you) can get it out of customs once it enters the port yard. Once they get it out the gate, it’s gone—and that’s the goal: Just get it gone! The analysis goes like this: We have to deliver something. We’ll work on what they expect and get as much done as we can (as much as they want to within the context of other clients’ needs, raw materials’ price changes, other cost changes, etc.). If it’s not 100%, we can always just add the missing qtty’s to the re-order. You can use this desire to get stuff gone to get what you want on time--if you catch the problems early enough AND if you are in the factory and can enforce changes quickly enough. Usually this means that your QC or project manager steps in as soon as there are issues--with in hours or a couple of days of finding issues. If you wait a week (because your out of the county, it’s too late). Either catch it early or ship late. There are few other options. Factories will never give you money back. They will discount reorders, they will give you “free” additional qttys on re-orders, they will fix or repair current orders, but they will never just hand cash back to you. Why would they? What are you going to do if they don’t? Exactly. Nothing. So just don’t ever expect to get your money back. Factories will also never take product back once it’s been delivered to you. Not only will they not even talk about it, if you do actually put it on a boat and return it, chances are the Chinese government won’t even let it into China. Again, once it’s gone, it’s gone. Recent example: “We know that about 10% should be rejected, but the cartons are packed and the container is loaded. We’ll just give you 10% more for free.” That’s great, thanks for the free stuff but who pays for int’l shipping of crap? Who pays for the rejects and the domestic shipping returns from the retail stores to me? Who pays for my damaged reputation in the market? What about the wasted warehouse space for the bad product? And how about the wasted time to sort and restock? How about the fact that you know you did it wrong but you didn’t do or say anything about it until it was too late? What if I don’t want the product at all now (a real threat if the reject % is too high)? There are really only two solutions to having bad or late product. You can accept it or you can delay it. Accepting it means that you have to deal with the reaction from your market and buyers. Delaying it to rework or replace it means that you’ll get it right, but you’ll also be late and that may mean that specific buyers may no longer take the product at all. So what do you do? First, you either get into the factory your self or you have some one in there for you. You never find out about problems until you’re supposed to ship unless you’re there. If you’re not there at all you’re asking for trouble—you’re basically trusting someone else with your money, and that someone else does not have the same goals as you do. You want the best product you can get (and you’ve contracted for such). They want to save as much as possible on each and every piece they ship out. Second, you follow production as closely as possible—any red flag comes and you immediately investigate. If you’re getting red flags in edited and controlled email communications, you know that production is not nearly as good as what you’re being told and the problems are probably worse. Third, step in to resolve issues ASAP. Don’t assume that they’ll get it right or even take responsibility for mistakes. Work with them to fix issues, but do work and work quickly to get questions and problems taken care of sooner than later. Or you’ll be stuck with the choice of crap on time or quality at some later date. Finally, if you’ve got delays due to quality and the factory has shipped out a majority of the goods for you already, you actually now have the upper hand in negotiations. And you may be getting, by default, better payment terms too. I would never advise anyone to abuse this new power position, since it WILL come back to bite you, but I will say this: use this to get what you want done right and make sure that you get EVERYTHING you contracted for before you pay. For example, we had a multi-container order last year that didn’t all go out at the same time because of quality delays. After shipping about 5 of the 6 or 7 containers they played the old “we won’t ship the last container until you pay the full balance” card. Of course se said, “Fine. Keep it. We won’t pay for the 70% outstanding balance.” They shipped two days later. This is a simple example where they just didn’t play it very smart and a lot of times it’s more complex than that. But don’t be vindictive about withholding money or demanding extra product or perfect quality for the last container. Keep your side of the bargain and be fair. Remember the goal is to get as much as possible as on-time as possible and then to get the rest done correctly before it ships. ### What to do when there is no incentive to continue URL: https://www.silkroadintl.net/what-to-do-when-there-is-no-incentive-to-continue/ Last updated: 2026-07-18T14:48:27.000Z No matter what the reason, when your factory has officially passed the we’re-losing-money-on-this-project point, expect to see product laying around, no more QC, no managers, and expect no one to answer your calls. This is what happened to us last month. We had a project worth hundreds of thousands of dollars and about 10 containers in size. We had spent more than a year setting up the deal with three suppliers. By October 1 we had completed work with two of the three suppliers and the other supplier was completing their production and packing. We were doing QC the entire time, and rejected a frustratingly large amount of product from supplier #3\. They were replacing it as we rejected it, but the larger than expected qtty’s of rejects were starting to delay packaging and were making both us and the factory angry. They were, to their credit willing to replace things that were their fault, but the costs were mounting and we could tell that any more problems would be met with some serious resistance. Well, there were more problems. (They seem to come in bunches, don’t they?) There were some serious fulfillment issues and that turned out to be the final straw. The factory basically stopped working on the project. They’d past the we’re-losing-money point long ago and now, to the factory, there didn’t seem to be any value in dumping more money down the same hole. It didn’t matter that there was a contract. It didn’t matter that they’d shipped 6 of the 10 containers already. What to do?**1\.** We continually reassured them that even though things were late we were indeed still interested in the remaining qtty’s. This was a major point of emphasis for us--we still needed the other 40% of the order and couldn’t renegotiate with our clients to just not deliver almost 1/2 of the order. Of course this put us in a bad position with the factory as they figured if we really needed it we’d pay (a lot) more for it--which was simply not true. So we pressed both for the remaining qtty’s and the terms of the contract, not a strong position in China, really.**2\.** We then reassured them that we were going to not only pay for what we ordered, but we would pay on time and pay for any additional costs that were due to changes or our mistakes (of course, there weren’t any, but we doing everything we could to be fair and empathetic to get product). This is a fine line--paying for what you’re responsible for and nothing more can be a tricky proposition. We try to be fair, we are willing to give a bit extra to get things done right. And more than once we’ve paid for other people's problems just to get things done--sometimes it’s the best option.**3\.** At the point that things ground to a stop, sending project managers into negotiate with other managers wasn’t going to solve anything. Sometimes it’s more about face than money--and that was the case here. I went into the factory and met with the owner. We discussed 1\. what the problems were (they knew it was their fault), 2\. we’d gladly work with them to get things done right, 3\. we’re not going away until this got done. At the point that the owner had some face time, the managers were more conciliatory. Both being in their factory every day and having someone other just a QC engineer gave us the physical and social presence that we needed to press our case.**4\.** To get what we wanted (product done correctly, at the same price, ASAP) we basically gave in on everything that we could that didn’t affect product quality or cost us cash out of pocket. We waved late-shipping penalties, we extended shipping dates and re-booked containers ourselves, we adjusted container packing/SKU qtty requirements, we brought in our own project managers and QC from other projects and added them to the factory’s daily rotation so that they could still take care of their other clients while working to finish our project. In our situation we had two positions of strength--the outstanding balance of payments and our physical presence in the factory. Even though the factory was losing money with every re-do and delay the owner recognized the value of the contracted payments still sitting on the table (worth more than both the value of the product that had been shipped and the value of what was left). This was our trump card. While the factory was indeed losing money they were not going to ever lose as much as they stood to lose if we walked away from the final payment. They didn’t want to spend any more money but they didn’t want to lose any more either. Them not finishing anything else meant two things: one, they got nothing but the deposit and two, we were going to make the unfulfilled contract even more expensive for them via court. What made the money real to them though was the fact that we were in the factory each and every day literally waving cash at them to ship portions of the production. We wanted the product and we kept promising them that we were willing to pay 100% for everything that was correct (even if it was late). AND, and this is a big and, we were a pain in the butt every day. They weren’t getting rid of us until we got what we’d been promised.**Other random lessons learned here:**It’s not always a bad thing when your factory tells you that they screwed up and they fire their manager and some QC people. At that point you know that all that you have the attention of someone that will actually do something for you. Also, now you have a couple of new people in positions that are publicly sensitive because of what just went down. As long as the boss hasn’t told them to ignore you, you’re going to get more attention. Sure the boss is listening, but is it too late? Since we were here and already in the factory it wasn’t too late. If we had had to fly from around the world after either receiving crappy product or after realizing after days or weeks of delays that things weren’t coming then, yea, it would have really been too late. But we knew before it all hit the fan that there were problems. We could both document the issues and we were pressing to fix things even before it all went south. No possible way we could have done that had we been out of the country. Managers, the very people that you’re depending on to help you push through difficulties, may be the problem. Just like back home, different departments in large organizations work on budgets and they allot time to specific projects. They when they overspend in either time or money, they get in trouble. Precisely because they are tied to these specific limits they can’t always see the big picture. Sometime a single project that busts their budget is the worst thing they can imagine and so they freeze up or stop the hemorrhaging in their department. When this happens, you need to get up a level, get above the managerial trees and recruit a GM or owner to direct these lower lever guys to do what’s best for the factory (as opposed to what’s best for their personal fiefdom). You need to realize that you’re working in a vacuum over here. The factory isn’t worried about their reputation. They aren’t worried about seeing you again. They aren’t concerned that you will complain to the HKTDC or Alibaba or Global Sources. They aren’t even worried about getting taken to court. Appeals to reason or morals will always fall on deaf ears if they’re losing money. Negotiations based on obligations, contracts or agreements will similarly go nowhere. You can threaten legal and other actions all you want, but they aren’t scared of that; remember, they’ve had little to no experience with going to court so it means nothing to them. And if they have had experience then they know that enforcement of a verdict is next to impossible in China. They are worried about two things and two things only--getting paid for the work that’s already been done and making money on the project, or losing as little as possible. This is why I always say that paying more to get less than you original wanted is sometimes the best bet. ### Always Check Yourself URL: https://www.silkroadintl.net/always-check-yourself/ Last updated: 2026-07-18T14:48:27.000Z This is the second posting from SRI's current Intern, Eric Luker, from [BYU's Kennedy Center for International Studies](http://kennedy.byu.edu/?ref=silkroadintl.net).Quality, quality, quality. Quality equals money, which is most likely why it is the hardest thing to get. Over the last few weeks I have learned that you should never trust a factory’s quality control and you always need to check the product yourself. Here is one experience that helped me come to this conclusion. Our factory was getting close to the shipping date of a product that was not packaged. The factory that we had contracted with couldn’t finish the packaging and was sending our product to multiple other factories to help with the packaging so we could meet our deadline. A co-worker and I went to one of the new factories to make sure that the packaging went smoothly and that quality was being maintained. We spent the whole day teaching the floor managers about the quality we were looking for, how to check for bad material, and how to package the product so it doesn’t get damaged. We felt confident that things were going smoothly and that we were going to get good product. The factory was going to have more people come and work through the night so we could get the product shipped the next day. Before we left the factory we made sure that the floor manager knew our quality requirements and that she would make sure all the new lines packaging at night knew them as well. When we came back the next morning to check the product we expected to find the quality as we left it but what we found was far from that. The lines at night had not maintained the quality like we taught during the day. We ended up not being able to ship the product. What is even worse was that when the product was moved back to the original factory their quality control personnel checked the product and tried to tell us that it was fine. They said after checking over 10 cases they didn’t find any bad product, we then checked and found bad product in every case. We ended up having the factory go through the product and pick out the bad items. They then had to make more to replace the large amount that was wasted. I can only imagine how much extra money the project cost the factory because they didn’t maintain quality. It seems counter-productive for factories to cut corners to save a little money when it costs so much more to fix the problems if they are caught but they still do it hoping you won’t find out. The bottom line is trust yourself. If someone tells you it is fine, check it, if you weren’t there check it, even when you were there, check it again to make sure.**Notes from David**Notes from New to China Buyers Seminar at the first phase of the [Global Sources China Sourcing Fairs](http://tradeshow.globalsources.com/TRADESHOW/CSF/INDEX.HTM?ref=silkroadintl.net) at the Asia World Expo in Hong Kong. I'll be speaking again this next week at the [Gift and Premiums Show](http://tradeshow.globalsources.com/TRADESHOW/CSF/INDEX.HTM?ref=silkroadintl.net) and then again next week at the [Garments and Textiles show](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-GARMENTS-TEXTILE/CONFERENCE.HTM?source=TSCCSF%5FGS).1\. Charles Kirmuss of [Kirmuss and Associates Consultants](http://www.wwtechnologiesdirect.com/?ref=silkroadintl.net) says that buyers need to build relationships with manufactures because you’ve taken away the QC and the professional middleman that was guaranteeing product quality. If you go factory direct to China you are now responsible for ALL the professional services that were previously taken care of by others (QC, logistics, testing, importing, project management, etc.)2\. In China there are very few managers with more than 10 years of experience. There are a bunch with less than 10 and then there are a ton of guys just out of college (who have NEVER EVER even had a part time job before). That’s pretty much it. If you’ve graduated from a Western University, if you had a part-time job in high school and/or college or fixed your own car (or stereo) you are the new middle manager and you have more experience than most of the people you’ll work with here. If you went to graduate school and/or have been working for more than 15 years in your profession/industry you will be the undisputed expert in just about every factory you visit over here.3\. Mike Bellamy of [Passage Maker ](http://psschina.com/?ref=silkroadintl.net)said: Choose you lawyer and location carefully. 1\. Make your contracts enforceable in China first, and a nearby locality or the main city of production preferably. They only time when you wouldn’t want to do this is when the town is so small or the manufacturer is so large (% of local employment) that you’ll not be guaranteed a fair trail. In that case make the juristiction the nearest big town/provincial capital. 2\. While you may be better/more familiar legal services and a better court system in the US you’re not likely to ever see your Chinese supplier in the US--and that means you’ll never be able to actually take him to court. Here's a link to a [very good article about the N0be1 Pr1ze from Cal Poly](http://calpolymbatrip.com/2010/china/liu-xiaobo-and-human-rights-learning-to-define-the-terms-you-use-or-abuse?ref=silkroadintl.net) that references SRI (blocked in China). What will the Chinese government do when some Chinese person they agree with wins the N0be1 Pr1ze? (Yes, I'm paranoid about getting blocked.) Will they count past Chinese winners? Will they let a Chinese ever accept the award? What if it's a government official? On a related note, of course the events of the past week are blocked in China. Even with the fact that there were issues with busses and marches in SZ on Monday, no one in my office knew anything about them other than there was traffic problems. Isn't this is like lying to get something and then realizing that the lie may ultimately prevent you from getting what you wanted after all! ### A little goes a long way. URL: https://www.silkroadintl.net/a-little-goes-a-long-way/ Last updated: 2026-07-18T14:48:27.000Z No matter how well you plan, there are almost always problems that arise prior to shipping quality product from China. It’s debatable whether China itself is inherently problematic or not, but sourcing, managing production and doing quality control from 5000 miles away (more or less) certainly is. Problems typically crop up from areas that are either under-understood (business culture or the design of a new product, for example) or under-managed (lack of any of your own on-the-ground personnel for production, for example). These hurdles can be the death of any project regardless if China is involved or not. But working in China can add additional barriers into the production mix. A second language, new or relatively unknown suppliers, non-transparent sub suppliers and/or business practices, difficult to manage meeting and travel schedules. They all can add up to serious delays and/or cost overruns. So, what to do? Fortunately, you don’t have to do anything by yourself anymore. Every problem you’ll ever deal with has been dealt with already by others. China is not new, unknown or inscrutable. Chinese history, politics, dating, business culture, you name it, it’s all been detailed and analyzed for you. All you have to do is to apply the (hard) lessons of others to your own situations. I know, easier said than done. So here’s some things that I’ve found to be invaluable.**First, one trusted employee is worth their weight in gold.** You’re not going to find this person on the first try (that’s the scary part) but it’s worth it to keep trying to find this person. This might be a QC or it might be an office manager or it might be a finance person, but it’s going to be someone that can be both involved in multiple projects and understand the “foreign” and Chinese perspective on things. One of the things that you’ll notice about ALL Chinese companies, no matter the size (remember the arrest of the Guome boss ordeal?), is that there is a relative involved in or managing the finance department. I’ve said it before and I’ll say it again, Chinese people don’t trust other Chinese people--so why should you?!Probably the most important person after the one managing the money in your company is the person making the deal. I’m not talking about you or your lawyers writing the deals, I’m talking about the person that is negotiating how the deals actually get done--on the ground in the factories. This person, more than anyone else will structure how money is paid/received, how projects are completed and how problems are solved. They literally have their fingers in every pie in your business. If you don’t speak Chinese then you’d better be praying every night that you can trust this person. And even if you do speak Chinese you need to be so confident in this person that you can let them put your company (or at least your company’s cash) on the line each time they go into a meeting--because that’s what they are doing. The next person that you have to trust is your project managers. They are the people who make serious decisions about where things are done, about who gets involved in which QC issues, about how everyday problems are managed and what issues you’re notified about and what they can handle themselves. These people, again, have access to a ton of money even if they don’t pay any bills or have actual access to any accounts. These are the people (along with QC) that are always (and I promise you it really is ALWAYS) offered the kickbacks for orders (and delays and changes). These people are organizers and managers, not negotiators or QC. You pay them just to keep things going, to keep product flowing from all the sub-suppliers, to coordinate all the logistics, testing and other schedules. > I’ve shared it before, but had it confirmed to me again recently with some other people working in China, so I’ll share it again: Your staff is getting offers for kickbacks all the time. And I really do mean ALL the time. On every order, one of the questions they are routinely being asked is “How much do you want for this project?” If they are honest (with you) and rejecting the offers you need them to be cutting the prices accordingly. Let me repeat that: YOUR STAFF IS GETTING OFFERED CASH BACK FOR EVERY SINGLE COMPONENT OF EVERY SINGLE ORDER IN CHINA (AND SOUTHEAST ASIA). IF THEY ARE HONEST, THEY ARE REJECTING THE OFFERS AND CUTTING YOUR PRICES. I don’t care who you are. I don’t care if you fire people for taking kickbacks. I don’t care if you think that everyone in your company is as honest as the day is long. I will bet you any amount of money you want that if you don’t know that this is happening (and you’re not doing something about it) your employees are making money on your orders from the factories--and not even thinking twice about it. This is how business is done here. This is one reason why wages for college grads are so low. This is the honest to God truth. Believe it or keep losing money. > One more person that you have to trust is your QC. QC is the position that we’ve hired and fired the most in China. They will make or break your orders. They are usually the only one in the factory seeing actual production. They can be the ones getting the most money/extras and they can be the single best on-the-ground resource you have. If you train these guys well they will be a copy of you. If you find a good one, pay them well enough to keep them honest and keep them from leaving. They are totally worth it. If you find they are getting paid, make the firing very public (factories and other employees should all know all about it). If you only have a couple of trusted people in your company I would suggest that a majority of these trusted people have to be Chinese--No, not a Chinese speaking foreigner and not a Hong Kongese and not even a Taiwanese. You need someone local that knows how the the local game is played. Now I know that there are a ton of smart overseas Chinese and a ton of Chinese speaking foreigners, but you need someone one that can tell you what’s “meant” not just want is said. I’m not saying don’t hirer the others, I’m just saying that you need at least some of your trusted inner circle to be locals so that you know exactly what is going on.**Second, unlike some other problems there isn’t a language problem that you can’t pay to solve.** If you’re still working in ESL then you’re missing MOST of what’s really going one. Not some, not part, not a bit, MOST of what’s going on is not being relayed to you. This is a problem that money can solve--hire someone that is fluent in both Chinese and your language. And then train them to tell you what’s going on--not just what’s being said, but what’s really going on. There is a big difference in what’s said and what’ happening and you need to know both. Of course the best way to do this is to learn Chinese yourself--it’ll take you two years, full time, but you can do it. Or you can hire someone that you can depend on to follow you around 24/7.**Third, time up front saves money later.** Do your due diligence on your potential suppliers BEFORE you pay them anything. Know what has to be done to get your product completed before you ever start asking questions to factories about the the process. Know the market prices for all your components and raw materials. Know the import taxes and duties in your destination countries on your goods before you ever start any work in China. Get more than one bid and get more than one factory approved to do production. Tie QC to payments and make sure that the factory is not only aware of this but in complete agreement from the top down. Make sure there are no problems with your documents and artwork.**Fourth, even a single day of QC early on can save your project time, money and problems later.** To me this is the single most overlooked part of working in China. Have a 3PQ confirm that what you’re paying for is actually being done. It can be as painless as just spending $300 to get a day of QC at about 25% of production and then another $300 to have 85% to 90% of the product confirmed again.**Fifth, Westerners typically think of cost, quality and time as the most important factors affecting any project. Your Chinese supplier is usually thinking cost, cost and face.** Quality is such a vague concept that it’s never a priority for your manufacturer--he’ll do exactly what he’s compelled to do and no more. There are so many levels of quality in China that you’ll get only what you can enforce--why would they do anything more? My friend Mike Bellamy always says: “All quality problems are really money problems.” I rephrase it as “There isn’t any quality problem that more of your money won’t solve.” So in this since, Chinese are thinking about quality, but it’s more about how to afford quality not about the concept of doing things right. Time is similar. There is nothing comparable in China to the delivery expectations of the Western box stores. Everything is flexible since everything in China is always changing and/or under construction. Hell, there was/is a 60 day traffic jam in Beijing--you think that every one of those orders was cancelled just because it was late? Of course not. Chinese don’t work like that. You have to be understanding and flexible here or you’ll have a heart attack. If I had to make a guess, I’d say that most foreigners who have problems in China, most of them not knowing it, have problems because they can’t read the signs--not the Chinese language signs, but the cultural ones. Maintenance of face and status are the only things that I can think of that will trump the desire to make money in China. There are many reasons for this, but one is the fact that if you have face/status historically you’ve still been able to make more money. But without that social position, you have nothing. Americans especially are very direct about business and problems. We think it’s “honest” and “just how things are done.” But here it’s insulting (even if it’s true) and often the complete wrong way to get things done. In the US, where time is money, it’s the best way to get the most done. We want to know what’s wrong and why without wasting time guessing or beating around the bush. But when your country and culture is thousands of years old, there is much less urgency to each transaction. I have many clients come to China and before they get here they tell me they’ve scheduled something like one day each with a number of different suppliers and ask me what they should do to make things go smoothly. I always say: “Spend more time with each one--the more money you spend on them, the more time you should spend with them.” Of course, no one ever takes my advice (“We’ve already booked our return tickets.”) and so instead of doing what’s best for millions of dollars of product, they do what’s best for a $1000 plane ticket. Time spent on relationships will save you money and problems.**Finally, sixth, China is as risky as you make it.** Mike Lavine from BV once told me that he was amazed at how many foreigners come to China and think “Well, since China’s such a big risk anyway, we’re just going to throw all our SOP’s out the window and jump in with both feet.” Whither this is your conscious decision when coming to China or not, don’t let it be your default position. Don’t let a short trip force you into uninformed decisions. And just in case you didn't know this yet, not being here in China when you've got production on-going greatly increases your risk. China IS risky, but the level of risk is in direct proportion to the amount of research and effort you put into your China investment. Just because you’ve heard that due diligence is hard to do in China (true, it is), that doesn’t mean that you just don’t even try to do it. Instead, you should take more time and try to do more, not less. Just because you have your ticket home already, doesn’t mean that you should agree to start production before you see samples. If you can't be here, hire someone to do it for you--it's well worth the money. You can either learn from history (other’s mistakes) or you can repeat it. Good luck! ### Guanxi, Tradeshows, Free Stuff and the China Law Blog URL: https://www.silkroadintl.net/guanxi-tradeshows-free-stuff-and-the-china-law-blog/ Last updated: 2026-07-18T14:48:27.000Z **First**, if you're not reading [The China Sourcer Magazine](http://chinasourcinginfo.org/china-sourcer/pdf-editions/?ref=silkroadintl.net) already, please do--it's free! The China Sourcer Magazine is part of the new [China Sourcing Information Center](http://chinasourcinginfo.org/?ref=silkroadintl.net). If you’re sourcing from China, then you’ll want to check it out. Yea, I’m involved in it, so I’m not unbiased in my recommendation. But I also know the others involved and I’ve read all the content so far published and I know that it’s a collection of valuable information. And it’s free!**Second**, Dan over at the [China Law Blog](http://www.chinalawblog.com/?ref=silkroadintl.net) not only contributed to the [first issue ](http://chinasourcinginfo.org/china-sourcer/pdf-editions/?ref=silkroadintl.net)of the China Sourcer, he[ recommended the second ](http://www.chinalawblog.com/2010/09/china%5Ftrade%5Fshows%5Fwhat%5Fyou%5Fneed%5Fto%5Fknow.html?ref=silkroadintl.net)too. Thanks, Dan.**Finally**, the China Law Blog group at [Linked In](http://www.linkedin.com/?ref=silkroadintl.net) has a great discussion about[ "What is Guanxi?"](http://www.chinalawblog.com/2010/10/how%5Fwe%5Freally%5Ffeel%5Fon%5Fchina%5Fguanxi.html?ref=silkroadintl.net)\--something that everyone working in China has to, at some point, deal with. I deal with this all the time--personally (Chinese family) and professionally--so my answer was too long for the form. But you, you lucky devil you, get it for free here! And you don't even have to sign into Linked In to get it. Consider these two free offering my apologies for not posting much this summer.\_\_\_\_\_\_\_\_\_\_\_\_\_\_**What is Guanxi?**What it is is relatively easy. I personally think that there are three kinds of Guanxi. And there is really no problem with guanxi until it’s used in a context where the legality of relationship comes into question. The first is the natural human relationships between associates, friends and family. Every culture has this. Everyone “uses” these kinds of connections—you ask your neighbor to help you with something heavy. You ask your friend to help you get some tickets and you’ll pay him back later. You don’t have cash on you so you borrow 100RMB from your co-worker. These are favors that are not illegal or morally questionable in any culture—it’s friendship. Chinese are always saying that westerners don’t have renqing or guanxi like they do since we are a more mobile society and are more nuclear-family oriented than they. My response is that they misunderstand us as much as we misunderstand them. We all share, help, love and work together. We just haven't had 5000 years of "continuous" history to formalize it like they have. The second kind is relationships that are completely illegal in most legal systems—China, the US, anywhere. These are legally defined lines and when crossed constitute nepotism, insider trading, under-the-table deals, kickbacks, cash payments to officials, etc. There is no question that foreigners AND Chinese alike should not be participating in these types of Guanxi. It blows many clients away to find out that the dinners and gifts and “bonuses” they are paying for are not only illegal in the US but in China too. The third, then is the middle/gray area between these two. This is where most people get caught. There is no line, no definition where these end and where they end. For example, your client knows a buddy that does printing and he gives the client a special deal and the client then takes him out to dinner to say thanks—legal or not? Probably not a problem, right? But what if he gives the deal and the return is dinner, Karaoke, some companionship and a hotel room for a weekend? What if it’s just straight cash (homie)? Now, is it still clear what’s legal and what’s not? Another example. What if you buy a license for something that would cost thousands of dollars to actually qualify for? Clearly illegal, right? But what if your sub-supplier buys materials with fake credentials—and come to find out they always have, you just didn’t know about it, AND the “fake” materials will pass the tests too? Now, is that an illegal use of connections or not? Another example, what if you legally do all you are to do go get your license in China to do business. But one of the offices that you must use “requires” you to give a “gift” of thousands of dollars to the inspector or he will not even come out to your office. There is no way around this you’re completely legal, but this guy has to have some cash or you don’t get your license? What if you can “pull strings” with others you know in the govt and get the cost reduced, but not eliminated? Of course you have to pay the “others” back too, but it’s cheaper. Legal or not? Lastly, what if your factory clearly breaks the law and holds your goods hostage for a “ransom” payment before they ship it? You know a local policeman and call him in to help. For his help, you have to pay either a cash payment or host a lavish banquette for him and his friends. What do you do? *Where does Guanxi end and bribery begin? (This is really the money question, as far as I'm concerned.)* What is a favor between friends and what an illegal kickback? All of these are real situations that we’ve seen over the years. How do you work in a corrupt system and keep your hands clean? How do you do business in a system that has as one of its founding social principles the use of personal guanxi over adherence to law? I love guanxi—I got box seats at a soccer game in the States this summer because I knew someone. My Chinese staff can solve many problems with production because they know how to talk to and how to work within the system using “relationships” to fix problems. But you have to define your own lines and say: “No mater what, I don’t do X.” I promise that if you’re here long enough, you’ll be asked to do X—and you better have decided before you get to that day what you’re going to do or guanxi will become a problem for you too. ### First Three Weeks URL: https://www.silkroadintl.net/first-three-weeks/ Last updated: 2026-07-18T14:48:28.000Z One might think that business is business no matter where you are. That might be true to an extent, but culture and monetary circumstances have a big impact on how business is done. I’ve been in China now for three weeks working with factories on quality control and also trying to find suppliers for new projects. Much of what I have experienced is not what I expected. My expectations however were set in place by my western education and by some previous experience in China. I am currently studying mechanical engineering and have learned about many processes used in manufacturing. I have also been to China to study about globalization and its effects. During my study I was able to visit various factories in Shanghai and other large cities. These factories were very well maintained and manufactured products like laptops and automobiles. This experience, combined with my education on the latest manufacturing processes, gave me a false expectation of the factories that I am currently working with. During the interview process for my current position I was told that I would be working on small projects, but I failed to realize the large difference in manufacturing conditions. During my first quality control visit to a factory here in Shenzhen I expected to see a fair amount of automation. While there were machines that performed what a person couldn’t, I was surprised to see the amount of labor required for the product. The machines’ accuracies were highly influenced by the operator’s ability to position the next product in the correct position. The operators did just that very well most of the time, but often the materials they worked with weren’t perfect which caused inaccuracies. This made my assignment to do quality control harder because there always seemed to be things that were wrong and often it was not because of the current step, but rather an earlier one. My expectations received another shock when I went to a factory that had no machinery. This factory was used for the beginning steps of the packaging process. The product they were working on required that several hundred pieces of an item be put in a bag. It would have taken too long to count each item since tens of thousands of these bags had to be done. So they weighed the bags using simple digital scales to see if each had the right amount. This was a smart way to speed the process up but it did once again cause some inaccuracies in the packaging. I quickly realized that I would not be working with the type of factories that I had learned about in my classes and that I needed to change my way thinking. Understanding the process that is being used by a factory and the limitations that are imposed by that process has been extremely important while doing quality control. As I continue to better understand these processes I am able to focus on the parts of the product that are more likely to have problems. This also plays a large part when trying to get the factory to fix problems. Often factories will say that they can’t get 100% accuracy because of their limitations but by understanding those limitations you can work with the factory to solve the problems. While finding suppliers for new projects I ran into some interesting things that have made me reflect on modern Chinese culture. The first thing that I noticed was the ability of my contacts to use English. I used emails and instant messaging to make my contacts and communicate. It seemed that everyone had English that I could easily understand, sometimes I actually had to look up terms they used. China is really trying to grasp English and many factories have hired employees that make them accessible to foreign business. I was even given an option between Chinese and English when I called my cell phone’s service provider. Still my time in factories is always spent speaking Chinese. While English might be used to do business with foreigners, Chinese culture is still present. The Chinese cultural idea of guanxi or relationships has a significant impact in Chinese business. I got a glimpse of this while instant messaging a factory. In my initial search I had missed the fact that this factory had a minimum order quantity, or MOQ, that was a bit larger than what we were looking for. When I made the comment to him that our order wouldn’t be large enough to fill his MOQ he told me not to worry about it because it was our first time working together and he wanted to be friends. I took this as him trying to build guanxi with our company by going out of his way to see if he could help us fulfill our needs. Some other factories also wanted to know a little about me personally which must be the same thing. I don’t know how business is generally done in the US but the friendly attitudes of the factories made me feel more at ease while working with them. Overall, China has been a great place to work. It gets frustrating when I can’t understand what people are saying due to any number of reasons but those instances get less frequent as I try to study things I’ve heard. China is not the easiest place to just jump in and do business but it is possible, you just have to work at it.\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_Eric Luker is currently working for SRI and finishing his degree in Mechanical Engineering at Brigham Young University. He is fluent in Chinese and has worked and studied in both Taiwan and Mainland China. ### “Doing business in China you always play the games or they will eat your weakness.” URL: https://www.silkroadintl.net/doing-business-in-china-you-always-play-the-games-or-they-will-eat-your-weakness/ Last updated: 2026-07-18T14:48:27.000Z I was told in once in a sales course that if you can name the game you don’t have to play it. It’s just as true in China as it is in the US, although the Chinese version I was told this week “Doing business in China you always play the games or they will eat your weakness” seams a bit more vicious. Here’s how we played the game with a factory this last week. First, we’re working on a rather large project that involves more than 10 different suppliers and testing for countries on three different continents. So of course we had contracts (in Chinese) and NDA’s and had spent a few months getting both preliminary testing and correct samples from everyone. And of course, prices, timelines, quality standards, et al were all approved and agreed to. We had worked with suppliers to confirm with their sub suppliers that they’d have enough materials in advance too. But now that the order is placed, the molds are “more difficult” than they expected and the price is going up—about 200%. Funny thing is, we were told that after our meeting to confirm the spec’s of the CAD drawings the molds had already been started! Of course both the facts that we were told something that was not happening and that the price is changing was completely (expected) unacceptable. So we said no—but how we said no was the key to the game. We said no and reminded them, politely that we had a contract. They said that if we didn’t pay they would have to return our money. So we said, “Fine, we’ll pay you 1000RMB for your time and you give us the rest of the money back.” Then we stopped talking to them. Within a day they had returned with a much lower price increase and a newfound willingness to complete the project. About two weeks later, after we had confirmed that the molds were started (we went to see them this time), they called us again. Again, they wanted more money. This time the problem was that our products “were not typical” and so the molds were more expensive than previously estimated. We told them, again, that we had gone over the CAD details and that the contract stated that the mold price was fixed. They said that we could keep the same contract and just increase the payment per piece to cover the additional mold costs. Of course we said no. And they responded with the “if you don’t pay we won’t work with you any more” ultimatum. We said we were sorry they felt like that and we would compensate them a few thousand RMB for their time and efforts and they could return the product deposit and the balance of the mold costs to us and we’d find someone else. Then we stopped talking to them and waited. They called us back a couple days later, said they had a new engineer and some better “skills” and would continue the project for us. This happened again too, and we resolved it the same way. This is a very simplified version of what happened. In real time, there were behind the scenes arguments about what we should do, if they were lying or telling the truth, what other options we had, etc. And we’ve had this scenario happen to us over and over again over the last 10 years in Asia. While negotiations are often different in their specifics negotiations like these are often quite similar in general and there are a number of lessons that can apply across the spectrum.**1\.** Sometimes the request for money is true—and that’s both why you call the bluff and have a back up prepared at the same time. If you call the bluff and you don’t have a back up, you’re in a worse position then you were with them asking for money as you now have no credible supplier. For example we molded a new PP product for a client this last year and found that the specifics of the design required a skill set that was not common at many of the factories that typically built this kind of product. When our chosen supplier called to tell us that the prices would be going up, we expected it—we negotiated the amount but kept them as our primary supplier and paid them to keep the project going.**2\.** There are times when it is indeed worth it to pay the new costs and keep the same supplier. This is different than #1—sometimes the request for money is not based on a true increase in costs, but you want/need/like the supplier (or don’t have any other options) and so making a payment is valuable to you.**3\.** Delays often mean that either they are stealing your money, they can’t do it and won’t tell you or they have price issues they are trying to outsource themselves without telling you. In the first case above, they couldn’t do what they had contracted for and were trying to not let that cat out of the bag.**4\.** When the offer to pay more comes, and it will, you can offer to cancel the project and send bank info then wait. If they are bluffing they price will come down, you can then make a counter offer, wait and repeat. If the price drops you know it was a ruse to get money. If he returns your money, he’s telling the truth, they can’t do it.**5\.** If you pay each time they ask, they will keep asking until you are so far down the line that you can’t back out and you’ll get screwed (a la hostage payments to release goods).**6\.** Nominate only one person to talk with the factory. Tell the rest of your staff to NOT talk with them. Anyone that is not the point can only take calls and say thank you and then goodbye. Why? Because, even if staff says something as simple as “I’ll talk with so and so about this,” that means that there is room to negotiate. Be strict and tell them to respond when asked about The Point person, “We can’t find so and so. Sorry.”**7.** Always talk direct with the factory and the boss that can make decisions—remember, they’re playing the same game you are.**8\.** On the bright side, the request for money is not always a bad thing. Tie some additional quality standards or dates to any new payments to make. If you didn’t have before, now you can get a legally enforceable Chinese contract signed, for example. And, if the money shows up you know three things. 1\. What the cost of good should be within a small %. 2\. What the mold costs really are. 3\. The factory is honest—so if you can’t find anyone else you can go back to him and pay more and get it done right.**9\.** The exact same words do NOT mean the same thing to you as they do to your Chinese counterparts, so be careful and consult with some trusted bilingual staff. For example, one time the factory told me, “If I have time, I’ll return your money.” My staff was really offended while I thought it meant that they get to it as soon as they could. Our Chinese negotiator knew though that this meant that the factory boss was fighting with himself—do it or don’t do it? Turns out he later came back and negotiated to keep the project going.**10.** If you let your supplier “win” the first time they ask for money you will never know if you can trust them or if they will do it again or what your real costs/prices are.**11.** No matter what, you can’t make your Chinese counterpart lose face in public (unless you calculate it very carefully). Once he’s lost face, he’s lost all desire to help you out, maintain civility or even complete the current project.**12.** Your Chinese supplier has to retain hope that there is more business coming or there is no reason to keep the current deal going. If they think that this order is dead they will fight for all they can get now. You play the game too—Tell them if they want the order next time and you’ll give them 2% more. “Next time I’ll let you make more profit.” You need to act as if you’re trying to help them as much as you possibly can.**13.** Never tell them, before you place the order that you’re going to place the order. You cut the prices and lead them along, get them to cut the price and then place the order. If you tell them “I’ll place the PO tomorrow” you know the factory will raise the price tonight. ### Ok, so it doesn’t meet your standards….so what? URL: https://www.silkroadintl.net/ok-so-it-doesnt-meet-your-standards-so-what/ Last updated: 2026-07-18T14:48:28.000Z “Sorry it is not the same as the sample. We hope that you’ll accept it anyway.”“Your QC is too strict. No one can expect to be 100%.”“This is still within tolerance levels.” (No tolerance levels were ever given.)All three of these comments were said to me this last week in discussions about active projects in China. All three of the suppliers then moved to the dreaded show-down level of negotiations: “We won’t make it again. You can accept this standard or cancel (part of) your order.”I’m not sure how this type of brinkmanship helps establish long-term relationships or encourages buyer-confidence—which is what every Chinese supplier I’ve every worked with has told me is their goal. I’m also not sure how anyone would deal with this if they were not in China with the ability to sit down with the factory and have face to face discussions about the issues. Here’s what we did in each of the three cases.**1\. “Please accept it any way.”** This was the weakest of the three positions and really more of a pleading than a demand. The factory knew and admitted that they we wrong and were hopping more than demanding that we would help them out here. Now of course there are some things that we really can do to help out. Sometimes the colors aren’t exactly right, sometimes there are other nonessential components that can be less than 100% and the product will be still meet the overall standards demanded. But sometimes, as in this case, the fact that production was significantly different than the sample components was completely unacceptable. This is both a rather important component and a costly piece—I understand why they don’t want to do it over again. So when we didn’t agree with their request and rejected the product they had no other option but to force the issue and they went straight to “Fine, if you won’t cooperate with us, then we won’t do it all. Either accept the product as is or cancel your order.”This is a pretty risky position for them to take, considering that the deposit that we paid does not cover the amount of time/money they’ve already invested into getting the order to this point. They were banking on us caving in on either quality standards or additional monies to redo it (or both!). They assume that we don’t know what their position is. They are also assuming that since we’ve placed an order with them we’re committed to them and only them. They think that now that we’ve paid we’re so involved that a price change, a delay, a change in product standards will result in us freaking out but then eventually agreeing (because, what choice do we have?!). So we called their bluff. We do indeed have a second factory option, though we’d rather not use them unless we absolutely have too. We do have approved samples from this other supplier too. We just didn’t place the order with them (this time it was price, sometimes it’s quality, sometimes it’s the ability to work/communicate easily). And, mostly likely, if we do have to move it will mean that we would lose our deposit, but that’s better than getting crappy product rejected by a client who then wouldn’t pay. So as we assumed, they backed down, and found an excuse for why it was wrong the first time (a manager, whom we never met but was in charge of our project (?!?), has just been fired). They saved face, we get our product (re)done correctly and the exchange was relatively pleasant and not too confrontation, all things considered. Of course they ended this round of negotiations with “OK, but next time the price has to go up.” > I love that cooperation in China means that buyers accept less than what they contracted for. It’s never the other way around, though. Factories never add more into their production costs then they originally contracted for. Yes, sometimes you’ll get suppliers to agree to do additional things for you. But if they do, then you know that one of two things has already happened. One, they knew the expectations even though it was not spec’d out—remember they do these same things for hundreds of buyers every day. They know what you want, probably more than you do. So they included everything that is usually expected in the bid—then they wait for you to bring up each and every item in your spec list. Or, two, they are adding more to the final price and won’t release your goods until you pay up. > **2\. “We didn’t really believe you when you said you were going to be this strict.”** Yup, we get this all the time. I think that only two times in the last decade have I been out “QC’d” by a factory—I can remember specifically each time too. It almost never happens. This time, we did exactly what we said we would do (use approved samples for production QC) and told them that we expect them to be able to do the same thing (namely, match the sample standards in production). When we did QC and in all discussions afterward, we stuck to the same position, “match previously approved sample standards.” But production was NOT up to snuff and they didn’t want to redo it. So they went to “we can’t do it any better than this” and “your QC is just too strict.”Whenever we hear this our questions are always the same, 1\. If you can’t meet this standard in production, why did you sign a contract saying you could (and why did you repeatedly tell us you could)? 2\. How come you can do it for a sample but not for production (and if it is a different process, why did you bid on one process but plan on using another)? Unfortunately, the answers are never what we want to hear. And the bottom line is they either don’t think they can do or just flat out don’t want to do what they’ve committed to. This of course, is unacceptable for us. We expect to get what we’ve contracted out for. This time we invested in some additional in-line QC, helped them to fix the molds (we brought in an engineer friend from another factory). It will take us at least 2 extra weeks to do this right, but we will do it right and for no more additional cost than our time.**3\. “Oh, by the way, our machines/engineers can’t physically meet the requirements that we’ve discussed with you for the last three months and that we agreed to verbally 100 times and that we just signed off on in our contracts.”** Yea, I figured as much. But, really, if you knew that you had predefined tolerances and you knew that we were going to very strict in QC, why didn’t you inform us of your tolerances (and why did you contractually agree to our higher standards)? To me this is actively dishonest—which is significantly different from just honestly finding out about or having issues later on in production. There are honest physical limitations that can’t be exceeded, I know this. I’m thrilled when factories tell us about these limitations too—in fact, we ask for this type of info from each factory before we ever do a project. But before we pay the deposit we usually are just told “no problem.” Of course, after we pay the deposit factories usually find “new” limits that apparently didn’t exist before. For this problem there were two solutions left to us. One, we change our standards (not really an option). Two, we switch factories. We picked #2\. We had a back up, but our back up couldn’t meet the standards either. So we had to find a third, and eventually a fourth factory before we had what we wanted exactly—price, quality, timing, communications, etc. This time is didn’t cost us anything. We got our deposit back and were able to move on. Sometimes this means you sacrifice your deposit if you leave or your standards if you stay (which is the goal of the supplier in the first place). This is bait and switch at it’s worst—they know what they can’t do but want the order and are banking on the fact that they can either a) get close enough that you won’t know or will accept it anyway, b) will get far enough down the road that you can’t back out, c) will either get you to agree to lower standards or pay a deposit and then leave without taking product. Few and far between are the factories that admit that they over estimated their abilities and will admit it and give you your money back—if you do find one of these, keep their number handy. You can never know enough honest suppliers. ### Face? What? URL: https://www.silkroadintl.net/face-what/ Last updated: 2026-07-18T14:48:27.000Z I’ll be the first one to admit that I just don’t get face. My wife would certainly confirm that as well. After I graduated and for my first few years working in Asia, I thought I knew what was up. But as the years have passed and I've learned what the Chinese words I'm saying actually mean to Chinese people, I realize more and more that I have a long way to go before I'm fluent in Chinese Culture. I’ve heard some people simplify dealing with face into “just be polite and you’ll be fine.” This is certainly part of it, but has nothing to do with things that you can’t say in Chinese that are perfectly acceptable to say in America. And how do you politely and professional discuss lies, broken contracts, sub-standard samples, non-disclosed changes in production and unapproved production locations (sub suppliers)? Even if you can manage to speak like Pollyanna you’re going to be nailing someone’s keister to the wall, canceling contracts, changing ship dates (enforcing late penalties) or rejecting thousands of dollars worth of product all in a second language or through a translator. Face is not just being polite, it’s more than that. It’s complicated. We’ve had two factories in the last year try to change out approved product with cheaper un-approved product after we’ve had testing completed. In both cases the tested product was clearly marked in sealed boxes, wrapped in shrink-wrap, labeled (in Chinese and English) and set aside. Yet somehow the factory “mistakenly” used part of our product for someone else and then “replaced” what they used with substandard, un-approved inferior product. When asked about it, there is always an excuse. And we of course, since we live in the PC 21st century, we listen to all BS politely. But even if we could agree that it was an honest mistake, how do we not get notified about a problem this large after 6 months of stringent testing? How do the sealed boxes get “re-sealed” with our special tape? How does our signature over the seals get copied? How does product get replaced just coincidentally the day/night that we pass the tests? One of the tricks to working in a very face-conscious culture is to let others know that you know their lying without actually saying as much. You have to show that you know more than they realized without publicly pointing fingers. Even when you’re in the right, you have to give them a way out and you have to keep your cool. It’s a VERY tall order. Sometimes too tall for me to deal with. I’m reminded of Jim Gaffigan’s comedy routine when he laments that ethnically he’s “nothing.” He claims that if you’re a Latino and you get mad it’ll be said that you have a “Latin Temper.” But if you’re white and you get mad then you’re just a “jerk.” The same is true here. If you’re Chinese and you say “Chinese people lie” it means you understand your own culture and you’re being street smart. If you’re a foreigner saying it, you’re a racist bastard (trust me here; personal experience). If you’re Chinese and you’re angry and threatening to foreigners in China it’s because you’ve been offended and oppressed for 1000 years. If you’re foreign and you’re angry it's because you have no culture/class and you’re making yourself and others lose face. Over the years I’ve gone ballistic more than once when I’ve been straight-out lied too. Sometimes we plan the fights, sometimes I can keep it cool and sometimes it’s like a 2x4 to the side of the head—out of the blue and almost deadly. Sometimes people get fired, relationships are damaged beyond repair and all the previous work is lost (worst case scenario). Most of the time, there is a big fight, a show, a reconciliation and then things move on. Yet with all these pot-holes in the cultural landscape, what amazes me is that sometimes after what I consider a fight, a single phone call can “solve” it all. For example, we had a supplier that decided that since we tested his product, we had no choice but to order from him despite the contracts (written by a Chinese lawyer in Chinese) he’d already signed. Other than one cultural unacceptable outburst in which I had a few choice words for him, I calmly laid out all reasons why he couldn’t raise the price (contracts in China and the US, personal agreements). He responded that he had “invested” a lot of time into the sample process and needed to recoup his costs. I then outlined the mistakes and problems in the sample process that he was responsible for. Of course, being the boss, he had no clue what had actually gone on in the trenches during the 6 months of samples—he’s only been shown the bills and been told that we were locked in due to the testing we’d done. But instead of helping, my phone calls and emails that pointed out all the details about his employee’s mistakes made him lose face. We went from “best friends” to “we will never do business” with “foreigners like you” in two emails. But one call and it was back to “we are businessmen, that’s how we talk” and “we’ll just work on the future not the past.”While everyone is polite now, and we still have the same price as agreed, my professional issues with the processes were never addressed. Of course, a factory employee has probably been dressed-down, but how do I know that anything has been taken care of?! And worse case scenario, what if the anger has just been transferred to the employee who will now sabotage things later? This is where having a savvy and trusted Chinese employee is invaluable. When dealing with heated and potentially face-losing situations and their aftermath, just remember, just because you’re paranoid, doesn’t mean they aren’t out to get you. Sure, fear is irrational but it’s usually based on some actual previous experiences—in my case 10+ years of these kinds of experiences. Face is public, but retaliation is private and discrete. Problem solving “western-style” is completely unacceptable in Asia—confrontations, “open” discussions about the merits of various plans, brainstorming, finger pointing for problems and praising individuals for success, email trails with names and dates, etc. In short, personal accountability in a collective face-conscious society is not something you should expect to encounter. (I know, I’m a racist bastard for saying this. Oh, well.) But hey, now you know and so you can prepare for it. ### Product Testing—Are You Sure That You Didn’t Pass? Are You Sure That You Did? How Do You Really Know? URL: https://www.silkroadintl.net/product-testing-are-you-sure-that-you-didnt-pass-are-you-sure-that-you-did-how-do-you-really-know/ Last updated: 2026-07-18T14:48:27.000Z We’ve been involved in the sample and testing processes for 4 different clients and about 18 different SKU’s of product for the last year and a half. Why has it taken so long to get the testing done? you might ask. And I’d be glad to tell you, if you did ask, that CPSIA is a huge pain in the butt. A complete racket from every angle. First the rules are a complete burden to US businesses. Well, a burden to everyone except for testing companies, that is. We have one client that has closed down specifically because of the onerous requirements of CPSIA on their small start up company. We’ve had at least three others (that I know of) that have changed design and/or target markets and/or components so as get out from under the CPSIA regulations. The regulations are real nightmare. Second, the actual testing process is a complete scam too. You can only use a testing company from a US govt approved list—and of course, those on the list charge more for their certification than companies who are not on the list. In addition to that, some large box stores also “strongly suggest” that if you want to place product in their stores you have to use a specific testing company. Why the hell should it make any difference?! That’s like forcing everyone that sells to you to deliver their goods in Ford trucks even though Chevy, Audi, Toyota, Buick, VW, Honda and BMW (wow, can you tell I live in China?) all have legit truck options too. Three clients switched testing companies after products failed their first round of tests. ALL three had the exact same products pass the tests after they switched to a different testing company!! (And they all switched in and out of the same two testing companies!) We pulled and sent all the SAME samples for ALL three clients and mailed them ourselves to the two different testing companies so I can personally testify that NOTHING changed in the samples between tests. But the results were different—radically different. When testing, the responsibility is on whomever requested the tests to make sure that everything is done correctly—and really, how in the world can you know if it was done correctly or not?! Unfortunately, the reality is that if there are problems in the methodology, you’ll never be told about it. We have one client with a personal connection to one of the testing companies US sales office and they were able to get some inside info and some help. The other two? Paid for everything twice (or three times). FYI: If there are problems with the testing methodology you can get the tests redone for free (at least that’s the policy of the two companies that we’ve been working with). The problem is, unless you get them to admit themselves that there is a mistake/problem, you’ll never know that maybe you could have either passed the tests or you could have your stuff retested again for free. This is significant when testing for a single item can cost thousands of dollars. Third, despite what our suppliers told us before we started samples and testing, CPSIA standards and the strictness of the processes that must be followed are not fully understood here in China. The fact that we’d be testing both before and during each and every production run was seen as unnecessary. The fact that we would still test production when suppliers already had other clients that they were sure had already passed testing was again not understood. One Taiwanese/Chinese supplier, who has been exporting to the US in this industry for more than 25 years, was advertising “CPSIA CERTIFIED” at a trade show in the US this year and last. But when called, not only did his factory/staff not know what CPSIA standards were, they had NEVER testing anything. He had sold one item to a customer in the past who had told him that he had passed CPSIA tests, and apparently that was enough for him. Despite the fact that this supplier has hundreds of different products made from different materials and with different processes, he was selling his “certification” as a done deal based on the hearsay from one clinet. He did have some testing doc’s from the EU, but no CPSIA. Over 50% of the product that we tested from this supplier failed tests (at two different testing companies). When called on this fact, his answer was this: > "There are more than 300 colors and patterns available in XX. No one would send all to test CPSIA one by one. You may find tens \[suppliers\] in China, who can show you 300 certificates of XX? Who will prepare 300 kinds of XX material any time to be tested by CPSIA?" > Stupid me! Why should I think that if he advertised as being “certified” that he actually was?! Obviously, no one in their right mind would ever spend that kind of money! Duh?!Without exception, the fact that we are actually testing our own products when suppliers could either buy fake certificates of completed tests (ANY test you want: LHAMA, RohS, CPSIA, ASTM, etc., 1,500RMB) or just change the dates on older tests (“It’s all the same materials.”) was completely not understood either. In fact, the idea that we would be testing and were tying payments to test results made more than one factory very nervous. We had one back out completely and two others expressed concerns along the lines of, “But we’re not sure if we can control all the materials. What do we do if they don’t pass the tests?” Which is precisely the point—you need to “control all the materials.”For us the processes usually goes something like this. Contract out with the supplier for the testing sample process—these means that we pay for what is often free, but we get agreements (in Chinese) that we can enforce later when we have to make sure that production matches 100%. Pull our own samples, send to independent third party testing company, sign new contracts and initiate PO’s with suppliers and then pull, test and repeat. While suppliers might not understand the necessity of strictly following the testing standards they know how to work the process. Where it gets really frustrating for us is either just before the PO’s are placed or just after testing of actual production samples is completed. We sign agreements before we start because we know what’s coming—suppliers realize after we’ve spent $10k or more and taken 6 months to test (and re-test) that they now have the upper hand. Since they are now “legit” they figure that can raise the price as much as they want (and request copies of our testing results) to release any goods. Usually the new price requests result in a pretty big argument since we’ve already completed contracts in the US months before and contracts in China to ensure against this very thing with the suppliers too. This type of problem is difficult, but usually resolvable; even though getting past these changes and into actual production can sometimes cost a lot (time, money, face, emotion). What’s not resolvable is when a factory decides that they need to save money (aka: make more profit of this one order) and change either some of the raw materials or change part of the already approved production processes. If either of these things happens when doing both pre-production and in-line testing the supplier is going to get caught almost every time--but it still happens, often. Of course, now the entire production run will be rejected. And if you didn’t have a fight on your hands before, you most likely will now. If you can get correct production and pass the tests, the question, if you’re not in the factory 24/7, still is: “Am I getting the product that I tested?” If you can ship to a secure 3rd party storage facility without paying the balance before the testing is completed, I encourage you to negotiate that—but we’ve never been able to do that. Usually we seal and sign all boxes to make try to minimize the chances of “replacements” being shipped to us after testing has been completed. After having gone through this process over the last 18 months with 4 different clients in completely different industries, I would be completely shocked if all the product in the US that is “CPSIA Certified” really is, in fact, certified. There are just too many tantalizing options for individuals in the process to cut corners and take a huge one-off profit; there are too many people that just don’t understand how important testing standards are; and there are just too many people involved that will NOT be held accountable if, in 5 years, some component is found to not comply with the standards. ### China is different now? Really? How? URL: https://www.silkroadintl.net/china-is-different-really-how/ Last updated: 2026-07-18T14:48:27.000Z It’s be more than 20 years now since my first work experience in Asia, 15 years this month since I first came to China. So much is different, so much is so new, so much is much more developed. Buildings are new, technology has not just made it here, but taken over. Cars, shopping, manufacturing, education and income levels—it’s almost a different planet than the China of 1995\. Almost. Whenever my Utopian vision of what Asia is pops up (yes, I still have dreams of Shangri-La) it's usually quickly beaten down a few times with the baseball bat of reality. Here are a few of the most recent bruisers.1\. Conversation at a factory: “You know how fake LV is much cheaper than real LV? It’s like that. It looks the same. The quality isn’t too bad. But it’s much much less expensive.”This is the analysis from a factory manager (800 people, 11 years in business in Shenzhen, over 80% of their volume goes to the US/EU). He also confided in me that they can buy any testing certification their customers need for about $150 per item—ANY ONE HE NEEDS! That’s RoHS, LHAMA, ASTM, CPSIA 2008, TRA. You name it, it’s for sale. Wasn’t China supposed to have [significantly improved enforcement](http://www.chinalawblog.com/2010/06/china%5Fintellectual%5Fproperty%5Fthe%5Fstatistics%5Fare%5Fdamn%5Flies.html?ref=silkroadintl.net) of things like this? I usually agree with Dan, but I'm not seeing ANYTHING different today than 10 years ago. Maybe we disagree on the definition of IP, but it's not getting a lot better down here in the trenches.2\. Comments from a conversation with a group of about 10 men, all working for large (VERY LARGE) multinationals:“Let’s just say that my company will never build another plant in China.”“I can’t tell you what’s next, but “next” for us isn’t China.”“We have too much here already for how risky it still is.”3\. Conversation with a newspaper reporter about China vs. Vietnam. He asked me about the increasing preference for doing projects in VN. Me: “Sure Vietnam has cheaper labor. But the supply chain and infrastructure are so much less developed. Unless I can get the components, packaging and fulfillment all done in the same city there, it’s still faster, more convenient and about the same price to do things in Guangdong. " And even though I love Pho, I have to have more than coffee and bread shops to break up a week long trip there.4\. Conversation with a QC manager working in Zhejiang. “I hate working in Zhejiang. It’s 10 years behind factories in Guangdong. No one understands that contracted quality standards really do need to be met. It’s a nightmare.” I guess it’s all relative, huh?5\. Conversation with a local in a bar after the US beat Algeria in the World Cup last week: “How come the US can get to the elimination round but China can’t even get in?! We have 1.3 billion people, a national program for football and it’s our favorite sport. America is only 300 years old and American’s don’t even like football.” I had this conversation in 2006, 2002, 1998, and 1990 in Asia. Remember when students were jumping out of dorm windows in 1996 as China tried and failed to qualify for the 1998 world cup (they lost to Korea and complained about the population then too). Quick side note on China a soccer performance: > My theory is that collectivist cultures deny the development of most of the great individuals that they would otherwise have and that are necessary to win. China's Olympic medal haul in so many individual sports may seem to contradict this, but if you look at what they won it does not. They only won in sports that they specifically targeted because there was no great Western presence. They picked unpopular sports that the West didn’t care about so they could win the gold medal count. So my theory still holds— they themselves know that they could not create the greatest athletes in the most popular sports. > 6\. In our church group of about 150 foreigners here in SZ, 4 families (total of 20 people) are moving out within the month. Either business is not as good, opportunities are better elsewhere or factors of health/safety/education have prompted them all to move to other countries. 8 years ago there were less than 20 people, in 2007 there were about 200\. Now it’s down to a buck 25\. Not sure why I included this one. I thought it was interesting.7\. Money: I was passed [counterfeit money](https://www.silkroadintl.net/fake-money/) twice in the last week; once in a taxi and once at restaurant. I can’t believe that I didn’t check either time—I’m obviously not getting any smarter either.8\. My phone didn’t work with the new software upgrades this last week. I took it to the “Official Apple Retail Store” in our local “International” shopping mall where I bought it. They charged me 100RMB, spent about 15 minutes with it plugged into a “jailbreak” program (yes, it said “jailbreak” in English and Chinese right on the overhead screen in the shop in the middle of the mall) and now it works fine. Of course, Apple won’t register it and they tell me it came from Australia.9\. Of ten new projects/orders started in the last two weeks 7 of them had price/component issues because what was spec’d out in signed contracts and approved in samples and what was “meant” by the factory for production were two different things. No, none of the 7 changes made any of the orders cheaper. But thanks for asking.10\. We have an English teacher in our apartment complex whose English is so, um, accented that none of my kids can understand her (or my wife when the teacher speaks English). I can usually figure out what’s being said only because I speak Chinese and so have learned the art of simultaneous language deconstruction (“If I say that sentence word-for-word in Chinese, what does it mean?”). 15 years ago, a high school English teacher asked me the same mis-spoken question over and over again while translating a much more interesting conversation back to her friends.11\. After my last triathlon in Bali (50 minutes faster and 4kg lighter than the first one last year, thank you very much), I had my wife bring my bike back into China while I was updating some paperwork in HK—she was stopped at the border for 2 hours (and was furious with me). I’ve crossed the China/HK border with the same bike, in the same box (and unboxed too) more than 15 times—never stopped once. I’d love to be able to say that the US border is different/better. But it’s not. It’s worse. My father in law said the most accurate thing I’ve heard to date about the US bureaucracy, “At least with the Chinese government, if you pay some one you get what you paid for!” I can think of very few things I hate more in life than having to deal with the US govt (IRS, TSA, Immigration, Embassies, etc.).12\. This is what’s officially [happening in China](http://www.chinalawblog.com/2010/06/whats%5Fgoing%5Fon%5Fwith%5Fchina%5Flabor.html?ref=silkroadintl.net): labor laws are impacting workers and wages, RMB valuation is change prices, labor shortages are stretching out lead times and raising costs, inflation and raw materials prices are rising, factories have still not recovered from the lowest points of 2009 so fixed costs are still higher per order, new international express mail rules are making it much more difficult to send samples out of China. You'd think that China would be running pell mell from the Obama method: tax, spend and make it hard to do business. Nope. Finally, [GE boss Immelt on the current situation in China](http://www.ft.com/cms/s/0/ed654fac-8518-11df-adfa-00144feabdc0.html?ref=silkroadintl.net): > Mr Immelt acknowledged the importance of the Chinese market, which contributed $5.3bn to the group’s revenues last year, but declared GE was encountering its toughest business conditions there in 25 years. > The more things change, the more they stay the same. ### Chinese Culture for the Frustrated Foreign Buyer, Part II URL: https://www.silkroadintl.net/chinese-culture-for-the-frustrated-foreign-buyer-part-ii/ Last updated: 2026-07-18T14:48:28.000Z Part I is[ here](https://www.silkroadintl.net/chinese-culture-for-the-frustrated-foreign-buyer/).**6\. You will never know when you’ve gone “too far.”**Once, back in ’95 in Chongqing, people were gathering on the street and huddling around me yelling advice at me crowding around me and staring at me while I was trying to take care of my crying 1 year-old son. I asked them to stop and leave. (OK, I screamed in Chinese at 100+ mobbing Chinese strangers, telling them to get the hell out of my face and leave me the \*&^%$ alone—of course this just added another 100 Chinese strangers to the scrum.) Other than more of the same, the response from one of the people nearby was this: “This is China!” I will never forget that. You won’t change China. You can either learn how to work within it or constantly fight against it. I find that it’s usually some of both. When you make small cultural mistakes like not using the public chopsticks or bowing (Chinese don’t bow) or slapping a female co-worker on the shoulder or a million other little things you’ll be completely forgiven. It’ll just be chalked up to “stupid foreigner.” But when you make demands on a broken contract or hold people accountable in public for personal mistakes or force specific processes to get things done you will be punished for it. I promise. You many never know what the retaliation will be, but it will happen. I’ve found out that problems on one project were related to arguments we’ve had over previous projects. Again, Asians do NOT compartmentalize their lives like Westerners do. And so usually there is no reason for your supplier not to retaliate. There is no guilt since no one knows if they will ever see you again or if there will actually ever be re-orders. Right now, in the heat of the moment, it’s all about recovering physical, social (and probably personal) loses. And don’t ever underestimate the need for a restoration of face. The most difficult thing about Chinese culture for many foreigners here is the reality that you don’t know when you’ve crossed the line and offended someone that will not forgive you. Maybe it’s because there is not a defined line for every person/situation. Maybe it’s because I’m a foreigner and I just can’t tell you where that line is. My rule is this: separate the argument from the people. Again, Chinese DO NOT do this. But you’ll want to keep your cool and avoid as much personal animosity as possible. To do this you’ve got to consciously talk about things rather than people decisions, comments or anything that can be considered personal. This will be hard, because when you’re talking about money, personal responsibility, deadlines and names on contracts I promise that it will get very personal very quickly.**7\. “We just don’t really work like that.”**The reality of contracts (even the good Chinese ones) is that no one but you has ever read them. When contracts are broken in China (and court is not an option) your going to just hear “well, we don’t really work like that in China” or something similar. Your own Chinese staff will of course and help you, because it’s their job to do so, but will also think “my boss doesn’t get it, Chinese just don’t work that way.” The fact that you don’t know “how to do business in China” is your fault. Unless you can enforce something in court, no blame (social, financial or otherwise) will be laid at feet of the supplier for breaking the deal. “Everyone else gets it but you!” Sure they’ll sign the contracts. Sure they’ll tell you they do it all the time. Sure they’ll sign the non-comp. But I promise you that no one but you will ever look at the contract again unless you force them too in a meeting to review standards/penalties. If a factory screws up you’ll have to fight tooth and nail to get them to pay for replacements (rather than just “fix” the problem pieces). If a supplier misses their delivery dates you’ll have to pitch a small tantrum to get them to understand that they are responsible, like the contract clearly says, to pay for the resulting airfreight costs. You will learn to hate (hate hate hate, I tell you!) the words “chabuduo,” meaning “just about” or “almost” as in “Well, it’s almost right” or “Isn’t this good enough?” (I always responded to “chabuduo” quality statements with an offer to pay off “almost” or “just about” the full invoice amount. No one has ever accepted my offer.)Contracts are only as good as the people signing them. And if your supplier doesn’t really understand how important the document is and has never had legal experience with any contract, he’s not going to value it at all. China is just not a “contract” culture; there no cell phone contracts here, apartment lease agreements are a very new thing here, most people buy houses and cars with cash. The reality is that they don’t have the legal experience that we just grew up with in the West.**8\. Hierarchy—use it or be abused by it.**Sure there are bosses and underlings in the West. Sure there are complex corporate structures all over the world. China also has it’s own structure and it usually very slender and very vertical with a wide base. The thing about China's typical corporate culture is that it's very limiting. There are tons of titles in Chinese companies but typically very few people that actually have the power to make decisions and enforce or take responsibility for the results. Maybe you have worked out a great solution to a problem with your sales rep, but if the manager doesn’t agree, you’re dead. Ditto working directly with line workers without getting an “OK” from management first. The opposite side of the coin is that if you know who to talk with you only have to convince one person that you’ve got a solution. They have the authority to get everyone else on board. For example, we had a factory that was NOT doing QC on incoming components. Every one agreed that we needed it, but for some unknown reason, it wasn’t happening. No matter who we talked with, we couldn’t get past this. Then, over lunch outside of the factory, one engineer told us that because the components came from a factory that was owned by a relative of the owner of this factory they would lose face if they QC’d incoming components (and rejected some—which is what really needed to happen). So we drafted a letter from our US office saying that we had to QC on all incoming components ourselves and let the boss present it to the other factory on our behalf. We do QC there now too. Problem solved—but only because we had inside info and used the hierarchy. And other example, we worked with a manager and a couple of engineers to solve a problem for almost two weeks without getting anywhere. The project was wrong and late and they would neither take responsibility for the mistakes nor correct the processes to stop future bad product from being made. Finally we realized that we were going to have to kill some personal relationships to get things done. We went over the manager’s head by cornering the owner and telling how much money in past/current and potential business this issue was going to cost him. We pointed out exactly what we wanted that was not being done and what we were going to do if things didn’t get better immediately (a law suit). The manager got fired (not our intention), the difficult engineers got moved off the project, the replacement materials were bought by the factory and the product was redone, correctly, in record time. While this is an excellent example of using hierarchy to get things done quickly, this also worked specifically because we’d done hundreds of thousands of dollars worth of business with this factory and were also negotiating another larger order at the time of this project. I’m not under any delusions that we could have pulled this off if we were not a significant client for this supplier. But small or large, cornering the boss, and getting his ear for just 5 minutes can save you days of pointless negotiations.**9\. If you’re not here, it doesn’t matter what you want or what you say.**Factories *themselves* tell us this ALL THE TIME! The client places an order, doesn’t hire any 3PQ and the factory is just left to produce product on their own. Sure, most of the time they don’t produce complete crap, but who is deciding what’s crap and what’s not? Yup, the very people who stand to make the most money from doing as little QC as possible. I’m really tired of foreign clients who counter this reality with “but there is so much potential future business, I can’t believe they’d do this to me!” Learn this now: *there is no such thing as potential* when you’re manufacturing in China. There is no future, only now. No one feeds their family on potential. Just think about how may hundreds of clients tell your supplier the exact same thing every week? Day in and day out, they’re hearing this from everyone of their potential and current buyers trying to cut prices. Your project is not special (unless your current order is BIG for them). They don’t know you, they don’t trust you, and sometimes they don’t even have a clue what your product or your market is. No matter what you say, you are not getting good product if it costs your factory more and you’re not here to enforce your agreements/standards. So, what to do? Be here 100% of the time or hire someone to be here for you. You can physically take control of the manufacturing process by passing or rejecting every single item that rolls down the line. If you can’t do 100% QC, hire 3PQ for day visits and give them standards that are so high (matching the contract, of course, but letter-of-the-law exacting and demanding) that you know a high percentage of product will be rejected. Once you’ve got independent QC saying the product sucks—you have leverage! Again, these are tricks that are ALREADY BEING USED AGAINST YOU now, I’m just telling you how to level the playing field. If you don’t think that factories are buying testing results to pass EU and US quality standards, you’re just not thinking. If you don’t believe that entire QC departments are corrupt then you’ve never talked with any Internal Security Officers for large MNC’s based here in China. Have you ever heard of Quality Fade? Uh huh, much of it is very intentional. If you don’t believe anecdotal stories then believe this: the 3PQ industry is still growing, even in a recessionary economy.**10\. Know your role to be truly effective.**You have a role to play in China business (in Western Business too) and Chinese history and culture are the authors of your script. Your role is explicitly understood by the Chinese. But unless you’re an expert in “China” you’re not going to know what your expected role is. This is historically true—the Brits coming in the 1600’s didn’t get it. Bill Clinton didn’t get it. Bush didn’t get it. Dannone didn’t get it. Obama, Geitner and Hillary don’t get it. Google doesn’t get it (they thought they knew and then were forced to reconsider). Hundreds of other businesses didn’t get it and have since left China. There is a VERY good reason why there are entire industries that have grow up around helping foreign companies adapt to the business environment in China. The protestant work ethic means nothing here. You are not respected because you yourself work in your own factory back home. If anything you’re looked down on for being a boss that is still getting his hands dirty (“Must not be very successful if you still have to do it all yourself.”). You are a foreign buyer, you’re expected to have money. You’re a guest, you’re expected to be well educated, polite, understanding, generous and above the everyday issues. Because you are the guest (the owner/manager of your own company even) you need to use your title and talk with someone that is your “equal” or at least a final decision maker. We typically don’t like to throw titles around in the more socially egalitarian West. But here in China, titles are basically the only thing that make you different from the billion other people on the streets. If they are going to fit you into a specific role, and they will, then you yourself need to define what that role is as much as possible. And it should go without saying that it’s ever so much better to play the Boss role than the Worker role.**11\. Bridges can only be burned once**.Make each and every negotiation/argument count. Hopefully you can get what you need without getting anyone fired or destroying relationships. But the reality is that sometimes your product ($) is more important than the “relationship” that you have with the factory. If it’s the choice of getting the product correct and being “friends” with someone you may never work with again, there isn’t really much debate about which choice you should make. Here’s an extreme example. We had a project that was worth about a quarter of a million dollars with a single factory and the production we were getting was complete crap. The factory was doing everything they could do to fix bad product. But in the end it was still bad product. This was a huge and successful supplier too; more than 1000 employees and only foreign clientele. Nothing we could do could get them to change processes. We had paid a 30% deposit and had other projects going on at the same time too. It finally came down to an end game where if we didn’t get what we had to have to accept the product we were going to cancel the order (and go to court). They wouldn’t give in and neither would we. At the same time we finished and took delivery on two other projects that were almost the same total as the deposit we paid for the problem project. We took these two completed orders didn’t pay and left. We never worked with them again. The crappy product was unusable as it was customized and only a part of a larger kit that we had kept from them. We never saw the bad product or the supplier again (we were told later that it was sold to be recycled and two managers were fired). We had a Chinese contract that we made sure the owner knew about. Before we left we paid for additional labor, engineers, molds to the factory and also late fees to the client. They took responsibility for nothing always, instead, offering only to “re-do” product for later delivery. This was unacceptable, of course. We eventually did it correctly with another supplier. But we also “fired” me so that we could get them to understand the seriousness of the issues we lost an employee (QC) over the issues and were scared for months that they’d come after us (physical retribution). It cost us 10’s of thousands of dollars in time, fees, airfreight and additional expenses. Up to that point they’d been one of our best suppliers (for 3 years), of course we could never work with them again. We were told by a manager involved, who eventually moved to a new factory (and is now one of our regular suppliers again), that they purposefully decided not to change processes to force us to accept poor quality product to meet our shipping deadlines. It was a calculated gamble that they lost. They made the decision having been in the situation before—they knew what we were up against and bet that shipping deadlines for a box store, just like with their other clients, would trump quality details. What they didn’t know was that we had, by design, cultivated other back-up supplier options “just in case.” We rarely use our back ups, but this time having one literally saved our company.**12\. Relationships are not the most important thing.**I've been here too long, I just don’t buy the standard line “in China relationships are most important.” When it comes to small orders from unknown foreign buyers they just aren't. If you’re not a large percentage of the factory’s total business then your personal relationship is worth next to nothing. To be precise, your relationship is worth only as much as you’re able to pay in cash right now. I think that foreign buyers get inordinately worried about relationships when they have small orders. If you’re not even your salesman’s biggest client, why do you think that you’re a priority to your factory? You’re not. They don’t care who you are and they don’t care about your “potential “ either. Once you re-order 3 to 4 times and/or your volume is something that they actually have to plan for you’ll matter. But until then, you are nothing but a deposit number. This should be freeing, in a way. Don’t worry about the conflict of pressing for quality over personal relationships. Don’t worry about being a bit harsh, you’re not working with a long-term friend. While a close professional relationship may develop, it will be one that’s based on quality and the fact that you’re setting standards and expecting them to be meet every time (not on “friendship” or nights out or the guy who introduced you). It’s all about context and China is not Kansas. Remember, I’m not advocating spitting on anyone’s culture. Hopefully these attempts at explaining some culture will not be abused or taken out of context. The point is this: you’re being played if you don’t know what’s going on. Learn the culture, do the right thing and protect yourself. You’ll earn friends, respect, get good product and maybe even fall in love with China (or a Chinese). I did. Good luck! Part I is [here](https://www.silkroadintl.net/chinese-culture-for-the-frustrated-foreign-buyer/). ### Chinese Culture for the Frustrated Foreign Buyer URL: https://www.silkroadintl.net/chinese-culture-for-the-frustrated-foreign-buyer/ Last updated: 2026-07-18T14:48:28.000Z First a quick Healthy Department update:I just had my annual “health check” for my new visa and my hospital experience was surprisingly good. “Not really news,” you may be saying. But the last time I was in a hospital in China [I was quarantined for (not) having swine flu](https://www.silkroadintl.net/quarantined-aka-never-tell-the-truth-to-anyone-but-your-parents/). And the time before that I had to sign a legal waver (not to sue if I got addicted) to get [enough pain meds](https://www.silkroadintl.net/another-trip-to-the-healthy-department/) to stop the pain (kidney stones) and the time before that I had to [bring my own syringes](https://www.silkroadintl.net/news-from-the-healthy-department/). So today was a HUGE improvement. Today, and I'm not kidding at all, I had an some sort of EKG done with those big black office-style paper clips clamped onto my nipples (sorry, they wouldn’t let me take a picture, I tried), a chest x-ray, a blood test, an ultrasound (no, not pregnant), height/weight/reflexes exam (179cm/85kg/slow), a dental exam (they counted my teeth, 24, neeeaaayyyy) and an eye exam all in less than 45 minutes!! Everything they poked me with was disposable and over all it was quite a clean facility. Well, except for the cart with open urine samples in the main hall. But all things considered, not bad at all. I’m not saying I’d like to have surgery here, but I wasn’t scared at all and only slightly disgusted once. Now, on with the show!\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_Part II is [here](https://www.silkroadintl.net/chinese-culture-for-the-frustrated-foreign-buyer-part-ii/).I originally thought to title this: "How to ~~use~~ understand Chinese Culture ~~to your advantage~~." It was written during some serious frustration and was neither helpful, PC or even remotely polite. I've tried to tone it down some and make it more helpful than angry. Sometimes everything goes bad at once. At least 5 different suppliers still don’t have enough employees (this was originally written in March). Two different projects had defects due to miss-communications between factory reps and engineers/line workers and two other suppliers are stonewalling because they’ve done something wrong and don’t want to have to pay to do it over. I suppose the “bright side” of all this is that in the midst of an historically bad economy we actually have projects to work on. Or the fact that if factories were problem-free I wouldn’t have a job at all! But, if you hadn’t noticed in previous posts, I’m probably more Scrooge than Pollyanna. So, in the spirit of creating a harmonious society, lets look at “culture” and ~~how you can use to get what you want~~ what you may need to know ~~if you get screwed~~ when working in China. Two quick points about preparing yourself for China (or anywhere else, probably) before I get to the culture specific issues:First and foremost, learning Chinese is probably the single most advantageous thing you can do for yourself in China. (This is followed very closely to being an expert in the field/industry that you’re working in. Having one of these two can make you valuable. Having both can make you absolutely indispensable.) Being able to listen to and understand most of what’s going on first hand is a HUGE advantage. If you don’t speak Chinese then you should get a trusted interpreter (not a translator). Second, go in knowing that “dishonest is part of their business model,” as one Chinese businesswoman told me. Note: this is NOT ME saying, “all Chinese are dishonest.” It’s actually [Chinese people talking about doing business with other Chinese people](https://www.silkroadintl.net/ancient-chinese-secret-dont-lie-to-foreigners-its-just-not-worth-it/). (Although I’ll admit that I can’t think of a very effective counter argument if you blamed me for saying this either.) This is not Kansas. You will always be an outsider here no matter how long you stay and how much of a China Hand you become. The rules from “back home” do NOT apply to you and the local rules are not the same for you and for the locals—but there are rules and you do need to know them. (By rules, I do not mean official laws, which theoretically, apply to everyone equally.)**1\. You will always lose the politeness game (and yes, it's a game).** Chinese are nothing if not polite, and of course you can catch more flies with honey than vinegar. But do not ever feel guilty about “doing your job” because your hosts are so polite to you. Don’t get sucked into letting little things go because you don’t want to offend. Don’t let a ride from the hotel or $5 welcome gift and a $50 dinner keep you from bringing up the hard conversations that have to be had to get things done right. I’ve had more than a few customers tell me that their hosts are so polite and do so much for them on their trip to China that they are almost embarrassed to say anything negative. So they let little things go (and then get back home and regret it as soon as they deal with customer complaints). If you don’t think this overwhelming kindness is done on purpose, you’re just not thinking. If you’re letting the factory pick you up, shuttle you back and forth and plan your time in the factory—you’re not going to be getting a chance to point out problems and have difficult discussions. You need to step up and arrange the agenda yourself, to be more of what you need. Commenting over dinner that you’d like to “see a bit more attention paid to QC” may be a very polite way in the West to get a subtle hint across but in China it’s one of a thousand comments that will be forgotten unless it’s repeated with product in hand while pointing to specific defects in a conversation with the QC people and a manager. And then followed up on later. Use the fact that you just flew half way around the world for this visit to get what you want. Make sure they know that you are frustratingly aware that if there weren’t any problems you wouldn’t have had to pay for an international flight, hotels etc. You’re here because they couldn’t do it on their own—you mention that once and you’ll get embarrassed but knowing smiles. And results. Once everyone is on the same page you can eliminate some of the BS that usually accompanies factory visits. Don’t misunderstand, I’m not advocating being rude or insincere. Quite the opposite. Be overwhelmingly polite to them as you make very pointed comments about quality and ask for specific verifications, signatures, confirmations, contracted conditions to be completed, etc. Do this publicly and follow up your sweet talk with pointed and polite private conversations afterward. Get people on your side and make it just as difficult for them to refuse you as they are (consciously) trying to make it for you. Then follow though with EVERY ONE of the issues that you raise in public—make sure that they know that the consequences for failing will be made as public as the praise for success.2\. **Dinners—pay for them and demand pay back.** If you want to put someone in your pocket, pay for a dinner that they know they should be paying for. And specifically tell them (politely, of course) exactly what you’re doing. This works very well if a boss or higher up is in attendance and may lose a bit of face by the exchange. They will publicly complain and “fight” you for the bill…you know the drill. So after you’ve paid and they are still complaining you hit them with, “Ok, I’ll tell you what. Since I paid for the dinner you can make it up to be by...” And then of course you follow up on this too.(One of the best ways to pay for dinner is to get up and go to the bathroom and pay the bill before it ever gets to the pretend fight over the check stage.)If you don't know already, dinner is just part of the game (and your check is included in the fees suppliers charge you for product). I can’t count the number of times I’ve had factory reps stare at me with their mouths open when I reject product. Time after time they say to me something like this: “But I thought that we had good cooperation on this.” Which really means “Hey, we bought you dinner, gave your rides back and forth to the factory and played bball together. How can you bring up QC issues with us now?! I thought we were friends.”This is a little window into what’s really going on—there is 5000 years of culture going on behind everything that’s said, every dinner that’s hosted, every ride, every cola, every “extra” that you’re given, and you, the foreigner, are usually the only one that doesn’t get it. All those “polite” little things that make China so enjoyable to visit are really hooks into your wallet—each is expected to be paid back at some point in the future. Bottom line, your Chinese supplier either thinks you don’t get the culture and so will use it to their advantage or they don’t know you don’t get it and so can’t figure out why you just don’t seem to get it. (A third almost never seen option would be that they know you don’t get it and they help you out. This despite the obvious disadvantage to them it would be to have you know what’s going. This will only happen if they, like you, have never read The Art of War. Don’t get your hopes up as most suppliers memorized it in school and are living it. Daily.)**3\. Shame is the guilt of the East.** Guilt is a monotheistic concept based on an absolute truth and the concept of a conscious. In the karma based, polytheistic Asia (and especially in the officially atheist and socially unstable China) there is little if any guilt because there are very few things that are absolutely wrong all the time. Everything is relative. Things are not done for our western “right reasons” but rather for convenience, opportunity, necessity, duty, honor, pride, face, etc. (Not a criticism, just an observation.) Most lives in Asia are lived much closer to the scarcity side of the economic equation than the abundance side and so moral dilemmas, in my opinion, are just not dealt with all that often (e.g. who cares about morals if you’re starving/poor/needy/see your self as being historically oppressed by the West/etc.). The point is that you’re not going to get someone to do you a favor if it costs them money just because it’s what “ought” to be done. (And no, I’m not saying the “West” is better, I’m just saying it’s different here. Save your “yea, America sucks too” comments, I won’t post them.)Again, in telling you how you can use these things I’m not advocating humiliating other people. But I am talking about publicly using cultural expectations and the loss of face to coerce people into performing the way you’d like. You have to be very careful in “shaming” people in Asia (or anywhere) into doing things, even what they previously contracted to do. Asians will generally NOT be able to compartmentalize their personal face separate from this one single business transaction either. This is a one and done option. If you are not careful you’ll get worse product, less friends and no options. You’ve been warned. > A group of foreigners get together to play bball every week in Shenzhen. There are often a few Chinese that join in too; usually they get offended and don't come back after a week or two (they probable get hurt too, especially if I'm guarding them). But a few that have either been over-seas or are from HK stick it out. The one local Chinese guy that has been playing for 5 years now has told me a number of times that foreigners (mostly North Americans in our group) play ball very differently than Chinese. Chinese are very polite and much less physical so that there are no fights, he says. A Chinese bball group knows each other from other parts of life and connections made on the court lead to other interactions. Foreigners, he tells me, are very aggressive and fight and curse at each other on the court but then go out and drink and eat together afterward. At first he was totally stunned at how personal the verbal "attacks" were. But after a while he realized that once the game was over the egos were usually over too. He realized that foreigners compartmentalize (sports, business, family, social groups, etc.) but says that Chinese do NOT and so they must be very polite in basketball games so that they don't have lingering problems in business later on. > But you can very effectively put people in uncomfortable social positions that will get you what you want. For example, instead of pushing a solution onto a manager, engage him and get his buy-in, even let him take credit for the solution (even though it may have really originate with you). If his name/rep is on the line with this solution, you can bet that it’s going to work (or at least be completed). Most managers are not willing to lose face if they can get done what they’ve demanded with a bit more of someone else’s overtime and some yelling. Another example. Use names—don’t just name drop to give face, but bring up names of managers in discussions (with the managers there) that forces them to publicly support the position or lose face. Similarly, bring up private conversations and comments with people that force those people to pick sides in public. Sure, it’s not fair and it can get you in trouble. But it can also help if you do it right. Most people would rather, I think, have a bit of ground to stand on, even if it’s not in the best part of town. So be fair, but use what you know to get what you want.**4\. Without real leverage your just being a jerk.** If you can’t back up what you’re saying and all the games you’re playing by withholding some cash or having the ability to make the final decision on product quality then you’re just abusing people. If you have a contract you’d better follow it for many reasons. Just a few would include: One, you signed it--that's your name on the paper. Two it’s the right thing to do. And three, not following your own contract is the surest way to cut your own feet out from under you. But if you’re being lied to and yanked around and you can get product from someone else, I believe that turn around is fair play. String out payments, cancel orders that don’t meet standards, don’t send components to or refuse shipments from the supplier—always keep your word, but keep the very strictest letter of the law. I am not talking about cheating someone that has cheated you just for revenge. I’m saying be painfully, brutally, excruciatingly honest in all minutia. It will soon get to the point when it will become very financially painful for your factory to continue to repair/replace items or hold onto product for you unless you accept the product and pay the balance. When they are physically coming to your office for payment, you know that you have the leverage you want. The only way doing any of this is justifiable is: 1\. If you’ve been wronged by a supplier who is refusing to rectify the problem, 2\. You’re just trying to get what you originally contracted for, 3\. You have the authority to make the decisions that your forcing on others, 4\. You don’t have court as an option, and 5\. You’ve been honest and upright in all your doings with the supplier up to this point. Do NOT do this just to get upgrades/changes or revenge or free meals. Don’t be fooled, though. There is no guilt on the other side. Your factory will use their leverage to get early/extra payment even if there are no previous problems or reasons to doubt that you’ll pay. I’ve seen factories withhold perfectly good product for full payment even if there are clearly contracted terms. And if they have financial problems (Chinese New Year, bad economy, other defaulting foreign buyers) not related to your project you may still get blindsided through absolutely no fault of your own. Which brings us to #5.**5\. The rules in China work for only one party, and that party ain't you.**First, it is not unique to China that laws favor the locals. Don’t complain about the fact that the field is tilted against you—it is. Deal with it. Second, unless you’re a big deal (e.g. you are spending 6 figures per order) you’re not going to get any special attention, so take your ego down a couple notches before you start working here—you, the Westerner, are not that cool any more (Dollar and Euro are not worth that much, your market isn’t that big any more, and you’re not a “secure” payment source anymore either). Now, you may have connections and you may done everything the right way but if push comes to shove you’re the outsider and you’ll lose. Sure the legal system is getting better and you can certainly win court cases. But who wants to go to court over a $10,000 or $20,000 order?! No one. It’s just not worth it. And, don’t forget, China has regular bouts of “we hate everything foreign” where embassies get stoned and foreigners get intimidated (anti American and anti Japanese as recently as 2007). Know that all your hard work could, one random morning, turn out to be for not. Third, the culture favors those who know what they are doing in it and you, being foreign, most likely don’t have a clue. Don’t take that personally. It’s not just you. The longer I’m here the more I realize there is so much more going on than I ever knew. The adage is still true—you don’t know how much you don’t know. The answer to this? Ironically, play up your roll as the stupid foreigner. Force them to spell everything out in simple terms (e.g. get everything in writing). Compel them to include you in every discussion because it’s just too much of a pain to have every discussion twice or to do everything over again because you didn’t see it/approve it the first time. Play up every misunderstanding, ignore every Chinglish sentence and make them show you every process, every step, every carton of product. Be exacting, condescendingly simple, and don’t accept anything until you have it both in writing and a perfect sample in hand. If you think that you’re not getting exactly what you’re asking for, maximize your advantages. The quickest way to shut down an interfering sales person is shame; either correct their English translations (if you can speak Chinese) or speak more quickly and in more complicated English than normal and then have them explain back to you what they translated to the engineers or what they are going to do. This is, of course, very rude. But so is pretending that they understand what you want when samples show that they obviously do not. This forces them to show you, rather than just nod their heads, that they know what you are taking about and forces them to listen to what you really want. None of this is new. I know all of this has been done to me (and millions of other foreigners) at one time or another in the past 8 years of negotiating deals and solving problems in China. Part two in a couple of days. Part II is [here](https://www.silkroadintl.net/chinese-culture-for-the-frustrated-foreign-buyer-part-ii/). ### Chinese "education" URL: https://www.silkroadintl.net/chinese-education/ Last updated: 2026-07-18T14:48:27.000Z If you've got kids at home, you're probably worried about, or at least interested in the decisions made by your local school board, PTA and teacher's unions. You may even be involved to some extent in the process (kudo's to you if you are). At the very least you're paying taxes and helping you child with homework. But if you're doing business in China, there is another school system that you should be at least as worried about: The Chinese System. In case you had any delusions where this was heading, let me quote from one of the best new blogs on China that I've come across, The Diplomat's [China Power Blog](http://the-diplomat.com/china-power/?ref=silkroadintl.net) and their recent series on Chinese Education: > This system has made Chinese students literate and knowledgeable, but it also has also too many times made them incompetent and stupid. Let me emphasize this: the people best known for their respect for education and love of knowledge have constructed an education system that makes Chinese students, the very same hardworking and brilliant students who dominate international mathematics competitions and science laboratories, incompetent and stupid. > I've been making the same points ever since I taught English at university in Chongqing 15 years ago. Aside from the fact that you should question the quality of any school that gave me an English teaching position, the system in general is not helping China's future in any way, shape or form. The best and the brightest (or at least those with the richest parents) are fleeing the country for better schools and "real" education elsewhere--at least they're getting a lesson in capitalism, eh?!A couple of personal examples.1\. MA student in English can't speak to random foreigner on the street. Has a grammatically perfect 150 page thesis about a book (he later admits) he never read.2\. Parents of 10 year-old student hire professional business translator to write "student's own" essay for school competition. They spent a few hundred US dollars on 2 pages of Phd level grammar/vocab that the student couldn't pronounce and didn't understand. They then tried to hire me to "coach" him through it.3\. English teacher starts talking to me on the street, she can't understand a word I say. Asks me the same question ("how are you today? ") over and over again but each time translating a different Q&A back to all the people behind her who are asking questions about the foreigner (not knowing that I understood everything they all said).4\. My wife needs to write a thesis to graduate from University in Shenzhen. She is told to "copy it off line" so that the prof doesn't "need to spend much time reading it. " She was told that since her husband was a foreigner, her "English should be good enough. "5\. We have neighbors and employees that have told us that if their kids do not finish their homework, often falling asleep while doing it, the parents will do it for them so they don't lose points in class!!There are many books and blogs that have nothing directly to do with foreigners doing business in China. But many of these other source materials provide significant insight into the mindset of Chinese in general and, in this case, the educated your urbanites that you’ll most likely be working with. I highly suggest that you read this, if for no other reason than to understand the back ground of those whom your working with. I've detailed the background of [bosses:](https://www.silkroadintl.net/random-thoughts-from-5-non-stop-days-in-7-factories-in-three-provinces-in-china/) > Factory owner and millionaire, 35 years old, tells me that the road out in front of his factory he built with his own hands when he was in high-school. The local govt required all households to provide unpaid labor for specific lengths of the new road. His father was a teacher and away at school and his mother was over 40 and the only one home. So he had to miss much of one year of high school to fill the State-mandated labor quota. These are the type of people that you’re dealing with in China—you need to know that they can wait you out. They are not intimidated by your pressure. They know they can dump your product in the local markets if you back out. You need to understand that you’re probably not nearly as important to these many factories as you think you are. > and [employees](https://www.silkroadintl.net/over-promise-under-deliver-and-the-realities-of-the-chinese-market/): > Nobody in any office under the age of 25 has ever had a job before the job they’ve got now. Chances are, Chinese people under 35 have only ever worked in one industry in one city since college. They have never had part time or after school jobs or had to put themselves through college. They never rebuilt their first car (or any car) when they were 15\. The can't change a tire, the oil, wiper blades or a taillight. At home, they don’t know how to change the lights, build Ikea-type furniture or wire a stereo/TV or fix anything when it breaks. Why?The One Child Policy and Low Cost Labor. > and even commented on [students](https://www.silkroadintl.net/quarantined-aka-never-tell-the-truth-to-anyone-but-your-parents/) a few times too. > When I was teaching at a university in Chongqing in '95 I had a student say something to me that I will never forget, ["at least, well, I haven't forgotten it yet."](http://www.amazon.com/Ever-Tell-Lucky-Classic-Seuss/dp/0394827198/ref=sr%5F1%5F17?ie=UTF8&s=books&qid=1245390479&sr=1-17&ref=silkroadintl.net) She told me that when she was young she had the bad habit of telling the truth. After getting both herself and her family in trouble a number of times her father sternly taught her this lesson, "Never tell the truth to anyone but your parents."This was one of my first major lessons about how different China really is. There is no "moral code" no "generally accepted morality." Not even an overly trite "Confucian values" system in place here, really. I believe that one of the lasting legacies of the current government will be that they amoralized an entire country. I'm not talking about the vilification of organized religion I'm talking about the creation of a system that punishes honesty. > But this review of the education system (and indirectly, the students themselves) tells you what's coming next, what you're new hires are thinking (or not thinking, as the case my be). Basically:1\. Students are not taught to think. [In fact they are taught not to](http://the-diplomat.com/china-power/2010/05/14/education-thinking-process/?ref=silkroadintl.net). > Western observers say that Chinese lack ‘independence and initiative’ and ‘critical thinking skills.’ Both are true, but another explanation is that Chinese don’t understand ‘process.’ In a society where students’ futures are determined by their ability to get the right answers quickly in three days of multiple-choice examinations, ‘process’ is in fact an alien concept. > 2\. Students are taught to memorize, finish assignments and obey.3\. From Kindergarten to College, there is very little time to play, date, think, develop personality, etc. While many students are in involved in extracurricular activities after school these activities are classes, not (sporting) events. I hate all the homework my 5 year-old already has each day IN PRESCHOOL!4\. Why do 20 something Chinese girls like the same things that 12 year-olds in the West like (Hello Kitty back packs in the US, [Hello Kitty cars](http://www.kittyhell.com/2007/03/15/hello-kitty-car/?ref=silkroadintl.net) in Asia)? Because, for the first time in their lives they can choose for themselves. Do NOT misunderstand me. I’m not saying that Chinese are dumb. Quite the opposite. They are VERY smart and they will out-test anyone else on the planet. But they typically don’t out-perform others in random applications of applied knowledge. Well, [sometimes they do](http://www.networkworld.com/community/blog/black-duck-eggs-and-other-secrets-chinese-hac?ref=silkroadintl.net).Westerners typically are (or at least used to be) taught to be independent individuals. Chinese are taught to be cooperative members of a society. The differences for how work in an MNC is done, how instructions are understood, how leadership is perceived and how following is affected couldn’t be more disparate either. I’ve mentioned before the record setting 13-minute silence that my friend once sat through in a meeting with the “best and the brightest from China’s universities” in the boardroom of a VERY large MNC here in China. He had asked for the 10+ MBA graduates to “brainstorm ideas” for a new program to improve their logistics in southern China. He asked the question knowing that it would be hard to get them to make suggestions and open up, but then he timed the pause and waited… and waited. Have you ever been anywhere were 13 MBA’s didn’t talk for 13 minutes?!In my own company there are two important points in relationships that we recognize and sigh in relief when we pass. The first is with employees and usually takes about 6-8 months to achieve. This point is the: I’m going to make a suggestion, contradict my boss, or make a comment that obviously and openly shows I disagree. I always smile and point it out “Hey, Vicky is finally comfortable enough to disagree with me,” and she’ll turn away, blush and giggle uncomfortably (just like I expect a 12-14 year old back home to do). But the point is made—she knows that it’s both ok and expected for her to disagree. It doesn’t change who makes the decisions, but it’s an important point in their employment with us—they are now really valuable to me: I know they will question me if I do something they don’t think is the best option—and I need that back up to confirm where were going in the often confusing for westerners Chinese environment. Relationship point number 2, with factories. It usually takes about 3 orders for factories to come to us and admit: “We didn’t think that you were serious when you told us that you wanted us to call you when there were problems so you could help out. But now we see that you really do want to help us get it done right.” At this point I can expect that they’ll call me or a project manager at all hours of the day or night (and they usually do it a couple of times at like 4AM just to see if we’re really serious). This is a great place to be—trusted. In both situations there is a process of overcoming cultural misunderstandings that were taught for decades—one, the respect for title over correcting mistakes in public, and in the other, admitting to mistakes early on to achieve better results later. Neither these two new skills nor the ability to adapt to a fluid situation is natural to Chinese employees but both can be learned (or the inabilities can be UNlearned). We’ve had employees and factories both tell us that they are uncomfortable with these things, but they understand that that’s how it’s done and they make adjustments (amazing what people will do when there is incentive, aka money, on the line). Here are the latest posts on education from [China Power Blog](http://the-diplomat.com/china-power/?ref=silkroadintl.net):[Education in China](http://the-diplomat.com/china-power/2010/05/12/education-in-china/?ref=silkroadintl.net)[The thinking Process](http://the-diplomat.com/china-power/2010/05/14/education-thinking-process/?ref=silkroadintl.net)[Head Teachers](http://the-diplomat.com/china-power/2010/05/17/head-teachers-as-commissars/?ref=silkroadintl.net)[Education Games](http://the-diplomat.com/china-power/2010/05/18/education-games/?ref=silkroadintl.net) ### Sometimes there just isn’t a second chance. URL: https://www.silkroadintl.net/sometimes-there-just-isnt-a-second-chance/ Last updated: 2026-07-18T14:48:27.000Z It seems to me that one of the hardest lessons that we are constantly teaching factories in China is the sometimes there just isn’t another chance. Chinese factories certainly know that they usually only have once chance to get a client with a bid or a sample (hence underbidding and Golden Samples). And factories know that if there’s bad quality product they won’t get any reorders. They know all this. But I’m talking about something a bit different. Once production has started and mistakes are found, it’s usually the position of the factory, after much negotiations, to offer to redo, fix, replace or repair the product. Of course who pays for this and how long it takes (and who pays for the resulting airfreight costs) are also always up for negotiations. And here’s where the lesson comes in. Sometimes a redo, a fix, a replacement or a repair just doesn’t cut it. Sometimes it’s just too late. Sometimes the window of opportunity has passed. Sometimes a missed date is the death of the project. I’ve seen this happen a number of times, and it’s not all the factory’s fault. Usually (most of the time) it’s initially the fault of the buyer. They are on a very strict time line. They miss a couple of small design/art dates in the beginning but continue to push the supplier to meet the delivery dates originally agreed too. The supplier agrees, of course, as they want to cooperate and hope to build some type of relationship that will turn into future orders. They also assume that since they accommodated the client, the client will do the same later. Now factories always have issues. Some are small and can be fix with little or no impact on the delivery date. But some are much larger and change dates dramatically. But when push comes to shove, the factory thinks that it can bank on the store of good will they have built up with the client. Only they can’t. What factories don't understand is the West’s infatuation with contractual dates. You know that if you’re planning on getting your product into a any of the box stores you’ve probably got a 72 hour delivery window that if you miss you’re completely out of luck. Your factory doesn't know this. And the factory’s rework is almost never that fast. Further, if you’re shipping by sea you may have already scheduled your goods to go to port on the closing date—meaning if you miss that date you’ve got to wait at least a week to get on another ship. Because EVERYTHING is negotiable in China, this almost never happens. Dates are missed and everyone understands, or at least compensates for the change/delay. I believe that factories honestly don't get how important (devastating) a missed date can be. Because it’s such a huge deal to get a factory to take responsibility for problems (just like it’s so tough to get individuals to loose face and admit mistakes) it’s like they assume that just the fact that they’ve admitted to it and will fix it should be the end all of all negotiations. But sometime sorry isn’t good enough. What the buyer doesn’t understand is the quid pro quo that is part of the Chinese business culture. All those little favors are counted and recorded. There is a very tacit expectation that each one will be paid back. The supplier knows that they’ll have issues in the future and while no one likes delays, I know that factories love to have a client in their social debt—it makes the inevitable problems so much easier to work through. This is, of course, if the client understands the implicit cultural expectations. Often the buyer gets bugged, rails on the factory for agreeing to dates (repeatedly and even after delays) and then falling through. The factory feels like they’ve been hit upside the head with a frying pan. They went out of their way to help and this is how they are repaid!? Now the project is late, the relationship is flushed down the toilet and it’s a fight just to wind things up. Once it gets to this point the factory has no incentive to help the buyer. There is no trust at all that the buyer will keep their word. The buyer just wants to get their money back, which is not only unrealistic but probably impossible. The opportunity has passed and late product does no one any good. Bottom line? If you expect your factory to go out of their way to cover for your "little mistakes" then you'd better be willing to do the same thing for them later. And later is ALWAYS more expensive. Plan you time, your negotiations, your requests and your projects very carefully and with as much knowledge/foresight into future costs and delays as you possibly can. Do NOT take anything for granted and never ask for favors, even small ones, that you're not willing to return. ### Working in China: Where to go, what to expect, and how to do it. URL: https://www.silkroadintl.net/working-in-china-where-to-go-what-to-expect-and-how-to-do-it/ Last updated: 2026-07-18T14:48:27.000Z **First, Whither Shanghai?** As I've been saying for years now--Shanghai, smanghai. Who really needs 18 million people all in one place and all those overpriced-buildings and traffic jams?! It's not like the mag-lev is really helping out your daily commute, is it? Now, I'm sure Shanghai is great for some, but it's not for everyone--just like China is not for everyone. Just like with each of your suppliers, you need to pick your city to base your operations and even the country that you're going to be based in very very carefully. Research, not hearsay should be the rule of thumb. Here's an interesting take on [what's "really" going on](http://www.foreignpolicy.com/articles/2010/05/03/dont%5Fbelieve%5Fthe%5Fshanghype?ref=silkroadintl.net) in Shanghai. By the way, the book that they review, I [reviewed last year](https://www.silkroadintl.net/three-book-recommendations/). And it was already [not "new" then](http://www.amazon.com/Capitalism-Chinese-Characteristics-Entrepreneurship-State/dp/0521898102/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1252371196&sr=8-1&ref=silkroadintl.net). But at least they got around to it. The point though, is really this: just because Shanghai has got the expo doesn't make it the best option for everyone. And if you've not read "[Capitalism with Chinese Characteristics](https://www.silkroadintl.net/three-book-recommendations/)" you need too. I now think that it's the BEST BOOK I'VE READ ON CHINA. PERIOD.**Second, General State of Chinese Manufacturing.** The demographics of manufacturing in China and East Asia are changing. And not just changing in slow, cyclical patterns, but rather in large lurching jolts (that most recently coordinated with Chinese New Year). Here is a copy of an exchange that I had with a colleague from Singapore last month. His question: > I am trying to get my facts straight about the current state of China's manufacturing sector. What are the implications of minimum wage increases? Are companies going to start looking to build manufacturing facilities outside of China where there may be lower labor costs? Are there any general trends to be looking at?I was wondering if you could write back with your understanding of what is happening in China's manufacturing space, and where you see things headed. > My Response: Wow, that’s a big question. Let me see what I can do for you. I don’t have any actual stats. But I can give you some anecdotal evidence and personal experiences that points to some shifts in Chinese manufacturing.**1\. VN and other cheap labor countries are definitely having some effect.** Some, not a lot across all industries, but definitely some effect in some specific industries. The interesting thing is that a lot of the factories in VN that we use are Chinese owned (Taiwan and HK) mostly that have moved from China specifically to VN for the cheaper labor rates. This will certainly continue in SEA as the govt’s there invest more in infrastructure. China’s logistics (infrastructure and supplier density) are still so much better than anywhere (but Singapore and BKK) that even with higher labor rates most people can still get what they want here.**2\. Tariffs.** We’ve worked on 5 projects (2 in VN, 1 in BKK, 1 in India, 1 in Malaysia) where we were there specifically because of the US tariff and duty laws (rather than anything that had been done by China or other specific countries. I don’t know how exactly this type of thing will continue but it will continue and I know that it has affected a number of industries in China (furniture, plastics, clothing) already.**3\. Domestic stimulus and other In-land projects (5-year plans).** One of the surprising things that we’re seeing right now (as opposed to before CNY) is that labor is NOT coming back to Southern China and inland factories and cities within China are starting to show up in our sourcing results. We have had 5 projects in last 3 months that have been delayed specifically because hundreds of people didn’t come back to work in various factories (wood, plastics, clothing, metal—across all industries). I see two things here. One is that govt jobs (construction, mostly) is taking up much of the migratory labor. And with better infrastructure inland factories are moving to take advantage of the cheaper land and (now larger) available labor pool. This means that costs will rise in Guangdong and all along the East Coast; this trend will most likely continue.**4\. Internal competition in general is changing.** We’re seeing much more development of markets, infrastructure and general standard of living inland than what we saw even 5 years ago. The recent growth (off of the East Coast) has been noticeable. This will, I think, make manufacturing in general in China more like Zhejiang (lots of smaller, family owned, limited int’l experience factories) than Guangdong for the next decade. It will increase cultural differences/conflicts with foreign buyers, increase secondary costs of doing business in China even though primary COG may go down, and will increase total production times and extend supply chains into new locations.**5\. Specific industries.** As I mentioned before, it’s hard to generalize to such a big questions. So, in a bit more detail (without having much more detail!!) there are specific industries that are big in certain locations specifically because of either foreign tariffs or govt incentives. Much of the furniture industry has all but moved out of China in the last 5 years. Plastics and clothing are in the same boat. Tech is located in SZ with pockets in Sichuan, Xi’an and Beijing. Factories that rely on large (cheap) labor forces and are not demanding for quality or tech (bags, mold injecting) will be leaving GD if they haven’t already.**Finally, the unwritten rules for working in China** (yes, and other developing countries too; China-apologists can just keep their knickers on.)**My List of Rules for Working in China.** 1. The number of factory visits you make before and during production directly equals the quality of the product you’ll actually export. 2. No one cares about your product as much as you do—don’t expect them to. 3. You will never guilt a Chinese factory into “doing the right thing” if it costs them money. 4. If you don’t do QC you might as well take your money to Macao (or Vegas or Monaco). You’ll get about the same odds and have a much better time losing your money. 5. Never pay any money without doing some (a lot) due diligence first. 6. Always pull your own samples for QC and testing. 7. Technology is great, but fax, phone and email are not enough to manage production from overseas. You can’t do QC via video conference either. 8. If you (personally) didn’t record it and can’t reproduce it then it never happened. 9. What you see online and what really exists can be two completely different things. 10. Quality issues are really money issues. Every time. Without exception. 11. You can have any two, but not three, of the following: high quality product, low prices, quick production turnaround times. 12. K.I.S.S. your communications over and over again.. Keep It Simple, Stupid. Remember while English may be your second or third language, it’s definitely your supplier’s second or third language too. So be VERY clear in everything you say. 13. Register your product/brand, Research your potential suppliers, Visit production sites, contract-out all specs and details, QC every order multiple times, and Confirm everything over and over again. Do these things for every supplier, every product, every time. 14. The more customization your product requires the more problems you’ll have and time you’ll need to get it done right. 15. Sometimes paying more to get only what you originally contracted for is the best option. 16. The more time you have to ship your product the lower the cost will be. 17. Payment terms (Net 30, for example) and INCO terms (FOB, DDP) are not the same thing. Learn the terms before you buy. 18. Unless you’re using prison labor, you should always be able to go into the factory and do your own QC. And even if you are using prison labor, you can still hire local Chinese QC to go in and represent you. 19. Factory MNC or ISO certification means nothing. At best, it’s a double-edged sword. Yes, it can give you an idea of the capabilities of the factory. But do not assume though, that because they’ve met this standard once for an audit that they meet these standards every time. Yes, certification means that they’ve been, to some degree, tutored and managed (at least once) by an international team. But each MNC’s standards are very different. And an “audit” my have been a 30 minute visit designed specifically to check off a box on a corporate checklist rather than to actually critique a supplier’s capabilities. 20. Under-promise and over-deliver has not made it to China yet. So the samples you get are always going to be better than production—expect this or learn to live with disappointment. 21. Much of what you cut out when you go direct has value—you must make up that value on your own. QC is the most obvious piece, but there are others too—auditing, social compliance, printing, packaging, licensing, exporting, international shipping, customs clearance, product warranties/guarantees, return policies, etc. These things will cost you time and money. 22. Suppliers will NEVER offer to pay for the cost of missed delivery dates. And they’ll only pay for anything “extra” if they are either contractually forced to or if you have the cash leverage that allows you to withhold payment. 23. Bad product will NEVER be returned to China for repair/replacement. ### What you don't know you don't know can be dangerous URL: https://www.silkroadintl.net/what-you-dont-know-you-dont-know-can-be-dangerous/ Last updated: 2026-07-18T14:48:28.000Z It goes without saying that there is more than one version of China. The view of the English teacher, the foreign expat working for a large MNC, the foreign entrepreneur. There's rural China, East Coast China, rich and poor China, white collar vs blue collar, etc. I’m adding two more to the list—English speaking expat China vs Chinese speaking expat China. (For a great recent discussion on value of speaking Chinese go to the China Law Blog Linked In discussion group on this very topic.)I recently had the opportunity to talk with about 20 business people from around the Western world about doing business in China. They ranged from having 2 years to decades of experience in China. All were successful (professionally as well as financially) and well educated. About half spoke Chinese. Despite the similarities, there was a HUGE (ginormous, I tell you) difference in the understanding of Chinese business culture between those that were fluent in and those that could not speak Mandarin Chinese. Most of these people are associates of mine, so I mean no disrespect to any of them. Like I’ve said, they are all in successful positions and respected at what they do. But to say that those who do not speak Chinese live in a VERY sanitized parallel Chinese universe would be not be doing the extreme differences in perception and understanding of Chinese business practices/culture justice. For example, one guy who’d been here for a couple years already was shocked (completely shocked) to recently find out that his factory was offering nights out, complete with “full service” hostesses to foreign and domestic clients that came to the plant for businesses meetings. Another guy confidently said in response,“I’ve been here for 3 years and working with China for 10 and I can promise you that because of how we do business never once have I or any of my staff ever even been offered these types of services. Not once.” I’m impressed with his conviction and I hope that he’s right, but I’ll bet you any amount of money you want that he’s dead wrong. Myself and at least three other people in the group (including two ethnic Chinese) looked at each other when he spoke and just shrugged. What can you say to someone that is so convinced that his version of China is the only and correct version? In my opinion, to have worked here for more than 24 hours and not know that “evenings” are part of the business culture here is to admit that you’re not seeing/hearing/understanding (by ignorance or by choice) what is going on. **I’m not saying you have to participate—you absolutely do not!** But to not even know about it or have the only company in China where it’s never come up? I find it very hard to believe that that’s even possible. Now I know the people involved in this discussion are basically honest and strive to be fair and consistent, but to make claims about what happens in a language and within a culture they know little or nothing about is not just ignorant it’s arrogant. Basically, they are saying, “If you’ll just run your business like I run mine, you’ll never have any corruption/moral problems.”Not understanding what’s going on amongst your staff and not having corruption issues are NOT the same thing. If you don’t speak Chinese, there is a huge amount of information that you don’t know you don’t know. And that can be dangerous. A couple of years back, a Chinese-speaking foreign-born Head Security Officer in China shared with me two things that I will never forget. First, he said that almost EVERY level of their business in China was corrupt in more ways than most foreigners can ever even imagine. Second, he said that it would blow your mind the people that are involved in this corruption. It’s not the swarthy-looking, shady types hanging out in darkened stoops that are the problem. It’s not the random companies acting as middlemen that are the real issue. He said that even the accountants don’t catch most of the problems. It’s only the language-speaking investigators that are identifying the problems. His conclusions have been confirmed to me by other security officers and investigative professionals across Asia over and over in years of personal research (for grad school, a book and in personal conversations and business dealings). Divorce stats for expat postings and just about every book on business culture in Asia would also back this up. Another example. One businessman in this conversation mentioned that his company was completely open about their moral standards from the beginning of all negotiations and in every conversation with all suppliers—exactly what should be done. But they still have a large department dedicated to investigation of corruption. Having standards, talking about standards and enforcing standards still is not a free pass to projects-without-problems/corruption. It’s the right direction, but it’s only the start. The point is this—you’ve got to understand more than just your business and your particular industry. You need some Chinese language and Chinese cultural understanding to really make money the “right” way in China. Doing business in China is just as safe and moral or just as risky and amoral as YOU personally make it. You can do everything possible to keep things above the table or you can take advantage of every back door offer and under the table offered to you. Most people, I think, try to avoid the obviously illegal but may not have as many issues with the not-sure-if-it’s-legal-or-not type of issues. Even if you do speak Chinese, there are things that you’ll miss, just because you don’t know what you should be looking for. I was finishing up at a factory last week in Guangzhou and was about to leave with one of my QC guys. He asked me if we should wait for a ride from the factory or call a taxi (would have taken about 40 minutes to arrive). I just shrugged and said, “No, I always just walk out to the main road.” My QC was shocked. He told me that he’d never walk though a neighborhood like that (he’s a Guangzhou native). I just laughed him off, but he later told me that I really need to know that I shouldn’t be walking alone, at night, through that area. I had no idea. He was quite adamant that I didn’t know how dangerous it really was. Because I hadn’t had any problems and I’d never seen any and I’d never been told of any issues I assumed that there weren’t any. I’ll bet that I have this same conclusion pointed out to me at least once a month in various topics/situations—I don’t know that I didn’t know. And if I can speak Chinese and am at least aware of the idea and consciously trying to read up/study the issue how much more difficult would it be for those who are “just off the boat” or a bit sheltered in their own expat experience? On a related note, more than one person every season at trade shows asks us some version of this very question: “I didn’t know that it was illegal in China to do X, now that I’m involved in the deal already, what should I do?”First, if you’ve not yet paid any money, get out now. There is no reason to be involved in this kind of deal. This is not me being on a moral high horse, this is just basic gambler’s logic—if you get caught the cost of the deal will be much higher (time in jail, kicked out of China, fines, legal issues in your home country, etc.) than anything you’ve saved by taking shortcuts. Second, if you’ve already paid money and are involved in something that you are now questioning the legality of, you need to pay for competent legal advice—that means talking with someone that is both impartial and fluent in Chinese law particulars. (Here are a couple of trusted options, [Harris and Moure](http://www.harrismoure.com/?ref=silkroadintl.net) and [Southern Perspective](http://www.southernperspectivesz.com/?ref=silkroadintl.net).Third, if you’ve already sold your soul, so to speak (and this may be a deal with someone that misrepresented themselves to you and is not your fault), you may not be in a position to completely extricate yourself. At that point you may have to find the least expensive (not just in monetary terms) way to either wind down the project or complete the deal ASAP.I know that many people that come to China are in the same boat as a lot of these successful business people that I was talking with, myself included. We’re doing the best we can, we are aware of issues and do all that we can to limit our own personal liability and the shenanigans in our own specific spheres of influence. Often times it’s a question of “we’re making enough” and so we fine with not knowing what we don’t know—we’re just too busy to try to find problems. And really, why open a can of worms by looking for corruptions (which you will certainly find)?! Unfortunately, the laws for US citizens abroad does NOT consider ignorance of the laws of the US or the country that one is doing business in, a lack of ability to understand the language culture or ignorance of the actions of subordinates adequate defense for illegal activity. Part of the price of doing business in China is learning about, or at least admitting that what you don’t know you don’t know is probably a larger percentage of the information than what you know you know and even what you know you don’t know combined. ### Story Time URL: https://www.silkroadintl.net/story-time/ Last updated: 2026-07-18T14:48:28.000Z Once upon a time in a magical land of history, culture, riches, eunuchs, opportunity, etc., etc.**Story #1.** As I was returning from a factory for a US client on Saturday I met another foreign guy that was also returning from a factory visit in Guangzhou. We started talking on the train back to Shenzhen and he told me that he’d been ripped off by some suppliers last year and so decided to take my advice (he attended the Global Sources China Sourcing presentation last year) and visit the factories himself this time. While he was here on the ground and in a few factories he learned a number of important things. First, he found out that his “factory” was really a guy in HK that was charging him about twice as much as he could get it from a real factory source. Second, he found out that another one of his “exclusive” component manufactures was not only not “exclusive, but not a manufacturer either. Third, he was able to test and reject an order that otherwise would have cost him tens of thousands of dollars in bad product and shipping (and return) fees.**Moral of the Story?** You can pay for QC and information now or you can pay for bad product later—your choice.**Story #2.** We have a product that was originally supposed to ship the UK on March 15\. The lack of returning workers from CNY holiday has extended that date to the 10th of April. When that date was missed but other product was shipped from the factory for other clients we realized that we were not getting the service that we’d been repeated told we could expect. We had, in the spirit of cooperation and understanding, given them more time to finish our order since they honestly didn’t have workers to do the job on time. After the new delivery agreement, like always, we checked up, QC’d, called about worries they would not make the new date and finally when it was clear that they would not finish on time had an argument in the office as to why other product was getting shipped out but ours was not. After about 5 hours of hemming and hawing, the factory finally told us that they didn’t finish our product because the penalties in the other contracts forced them to ship on time or pay for air-freight. We pulled out our contract and pointed to the same line in our agreement and they said: “Yes, but you agreed that we could miss that date so we didn’t think this was urgent.”We hammered out a new agreement, signed it, chopped it and left with a new date and clearer understanding of both “urgent” and “contracts.” As we left my manager said to me: “You were too nice to them. They did that on purpose.”**Moral of the Story?** Don’t ever break any contracted details yourself or your factory will be more than happy to do it too.**Story #3.** I enforced some QC standards and helped teach some QC processes to a factory on Monday for an Australian client. The factory is very responsive, had decent product and is more than friendly. But they don’t have great QC and so have a high percentage of rejects on almost every order. They are always willing to re-do product, but the extra time to do this and the additional days of QC gets expensive for them, is time consuming for us and delays delivery for the client. The factory’s solution to this problem was to have us come out earlier in the production cycle to inspect. A great idea if they hadn’t assumed that one visit at 25% was going to be the only visit. How surprised were they when we showed up again at 85% to do QC again! As usual, we rejected a large percentage on both of the first two visits and had to come back the third time--the factory paying for visits 2 and 3\. While the product was our first priority, helping the factory improve their processes is an added bonus that helps everyone.**Moral of the Story?** If one QC visit is good for identifying problems and giving you a heads up before it’s too late, then multiple visits are that much better. QC at 25% is a great idea and I suggest that it’s of much more value that a single day at 100% completion. But IP (In Process) QC is not a replacement for final QC. Ideally you’d have an almost constant presence in the factory. If you can’t do that the next best thing is to be scheduling QC visits at regular intervals—25%, 60%, 90%, for example.**Bonus, Moral #2:** Work with your factories. Take the time not to just fix the problems with your product but lay out the processes that you've used that they're not getting correct. Take time teach them, not in a condescending way, but with real detail and honest intent to make them better. You'll get better service, better product and better relationships. The factory will get better/more clients and be in business to service your needs longer (and with less worries). ### Questions, Comments and Stories from a Week of China Tradeshows URL: https://www.silkroadintl.net/questions-comments-and-stories-from-a-week-of-china-tradeshows/ Last updated: 2026-07-18T14:48:28.000Z Here is the best quote from the shows so far. In talking with a Chinese industry consultant about the status of sourcing electronics in China, he told us: “I think that many foreigners have some serious problems here.” This is from a guy whose job it is to promote the electronics industry, not look out for the foreign buyers. The conversation we were in was about some of the people that are attending “New to China buyers: buying from China” seminars and why buyer’s with experience are attending these presentations as well. He shared with me the story of a large utility in Eastern Europe buying hundreds of thousands of dollars worth of components from a number of factories in Zhejiang province and ending up getting product that was either useless from the beginning or was broken within just a few months of installation. This consultant was hired to help them both get some money back and finding better suppliers for future orders. The results of his research were that the suppliers were actually not factories but had represented themselves as such. The buyers had not visited the factory sites but only met the suppliers at a tradeshow. The clients had also not done any QC either. This guy, who, again was representing the industry suppliers not the buyers, told me that he advised the clients to hire someone locally to both run factory audits before buying and do on-site QC once orders have been placed and before final payments were made.**Word to the wise:** if large industries are getting ripped off when buying from China, small buyers that don’t have the ability to enforce contracts or have any physical presence in China are likely going to be taken advantage of as well.**Question.** “All the suggestions you’ve made (QC, background checks, testing, etc.) take all the possibility for profit out of the orders from China.” (I know, it’s not a question. Work with me.)**Answer:First**, if you’re ordering $10,000 or more and you can’t afford to spend $600-$900 on QC and some background checks then you’re in the wrong industry. This is less money than the cost of the ticket that you bought to fly to the tradeshow (which, if you asked me is not where you should be spending your money anyway). $1000 could be lost in a customs delay, a very small percentage of crappy product, penalties from a DC for missing a shipping date, small changes in prices of goods, etc.**Second**, if your margins are too tight to be able to pay for testing (to meet legal requirements in your home country) then you’re asking to be put out of business (and maybe in prison too). This isn’t my “suggestion” these are legal requirements!!**Finally**, after almost 20 years in Asia, I believe that you’ll have better odds at Macao than you do of getting $10,000+ dollars worth of product without having defects or rejects that are worth less than the costs of QC. Why take the risk? China is as risky as you make it. You can eliminate MOST of your risk for a relatively little amount of money. Buying from China is much more like buying from ebay than it is buying from Amazon.**Question.** What are the very minimum standards that you’d suggest people do to safely buy from China?**Answer:1.** Spend $200-$300 for background research on your suppliers before you send any money. Confirm who they really are and what they really own/do.**2.** Coordinate all your documentation--Contracts, PO’s and QC reports. Don’t pay for anything without physical 3rd party verification. This will save you money!**3.** Hire 3PQC to check at least twice during the production cycle. One check at about 25-30% and another check at 85-90% completed. Man-day fees are about $250 plus expenses per day. $600.**4.** Hire a 3PL from the very beginning to coordinate logistics for you. Remember, just because China is cheap, if you don’t know what the importing duties/restrictions are it may not save you any money in the end. This will save you money! That’s less than $1000 to confirm that you’ll be delivered exactly what you’ve ordered and paid for.**Question.** One more non-question: Met a guy that was exporting from China and importing to South America knock-off (illegal) products—and he was complaining about all the troubles he had getting through customs in South America. He even went so far to say as to complain that it’s costing him more (in bribes) to get the goods through customs. Not sure why he was telling me this. Was I supposed to be impressed?**Answer.** Just don’t do it. Don’t go there. Don’t even be tempted by it. The fastest way to lose money is to bank on either some under the table deals or some special personal connections. Maybe you’ll make a bunch of money. Maybe you’ll get away with it. But if you don’t you will lose all your money and maybe even go to jail. China isn't nearly as risky as stupid deals are. ### Red Shirts and Business as Usual URL: https://www.silkroadintl.net/red-shirts-and-business-as-usual/ Last updated: 2026-07-12T07:59:07.000Z The protests in BKK have put the Thai government and the Thai people in an awkward position. The protests are no longer about if the government will change. Rather they are about when will the govt step down, how will it come about, and what will Thailand do afterward. The reality is that the Red Shirts have won. Like it or not, they have been in the streets too long and have too many people shutting down too much of the city to be physically moved or cajoled out. The government has ordered them out, has issued summons for arrest of the leaders and still they fill the streets and shut down multiple shopping malls, hotels and intersections. The govt looks both weak and indecisive even though they have the law on their side. They probably have about ½ of the populace on their side and business leaders are putting pressure on them to do something too. But they have done nothing. But to be fair, the govt have few if any choices left to them. They can use force and push out the Red SHirts and then have a full scale riot on their hands—this will garner support from people on the fence and be condemned by all the int’l press and foreign govts. Or they can negotiate—which just means that the Red Shirts get more and more leverage the longer they can hold out. The military doesn’t want to step in either. This is evidenced by the fact that there are NO police or military on the streets at all (police offices near the protests are closed!). Even though there is a State of Emergency in effect, laws specifically regarding mass assemblies have been breached and there have been more than 40 bomb threats in the last 3 weeks—even injured policemen--there is NO security presence visible at all in the main protest area (Radjaprasong Dist.). So if the military aren’t going to stop the protests will they force a coup? They are stuck here too. If they force a new govt on the people then they’ve simply recreated the same problem they are facing now—a non-elected government that the people do not accept. This is a crisis of faith in the system, not just a partisan political move at this point. The Thai people have to choose: if the government is dissolved and a new election occurs, will they accept democracy regardless of whom is elected or will the next government also face mass protests from the opposition? If it was just the position of the PM in Thailand that was in question this might be just an academic question. For example, Military kicks out Abhisit and sets up a temporary govt for 2-3 months to set up new elections and then the democratic vote ends the problem. But it’s much more serious than that. It is no secret that corruption in Thailand (and China, and Vietnam, etc., etc.) is a historical and cultural problem that affects not just governments but businesses and everyday life of almost everyone living in it’s wake. The Thai courts, the military, the freedom of press, the relationships/influence of business and powerful families are all in question. So what if the government is replaced but the courts are still controlled by the military? So what if a new PM is elected democratically if he again has big business ties (as Thaksin did)? So what if Thailand gets a new government but a large enough percentage of the population decides they’re not going to accept it no matter what (and protest until the choice is, again, force or absolving yet another )? Regardless of who wins this round Thai’s have some ethical decisions to make about what's next for the land of smiles. And these decisions will specifically affect business as well as politics, hopefully for the better.[](http://silkroadintl.net/blog/wp-content/uploads/2010/04/small-crowd-1.jpg?ref=silkroadintl.net)[](http://silkroadintl.net/blog/wp-content/uploads/2010/04/small-crowd-2.jpg?ref=silkroadintl.net)[](http://silkroadintl.net/blog/wp-content/uploads/2010/04/small-crowd-3.jpg?ref=silkroadintl.net)On a lighter note, the best piece of political commentary I've ever heard came from a speech given by a UDD leader yesterday. In talking about policies that look good on the surface he said (Using the word for transvestite as the personal pronoun) "It may look pretty, but until you see which bathroom it walks into you don't really know what it is. "And I bought a great shirt t00\. It says: "Have you gagged-down-like-a-dog enough yet? " Very vulgar Thai verb for eat that you don't use for people.[](http://silkroadintl.net/blog/wp-content/uploads/2010/04/small-shirt.jpg?ref=silkroadintl.net)Also, the Red Shirts were the most polite group of protesters I've ever seen. They offered me food, drinks and a place to sit and listen (relative close to the stage). I must have had polite conversations with 10-15 different people attending the rallies last night--all from BKK (as opposed to the afternoon folk which are mostly bussed in from the provinces and paid around 65B/day)--to a person they were interested in what I understood and hoped that I would support their cause. But they weren't pushy about it. Finally, just by chance I ran into a buddy from grad school who was also watching the protests. What are the odds?! Two Americans, that speak Thai, who went to school together, in the midst of a crowed of more than 10,000 people, at night, run into each other! ### Alternative Dispute Resolution (ADR) in China URL: https://www.silkroadintl.net/alternative-dispute-resolution-adr-in-china/ Last updated: 2026-07-18T14:48:28.000Z As anyone who has ever had an experience with Chinese courts can attest to, they can be difficult. Chinese culture is not the same as in the US, we all know that, but that does not mean that by learning a few words in Mandarin and showing off your Panda House chopstick skills, you will be able to simply overcome those differences. There are specific measures and methods that you can use to protect your investments and your business in China, playing it safe and understanding the rules that govern China is a great start. Arbitration can be a very effective tool in basically replacing litigation in China, while litigation has taken on a fairly negative connotation in China; Arbitration has avoided this label for some reason or another. Arbitration is generally considered more efficient than litigation in many ways, it is usually cheaper and faster, but there are also other benefits. Basically you are hiring a private judge or panel of judges to solve your dispute. As China’s court system is still in its infancy, there are many tendencies that Westerns find different, confusing or even downright disturbing; including but not limited to the competency of the courts, fairness of local judges and the amount of independence courts actually have. Arbitration can offer a solution as it is structured to be neutral, more flexible, the results of arbitration are confidential and if you structure the agreement correctly an award is more easily enforced. Most arbitration clauses between Chinese and foreign companies will agree to arbitrate in either Hong Kong or Singapore, as both of these locations have established themselves and dependable, mature legal systems and are usually the only seats that are trusted by both sides. While arbitration is very effective when done properly but there are potential pitfalls; here are some to be especially careful about;• The choice of court o In order for the agreement to arbitrate to be effective, all parties must have agreed in writing to their choice of court, this is often referred to as a choice of court clause.o From my discussions with scholars and practitioners, this choice of court clause should be included in the party’s commercial contract, as this will save time in the event of a disagreement of any jurisdictional issue.o Things to be aware of when selecting a court;• The national and local courts may have a supervisory role or allow for appeals against the award.• The freedom of choice as to whom the arbitrators of the dispute may be limited by local practice or laws• The enforcement of the award may be complex depending on the nationality of the award, the safest method is to select a country that had ratified the New York Convention, most noticeably absent from the treaty is Taiwan.• Defining what is and is not arbitrable in the contracto This point deals in particular with anticipation of what problems may arise between the two partieso Art. 17 of the PRC Arbitration Law specifically states that the arbitration agreement will be null and void if the dispute that is sent to arbitration is non-arbitrableo Disputes that are arbitral include;• Contractual disputes, most disputes involving property rights (Art. 2 PRC Arbitration Law)o Disputes that are not arbitrable;• Labor disputes, administrative disputes, definition of intellectual property rights and most disputes involving family law• Defining what language the arbitration will be done in• Defining the actual arbitratoro Most arbitration institutions offer a single arbitrator or a panel of three arbitratorso Three arbitrators means paying for all three but it also will more likely result in a stronger and more skilled arbitration experience. Arbitration clauses are a wonderful way to protect yourself, but they must be structured perfectly or they will end up being useless. Remember to stay on the balls of your feet and keep your head on a swivel, it’s the only way to thrive in China. Here are some helpful links to some of the larger Arbitration and Mediation institutions.– [International Chamber of Commerce](www.iccwbo.org )\- [Hong Kong International Arbitration Center](http://www.hkiac.org/content.php?ref=silkroadintl.net)\- [China International Economic and Trade Arbitration Commission](http://www.cietac.org/?ref=silkroadintl.net)[**Southern Perspective Shenzhen**](www.southernperspectivesz.com) is a boutique consulting firm that specializes in combining manufacturing and the legal system in China. The majority of our time is spent in factories negotiating for legal protection of foreign companies engaged in supply chain activities in China. With combined experience of over a decade in Guangdong province, China’s hot bed for high tech innovation, we have the on the ground skills and knowledge combined with the high level educational standards of one of the top legal education centers for Chinese business law at the Chinese University of Hong Kong. Matthew Kowalak ### SRI Spring Tradeshow Speaking Schedule URL: https://www.silkroadintl.net/sri-spring-tradeshow-speaking-schedule/ Last updated: 2026-07-16T04:58:14.000Z I’ll be speaking at 3 different shows in April. Topics range from Problems Solving to Sourcing Basics and an extended version of the bi-annual China for New Buyers. Like I've done with previous shows, I'll be posting Q&A as well as some of the useful tidbits from other presenters at the end of each show. One thing that we'll be doing differently is to post the video of the presentations on line this year too. Assuming that I can get a decent copy of the presentations I'll be adding them to the [SRI article library](https://www.silkroadintl.net/articles.php) and linking to them from the blog. **April 12th,** [Global Sources China Sourcing Fair, Electronics & Components](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-ELECTRONICS.HTM?ref=silkroadintl.net) at the AsiaWorld-Expo Center (out by the Airport) in Hong Kong.**How to Source from China (part 1):** [Buying from China, What New Buyers need to know](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-ELECTRONICS/CONFERENCE.HTM?ref=silkroadintl.net).**April 13th,** [Global Sources China Sourcing Fair, Electronics & Components](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-ELECTRONICS.HTM?ref=silkroadintl.net) at the AsiaWorld-Expo Center (out by the Airport) in Hong Kong.**How to Source from China (part 2):** [Project Management, Problem solving and In-Production Negotiations](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-ELECTRONICS/CONFERENCE.HTM?ref=silkroadintl.net). **April 15th,** [Xi’an Metering China Conference & Exhibition 2010](http://www.meteringchina.com/event/meteringchina2010/en/?ref=silkroadintl.net) at the Xian Greenland Pico International Convention & Exhibition Center (GPCEC).**Sourcing Workshops:** [What Buyers Need to Know When Buying from China.](http://www.meteringchina.com/event/meteringchina2010/en/speaker.asp?ref=silkroadintl.net) **April 20th,** [Hong Kong China Sourcing Fair, Gifts & Premiums](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-GIFTSPREMIUMS.HTM?ref=silkroadintl.net) at the AsiaWorld-Expo Center (out by the Airport) in Hong Kong.**How to Source from China (part 1):** [Buying from China, What New Buyers need to know.](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-GIFTSPREMIUMS/CONFERENCE.HTM?ref=silkroadintl.net)**April 22nd,** [Hong Kong China Sourcing Fair, Gifts & Premiums](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-GIFTSPREMIUMS.HTM?ref=silkroadintl.net) at the AsiaWorld-Expo Center (out by the Airport) in Hong Kong.**How to Source from China (part 2):** [Project Management, Problem solving and in-production negotiations](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-GIFTSPREMIUMS/CONFERENCE.HTM?ref=silkroadintl.net) ### Labor, Sub-suppliers and Time--3 other ways to lose money in China URL: https://www.silkroadintl.net/labor-sub-suppliers-and-time-3-other-ways-to-lose-money-in-china/ Last updated: 2026-07-18T14:48:28.000Z A quick story before I get to the issues at hand. An interesting thing happened on the way home from church… I was picking strawberries with my boys at a small farm yesterday when I overheard the workers talking about us. Now, hearing people talk about foreign kids isn’t all the interesting, but what was unique this time was that I realized that they weren’t speaking Chinese—I could swear they were speaking Lao, but even that wasn’t quite right. Turns out the workers are Dai minority people from southern Yunnan province and they were speaking a dialect of Dai (Tai) and we could communicate a bit. They told me the Thai people in town (owners of the local Thai restaurants) often come to the farm and they can talk together. I couldn’t understand everything, but I could certainly follow their conversations and they mine. The language sounded like 1/2 Lao mixed with 1/4 Chinese and then 1/4 of something else. Anyone know anything about the Dai and their language?\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_Now for the real stuff. This a portion of an email that I got from a lady that is doing some work on her own here in China: > Hi David,I wonder about my current manufacturer. This is what I have encountered.....Last time I visited the owner tried to give blame to the holiday for not having the required staff to finish the order. She also created worry about the reliability of a sub-supplier, and urged me to purchase fabric more than one month before I need it. For these and other reasons she also requested that I pay extra money.I have mentioned that I intend to take this trip and I have been providing orders for a number of weeks. As I was finalizing the details they told me that I needed to personally order the fabric at least 21 days in advance of any order. She led me to think that she is unprepared for my arrival and this visit might create some problems.Regardless I feel that she is trying to make me feel like I am in a desperate situation and so will be willing to pay more It becomes difficult to argue because I spend so much time at the factory, I naturally take the "YA TEAM" mentally in managing the work being done.In the last visit, I just paid the extra fees. This time I don't want to pay extra fees because of the problems and unprofessional-ness I’ve experienced.I also worry that because I am a “foreigner” they may be taking advantage of me. > **Answer #1 Labor shortages.** Staffing is a HUGE issue in Southern China right now. Warning from the [NYT](http://www.nytimes.com/2010/02/27/business/global/27yuan.html?ref=silkroadintl.net) about two weeks ago. And [more this last week](http://www.atimes.com/atimes/China%5FBusiness/IC09Cb02.html?ref=silkroadintl.net).We’ve had five factories, all in different industries (plastics, wood, stitched goods, packaging/printing, metal furniture), all tell us the same thing, “The order you placed in January is going to be late since we don’t have anyone to finish it now.”In the press, the lack of labor is usually blamed on three things: bad conditions, high cost of living in GD province and politics (hukou, no workers’ rights and no help with injuries/grievances, etc.). Sure these are partially to blame, but there are significant reasons why these are not the main motivators as well.**1.** Factory conditions, in my experience, are much worse inland than they are in Guangdong. Guangdong conditions were particularly bad when Guangdong was unique and there was excess labor. But that hasn’t been the case for at least the last 4 years. New factories in the inner provinces are not “shiny new buildings” with the latest in worker comforts. Rather they are probably relocated machinery and management from Guangdong in either new industrial zones with no supporting amenities nearby or in older (cheaper) areas of towns or out of towns where the land is cheapest. Either way, working conditions are not significantly different (if different at all) back home. Remember, the point of opening a new factory farther inland was to save money.**2.** For sure, the cost of living is higher in Guangdong province, but wages are higher too—much higher. Wages can be as much as 30% lower inland than on the east coast for the same job (or so say my employees in the first ever Quick SRI Office Poll). Sure that’s not scientific, but a quick scan of income stats online says that a 3-1 urban/rural ratio is probably pretty common. Again, the point is to get more for less, so back home people are probably making “chabuduo” (approximately the same) wages when compared with local living expenses. My theory is that people will work for less money and in the same conditions if they are closer to home/family—that’s the reason that people aren’t coming home. Oh yea, and they don’t have to fight for tickets and then stand on a train for 24 hours every year either.**3.** The Hukou and other issues are a bummer for sure, but the enforcement of hukou laws isn’t any more strict these past 3-4 years than it was in the previous 10 years and there were no significant problem in years past—so why is this now a “new” issue? It’s not. It’s a lingering issue that has been a thorn in the sides of migrant workers for 30 years. But it hasn’t stopped workers from coming to Guangdong before and so I don’t think that it’s the reason now.**Follow the money.**Let’s be honest, as soon as the demand for labor in Guangdong rises to a point where wages rise noticeably, people will come back—they’ve been here before and as soon as it’s worth it, they’ll come back again. It’s happened as recently as a couple years ago. It’ll happen again. But of course when the labor wages rise, that’s also when it affects us, the buyers. And the real point isn’t the why they aren’t coming back yet, it’s the bottom line result (what to do about late delivery and higher wages?). So what do you do if your factory is now telling you that projects scheduled to be done in March will be done in April or May (and projects after that will cost more)? The usual get out the contract and bang on the desk approach won’t work. Neither will the incentives approach (more money to get what you originally wanted, late). The physical limitations make both of these options worthless.**Option 1.** Accept the fact that you won’t deliver on time and start making adjustments to your supply chain now.**Option 2.** Incentivize the factory to hire more workers. This will take time (and cost money), but not as much time as waiting for them to find the workers themselves. This is what large box stores are doing now—(aka: this is what people with a lot of money and influence are doing now).**Options 3.** Cut orders in half and give the other half to your back up factory (you do have a back up option, right?). Of course, this only works if you don’t have specialized products or tooling. But even for specialty products, if you split up pieces or components you can save time.**Option 4.** Prioritize SKU’s and qtty’s and take delivery in pieces. This is what most people that we work with are doing. They know what their show orders are. They know exactly what qtty’s they must have and they know that they have to deliver to certain suppliers or lose their business (while others are more flexible).**Answer #2 Subsuppliers.** Unfortunately, even if you’re small sub-suppliers should be your concern. Why? 1\. Most factories don’t do QC incoming components. 2\. Most factories don’t forecast delays, price changes or rejects into the bids they give you. 3\. No one will be as careful as you are about your own product—if you’re not having 3PQ check incoming goods then no one will—contract with your factory for this service. 4\. The flip side is that if you buy on your own, factories will waste materials as they don’t need to be careful/save anything—so again, contract this service and tie performance to payment.**Answer #3 Time.** Yes, prep time is often the longest part of the process. We often have projects with 50+ day production times but actual manufacturing can be less than a week. Packaging/fulfillment is usually only another week too. So the remaining 30+ days is either spent buying raw materials and/or waiting in line in the factory. A word of warning, don’t confuse waiting in line and waiting for materials with getting pushed out of the queue for larger projects. Get a fixed date for when your product will be manufactured. The actually day may vary a day or two but more than that and you should be looking for the “real” problem. We’ve been completely pushed off line (in the middle of manufacturing) for larger projects. They only way to get people back to work on your product is to be there everyday all day pitching a fit until they acquiesce.**Answer #4 What’s really going on.** If you don’t know exactly what’s going on with your suppliers (because you are overseas, because you don’t speak Chinese, because you are working with a non-transparent middleman, etc.) than you are indeed in a desperate situation. You need to know. You need to have fixed times, milestones and other checkpoints that you can confirm to know how your project is doing and so you can make concrete shipping/delivery plans. You also need to have a physical presence in the factory to confirm the things that you’re being told and the quality standards are up to your (contracted) expectations. This is the very hardest part of the whole process—finding out what’s real, what’s a story and what’s a mixture of the two. If you’re not here, you’ll figure out that your being told stories, but by that time it’ll be too late. If you’re here and you don’t speak Chinese you’re either reliant on others who may have competing agendas or you may have to spend an inordinate amount of time on a single supplier to the detriment of other responsibilities.**Answer #5 Money.** If you’ve paid fees in the past, of course the factory assumes that you can pay them again. Remember, you’re made of money (at least that’s what many think). The concept that has been told over and over again to me by Chinese sales people is this: “I’d be stupid not to ask for more money—what if you’re dumb enough to actually pay?!” You will be asked to pay for EVERYTHING. If you do it once, you will be asked to do it again (and again). Sometimes you need to give in and help out. Sometimes there are real mistakes that you choose to forgive, help out with or use as a punitive tool later. Sometimes you’re just taken out back, bent over and beat ugly. You may never know. Each situation requires a health dose of Sherlock Holmes. Just remember, before you decide to fight the price increase, understand what the battle will cost you in things other than money (time, quality, relationships and the like, which, in the end will eventually cost you money). Sometimes it’s better to pay more and get less and sometimes it’s worth it to fight to the death. ### Reasons why a factory doesn’t want you to come see things. URL: https://www.silkroadintl.net/reasons-why-a-factory-doesnt-want-you-to-come-see-things/ Last updated: 2026-07-18T14:48:29.000Z Before I get to the post today, everyone working in China should read this great article on [corrupt QC](http://www.qualityinspection.org/corruption-of-inspectors-social-pressure/?ref=silkroadintl.net) (h/t [China Law Blog](http://www.chinalawblog.com/?ref=silkroadintl.net)).**\----------------**We’ve been extremely busy both before and after the CNY break. As we get back into factories to do QC and project management some factories are more helpful than others scheduling visits. I’m sure there are a hundred versions of “we’re not ready for you just yet.” These are just a few of the responses that we’ve heard from factories this last week or so. “There really isn’t anything new to see this week.”“Don’t worry, we’re doing it just like you asked/last time.”“Maybe you should come next week to see finished product.”“All of our staff have not returned from holiday yet.”Regardless of the words used, my experience tells me that there are really only a few reasons that you can’t go into a factory to see your product for a scheduled QC visit (or any other reason):1\. They are not as far along as they should be.2\. They are not actually making the product.3\. They don’t want you to see how some part of the process is done.4\. They don’t want you to reject product or change processes.5\. They are busy and have schedule legitimate appointments with others on your requested day.6\. They are closed (no power?), have repairs/inspections/other issues that would not allow you to come see product on your requested day. Maybe there are others. But the point really is this: either there is product for you to see or they are booked and there will be product to see within 24 hours of your requested date. Yes you should be understanding of legitimate conflicts, but you’re paying for it. Unless they’ve contracted different standards with you before the order was started you should be able to see it anytime you want (within reason, not 3AM Sunday morning “anytime you want”). In defense of busy suppliers, maybe there really isn’t anything different/new from last time. But the point of QC isn’t “what’s new” as much as it is a confirmation that everything is still the same (quality) level as last time it was checked. IP (In Process) QC already assumes that product isn’t finished anyway, right? So just keep pressing to get into the factory as often as you want. > **Side Note:** IPQC does NOT mean one day of final QC on the same day as container loading. I’m constantly reminding buyers that QC is not for just finished goods—it’s also for processes. What good is QC on finished product if you can’t reject it or they won’t replace it or you’re too late to have it re-done? > All but the scheduling conflict should make you worry. Not freak out, but certainly worry and get back into the factory as soon as possible for new dates. Specifically, if the supplier is late and not telling you you’re either going to get bad product (rush job), someone’s going to pay for airfreight, or both. It’s much harder for you to reject things if you’re up against a deadline or when production is completed and factories know this. They may just be busy but don’t discount the reality of them delaying your order because of “better” (more profit) projects or the very common belief that you can’t do much about it. If they are outsourcing your project and not telling you then you may have a major problem on your hands. The big question is “can you do QC at the other factory or not?” If the answer is anything less than “Yes! Anytime you want” then you certainly are going to have issues. One of the dirty little secret of Chinese business is not that projects are outsourced but that they are outsourced to “friends” (sub suppliers) that would be offended if a QC was sent in by the original factory. We’ve negotiated special deals with factories so that we can send in our own people for other projects just so that the factory doesn’t offend their friends/sub suppliers. Often times there are real issues that the factory can’t control like laborers not returning on time, rolling blackouts, accidents, etc. But in the very least you need to get new schedules. And it should be the factory that offers solutions to make up for lost time (since you’ve signed a contract and probably have ship dates that you have to meet). You can be flexible, but outside of “acts of god” you can reasonably expect the factory to be responsible to meet dates or make other arrangements for you. To eliminate as much of this rigmarole, be prepared to roll with the punches, plan extra time into your schedule before you order and of course, spend as much time as possible in the factory. ### Reading the (Western) Media on China URL: https://www.silkroadintl.net/reading-the-western-media-on-china/ Last updated: 2026-07-12T07:59:05.000Z UPDATE, 01/03/10: [**Apple Admits Child labour was Used to Build iPods and iPhones in Chinese Factories**](http://www.dailymail.co.uk/news/worldnews/article-1254221/Apple-admits-using-child-labour-build-iPods-iPhones-Chinese-factories.html?ref=silkroadintl.net).This is at best an (educated) guess but at worse a lie--Apple did not admit this. From the article: > The exact location of the factories has not been identified. Apple has factories which supply parts in Taiwan, Singapore, Thailand, the U.S., the Czech Republic, Malaysia and the Philippines, but most of its products are assembled in China. > Why does this article lead with China? Why not the US? Or Taiwan or Thailand? Not sexy enough? Not "threatening enough? Just another example of media bias that I talk about below. Now we may find out that later on that this is all true. Wouldn't surprise me. And since most of their products are made in China, odds are it is true. But we don't know for sure yet--so how can you lead with that?! Yes, the article points out specifically that in CHINA there were cases of underpayment and chemical poisonings. But we do NOT know if China used underage workers at this point. Of course 'using kids' sounds really evil, and we need a new villain so that's the lead in.\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_Everyone that writes has a direction, agenda or angle that they are writing to prove. My goal for this blog,for example, is threefold. In 2004 when I started it, the goal was to share with family, friends and clients the work that I do over here. Since then I’ve added more content directed towards people who ask questions, clients who have similar situations to other clients, and a general interest in recording what I experience in China on behalf of my clientele. Of course, the third reason now is more exposure for my business. I’m fine with blogs being average—Lord knows that that's an accurate description of my witting skills. The professional media though, should be held to a higher standard. But from my perspective, on China they barely meet much of any standard at all. When I’m in the office I always download articles to read later when I offline at a factory or traveling. Here are a few articles that I read in the last month and stitched together as my commentary on Western Media covering China. A couple of things before I get to the articles.**First**, I think that the next Century is going to be characterized by an [ever increasing Chinese presence](http://www.washingtonpost.com/wp-dyn/content/article/2010/02/24/AR2010022405168%5Fpf.html?ref=silkroadintl.net) in the world. Get used to China being involved in just about everything. It’s just too big not too.**Second**, I think that the most important and currently one of the least well-managed international relationship on the planet is China and the US. If they overtly tried too, could more people have done more stupid things over the course of the last 3 US presidents to damage this relationship? Highly unlikely. And just because the Americans are stupid doesn’t mean that [the Chinese are not blameless](http://www.cbsnews.com/stories/2010/02/25/60minutes/main6242498.shtml?ref=silkroadintl.net) in all this either.**Third**, I do NOT think that China is taking over the planet nor do I think that the 21st century is going to exclusively be the Chinese Century. I’m constantly frustrated by media that claim that China is the next superpower/super villain. They are big, they are growing, the change here is amazing. But despite all that and the disaster that is the current US economy, China is still multiple decades of double digit growth behind the US—and their growth will slow down and their population will get smaller too. Also, they do not have the ability to project power like the US does (but they are indeed getting [regionally much much stronger](http://www.washingtontimes.com/news/2010/feb/12/underestimating-china/?ref=silkroadintl.net)).**Finally**, I’m amazed at how many people in the US are “scared” of China for one reason or another. Job loss, communism, human rights, pollution, censorship, holding our debt, etc. all add up to seem like a huge menacing red scare in the East—especially if you have no other source of information about China (which most people do not). China is very very different, but it shouldn't be scary. First the good, then the bad, then the ugly.**Article #1\.** [**Uncle Sam vs. The Dragon**](http://www.spectator.co.uk/print/politics/all/5780913/uncle-sam-vs-the-dragon.thtml?ref=silkroadintl.net)**, Daniel W. Drezner.** This is a great piece that puts the relationship in perspective. It rings the right warning bells for the US without being alarmist or exaggerating. China is an incredible adventure, a poor country, an amazing story, a difficult nut to crack. Everything that is politically difficult to manage has a counter part in business—it’s not like there are two completely different cultures that never meet at work in Chinese cities. Remember, at least 30% of the Chinese economy is SOE's and the bureaucracy in China is filled with engineers, technocrats and officials that are driven by monetary goals.**Article #2** [**The China Fix**](http://www.time.com/time/printout/0,8816,1955426,00.html?ref=silkroadintl.net)**, James McGregor**James McGregor knows China.**1\. The local people.** > The pressures on Chinese President Hu Jintao and Premier Wen Jiabao are overwhelming. They are white-knuckling their way through their final two years in office, focusing on 8% or higher growth and crushing any dissent that could derail it. The Chinese people are generally pretty happy, but the Party leadership is terrified of their outsized expectations. People under age 40, the progeny of the one-child policy, didn't live through Maoist poverty and upheaval. They are pampered, impatient and demanding. They consider exponential growth as a basic benchmark of life, and access to information to be a civil right. China's rich are powerful opponents of further reform and opening. They made money the local way and are determined to block foreign competition so this can continue. > **2\. The foreigners** > The foreign business community in China has deep respect and affection for the Chinese people and their hard-earned success. But more than a few foreign business leaders are asking themselves if they have been bamboozled by the system. Multinationals have been solid citizens in China, handing over heaps of capital, technology, training, source code, best practices and proprietary products to joint-venture partners they were forced into bed with. They have funded schools, orphanages, disaster reconstruction, overseas scholarships and all manner of poverty-alleviation programs. But now that the China market matters more to them, it appears that China couldn't care less. Increasingly difficult China-market access is the immediate worry. But many are looking ahead and losing sleep over expectations that their onetime partners are morphing into predators — and that their own technology and know-how will be coming back at them globally in the form of cut-price products from subsidized state-owned behemoths. > **3\. On the ground situation.** > At the same time, I have also seldom seen the Chinese government and business community more unsettled and uncertain. Theirs is an arrogance borne of insecurity. The global financial chaos and China's rocketing global status threw off the meticulous national development schedules carefully crafted by the risk-averse and surprise-allergic engineers who run the Party. > **4\. The sad players in the int’l game.** > So both Chinese and non-Chinese have legitimate challenges and understandable phobias. …with the U.S. as the key negotiator for the West. It won't be easy. China and the U.S. are past masters at blaming their domestic policy failings on outsiders. Finger-pointing politicians and chest-beating nationalists in the two nations will make rational discussion nearly impossible.Yet it is time for leaders on both sides of the Pacific to lift their heads above overwhelming domestic concerns and fix China's deteriorating relationship with foreign business and the developed world before things get out of control. One thing's certain: they won't find the answers through Google. > But I think that his conclusion is a bit off. He said: > “Google is just a proxy in this intensifying dispute. It's really about rebalancing the economic and political dynamic between China and the developed world…” > I disagree—it is that big of a deal. Google is a global company but this isn’t a proxy for an international power struggle, It’s an argument that happens over and over every day in China—it just happens that Google gets a bit more press then most. It’s the oft repeated story of a foreign company that has finally had enough of abusive policies in China. If you think that this is about the US/Chinese balance of power, then I suggest that you talk with the French dairy products company, Dannon. The world balance of power isn’t shifting as much as fear mongers in the US and the party in power in China would like everyone to believe. With the US economy in tatters and China holding so much of the debt, China has decided that they can safely stretch their muscles a bit and the US won’t do much about it right now. But is this really what the future of global politics is trending towards for the next decade? How many decades has the decline of the US and the rise of China (or Japan before that) been predicted? Would China be as cavalier if the US was not involved in two wars right now? Or if Obama (less international experience than Ms. I-can-see-Russia-from-my-house) wasn’t president? None of these situations are permanent—neither is China’s run of incredible (and exaggerated) growth. People who watch China, myself included, often confuse news about China with news of global priority. Google, if it does leave China changes what? If they stay and force some sort of compromise, who else can match their level of influence? Wal-Mart? Microsoft? Anyone else? No one else will benefit from their ultimate decision (continued in article #3....).**Article #3\.** [**The Chinese Internet Century**](http://www.foreignpolicy.com/articles/2010/01/26/the%5Fchinese%5Finternet%5Fcentury?ref=silkroadintl.net)**, Adam Segal**The reality in China is that very few people within China care. Most foreigners outside of China don’t care either. This news affect a few hundred thousand of us who are obsessed with China and think, that everyone else should be too. > The fact is that the majority of Chinese simply don't care, giving the government even less incentive to change its ways. Technologically savvy Chinese "netizens" -- if that term even has meaning in a place like China -- find ways to *fan qiang* (scale the "Great Firewall"), but most users, like their counterparts elsewhere, are more interested in entertainment gossip, pirated MP3s, and updates from their friends than missives from Falun Gong or the latest report from Human Rights Watch. U.S. State Department spending on proxy servers or technologies that hide users' identities temporarily allow some Chinese greater access to information online, but won't substantially change the underlying dynamics.While the hacking of the accounts of individual human rights activists has garnered the most public attention, the primary objective of the cyberattack on Google was probably intellectual property theft. The Chinese leadership has a strategic view of technology development, and the cybertheft of corporate secrets is married to an industrial policy designed to promote "indigenous innovation" (*zhizhu chuangxin*). Through local content requirements, tax benefits, government procurement, and the development of competing technology standards for 3G mobile phones, Wi-Fi, and other products, China consistently seeks to free itself from dependence on foreign technology, particularly from the United States and Japan. In a few cases, China has backed down in the face of concerted pressure from more technologically advanced trading partners, but old policies were quietly replaced with new ones designed to forcibly transfer technology to Chinese firms. Cyberespionage is this industrial policy taken to its logical extreme, subsidies in the form of intellectual property theft. > If 1.3 billion Chinese don’t care, and except for sinophiles no one in the West even takes notice, then how is this a new global showdown of earth-shattering importance? It’s not. (I wrote this last month—heard anything lately about Google in China? Nope. Me neither.)**Article #4** [**With suspicious statistics, China obscures economy**](http://www.washingtontimes.com/news/2010/feb/05/china-obscures-economy-in-great-wall-of-statistics/?ref=silkroadintl.net)**, David M. Dickson.**I’ve mentioned accounting with Chinese characteristics a number of times. Without exaggerating I can tell you that any numbers you read out of China are faked to some degree or another—Enron style faking. There is no standard, no regulation and no reason not too. For example, when you buy anything in China you’re supposed to get a tax receipt from the vendor. But every store/restaurant/service provider I’ve ever shopped at will offer you a 5-7% discount if you don’t take the receipt—so they don’t have to report the sale and pay the tax (that’s why all the tax receipts are part of a lottery to entice consumers to force vendors to hand over the receipts). Similar, but much larger discount deals are offered for production runs of product, imported components, export duties, etc. I have a couple of friends that do finance work for a MNC’s with offices here in China—they tell the same stories—accounting in China is a complete mess. Sure the accountants themselves are well trained and can crunch numbers as competently as anyone else. But finding “real” numbers to crunch is the problem. And anyone who has ever dealt with [SOE’s, 30% or more of China’s economy](http://blogs.worldbank.org/eastasiapacific/state-owned-enterprises-in-china-how-big-are-they?ref=silkroadintl.net), knows that accounting is political at best and sometimes nonexistent. Mike Bellamy of [Passagemaker](http://www.psschina.com/?ref=silkroadintl.net) tells of buying components for below cost because the SOE just needed to keep people working (and they purposefully made defects to have product to fix too!).**Article #5\.** [**China mulls setting up military base in Pakistan**](http://timesofindia.indiatimes.com/world/china/China-mulls-setting-up-military-base-in-Pakistan/articleshow/5510235.cms?ref=silkroadintl.net)**, Saibal Dasgupta.**Since this is from India about a Chinese threat to India, I’m not sure how accurate the reading of the “signals” really is. But with the stance that China has taken in the last 5 years as they move up in influence in the world and with all the investment into Pakistan, I don’t discount it either. Like I’ve said before, as they themselves see it, it’s not really in China’s best interests to be a “good neighbor.” It’s in their best interests to quell unrest at home, promote domestic economic growth at almost all costs and not overtly aggravate their neighbors. China’s foreign policy can be, I think described best as plausible deniability. Publicly send SOE’s in instead of direct govt action, don’t support anything that is even slightly partisan in the UN, talk about growth, equality and “fair” play the “victim” and/or “still developing country” cards ad nauseam, and then quietly do what ever they want. The down side of this new base being true, is of course, that this will eliminate at least ½ of all the content of China’s international speeches (“we are not interested in influencing other countries' domestic affairs”). How will they be able to complain about the expansionist US military now that they too are building overseas bases?**Warning. These last two articles I totally hated. Read very very carefully—American EditionArticle #6\.** [**China scientists lead world in research growth**](http://www.ft.com/cms/s/0/7ef3097e-09da-11df-8b23-00144feabdc0.html?ref=silkroadintl.net)**, Clive Cookson**What’s wrong with this picture? (Graph is from the article linked above)[](http://silkroadintl.net/blog/wp-content/uploads/2010/02/numbers-games.jpg?ref=silkroadintl.net)Did you find the “mistake” or did you just read over it the first time like I did? The US is fourth behind China, Brazil and India, right? Wrong—the US has almost 40% more articles published annually than all of the BRIC countries combined. Sure, the title (China scientists lead world in research growth) is accurate but it’s either designed to be completely misleading or is very poorly explained. This is like saying “Hangnails are the most painful injury.” (Of course this is only for people with no other injuries whatsoever). What you don’t get from reading the article, only looking at the (awful) graph is that even with a 64-fold increase, and even with more students, China’s total is still actually less than 1/3 of what the US produces annually. Less than one third! China probably has more college students than the US has people! Don’t buy the argument that China is taking over the globe just yet. And of that huge increase—at least 9% is co-authored by US scholars. And the study only counts US scholars and doesn’t count all the co-authors from other countries. Remember, you should read 90% of statistics with a large grain of salt. To the details, anyone that’s worked in academia in China knows that the idea of “mixed quality” is a major understatement. Two personal anecdotal examples.**First**, to graduate from college in Shenzhen, my wife had to write an English thesis—10 pages of original research and analysis. Any topic. Her thesis adviser told her to copy text from the internet on a page that isn’t very popular and that way he “wouldn’t have to read it” since he would know that it was already “correct.”**Second**, when I was teaching at a college in Sichuan (’95) I was asked to review the theses of a number of grad students (20+) that were hoping to go on to foreign schools or better domestic universities for post graduate work. There wasn’t one of them that had done any original work. Not one. They had copied and pasted paragraph after paragraph with minimal original transitional sentences linking them all together—this was obvious to detect since the first and last sentence of every paragraph were the only ones with any grammar problems. When I brought this up to the Dean of the English department, he looked at me with a shocked expression and said something like: "Well, of course. Their English isn’t good enough to do all that work on their own. Besides they don’t have time with all their other class work. " Mixed quality indeed. This article gives no context or analysis: The article claims that “if \[China\] continues on its trajectory it will be the largest producer of scientific knowledge by 2020.” That's a HUGE "if. " The “logical” extension of the article that that China is on its way to dominating the world’s research centers. But this can’t be true for multiple reasons which are never discussed. First, They will not have this much growth opportunity in the future (remember, they were at ground 0 in 1980). Second, they will not average 10% GDP growth for the next 30 years, not even this year (or last year). Third, they can’t continue to push this many students into grad school. Impossible because of physical limitations now and the fact that the one child policy will limit the number of available students soon too. The thing about most journalists who didn’t study China and are just writing about them now is that it’s like other than some fuzzy memory about the summer of ’89 they’ve only just heard of China for the first time with the Olympics last year. “Wow, did you know China has 1.3+ billion people?!” My question to the author of this article and others is this: Shouldn’t China be producing the most grad students and research in the world anyway? They have the most colleges the most students, the most grad students, the most engineers, etc., etc., etc. But they don’t have the most peer review or original research so they won’t pass the US in research or innovation until they can solve this structural problem. If you don’t know much about China you may be asking: "Yea, but 64-fold increase is awesome, why the amazing growth?” Good question. I'm glad you asked since the “Science Editor” for the FT didn't (and should be asking and answering this question in the article). Here’s some historical context. The story measures growth from ’81 to ’08\. Prior to ’81 what was happening in China academically? Absolutely NOTHING! You could probably count the number of peer-reviewed papers from Chinese scholars from ’66 to ’81 on one hand—really, no joke. All schools were closed until ’76 because of the cultural revolution. ’81 is just about the first time in a decade in when China could actually have students that finished some college and were now graduate students and doing “peer-reviewed” papers at all. Because of how the info is present, there are a couple of complete lies within the article.**1.** “China far outperformed every other nation, with a 64-fold increase in peer-reviewed scientific papers since 1981, with particular strength in chemistry and materials science.” It should read “China far outperformed every other nation IN THE INDEX.”**2.** ““China is out on its own, far ahead of the pack,” said James Wilsdon, science policy director at the Royal Society in London.” it should read: “China is out on its own, far ahead of the OTHER BRIC COUNTRIES.” Sure this is a quote, but isn’t there some responsibility to clarify statements that are misleading or out of context? Many other parts are just totally misleading:While the US is measured in the graph it is NOT included in the research itself. But that fact is NEVER mentioned in the article. Of course readers are going to assume, from the visual presentation, that the US in included in the research and in the totals talked about in the article—why wouldn’t they? Since the US is purposefully included in the graph why didn’t the editor purposefully note that the US is not included in the research? So, what’s the point of this? Major mistake? I would hope not. So then what’s the agenda behind a horrible article and misleading graph like this? I don’t know what else it could be other than the promotion of China as a threat. Odd, since the FT is usually pretty even handed, I think. Now don’t get me wrong. I’m trilled that academia is gaining ground again in China. My first job in China was teaching English at a college in Chongqing in ’95\. I think that more education is one of the very best things that could happen to China. What I hate is the media distorting news for some unspecified agenda. This is just the most recent example of crap-reporting about China. As China grows and exerts more and more influence in the world you’ll see more and more reporting like this. Especially if the US economy continues to stagnate and China continues to grow—many in the US need a villain to blame. (It couldn’t be our own fault that our economy is paralyzed with debt. Nah.). And I love the FT. I read it and link to it all the time. But this article should never have been published like this.**Article #7\.** [**Global Weirding is Here**](http://www.nytimes.com/2010/02/17/opinion/17friedman.html?ref=silkroadintl.net)**, Thomas L. Friedman**I love my wife and my inlaws (honest), but my love for them hasn’t led me to believe that everything China does is glorious and wonderful. If anything it’s taught me that I don’t know nearly as much about China as I thought I did. Unfortunately, I can’t say the same for Thomas Friedman. Love of China has certainly blinded him to a number of realities over here. In his latest diatribe on the how our planet is, through America's faults, getting more “weird” than it otherwise would be without us evil (Western) humans, he ends with this gem: > “China, of course, understands that \[renewable energy is “going to be the next great global industry”\], which is why it is investing heavily in clean-tech, efficiency and high-speed rail. It sees the future trends and is betting on them. Indeed, I suspect China is quietly laughing at us right now.” > I agree that China is laughing at us, but it’s over our debt, not our energy sector. Besides, four desperately needed high-speed train lines (and no other evidence) doesn’t really show that China “gets” anything but logistics (and maybe capitalism too). A few example of China **not** getting it. How about the fact that they are the #1 builder of dirty coal plants on the planet? China builds more new coal power plants every year than the total number of coal plants in operation the US.How about the over building of every major commercial city center causing massive warming in more metro-areas than in any other country? What about the fact that they now have more autos than any other country? (So it's evil for the US to have so many, but for China it's a sign of progress?)Or that fact that air pollution from China is so bad that they have 16 of the top 20 dirtiest cities on the planet or that air pollution from China can be measured in the US? Do they really get it? > **SIDE NOTE:** It kills me that the environmentalists defense of climategate is 1\. It' climate change, not global warming so the cold is part of it too (So global cooling in the 70's was what?). 2\. It's overall climate not local weather that is the issue (so what about localized studies that "proved" #1?). 3\. “Yes, we lied, but it’s better to be safe than sorry, right?” Safe from what? You lied! You made up the threat! Friedman’s spin on this is: We fudged a bit but it’s going to be the next big thing—so let’s make as much money from it as we can! Isn’t that the problem in the first place?! Capitalism is destroying the planet, isn’t it? So how is more capitalism (from the resource desperate Communist Chinese, no less) going to save the planet? What a joke. > The reality is that China is investing into “clean tech, efficiency and high speed-rail” for at least five major reasons completely ignored by Friedman.**1.** One billion plus people. The logistics of China are such that much of what is done elsewhere is just not logistically possible here. High speed trains are cheaper than airfare and so service more people for less per person. This is a simple case of Friedman trying to fit a logistical problem into a complex liberal theory to prove a completely unrelated point. Just follow the money and the power: If normal people don’t have access to cheap transportation, they protest against those that are in power.**2.** Defensive realities. China is wholly dependent on foreign oil. More so than the US—because they have few natural resources, a larger % of their population dependent on out-of date transportation, heating oil and ever increasing social pressures to back up political rhetoric with actual physical improvements (like more cars). But, unlike the US who can project military power, China cannot. One of the major military fears of the Chinese (and the reason for renewed presence in Pakistan—ports, roads, pipelines and prioritized attempts at a military presence in East Asia) is the very real fear that in a conflict they will be cut off from the oil that they import. Oil which is necessary to run both the country and the military. China isn’t laughing at the US for not going green, they are scared to death that if push came to shove that due to the power of the US military they couldn’t get enough of the oil that they too are addicted to. The reality of “green” energy is that it is, for all intents and purposes, it doesn’t exist yet—not feasible green energy, anyway. And not enough to replace oil. Not now, not this next decade, not in the foreseeable future. China’s not betting wisely on future trends, they are in panic mode when it comes to energy.**3.** China is fast becoming a garbage dump. Literally. I love some of the things about living here, but it’s dirty and it’s not getting better. Air pollution, toxic spills, low levels of environmental rule enforcement, increasing numbers of automobiles, more coal plants, more flights, a rapidly increasing standard of living for 500 million Chinese, the governments goal of urbanizing 80% of the population—all of these things contribute to a increasingly dirty country. China is going green out of necessity. Again, follow the power and money—when things get too dirty, normal people protest. And in many cities in China it’s already “too bad.” You can’t have people complain when your national slogan is “harmonious society.”**4.** Inefficiency. Despite the fact that everything is made here, it’s not made well here—meaning, China wastes more of the energy (imported oil) needed to produce one unit of product than almost any other industrialized country. China is going to get poor (and old) before the majority of their population get rich—and that’s the real motivation for any and all changes.**5.** Money. If Freidman is right about anything it’s that there will certainly be (artificially created) demand for “green” energy in the future—socialist governments across the planet will see to that. And where there is money and opportunity, you will find Chinese entrepreneurs. They may be late to the capitalist table, but they are fast learner and they know how to make money! Friedman is biased and agenda-driven and has painted himself into a corner with past positions on (now discredited) anthropogenic global warming and the omniscience of Chinese group-think.**Article #8\.** [**China extends position as worlds’ leading food producer**](http://www.businessday.co.za/articles/Content.aspx?id=94747&ref=silkroadintl.net)**, Reuters.**The comments say it all—I’m not the only one tired of the media looking for someone to blame. ### Under-promise, Over-deliver, Part II, Vietnam URL: https://www.silkroadintl.net/under-promise-over-deliver-part-ii-vietnam/ Last updated: 2026-07-18T14:48:29.000Z So I’m sitting in a factory office outside of HCM city as the factory General Manager is talking with another client. The inevitable discussion about product quality and how the production doesn’t match the samples comes up and the conversation starts to get heated. The client is arguing that because of the samples he expects better quality than what is currently being produced. The factory is saying that his expectations are unreasonable—“production quality is never 100%. Nobody can do perfect.”The client, of course, is pointing out that the samples are much better looking than production and the sample from the factory is the standard he agreed to before he paid. The factory boss turns to me for support in his argument and says: “Mr. Dayton has been doing QC in Asia for many years, he knows that we can’t get it perfect, right?”Now, this was the first time that we’d ever worked with this specific factory otherwise this manager would have known that this was a bad move on his part. I complete agree with the client—but, since I’m next in line (to be screwed?) I’m a little bit more diplomatic. But only a little. “Yes, there are often differences in production and samples. BUT since you have both a sample and a contract, I believe that you should be able to get exactly what you contracted for since the factory already told you they could do it.”The manager who started out smiling was not pleased with my final answer. But, I was there to have the exact same conversation with him about our products. I wasn’t going to lie to this other guy (who was obviously lost as to what to do next) just to be nice to a factory that I was already displeased with. I’m all for being nice, but I’m not much on compromise when it comes to my clients’ money. The other client ended up getting more than what he was currently getting, but not as much as he wanted or thought he had contracted for. He got (almost) what he expected because of three things he did--he had a contract (and brought it with him); he and the factory both signed multiple sets of samples (and he brought them with him); AND HE SHOWED UP AT THE FACTORY. Not doing anyone of these three things means he never gets what he wants. I got a cheap bowl of Pho and a very silent ride back to my hotel. But I also got what I wanted/contracted for and stayed though two more days of production to guarantee it. I’ll take the crappy lunches, pay for my own taxies and endure the silent treatment if that’s the price of getting what I’ve ordered. It’s not what I want nor is it fun/comfortable. But it’s certainly worth it. On day two of my visit the manager, obviously still bugged, asked me why I didn’t help him out a bit more with the other client. I told them that I thought the client was right and that I’ve worked with too many factories that make golden samples to have any empathy for “differences” in production vs sample quality. He then told me that he has this same argument with just about every foreign client that comes to the factory (but not the local ones or the ones that don’t come to the factory, hmmm….) And then he launched into the same oratory that he used the day before with the other client. I listened politely, waited until he was finished and then, again, disagreed 100%. > **Side Note: Listening to disarm.** I have found that if you listen to, without interrupting, most people, but Asians in particular, and allow them to finish their arguments completely they are just blown away if, in the end, you don’t agree with them. It’s like they think that if they can just finish the sentence uninterrupted they win. I think that they expect you to interrupt each and every time you disagree and if you don’t interrupt, then you certainly must agree with all of what they’ve just said. When I first figured this out, I admit, I tried it a few times just for shock value. Now, I’ve seen it so many times over so many years that I realize that it’s more than just individual quirks. Yes, I’m stereotyping ("[I'm like my mother, I stereotype. It's faster.](http://www.imdb.com/title/tt1193138/quotes?ref=silkroadintl.net)"). But I’m not saying Asians are dumb/bad/ignorant/purple/whatever. Relax. I’m just pointing out that expectations in communications are different and it’s to your advantage if you know those differences. Remember, if you can name the game, you don’t have to play it. > I told him that Westerners feel lied to if they get production pieces that are noticeable different (lower quality) then the samples they used for contract standards. Let’s be honest, in the West it’s bait and switch. I said that doing business like this is the best way to ruin relationships quickly. I tried to share with him the idea that he’s got to under-promise and over deliver, and right now he’s doing the opposite. Foreigners want the sample to be the basic standard—something that checks off all the boxes but in no way should be better than production. It’s the standard, not the exception. Of course, he told me the same thing that every other factory tells me when we have the “golden sample” argument. Factories in Asia all face so much competition that they make perfect samples to get orders all the while knowing that production will never be that good. They just want to get the deposit and start the order assuming that they can work out the discrepancies in quality later; which they often can (or they can hide it if they know you’re not coming to do QC). My take away was this: the factory isn’t stupid. They would rather get deposits and have this quality argument over and over than take a chance at losing orders with “almost” perfect samples and never argue--money is more important peace. And I can’t argue with this logic; when a good percentage of the clients either don’t do QC, don’t call them on the changes or don’t even show up at all, factories have really lost nothing by making golden samples. In fact they’re making money! One more reason to always do QC. ### Even if it's not your fault... URL: https://www.silkroadintl.net/even-if-its-not-your-fault/ Last updated: 2026-07-18T14:48:29.000Z On of the things that I’ve learned, the hard way, about doing business in China is that as a (foreign) buyer when there are problems, even if they’re not my fault, I’m going to be asked to pay for them. For me, this is the single most exasperating thing about working in China (and Vietnam and Thailand and Taiwan and India too). Bad quality we can monitor and keep to a minimum. Ditto late deliveries. Changes in the prices and terms after we sign contracts really sucks, but the changes usually are not killing deals. But mistakes, even (or especially?) factory-acknowledged errors that cost time and money (and my face) are the thing that always makes me mad. "Nothing can be done perfectly" I'm always told (after we've approved the sample, paid the deposit and committed to the client). What does that even mean?! OK, so about 99% perfect? No? 96%? Who, if it's not me (the guy holding the bag), gets to choose what is and is not perfect? Which part of "yes, we can do that" does not cover the current imperfection? Now, I’m not unreasonable, I understand that mistakes happen. Anyone that reads this blog knows about my (poor) typing skills—everyone has something they don’t do well. That’s just part of life. Typo’s are my fault and I’ll refund your subscription if they are too much for you to deal with. I want that same offer from my factories. Or at least an offer to pay for the fixes! Only once or twice has that ever happened though. So, more often than not, we have to find ways to solve the problems or go crazy being angry all the time. Usually when we find problems, we're also told something like, "It's just really hard to do what you want" or "We've never done this before" or "What you're asking for is impossible. " I've found that one of the best ways to resolve production issues is to ask these questions back to whomever is telling you no: “Is it impossible or just difficult?” And: “Is it impossible or have you just never done it before?” Impossible means you need to find a new factory. "Difficult or "never before" simply means we need to try something new. Most production issues are NOT impossible to resolve. But because China is so task specific (a product of both hierarchy and a focus on labor) people are usually tied to very a very limited number of repetitive duties. They are paid to NOT make any changes or deviate from SOP so they do not solve problems. For example, this week we had a hat manufacture that had (handmade) perfect samples but was now having issues getting some layering correct in mass production. They even went so far as to tell my QC that what we were asking for was “impossible.”I went to the factory, they were politely embarrassed but agreed to build a hat with me. We walked through every one of the production steps with one of the hats, from cutting materials to final ironing and packaging. Now I’m not a seamstress (seamster?) so I had lots of stupid questions about why they were doing it the way they were. They had answers for most of the questions and a couple times they were honest and just said “that’s just how we’ve always done it.” After we produced the same (wrong) result together (“See? This is just what we can do!”) I asked them to switch up a couple of the steps in the process and see what would happen. They wouldn’t do it. I finally told them I’d pay for whatever happens—the wasted sample, the material, extra bills. Just switch up the steps, please. They did, amidst a bunch of grumblings and comments like, “It just isn’t done this way” and “I don’t think that our machines will be able to do this” and “You’re not a professional” and “We’ve been making hats for 15 years and never done this before.”What do you know? It worked! They were as surprised as I was and we solved the problem at no extra cost to me (which was the whole point). This wasn’t me solving the problem as much as it was just being in the factory and taking responsibility for trying out potential solutions, one of which happened to work out. I was talking with my friend, and 25-year China vet, Bernie, about why this lack of “just try it” attitude exists. He mentioned that it may have something to do with that fact that there is no one who is responsible for the mistakes it may cause or the fact that it’s really no one’s specific responsibility to try new things either. So no one does. It also opens the door to future “adjustments” and “changes” and gives the client the expectation that they are welcome to come in and change process and try other things out in the future. I agree and would add that there is no incentive to try new things as that means new processes and potentially new and currently unknown problems and/or costs. And if you get paid by the piece, why would you do anything but the same thing as fast as you possible can over and over—even if it’s wrong (as long as your step in the process is done correctly)?! In fact, if you're paid by the piece and you know something is wrong, it's better for you to not say anything and then have twice as much work (income opportunity) to do later. > **Side Note:** Did you ever see those management clips where the guy in the US factory pushes "the button" and stops the whole line? The boss comes down, they talk about the solution that this line worker thought up and all of a sudden the planets line up, world peace happens spontaneously and everyone is happy. You know the one I'm talking about, right? Well the Chinese have never see it. In China the guy would be fired, the loses from a delay in the line would be taken out of his salary--his family would probably be billed too, he'd be locked out of his dorm so they could sell his stuff, and if he had the guts to tell a manager that they were doing it wrong (or there was a better way) he'd be laughed at, cursed at. If foreigners were there at the time, they would be apologized to profusely and promises would be made that something like that would never happen again. > For whatever reason, it takes pressure from someone with influence (paying client), a manager (responsible party), a technician (the person running the machine) and then an agreement that the change can be repeated (without extra costs or time or money) in the production process to make even a simple change and have it last. I’m serious about getting all these people involved. If you don’t have a technician, you’re not getting the full machine capabilities—this person is really important and they don’t usually have any financial stake in the production process; they’re getting paid no matter what. They will say things that the salesman or the manager won’t and they know production details that that admin folks do not. Pay attention to these people, buy line workers or QC or engineers drinks gets and you’ll get access to privileged info and you’ll have a “friend” on the inside for future problems. And no matter how many friends you have on the line, you’ll never be able to do anything without having a manager sign off on the process. What I see more often than not is that this admin guy may also have to be at least the co-author of the solution too. Not always a bad thing since he’s then invested in making it work too. Knowing the process isn’t as important as knowing the final result/testing standards/quality spec’s and being here to make sure that you get what you want. I can’t know everything about every product that we manufacture. There are just too many variations. And I can’t do anything without a ton of other people signing off on the processes, prices, standards, timelines and contracts. So, as in all business, I trust a limited number of people in each part of the production process. Each has specific value added that I can’t do without. First, I trust the factory that they know what they are doing—even if I don’t agree with the way they are doing it. Hopefully I’ve done enough homework that this trust isn’t misplaced. But I’m also not arrogant enough that I don’t back up my own decision; we always have a second factory (or even third) that can do what we want if Option A fails. This also means that I’ve verified a supplier’s previous products, clients and as much history as I can find; so it’s not a blind trust. Let’s be very clear about the trust here. I trust factories to know how to make product and buy supplies. I do not trust them to value my business interests over their own. So I also trust in very very detailed bi-lingual contracts and instructions and lots of on-site QC.Further, I’ve learned that while there are specific steps and standards that can be translated from the West to China, there are many things that are done completely differently here but still achieve the same end result—which, again, is the goal. Don’t confuse the importance of the process with the importance of ending up in the right place. I know, sometimes you can't skip steps. Some times process IS the end result. But many times, what we think is absolutely necessary isn't even an option in China. Second, my staff—an honest QC, a detail orient project manager and an aggressing negotiator are as good as gold in China. If you have people that you can trust to look out for you first, you can get just about whatever you want in China (or anywhere). It is worth just about any amount of money to have quality, committed staff. Third, my clients—they are often banking their lives (second mortgages, loans, etc) on their products and they have a HUGE store of information/knowledge about what is and isn’t acceptable and usually a list of things that have already failed. They almost always know more than I do about their own product/industry than I do—and they want to share and be involved. People already in the industry are a gold mine of information, especially if they have a vested interest in your success. Chinese factories have issues with letting others in or letting people know that there is a problem. For some reason there is a deeply ingrained fear of mistakes being made public. I’ve said over that if you want to solve the problems (or even know about them) you have to be here and you have to ask the right questions. If you’re not here to ask, you won’t even know there is a problem until crappy (already paid for) product shows up in your warehouse. But even if you are here, you’ve got to get to the root of the problem before you can solve it. ### Famous Chinese Brands and other things you've never heard of URL: https://www.silkroadintl.net/famous-chinese-brands-and-other-things-youve-never-heard-of/ Last updated: 2026-07-18T14:48:29.000Z This [article](http://www.businessweek.com/globalbiz/content/jan2010/gb20100126%5F512186.htm?ref=silkroadintl.net) started a discussion on the [China Law Blog](http://www.chinalawblog.com/?ref=silkroadintl.net) LinkedIn group. Since I participated a bit (and I thought I summed it up nicely, "[if I do say so my damn self](http://www.imdb.com/title/tt0089155/?ref=silkroadintl.net)") I thought I'd share my comments here. Interesting article. Convoluted point. My ten cents:1\. He's right that Chinese brands aren't famous in the West yet. But while ubiquitous elsewhere in the 3rd world, they are not "famous" in other countries either. I do a lot of business in Vietnam and Thailand--Chinese brands of soap, motorcycles, noodles and other household items are everywhere--are they famous/have they built a brand or are they the lowest entry points into the market and so everyone carries them? Ditto Li Ning shoes--famous or cheap options with aging/unfamiliar reps (Shaq--failed at his own shoe line, JKid, Battie). [Maggie Rauch](http://chinasportstoday.com/en/blog/item/404/can%5Fchinas%5Fhottest%5Fsportswear%5Fbrand%5Fgo%5Fglobal?ref=silkroadintl.net) points out that they are not really going global at all, just trying to look like it for the Chinese Market (see #4 below).2\. Taking market share and "building a brand" are not synonymous. If a Chinese brands takes (the bottom?) 5% of Coke's high-end tea market, I'm willing to bet, they'll let them have it. When a Chinese brand makes a serious play at their connection with McD's or the NBA OUTSIDE of China you know that have both branding success and market share (and deep pockets).3a. The Chinese market is not the same as the West, true. That they don't understand this is the knock against Western brands that fail going into China. But like every other article on this topic, the pro-Chinese side here fails to mention that this is also the very same reason that Chinese brands don't do well in the West.3b. While HK and each city and class in the mainland are unique and must be understood individually, for some reason we're supposed to believe that expensive tea and Li Ning and other Chinese brands (that no one has heard of) are getting the entire "West" right all at the same time? And the first time they try it too! LA and Lisbon are the same? Paris and Chicago? Hell, LA and Irvine are not the same.4\. China is culturally (and internetly, yea I just made that word up) isolated. Not because they aren't connect or don't 'get out' but because they are so big at home that there is often limited motivation to move into the unknown when there are still so many opportunities in the known. Ok, and they have repressive investment, currency, internet, and travel laws too.5\. Read [Elite China](https://www.silkroadintl.net/elite-china-luxury-consumer-behavior-in-china-book-review/) or Luxury China for details on what the Chinese consumer really want. Wait 25 more years before anyone produces The Chinese version of Good to Great (even the examples of the past ten years like Hai'er have since stumbled) or the coffee table book: Famous Chinese Brands.6\. This [NYT article](http://www.nytimes.com/2005/06/29/business/worldbusiness/29iht-brands.html?ref=silkroadintl.net) from 5 years ago says the same thing as the BW article--China brands are going big soon. Look out world! Totally different brands mentioned than Shaun's article--what does that say about the longevity/global position of Chinese Brands?7a. [BW list of 20 Top Chinese Brands](http://www.businessweek.com/globalbiz/content/aug2006/gb20060825%5F962228.htm?ref=silkroadintl.net)\--where's Huawei and Hai'er? I guess since they are not "technically" registered Chinese companies they don't count? What does "Top" mean? Certainly not famous or global.7b. Of the 20 brands in the BW list less than 1/2 are private--only Moutai and Lenovo in the top 10 are. And if these are the best, then branding efforts are pretty pathetic. (Anecdotal evidence: I've lived here for 10 years and speak Chinese and haven't even heard of some of them IN China, let alone out of China.) I think that this is really a list of actually profitable state owned companies with a couple of semi-private companies thrown in just for (Wall) street cred.8\. The best book to read about this would be [Capitalism with Chinese Characteristics](https://www.silkroadintl.net/three-book-recommendations/)\--it points out specifically (written by a mainland Chinese scholar at Harvard) that NONE, not a single one, of the big Chinese success stories would even exist without Hong Kong. Most of the companies are not really Chinese and even when they are, they leave as quickly as possible to protect themselves from the Chinese govt. Finally, (or maybe this should have been first) if people can't name the Chinese brands off the top of their heads then how can Chinese companies be meeting any objective definition of "building a brand?!" ### Yea, but I'm not a Billion Dollar Global Giant URL: https://www.silkroadintl.net/yea-but-im-not-a-billion-dollar-global-giant/ Last updated: 2026-07-18T14:48:28.000Z While the Google controversy is truly fascinating, unless it’s directly impacting your ability to do business it really doesn’t matter exactly why Google says they might be leaving China. For most people it doesn’t even matter if they leave China or not. (For the rest of us in China, the new uber-slow, ultra-filtered internet is almost worthless, and probably [not getting better](http://www.ft.com/cms/s/0/092d5ab6-08fc-11df-ba88-00144feabdc0.html?ref=silkroadintl.net) any time soon—time to move the Shenzhen office to Shangshui.)One thing that most people should take from the Google mess is this: no matter how big you are, no matter how much money you throw at China, no matter how many other countries you’ve been successful in already, no matter if you hire local or foreign or both, the bottom line is that China is still a different beast. My friend from Wal-Mart and I have sat around and told the same stories about working with factories in China. Exact same problems, just different dollar amounts. Your size doesn't matter when dealing with China--no matter who you are. The pool is just so big here that most foreign companies are nothing here. China ranks first in the world in exports, first in car sales, third in GDP, first in people, first in internet users and the list goes on and on (and will continue to grow--better get used to it). [But it ranks 140 out of 183 in terms of freedom.](http://www.heritage.org/index/Ranking.aspx?ref=silkroadintl.net) Even if you don’t like this particular survey or the rankings (certainly a very [hawkish source](http://www.heritage.org/?ref=silkroadintl.net)), the fact is that China is wildly different than what most westerners are used to. It’s much more like the ASEAN countries—just lots bigger (than all of them put together). And that’s the real trouble. If you’re coming from Vietnam to China, or vise versa, you’ve probably got some experience that crosses over very well. If you’re coming from Perth or Detroit or Liverpool, probably no so much. The fact that HK, Singapore, Japan, Macao, Taiwan, South Korea, Malaysia and Thailand are ahead of China in the rankings is not all that surprising—they all had a 30 year head start and more international exposure. But that Cambodia and Lao are also ahead and openly repressive and [corrupt Vietnam](http://www.foreignpolicy.com/articles/2010/01/21/vietnams%5Fnew%5Fmoney?ref=silkroadintl.net) is about the same says clearly that economic development and engagement do NOT mean more freedom—business or otherwise.[Imagethief](http://news.imagethief.com/blogs/china/archive/2010/01/12/google-takes-a-match-to-the-china-corporate-communications-script.aspx?ref=silkroadintl.net), in his discussion on Google last week, highlights the fact that there are specifically predetermined ways companies are expected to work with China. Though speaking specifically to public communications the analysis is applicable to other areas of work in China as well. > Google has taken the China corporate communications playbook, wrapped it in oily rags, doused it in gasoline and dropped a lit match on it. In China, foreign companies tend to be deferential to the authorities to the point of obsequiousness, in a way that you would almost certainly never encounter in the United States or Europe. Scan any foreign company's China press releases and count the number of times you see the phrase, "commitment to China". Demonstrating "alignment with the Chinese government's agenda" is an accepted tenet of corporate positioning and corporate social responsibility work in China. This is testament to the degree of direct power that the Chinese authorities wield over the fortunes of foreign businesses in China. Even when foreign companies are in dispute with the Chinese government they tend to offer criticism obliquely as long as they have a business stake or operations in the country. Note, for example, the scrupulous diplomacy of [Rio Tinto's communications](http://www.riotinto.com/media/18435%5Fmedia%5Freleases%5F18433.asp?ref=silkroadintl.net) concerning the detention of its employees last summer, a far more serious situation than anything Google has encountered (although also with far more money at stake). > To me the key part for small business owners here is that there is a play book at all--and the people spending big dollars all know it. This is something that small companies typically learn the hard way, over years of (painful) involvement on the ground. Further to that end is an article from the [Guardian UK](http://www.guardian.co.uk/world/2010/jan/21/china-internet-censorship-great-firewall?ref=silkroadintl.net). The Chinese internet (and country in general), it says, is more like its own intranet than a hub in the global community. Despite how “small” the world is today, China is still very much an island unto itself. Like the (legitimate) criticisms aimed at the US for being too culturally insulated (physically isolated), China is the same, only with more people, less overall education, fewer if any emigrants and a more restrictive government. I’ve been saying this for years—China is unique. Business is business, I know. But the context within which business is conducted, personal relationships and communications here are all different from anything most have ever worked with in the West before. But "different" doesn't mean threat, although it may be threatening. In the larger picture, there are generally two theories bantered about by China watchers, the China threat and the engagement philosophy. James Mann’s book discusses why both have failed and if there is a third path. Anyone you talk to in China thinks that the rest of the world (especially many politicians the US and the [popular media](http://www.apple.com/trailers/sony%5Fpictures/karatekid/?ref=silkroadintl.net)) sees China as a threat. I agree that this is the most popular approach for many in the US (media)—they need a villain in their myopic, simplistic, sound-bite driven world of ratings. “China is good” doesn’t have nearly the impact as "Red Hoard" or "Chicoms" does. But even in the midst of this Google mess, I don’t think that China is an inherent threat. I do believe that China, for purely short-term domestic political goals thinks that the rest of the world is a threat to China (or at least wants the Chinese populace to think that the rest of the world see China as a threat). Because the Chinese Government is scared (of the rest of the world or of losing domestic power) it then acts like a threat—a threat because it’s actions are based on an aggressive fearful position that it’s being attacked. China thinks that the rest of the world acts just like they do—the specifics in the response to Google and the attacks on the Whitehouse, for example, are exactly what is going on here. China assumes that Govt communication issues/companies in the US are tied to and part of the US national interests and that the corporations actions are directed by the govt—just like they are in China. Of course they see everyone else acting like they act. We all do this. (And just because they are paranoid doesn't mean they aren't right.)But like the strict law defense that we’ve heard from China over the years (“Our laws are more strict than those in the US!” Yea, but you have no enforcement, so the laws are often meaningless.), just because China is honestly acting in their own best interest does not mean that they are not, at the same time and by those very same actions, threatening others. Just because you’re not an overt threat does not mean that you are not threatening. For precisely this reason, China is not a global partner or good neighbor. Could they be? Yes. Will they? I doubt it; only because they’ve determined that it’s not in their best interests to do so. > **Side Note:** And for those who are offended at this, this blog isn’t about “yea, well the US sucks too!” I really don’t care what you think about the US. This is about the question “will China act like the super power that it wants to be” (and claims internally that it already is). You want to complain about the US? Go get in line somewhere else.And I'm convinced that foreigners are trying to use some kind of reverse psychology on China--convince them that by our mass stupidity they really are the best in the world. These, for example, are defenses of China's GFW: "We have a very controlling govt in Australia too." "I guess that the people of China really do want to decide their own direction with the internet." So by this same logic, if we have human rights violations in Australia, then it's OK to have them in China too? How about other crimes? How about just crappy quality? That OK too? And which part of "the people of China" do you think are "deciding" anything about "their" internet or anything else for that matter? Sorry. I'm finished. > This Google mess bring to light specifically [how “business” can very quickly become nationalized and politicized](http://www.ft.com/cms/s/0/e6022fe0-05c6-11df-88ee-00144feabdc0.html?ref=silkroadintl.net). Just like Rio Tinto last year. What is considered “State’s interests” is up to anyone’s guess. Like so much of the content that is blocked on the Chinese internet or the people that are stopped at the border crossings—it’s random, political, emotional and event (rather than policy) driven. If you [don’t think that this affects you](http://www.ft.com/cms/s/0/e9306da0-0461-11df-8603-00144feabdc0.html?ref=silkroadintl.net), Mr-I’m-here-doing-business-on-a-tourist-visa, then you just wait for the combination of the tightening economy and this year’s census. One of the best lines that I’ve ever read about doing business is form Jame McGregor’s One Billion Customers: “Most business people come to China with way too much trust.”I strongly suggest that you read James Mann’s book, The China Fantasy. Excerpts from my review: > “But if you wonder why economic change in China hasn’t lead to political change or why no one seems to mind that every US president has taken a hard line on China to get elected but then reversed course in office then you should read [James Mann's The China Fantasy: Why Capitalism will not bring Democracy to China](http://www.amazon.com/China-Fantasy-Capitalism-Bring-Democracy/dp/0143112929/ref=pd%5Fbbs%5Fsr%5F1?ie=UTF8&s=books&qid=1218792895&sr=8-1&ref=silkroadintl.net).”“This is not a rah-rah China book and it’s not a China disaster book either—it’s a middle ground, a third path. Mann says that **it’s far more likely for China to continue to grow economically and remain repressive politically than any other option. The question is: can businesspeople and politicians and consumers in the west live with that.”** > ### Foreign Mental Blocks URL: https://www.silkroadintl.net/foreign-mental-blocks/ Last updated: 2026-07-18T14:48:29.000Z While working in China is a completely new experience for most foreigners—and a completely foreign experience at that—there are some things that are, well, pretty easy to understand, I think, but that many new-to-China foreigners just don’t seem to get. I’ve put together a list of issues that have stumped more than one foreign client in the past few years—and I made the list because all of these issues came up within the last month working with clients in the US during the current run-up to Chinese New Year.**1\. Order your 2Q products in the 4Q of the previous year NOT in the 1Q, just weeks before you need it.**Everyone knows that nothing gets done in the States the last week of each year. From about Dec 23rd to Jan 2nd you can just count on 50% of every office staff being out on holiday or taking their accumulated sick days or just not working (because everyone else they need to talk with is on vacation). So why is it hard to understand that China has the same event, just at a different time each year? Sure CNY is on the lunar calendar so it changes every year. But it’s still in same quarter, always in January or February, so it’s not that different. And besides, Easter is lunar; the dates for President’s Day, Mother’s Day, Memorial Day, Father’s Day, Labor Day, Columbus Day and Thanksgiving change every year too, but we don’t forget those. If your secretary was Jewish, you wouldn’t forget that she’s taking off for Chanukah (every year). So if your supplier is Chinese, how is CNY a surprise every year? Remember, all of China (the whole 1.5 billion people-population) goes on vacation for at least 10 days if not more; and all at the same time. So Chinese factories also place their 2Q orders early too. January is easily the busiest month of the year for everyone in China—and so if you’re late placing your order, you’re out of luck. Just assume that if you want anything before April of any given year, you’d better order it before Thanksgiving. Mark your 2010 calendars now—I’ll wait.**2\. Working with China is like working with a contractor--it’s always going to be late and over budget.**If you’ve ever worked with a contractor on any building or remodeling project you know that while the end result can be very satisfying, the process is usually hell. Delays, over billing, living through a mess in your house (or office); it’s just not pleasant until it’s completely finished. Working in China is much more like working with a contractor than working with a box store (which is the attitude that I feel like some people come to China with). China is not Wal-Mart or Home Depot or Target or Costco. You can’t just walk in and buy 5 or 500,000 pcs in the same amount of time. If you order 5,000 pcs you’re not going to be able to get 500,000 pcs made in the same amount of time. Even if the contract says the lead-time is 45 days, that does NOT mean that you’ll have product in your warehouse with in 7 weeks. If you get a bid on 350,000 pcs you’re not going to buy 70,000 pcs for the same price. Just because they’ve “done it before” doesn’t mean that your production run will not have issues. I caution everyone to assume that production will certainly have issues—the question is just how many issues you’re going to have. You’ll probably have at least 2-3 pull your hair out scream at the wall issues. Know it going in, and when it happens, you’re ready. And if it doesn’t, well….it never doesn’t. China is a contractor not a retailer. The price and supply of materials is not set even though you’ve got a contract with a fixed price. The time to create a new product (or even do re-orders) is dependant on many things that are not confirmed when you sign the contract (holidays, raw materials, mistakes, power outages, people problems, mistakes, transportation issues and weather, mistakes). I honestly don’t think that we’ve ever done an order for any product in the last ten years where at least one things hasn’t changed that affected the final date or price. (And yes, that’s what I get paid to do: eat the new costs and fix the problems for people that are not here themselves.)This is not an excuse for inefficient labor or poor quality production or mistakes or flat out lies. But it is a realistic view of working here. You have to know that just because “you can do it back home” doesn’t mean that you can have it done here—and let’s be honest, you can’t do it back home (for the same price) or you’d be doing it there now and you wouldn’t be here in China in the first place, right? With the cheaper prices comes more need for management and QC. Remember when you go factory direct you are cutting out a lot of fat in the pricing but you’re also cutting out a lot of legitimate services too.**3\. Just because the rules are the same doesn’t mean that business is the same. AKA: Driving in the US vs China, part 748.**When driving in the US you assume that everyone is going to follow the rules and you’re bugged at the one guy that doesn’t. China is the opposite—no one follows the rules and they are all just fine with that. In fact they usually only get angry at the foreigner that does follow the rules (and is driving different from everyone else). My experience, both driving and doing business in China, is that for the most part, foreigners are usually pissed off at just about everyone here; simply because no one follows the (*assumed*) rules. The real problem though, is with the foreigners whose expectations are based on experiences from driving and doing business in the West. Those experiences then color our expectations of how things are supposed to work over here. Processes here are completely different, even if the rules are the technically the same, so we spend an inordinate amount of time being frustrated. Again, this is not an excuse for illegal dealings or getting cut off by some jerk that doesn’t know where he’s going. But foreigners need to understand that while the West is mostly black and white with very little gray, China is mostly gray with very little black and white. And the black and white that there is, at best sporadically enforced, if at all. Part of the reason that the prices are so good here is precisely because enforcement of the laws is so lax. (There. I said it. The secret is out.) Another part of the reason that you can get done whatever you want here is because if there is money in it someone will figure out a way to get it done. You can do that (entrepreneurialism) when you don’t have the US nanny state breathing down your neck.**4\. Just because it’s your project doesn’t mean that you’re the best one to negotiate the prices or solve the problems (obviously, or you wouldn’t be having problems in the first place).**Sometime you need to play a different role (and that other role is NOT backseat driver either). When you contract with a factory and something goes so wrong that you need to bring in someone else to fix the problem, you are no longer in charge of the negotiations. Maybe you think that you are. Maybe you’re still paying for all of it. But the fact that you couldn’t fix it on your own tells everyone involve that you’re no longer the Chief. Problem is, you’re probably part of the original problem and the factory knows that if they can talk with you then they don’t to deal with the negotiator/problem solver that your hired (who is going to be infinitely more strict and consistent since they probably only get paid in full if the problems are all solved and the product is delivered). Take for example a project we’re working on with a factory in Zhongshan now. The client brought us in mid project because he needed help with, in his words, “getting the factory to do what they said.” But the original client is still answering all the emails from the factory; there really is no place for us as the project manager/problem resolver in the chain of command. After a few days of negotiations and QC with the factory, the factory emailed the client and complained that we were too strict and they couldn’t do what we were asking (which is only what the client originally contracted for). So client, scared that he won’t get his order, caves in and changes the standards. Now he’s paying the factory more for less and he’s paying us to do nothing too—and we’ve told him so. Sometimes you need to let someone else fix things for you. It’s not a knock on you personally, it’s just China. You may be great at managing projects and negotiating contracts back home. But you’re not in Kansas any more and you need to understand that while you may know product X better than anyone else in China, you probably don’t know China better than someone that’s been working here for 20 years.**5\. China is huge.**If you’re a geography major or you're here already, this is a no brainer. But if you’ve never been here before, I’m warning you. It’s bigger than you think. And more crowded too. “I’m going to China” is like saying “I’m going to the US.” Ok…where? New York? Chicago? Detroit? Miami? Houston? Denver? LA? San Francisco? China has 10 cities the size of LA or New York or larger. Chances are, where you’re going or where your factory is located is not convenient to anything else you’ll be doing in China. Similarly the chance of getting a positive response to the question “Have you ever heard of factory x?” is literally like finding a needle in a haystack. There are millions of factories in China and the likelihood of finding the exact one is slim to none. Pick the biggest tradeshow that you’ve ever been to and I’ll bet I can find two in Guandong Province alone that are bigger (both in terms of attendees and exhibitors). > **Side Note:** May favorite question. “Oh you’re from the US, do you know Joe in New York?” And the foreign counterpart: “Oh you work in China, do you know this American guy in X city?” I don’t know how many times I’ve been asked these questions—obviously the geography classes on both sides of the Pacific are lacking somewhat. > For example, we’re managing a shipment for a client now that includes product from 9 different factories in 5 different provinces. This is more than usual, but not unique. We figured out that we average 6 factories and 2 provinces per order in 2009\. The client in this case had already “found” 3 suppliers at a show and online. We never could reach 2 of the 3 factories the client “found” but we found the same (or better and/or cheaper) product at completely different factories. The point? You’re not going to fly into the Canton fair and come away with everything that you need for your company in one city let alone one factory—so plan accordingly. The corollary is that if you’re only looking in one area of the country, your missing out on opportunities elsewhere.**6\. Everything is relative.**Just as I was about to post this, I got a reality check. I was eating lunch and started talking with a lady who was living and doing work in India. She was in Guangzhou on vacation and couldn’t believe how nice it was. “No noise, so clean, everyone follows the (traffic) rules, it’s so easy to get around. You can actually walk on the streets and use the public transportation.” I was blown away. Coming from the States to China, I often find the exact same things she complemented as nightmarish. But coming from India, for her China is an absolute dream vacation! Pollyanna? Maybe a bit, but as I look out at the large square in the middle of downtown, blue skies and nicely dressed shoppers, I have to agree. Somewhat. The infrastructure here is really pretty good (even compared to the US), it’s just that there is more than a billion more people using it. The pollution is bad, but it’s bad in LA, Mexico city, Bangkok and India too. China is what you make of it. It’s a great opportunity for me. Frustrating at times, yes. But on balance a good experience. Will I spend the rest of my life here? Not a chance. But other than maybe, Phuket, I can’t think of anywhere else that I’d like to spend the next 50 years either. Good Luck! ### Another day, another interesting conversation (headache) with a factory. URL: https://www.silkroadintl.net/another-day-another-interesting-conversation-headache-with-a-factory/ Last updated: 2026-07-18T14:48:29.000Z We’ve been working on samples for a large order of clothes for over a year now. The clothes are cool, new, fun. But it’s been a very difficult process getting to the end of the road—the start of actual production. We’ve got the PO signed, the deposit paid and what happens? Factory tells us: “We don’t think that we can do this order. We’re really busy now.” This, of course, was the response to the payment of the deposit. No indications prior to the placing of the order that there would be anything problems. We’ve talked EVERY day in the two weeks preceding the actual transfer of funds and every conversation was great. “Of course we can meet these dates.” “Of course we’ll work with you QC.” “Of course we’ll meet all the QC standards (you’ll never be as strict as our Japanese clients.)”So we’ve spent the last week just trying to get them to keep the commitments that they agreed too (signed and chopped) in the contract. Every single line in the contract was review with them before they signed it. Every point was agreed to. Dates were confirmed. Qtty’s and time frames agreed to. And then they got the money and EVERY item that was important (material, quality, times, prices) were all no longer committed to. We have a negotiator/problem solver that we hired just for situations like this. She worked on the factory for three days before we got back to the point where we were when we made the deposit in the first place. (Side note--this person does the least amount of actual daily punch-the-clock work in the office, but saves us more money than any other single employee other than maybe QC.)Here is what she reported to me after the order issues had been resolved.1\. They did it on purpose. She said that there are times when there are legitimate concerns and changes and times when it is completely a strategy to get more money. The major difference between real and fake issues include: when you can track changes in material prices, you can see factory capacity already maxed out, or there are differences in the samples and production standards.2\. Fighting about the contract is not nearly as effective as begging. It’s all about face. They know they are wrong but allowing them power can often be as effective as offering them money. The end result of our negotiations is them being in power anyway—they have the deposit, the control the speed for the production line, they monitor the QC, purchase the materials—there is so much that could be sabotaged and be made to look it was just bad luck. So, giving them the face now and admitting that we’re at their mercy is both pleasing to them and the truth. We don’t pay any more (yet) and can still go after them legally if we had too. But at this point they are pretty pleased with themselves and we’re just glad to be back to square one.3\. Thanking them profusely (gifts) is the correct response. A dinner will cost $100 for the manager that told us “we moved other projects back for you.” A shirt or wallet (brand name but from Ross or another US discount store) gives tons of face and costs $20\. It fulfills the social obligation we had to the manager for “helping” and it saves us a bundle of money we would have wasted in transferring the order or suing them or fighting and raising the price. I’ve often said that sometimes the best option is paying more to get what you had already agreed to. When it’s a small gift or dinner it’s almost not even painful. Ego is a bit hard to swallow, but that’s about it. Sometimes you are totally in the right. Sometimes people lie to you. Sometimes there is nothing you can do about it. But the end goal, which is often very very hard to remember, is to get the project done (correctly, on time and on budget). You may not get what you wanted at the originally contracted-for price, but on balance you’re still getting what you want (and it’s still at a savings too!). ### Books to read if you’re coming to China URL: https://www.silkroadintl.net/books-to-read-if-youre-coming-to-china/ Last updated: 2026-07-16T04:58:15.000Z I apologize for not posting for a while. I was completing a year-long goal of losing 50lbs and running a triathlon, the Laguna Phuket Triathlon, this last week. I have never been so proud of 618th place in my life! I've also been incredible busy--I'm writing this from Vietnam. 5 countries in the last week and the contrast in national "personalities" is just striking--I'm literally overlooking a huge street party in HCM city right now. Vietnam just won the Asian Games football gold. Thailand was a vacation (whether we wanted it or not) and China is 24/7 business--we were gone for only a week and came back to a new building that had previously just been cement, with a totally new glass face. Taiwan seems more and more depressing each time I go and Hong Kong is still amazing. And as we're heading back to the US for Christmas (country #6 in 10 days), this will be the last post of the year too--other than the annual year-end review of the most popular posts. Thanks for reading and commenting. **Merry Christmas and Happy New Year.**At the last [Global Sources show](http://tradeshow.globalsources.com/TRADESHOW/TRADESHOW.HTM?ref=silkroadintl.net) in Hong Kong I was asked after my presentation: "So is there anything else that you think we (people new to business in China) should know? " I answered, "Yea, tons! Do you have a year? " Here's the longer answer to that question. These are my suggestions based on the books that I’ve read over the last few years. These are all books that I liked and found to be of value, or at least to be of interest. I tried to focus the list and limit the qtty to what I expected is a manageable amount of reading for someone who is busy moving to another country. Of course, this list is in no way exhaustive. Feel free to add to it. I’ve divided the suggestions into different categories based loosely on the situation of the coming reader. The first link is to SRI's book review (if I wrote one), and the second is to Amazon--you're welcome. My favorites are numbered (1-10).**First, Business Professionals**—meaning people that are going to be working in China in a more or less completely Chinese environment full time.[(4) Inside Chinese Business](https://www.silkroadintl.net/inside-chinese-business-book-review/), by [Ming-Jer Chen](http://www.amazon.com/Inside-Chinese-Business-Managers-Worldwide/dp/1591393272/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1260487185&sr=1-1&ref=silkroadintl.net)[(3) Chinese Business Etiquette](https://www.silkroadintl.net/chinese-business-etiquette-book-review/), by [Scott D. Seligman](http://www.amazon.com/Chinese-Business-Etiquette-Protocol-Republic/dp/0446673870/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1260487472&sr=1-1&ref=silkroadintl.net)[(7) The China Price](https://www.silkroadintl.net/the-china-price-by-alexandra-harney-book-review/), by [Alexandra Harney](http://www.amazon.com/China-Price-Chinese-Competitive-Advantage/dp/B001KOTUCY/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1260486588&sr=1-1&ref=silkroadintl.net)[The Chinese](https://www.silkroadintl.net/the-chinese-by-jasper-becker-book-review/), by [Jasper Becker](http://www.amazon.com/Chinese-Jasper-Becker/dp/0195149408/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1260486523&sr=1-1&ref=silkroadintl.net)[Managing the Dragon](https://www.silkroadintl.net/managing-the-dragon-by-jack-perkowski-book-review/), by [Jack Perkowski](http://) and (8) [Mr. China](https://www.silkroadintl.net/mr-china-book-review/), by [Tim Clissold](http://www.amazon.com/Mr-China-Memoir-Tim-Clissold/dp/0060761407/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1260486246&sr=1-1&ref=silkroadintl.net)[Business Leadership in China](https://www.silkroadintl.net/business-leadership-in-china-frank-t-gallo-book-review/), by [Frank T. Gallo](http://www.amazon.com/Business-Leadership-China-Western-Practices/dp/0470823658/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1260487279&sr=1-1&ref=silkroadintl.net)(5) The Coming Collapse of China, by [Gordon G. Chang](http://www.amazon.com/Business-Leadership-China-Western-Practices/dp/0470823658/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1260487279&sr=1-1&ref=silkroadintl.net)(Yes, there are a ton of other books that could go here--feel free to add to the list below--but these are the ones that I thought were the best.)**Sub category: Importers**—people trying to build their own brands and markets within China. All of the Business books above, plus:Luxury China, by [Michel Chevalier and Pierre Xiao Lu](http://www.amazon.com/Luxury-China-Market-Opportunities-Potential/dp/0470823410/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1260487661&sr=1-1&ref=silkroadintl.net)[(6) Elite China](https://www.silkroadintl.net/elite-china-luxury-consumer-behavior-in-china-book-review/), by [Pierre Xiao Lu](http://www.amazon.com/Elite-China-Luxury-Consumer-Behavior/dp/0470822678/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1260486780&sr=1-1&ref=silkroadintl.net)[Where East Eats West](https://www.silkroadintl.net/three-book-recommendations/), by [Sam Goodman](http://www.amazon.com/Where-East-Eats-West-Street-Smarts/dp/1439228302/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1260487606&sr=1-1&ref=silkroadintl.net)**Sub category: Buyers**—these are people that are here irregularly, but still have significant in-China experience. All of the Business books above, plus:[Poorly Made in China](https://www.silkroadintl.net/poorly-made-in-china-paul-midler-book-review/), by [Paul Midler](http://www.amazon.com/Poorly-Made-China-Insiders-Production/dp/0470405589/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1260486426&sr=1-1&ref=silkroadintl.net)Factory Girls, by [Leslie T. Chang](http://www.amazon.com/Factory-Girls-Village-Changing-China/dp/0385520182/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1260487798&sr=1-1&ref=silkroadintl.net)[All the Tea in China](https://www.silkroadintl.net/jeremy-hafts-all-the-tea-in-china-book-review/), by [Jeremy Haft](http://www.amazon.com/All-Tea-China-Money-Mainland/dp/1591841593/ref=sr%5F1%5F3?ie=UTF8&s=books&qid=1260486660&sr=1-3&ref=silkroadintl.net)One Billion Customers, by [James McGregor](http://www.amazon.com/One-Billion-Customers-Lessons-Business/dp/074325841X/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1260487890&sr=1-1&ref=silkroadintl.net)**Second, non-business types.** Maybe spouses of professionals and/or English teachers or students (non-business focus).[(9) River Town](https://www.silkroadintl.net/river-town-book-review/), by [Peter Hessler](http://www.amazon.com/River-Town-Years-Yangtze-P-S/dp/0060855029/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1260535979&sr=1-1&ref=silkroadintl.net)[Oracle Bones](https://www.silkroadintl.net/oracle-bones-book-review/), by [Peter Hessler](http://www.amazon.com/Oracle-Bones-Journey-Between-Present/dp/0060826584/ref=ntt%5Fat%5Fep%5Fdpt%5F3?ref=silkroadintl.net)[The Rape of Nanking](https://www.silkroadintl.net/the-rape-of-nanking-book-review/), by [Iris Chang](http://www.amazon.com/Rape-Nanking-Forgotten-Holocaust-World/dp/0140277447/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1260536046&sr=1-1&ref=silkroadintl.net)[Will the Boat Sink the Water](https://www.silkroadintl.net/will-the-boat-sink-the-water-book-review/), by [Chen Guidi and Wu Chuntao](http://www.amazon.com/Will-Boat-Sink-Water-Peasants/dp/B002N2XF50/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1260536119&sr=1-1&ref=silkroadintl.net)Wild Swans, [Jung Chang](http://www.amazon.com/Wild-Swans-Three-Daughters-China/dp/0743246985/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1260536206&sr=1-1&ref=silkroadintl.net)Life and Death in Shanghai, by [Nien Cheng](http://www.amazon.com/Life-Death-Shanghai-Nien-Cheng/dp/014010870X/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1260536257&sr=1-1&ref=silkroadintl.net)Soul Mountain, by [Gao Xingjian](http://www.amazon.com/Soul-Mountain-Gao-Xingjian/dp/0060936231/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1260536345&sr=1-1&ref=silkroadintl.net)Chinese Lessons, by [John Pomfret](http://www.amazon.com/Chinese-Lessons-Classmates-Story-China/dp/0805086641/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1260536400&sr=1-1&ref=silkroadintl.net)[China Hands](https://www.silkroadintl.net/china-hands-book-review/), by [James R. Lilley and Jeffery Lilley](http://www.amazon.com/China-Hands-Adventure-Espionage-Diplomacy/dp/1586483439/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1260536446&sr=1-1&ref=silkroadintl.net)[Lonely Planet China](http://www.amazon.com/China-Country-Guide-Damian-Harper/dp/1741048664/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1260536596&sr=1-1&ref=silkroadintl.net), here's the [web site](http://www.lonelyplanet.com/?ref=silkroadintl.net) too.**Sub category: Politics and/or higher education** [(10) China: Fragile Superpower](https://www.silkroadintl.net/china-fragile-superpower-book-review/), by [Susan L. Shirk](http://www.amazon.com/China-Superpower-Susan-L-Shirk/dp/0195373197/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1260536824&sr=1-1&ref=silkroadintl.net)The Tiananmen Papers, by [Liang Zhang](http://www.amazon.com/Liang-Zhang/e/B001JX1G5A/ref=sr%5Fntt%5Fsrch%5Flnk%5F1?%5Fencoding=UTF8&qid=1260536891&sr=1-1&ref=silkroadintl.net), Andrew J. Nathan, Perry Link, and Orville Schell (1)Gifts Favors and Banquets (anthropology), by [Mayfair Mei-Hui Yang](http://www.amazon.com/Gifts-Favors-Banquets-Relationships-Politics/dp/080149592X/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1260537183&sr=1-1&ref=silkroadintl.net)[(2) Capitalism with Chinese Characteristics](https://www.silkroadintl.net/three-book-recommendations/), by [Yasheng Huang](http://www.amazon.com/Capitalism-Chinese-Characteristics-Entrepreneurship-State/dp/0521898102/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1260537255&sr=1-1&ref=silkroadintl.net)[The Great Wall, China Against the World](https://www.silkroadintl.net/review-the-great-wall-china-against-the-world-1000bc-2000ad/), by [Julia Lovell](http://www.amazon.com/Great-Wall-China-Against-World/dp/0802142974/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1260537632&sr=1-1&ref=silkroadintl.net)[What does China Think?](https://www.silkroadintl.net/book-review-what-does-china-think-by-mark-leonard/), by [Mark Leonard](http://www.amazon.com/What-Does-China-Think-Leonard/dp/1586484842/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1260486868&sr=1-1&ref=silkroadintl.net)The Search for Modern China (history), by [Jonathan D. Spence](http://www.amazon.com/Search-Modern-China-Second/dp/0393973514/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1260537735&sr=1-1&ref=silkroadintl.net)Chinese Religiosities (anthropology), by [Mayfair Mei-Hui Yang](http://www.amazon.com/Chinese-Religiosities-Afflictions-Modernity-International/dp/0520098641/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1260537803&sr=1-1&ref=silkroadintl.net) ### “Yea, I know where it is” and other lies. URL: https://www.silkroadintl.net/yea-i-know-where-it-is-and-other-lies/ Last updated: 2026-07-18T14:48:29.000Z Sometimes doing business in China is like getting in a taxi. The guy pulls up to the curb and you get it. It’s a working vehicle, probably not too old, middle aged guy driving, license on the dashboard, working meter, lights, gauges, etc. Everything you’d expect. You tell the guy (or show him) the address and he takes off. Most of the time you get where your going and were only scared half to death once or twice—no actual physical or financial harm to your person. But sometimes you realize that he’s not going the right way. When you know more than your driver, you can expect there to be problems. Your questioning of his methods is usually meet with one of a couple standard answers. “Oh, you meant *that* hotel.” Or. “I just know the area, I figured you’d know the building.” Or, “I don’t know, I thought you were going to tell me.” Or, “This is a short cut.” Or “That road’s closed.” Or, in the worst cases, “If you don’t think I’m going the right way you can get out and walk.” Either way, you know these answers mean a round-about trip to raise the price, fake money back as change or the guy running over your foot as he drives away grumbling at *your* poor attitude. It’s amazing how many of the same things happen when you’re doing business. Example #1\. “How should I know where the Vietnam embassy is!? It’s such a small country, nobody cares about it.” (Quote from a HK taxi driver last month.) Yea, but it’s the most important place in HK for me at that moment, so please, either call someone else or use the damn GPS and find it. I’m still surprised at how difficult it can be to get factories to make it easy for us to buy from them. More often than not we’re told something like, the catalogue isn’t up to date, the products offered are not available for sample only purchase, or they only want to do business with foreigners and don’t want to talk to another Chinese (my staff). I have to say, I think that the quality it of service in HK is really on the slide. I had to speak Cantonese to this guy to get him to help me find where I’m going (and I don’t speak Cantonese). Before you say I’m just complaining, remember that HK is still officially a bi-lingual country (Cantonese and English) and everyone in school for the last 100 years has had education in both languages as well as Mandarin for anyone under 20\. So how do I get stuck with the one guy that doesn’t know where I’m going AND can’t speak anything but Cantonese? Just lucky, I guess. I think that you can get much more done in HK in Mandarin than in English nowadays. This is both good and bad. First it’s fine for me since I can speak Mandarin (yes, I’m the most important reason to me—you’re first on your own blog too, admit it). Second, it should be good for Hong Kongers (Hong Kongese) since most of their economy is now coming from Mandarin speakers—especially service industry folk like taxi drivers. But according to my wife (a Mainlander with HK ID) and other mainlanders, people in HK are increasingly rude and condescending to the “new money” from the mainland. She has a much worse experience in HK than I do even though she speaks Cantonese. Of course, it’s all relative. Despite getting lost on the way to the Vietnam embassy (which is quite small and hard to find, I’ll admit) I typically have a much harder time in Mainland than I do in HK—HK is usually where I go when I need a break from China.2\. One more from a HK taxi driver today, “I’m driving the car. You can’t expect me to know the address too.” My wife’s response: “How the hell do you know where you’re driving to if you don’t recognize the building name or the street address?!”This is why I wrote the post today—seeing my wife get angry with the taxi driver made me realize that I have the same conversation over and over with factories, like I mentioned above. You start a project and then when the money is paid all of a sudden, you can’t tell where they’re going with it—or worse yet, they don’t know where their going and you’ve got to find the way for them. Of course, if this wasn’t the case, I wouldn’t have a job over here. So part of me just sighs and goes back to work. Probably the worst example of this is this line from a factory we worked with last year on some clothing. “I don’t know what the Chinese government’s standards are, I’m just a manufacturer. You’ll have to ask them for that.” Now I'm not talking about standards for import to other countries--just exporting from China. There are specific standards for clothing that must be met for export from China and specific licenses that must be had to actually export finished goods. Good grief.3\. “Let me tell you, dishonest is part of their business.” When you have a couple of people in your office that you can really trust, you often get more information that you really want confirmed. Thinking that someone is being dishonest still gives you the out, “I don’t think they’re doing that on purpose.” But then when it’s confirmed, you’re left with the fact that you’re working with a crook and you’d better play your cards accordingly. Scary. Today we got a piece of email about some art at a factory. Now that the order is placed, the deposit is paid and the project is on the clock we are, for the first time being told that artwork needs additional screens/films—at a few hundred dollars per SKU (multiple SKU’s). Could this be true—could they really need more screens? Sure. But did they have art before? Yes. Did they bid out the project/art before? Yes. Did they confirm the files we sent them already? Yes. So to me the timing is more than suspect—it’s flat out dishonest. I know that every process has procedures that need to be followed. I know that every factory has rules that need to be obeyed. I know that sometimes people do make honest mistakes. I don’t have any issues with any of that that. What I do have issues with is when the factory doesn’t tell us the rules or procedures upfront and it costs me money later. Or if there are specific rules that are broken by the factory themselves (to get our business) and then we’re asked to pay for it later (like what is happening now). Or if they don’t own up to mistakes and claim that “this just is what it is—more cost for you!”We had another client hire us just this week for a similar problem. The client found and started working with a factory in the summer. In September, the factory confirmed (in writing) that production could be finished and shipped by Halloween to meet the expected Holiday sales. We're now involved because molds won't even be finished until Dec 7th! Production won't even be finished this year. Getting a deposit is often the ONLY goal of many suppliers--History has taught factories that once a buyer is hooked there is almost nothing that they won't put up with to get their product without losing the initial monies. We placed an order with a factory in Vietnam last month only to find out that instead of QC visit this week they are moving to a new location. They offered our money back, but also told us straight out that if they told us last month they were moving this month, they figured they wouldn't get the order or the future business--so they didn't tell us. We took our money back and placed the order with another factory. Since they were our preferred vendor option, if they'd told us there would be a delay in the firs order, we actually would have been fine with it. Now they get nothing. Finally, I find the news, like taxi rides, to be oddly related to doing business in China—OK, you’re right, I’m either working too hard at analogies or just working too hard. But if you’re reading this you’re not working at all. So cut me some slack. Reading the news to understand business in China. Obama’s trip to China wass “highly scripted.” Wow! You don’t say?! No one could have possible seen this coming. According to the [WSJ](http://online.wsj.com/article/SB125835068967050099.html?ref=silkroadintl.net) there are a couple of “reasons” for this. Face and the fact that the US has more debt than clout are, surprise surprise, still important in China. It’s important for you too. If you give your factory face and if you pay in cash you can, more likely than not get whatever you want. ### Before we just did business together, but now… now we’re friends! URL: https://www.silkroadintl.net/before-we-just-did-business-together-but-now-now-were-friends/ Last updated: 2026-07-18T14:48:29.000Z I spent one day this last week translating some new product negotiations for a client that is here visiting a factory that I’ve previously visited as 3PQ. The boss and sales manager picked us up and we spent 2-3 hours in the factory talking about project specifics before heading out for the obligatory long lunch. Both the client and I commented that we were pleased and surprised to actually get the business done and out of the way prior to the lunch. As we headed out the door to the restaurant the boss said to me, “you’ve been here two or three times, before we just did business together, but now that we’re going to lunch, now we’re friends!” My response was that I wasn't really a client before as I was just doing QC for someone else. The boss didn't buy this for a minute and he told me that I've been here enough that I should have given him face earlier than today. This, and a couple of other comments to me, confirmed again to me some of the conceptual differences in how business is done over here. > **Quick side note:** When we go out on QC visits we have a very strict rule that no other party outside of SRI can pay for food, transportation, lodging, time, salary or anything else; nor can our QC take ANYTHING, even a Coke, from anyone while on the visit. When I go out, which I do at times when were busy or if I’m working for special clients, I follow the same rules—and factories never ever understand. “But you’re the boss?! You don’t have to follow the rules.” is usually the response I get. Some are quite insistent that I “give them face” and let them take me out to eat or at least sit in their office and have a few drinks with them. Most people eventually understand, but I know I’ve offended more than a couple of people by steadfastly refusing to go out with them. So be it. This exercise in and of itself gives insight into the culture of personal relationships and moral relativity that is China today. > **First, going to lunch was the Chinese equivalent of a background check.** Prior to just a few years ago, it was basically impossible for a Chinese company to run a background check on a foreign buyer. There are a number of reasons for this, none of which are “they were not available.” Most buyers in China are just that—professional buyers not companies/people going direct. Getting a background check on a trading company that has an office in HK wouldn’t tell the factory much—and the trading company may have personal connections with the factory in the first place (hence the orders!). The increased use of and popularity of online sourcing sites and trade shows in China and the surrounding regions are quickly changing that. Secondly, even if the buyer was going direct, the factory wouldn’t necessarily be wrong to take a cash order from a foreign client with bad credit. Remember, prior to 2005, the US dollar was really all that anyone over here wanted—and 30% down 70% to ship was safe for the factory. If the buyer agreed to that and was paying in USD there really was no reason to not accept the order. Third, many if not most factories didn’t start off with the necessary export licenses 10 to 20 years ago when they first opened their doors (I’m speaking of factories in Guangdong province and SEZ’s as they were really the only one doing export prior to 2000). So their only customers were locals and trading companies. And for domestic orders there was no financial information available (except for tax records) anyway.**Second, contracts were not nearly as important as the ability to talk directly to the clients.** No matter how you paid, the supplier took security in knowing where you were, not what paperwork you had. Problems are still today resolved by personal negotiations, not via contract arbitration. There is no Chinese precedent for calling lawyers into the mix for contract squabbles. Lawyers, until as recently as 5-10 years ago, were VERY limited in what they could actually do and the law surrounding commercial disputes was equally limited. Factories still want to know where buyers are physically located within China—offices, homes, and where people came from, etc. The security comes from “I know where you live” more than I have your name on a piece of paper. Besides, as I said before, Chinese is not a detail language and there will be, of necessity, future discussions about the exact meaning of much of the contract’s details.**Notice that both of these statements are in past tense.** Chinese companies today both know how to manipulate contracts and do background checks just like anyone else in the West. Not every supplier is this up-to-date, and a PO for stock items is sometimes enough. But I suggest that for anything customized or any order over a few thousand dollars you have to have a contract and you probably should have lawyers with China experience write it for you. And though many suppliers are not as savvy in the English legalese as your lawyers will be, the modern Chinese law both requires Chinese contracts (unless stated otherwise in Chinese) and is much much more detailed and improved in consistency of interpretation than what it was even 5 years ago. Do both the culturally expected thing and do the safe legal thing--do more because China is risky, not less. While the business environment today is much different than that of even 5 or 10 years ago the social habits of doing business have not changed much in the last 30 years. While you may be able to visit your factory or company in a 50 story building in the CBD of a major city, don’t be fooled by the physical trappings of western business. This is still China. You don’ have to pay any one off or go get totally drunk to cement the relationship. But you should both go out to lunch and sign a contract. You should make an attempt to both become friends and do business together. Really, not a bad combination if you play the game right. Remember that in this game, the playing field is not level. You are not both coming to the table as even partners in some grand expression of mutual opportunity and equality. For example, the factory has the ability to control almost 100% of what you will see, test, sample and receive. You need to spend as much time as possible checking (and double and triple checking) everything you can to confirm that you’re indeed getting what you’ve ordered. This is not to say that Chinese are dishonest, and going there is the surest way to make sure your supplier loses face and you’ll not get what you want. But I am saying that most Chinese suppliers will very conscientiously do absolutely everything that they possibly can to save money on each and every order. If that means that they replace a specific component with a “similar” piece that you either didn’t specify or didn’t test (but didn’t specifically decline), then so be it. It is incumbent upon you to make sure that you’re getting what you want. This is true for everyone, the most famous example is Bill Clinton’s joke of a visit last decade in which he was shown everything that he expected to see—they gave him the face he expected to receive. And buyers get the same treatment. Factories know exactly what you expect and what’s been disappointing to previous clients and what other clients (and auditors) have previously approved. They want you to be happy. Happy visitors means more orders (problems can be solved later, over lunch, when we’re friends). Regardless of where or with whom you work with in China, “face,” however you define it is still very important. Even if it’s just meeting together to break bread (fry rice?), you need to sit down with your Chinese counterparts and give them some face time. Don’t beat them up over mistakes (and even flat out deceptions) in public. Publicly support their efforts to improve/grow. Basically play nice and realize that you probably don’t know all the rules of the game, even if you’re currently “winning.” Face is still a big deal here and if you recognize that, [it’ll help you more than you know.](http://www.forbes.com/2009/10/15/china-piracy-counterfeiting-leadership-managing-infringement.html?ref=silkroadintl.net) ### Read very very carefully URL: https://www.silkroadintl.net/read-very-very-carefully/ Last updated: 2026-07-18T14:48:29.000Z Sometimes the details that really kill you are not in the printed text but in the white spaces--what's not said. Here are four examples of how careful reading gives a completely different story than what was originally reported.**1\.** [**Retail sales are NOT good in China.**](http://www.chinaeconomicreview.com/cer/2009%5F10/Data%5Ftroubles:%5FRetail%5Fstatistics%5Fdont%5Ftell%5Fthe%5Fwhole%5Ftruth.html?ref=silkroadintl.net) Unless, of course, you count food, services, gas and auto ~~loans~~ sales—which China does count and much of the rest of the world does NOT.\*\*\*Quick Monday Morning update. [The iPhone isn't selling well (subscription required).](http://online.wsj.com/article/SB10001424052748703294004574509181789222564.html?ref=silkroadintl.net) Really? No kidding? Well let's think about this for about 2 seconds. 1\. It's relatively old (I bought mine in China more than a year ago). Chinese are just as up-to-date as the West in terms of brands/fashion, maybe more so so why buy now? 2\. It's expensive and retail sales are not good in China (no money for new toys here either). 3\. Bonuses are paid in Feb--people will (maybe) have extra cash in 4+ months, not in October. If you want to know if this will be successful in China, wait for the next post CNY software or hardware update and then look at the numbers again.**2\. The Chinese market is HUGE.** Unless, of course, [none of the people that you’re marketing to spend any money](http://managingthedragon.com/?p=601&ref=silkroadintl.net). > “Statistics show that there are more than 300 million basketball fans in China, surpassing the entire U.S. population…”“Despite its promise, the income earned from the China market is estimated to be less than $50 million, far less than the $3.5 billion earned domestically in the United States.” > Haven’t seen many of those “China will lead the world out of recession” articles in the last 6 months. Hmmm….**3\. High context vs low context.** I was reminded of this last week in a heated negotiation over some details that were included in a Chinese contract (translate originally from English). The sticking point wasn't what was said but about who was responsible for understanding the meaning of specific professional terms in the contract. Chinese is a high context language--meaning you need to understand what's going on culturally and "behind the curtain" to get the full picture. If that wasn't hard enough in a language as, well, as foreign as Chinese is to most Western European language-speakers the burden of learning and (correctly) applying all this context is up to the LISTENER not the speaker. In English, a low context language (specific words that don't need as much context), it is the responsibility of the SPEAKER to make sure that his message is clear and appropriate to the audience. Not so in China. This is specifically why contracts in English are the final word (literally) and in China they are just a starting point for further negotiations. There is no way that a Chinese document can detail all the spec's of any given items within a significantly larger context being understood in different ways by both parties. Add to this the fact that Chinese does not add new characters to it's language nearly as fast (hundreds a year, mostly unofficially) as English does (officially hundreds of thousands each year) and you understand why detailed contracts are as foreign to Chinese business as Chinese characters are to most Americans. In our case the factory claimed they didn't understand our use of the wording--we said they shouldn't have signed a contract they didn't understand. They didn't disagree but they didn't admit any fault either. Fortunately for us, there were two sections in dispute and the other one was significantly more expensive for the factory--so we were able to make a trade and get the problems fixed for basically what we had originally agreed to. Like I've said numerous times before, sometimes the best solution is being happy to pay more for what you originally contracted for.**4\. Know where you’re going before you start the trip.** This is an older (Sept) piece that I never posted, but the question came up a couple times in the [Global Sources](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-GIFTSPREMIUMS/CONFERENCE.HTM?ref=silkroadintl.net#Buying) show last week so I’ve resurrected it (don't kill me, it's helpful if not exactly topical). I’ve written before about concept of China’s interstate commerce laws making the country more like a loose confederate of countries rather than a united country. [Here’s is a new take from the WSJ](http://blogs.wsj.com/chinajournal/2009/09/04/counting-22-chinas/?mod=rss%5FWSJBlog&ref=silkroadintl.net).This is important for foreigners coming to understand before they get here for two reasons. First, if you’re into general manufacturing or sourcing or in need of multiple products than your location will be different than if you’re doing finance or logistics or investment. If you’re setting up an office, you need to know where you want to be in relation to your suppliers or distributors. If you’re planning on marketing within China you must know where your market and DC's are before you'll know where you want to be. Second, if you are doing research into living conditions of Chinese cities I'm convinced that maybe the single worst thing you can do is read about those cities online. Foreigner posts and government sponsored info will typically give you only the highlights and lowlights--not what you'll have to deal with on a daily basis. You really need to see these places for yourself. I suggest that you stay for a week and "try it on, if you can. Oh yea, and your spouse better be included in that discussion or you'll be looking at a divorce lawyer faster than you can say "Chongqing, what a dump! " (This was the lead line for the Lonely Planet's chapter on Chongqing when I first moved there in 1995.)I got two or three emails a month from people asking me where they should locate and my response is always the same: "Where are your main suppliers/partners/DC’s? That’s where you should locate. " One guy from London was doing significant business with a supplier in Chongqing and wanting to know what I thought about him relocating to Beijing, Shanghai or Chengdu as he didn’t think that Chonqing was a good place for his family. Now having lived in Chongqing before I agree that Chongqing may indeed not be good for you or for your family. But it’s not like Beijing or Shanghai or Chengdu are any cleaner or safer. And being in a city that is not convenient for your business interests means that you’re going to be on the road a lot—which isn’t good for the family either. My personal experience is that being gone on business all the time is worse for the family than a couple years of pollution and inconvenience. My basic recommendation, no matter if you’re coming here for a month or a year or a decade, is to do some research before you get here but actually visit the potential cities to determine where the best place for you should be. When I moved to China the second time I went to Guangzhou, Shuzhou, Shanghai, Ningbo, Hong Kong, Bangkok and Shenzhen to visit suppliers and to check out possible relocation options. We determined that, based on the location of a majority of our factories, transportation options, living conditions and costs, that Shenzhen was the best bet for us (for our company) and then made things work for the family. 7 years later this is still true--we do 70% of our business in Guangdong province, about 20% in other provinces and 10% in Southeast Asia. ### “What you must do, what you should do and what would be nice to do.” URL: https://www.silkroadintl.net/what-you-must-do-what-you-should-do-and-what-would-be-nice-to-do/ Last updated: 2026-07-18T14:48:30.000Z Do you know the difference?[Johnny Sandhu of BV](http://www.bureauvertias.cn/cps?ref=silkroadintl.net) does and he presents a great PP on it at the [Global Sources Trade Show](http://tradeshow.globalsources.com/TRADESHOW/TRADESHOW.HTM?ref=silkroadintl.net) Seminar, [Buying from China: What new buyers need to know](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-GIFTSPREMIUMS/CONFERENCE.HTM?ref=silkroadintl.net#Buying).First, what you must do includes anything that is mandated by either the Chinese government of the government of the country that you’re importing into. If you don’t comply with these regulations you’ll be breaking the law and maybe get your goods either confiscated or stuck in port. Part of this is also your necessary research into what expenses (duties, taxes) you’ll be paying to legally export and import your product. Your 3PQ and customs broker can/will tell you each and every thing that you must do to meet compliance standards—all you have to do is ask. Second, what you should do would include anything that is not mandated but is morally right and/or is conventionally accepted practice in your industry. This is where I find that many people coming to China lose their way. The idea that “China is risky, so let’s just go for it” is really the wrong way to see things. In fact, China is really not much more risky that you're willing to make it yourself. [CLB](http://www.chinalawblog.com/?ref=silkroadintl.net) just ran [this on trademark law in China](http://www.chinalawblog.com/2009/10/china%5Ftrademark%5Flaw%5Fits%5Fall%5Fgo.html?ref=silkroadintl.net), for example. The funny thing about foreigners here is that some of us will scream and rant about how bad it is here but then turn around and say something akin to “when in Rome!” You can’t have it both ways. If you expect your supplier to be honest with you, you must be honest with him and not give him (or anyone else) any reason to question your ethics. Bottom line? Just “do the right thing.” Meet all the standards you can and are expected back home, even if you’re not going to get tested for them. Does this cost more? Yes. Does it take more time? Yes. Is it worth is? Yes. Definitely. Sometimes we lose customers because we tell the ugly truth—we over estimate rather than underestimate expected time, problems and costs. We are rarely wrong in our estimations and when we are it is always because we were still too optimistic (but much closer to reality than we would have been otherwise). As you can guess, because of this policy, we are hardly ever the fastest or the cheapest bid. But I regularly have people come back to me and hire me to fix projects they started with people who gave them “better” bids than what we offered but can’t meet their own commitments. The point is this: I believe in playing it safe and I believe in karma. Over-estimate problems/expenses and underestimate success/profit and you'll probably come out just about right. And even if the right thing looks bad on paper, do the right thing and you’ll come out better for it in the end. Third, what would be nice to do. This is anything that you think will give your product a marketing or other advantage. This has nothing to do with testing or taxes but everything to do with sales and/or product uniqueness. These are also the things that the 3PQ can’t define for you. You cannot mix these three categories up (must, should, nice). If you focus on the nice-to-have and neglect the must-have you may find that your product can't be imported into your home country or after you go through all the headaches of production in China there is a 217% duty that puts you in debt rather than makes you any money at all (what happened to someone I just met at the show last week). ### The City of *#$&ing Yes. URL: https://www.silkroadintl.net/the-city-of-ing-yes/ Last updated: 2026-07-18T14:48:30.000Z Questions from Buyers at the [Global Sources Electronics Show](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-ELECTRONICS.HTM?source=EVENTCAL%5FCSFPROMOBOX%5FshowText) in Hong Kong this past week.**1\. Buyer Question: So where do you live in Cina?** **My Answer:** Shenzhen.**Buyer Response:** “Ah… the (beeping) city of (beeping) ‘Yes.’ To bad I’ve never found a (beeping) factory that can actually do what they (beeping) say they can.” (No exaggeration, he really said this. Actually, I probably left out a couple of bleeps.)Following up on this—just this AM—in the office we’re talking about a shipping schedule that is later than we’d like due to the recent holiday. The question in point isn’t the date, it’s the way the dates were communicated. I was told “usually the closing date is Wednesday each week.” But the reality is, because of the holiday, there were two weeks that this was not the case. Specifically, we were supposed to ship sometime during those two week, but didn’t because what was “usual” and what was really happening was not the same. Maybe this seams like a trivial point. “Of course you can’t expect things to work the same on holidays” you may be saying. But that is the point—I don’t expect things to work the same on holiday, but I do expect those differences to be clearly detailed when I ask for them. I don’t want to hear “Yes” now only to find out later that “Yes” really meant, “Yes, but not this time.” As the buyer had already experienced, this is way to common in China.**2\. Buyer Question: Where do I go to find out what is legal and illegal to export from China and into my home country?** **My Answer:** First talk with your customs broker. Their job is to be up to date on these specific things. Other resources would included your freight forwarder, local government offices. Be warned, I’ve never heard of or found a really user-friendly website for Chinese customs. You’re going to need someone that can deal with customs in Chinese to find out exactly what the domestic requirements are.**3\. Buyer Question: What language should I use when I’m contracting with my Chinese supplier?** **My Answer:** See [China Law Blog’s answer ](http://www.chinalawblog.com/2009/10/dual%5Flanguage%5Fchina%5Fcontracts.html?ref=silkroadintl.net)to this very question—just this week! In brief, it's Chinese by default unless your Chinese contract specifically says (in Chinese) that it's the other language.**4\. Buyer Question: Is there anything else that you think that we need to know about working in China?** **My Short Answer:** Tons! How many years to you have?**My Long Answer (you knew I couldn’t just have a short answer):** Going to China from western Europe or the US is not the same as going from Chicago to LA on a business trip—the sights and accents are different, but it’s basically the same. China is not the same. You need to have both a product/industry expert (usually you) and a China expert to work effectively in China. Remember, language, logistics, negotiations, banking, legal management and cultural processes are all significantly different. Even many Overseas Chinese have difficulties here because it’s structurally and culturally so different. Basically, Register your product/brand, Research your potential suppliers, Visit production sites, Contract all specs and details, QC every order multiple times, and Confirm everything over and over again. Do these things for every supplier and every product, every time.**Here is a list of (my) Rules for Working in China.** 1. The number of factory visits you make before and during production directly equals the quality of the product you’ll actually export. 2. No one cares about your product as much as you do—don’t expect them to. 3. You will never guilt a Chinese factory into “doing the right thing” if it costs them money. 4. If you don’t do QC you might as well take your money to Macao (or Vegas or Monaco). You’ll get about the same odds and have a much better time losing your money. 5. Never pay any money without doing some (a lot) due diligence first. 6. Always pull your own samples for QC and testing. 7. Technology is great, but fax, phone and email are not enough to manage production in China from thousands of miles away. 8. You can’t do QC via Skype video conference. 9. If you didn’t record it and can’t reproduce it then it never happened. 10. What you see online and what really exists can be two completely different things. 11. Quality issues are really money issues. Every time. Without exception. 12. On a good day you can have any two, but not three, of the following: quality product, low prices, quick production turnaround. 13. K.I.S.S. your communications over and over again.. Keep It Simple, Stupid. Remember while English may be your second or third language it’s definitely your supplier’s second or third language. So be VERY clear in everything you say. 14. The more customization your product requires the more problems you’ll have and the more time you’ll need to get it done right. 15. Sometimes paying more to get only what you originally contracted for is the best option. 16. The more time you have to ship your product the lower the cost will be. 17. Payment terms (Net 30, for example) and [Incoterms](http://www.icc-deutschland.de/?ref=silkroadintl.net) (FOB, DDP) are not the same thing. 18. Unless you’re using prison labor, you should always be able to go into the factory and do your own QC. And even if you are using prison labor, you can still hire local Chinese QC to go in and represent you. Trust me on this one. 19. Factory MNC or ISO certification means nothing. You can buy the wall plaques and paper work, and at best, it’s a double-edged sword. Yes, it can give you an idea of the capabilities of the factory. But do not assume that because they’ve met this standard once for an audit that they meet these standards or use these processes in production every time. Yes, certification means that they’ve been, to some degree, tutored and managed (at least once) by an international team. But each MNC’s standards are very different. And an “audit” my have been a 30 minute visit designed to pass rather than to critique. Again, trust me on this one. 20. Over-promise under-deliver has not made it to China yet. So the samples you get are always going to be better than production—expect this or learn to live with disappointment. 21. Much of what you cut out when you go factory direct has value—you must make up that value on your own. QC is the most obvious piece, but there are others too—auditing, social compliance, printing, packaging, licensing, exporting, international shipping, customs clearance, etc. These things will cost you time and money. If you work for free and have no deadlines then you should do everything yourself. 22. Suppliers will NEVER offer to pay for the cost of missed delivery dates. And they’ll only pay for anything if they are either contractually forced to or if you have the cash leverage that allows you to withhold payment. 23. Bad product will NEVER be returned to China for repair/replacement. ### Hangzhou, Hainan and Hong Kong URL: https://www.silkroadintl.net/hangzhou-hainan-and-hong-kong/ Last updated: 2026-07-16T04:58:16.000Z I spent a week last month working with a factory in Hangzhou. The factory was great but I'm sure that I lost a week of my life due to the pollution (lucky I didn't lose my life due to the traffic). Hangzhou was so polluted that it makes the PRD look clean and sunny. Maybe it's the recession that's making the PRD look so nice lately... But back to Hangzhou, I'm really not sure which was worse, the traffic or the pollution. I've lived over here for more 10 years and the traffic there was surprisingly awful but each night I could feel the grit on my teeth. Yet Hangzhou is not even on the list of the [most polluted cities in China](http://sayiamgreen.com/blog/2009/09/the-10-most-polluted-cities-in-the-world/?ref=silkroadintl.net). Scary. Nice lake, too bad you can barely see across it. Two days after returning from Hangzhou I went to Sanya for a few days of vacation. In contrast to Hangzhou, Hainan, specifically Haikou, is on the list of cleanest places to live in China. Partly due to the fact that there is no manufacturing in Hainan and partly due to the fact that a typhoon just passed through, it was beautiful! Dare I say pristine, even? Surpassing my expectations in every way, I can honestly say it was the nicest place I've ever stayed in China. Really very clean, uncrowded, with lots of fresh seafood and fruit, long empty beaches, blue skies and some very nice hotels. Highly recommended. Oh, yea, and there were tons of Russian speaking tourists there too--how random is that? I guess that it's easier to get a visa to China from many of the Central Asian States that it is to Thailand or other SEA beach destinations. Everything there was in Chinese or Russian--hardly any English at all. Very odd experience to be in China and not be able to communicate with any of the other occidental expats. Also, I've never been to a beach where I was shorter (or more clothed) than a majority of the women. Sorry, no photos. Finally, over the next two weeks I'll be speaking in [Hong Kong](http://johomaps.com/as/hongkong/hkmetro%5Fch.html?ref=silkroadintl.net) at the Semi-Annual [Global Sources Trade Shows](http://tradeshow.globalsources.com/TRADESHOW/TRADESHOW.HTM?ref=silkroadintl.net) at the [AsiaWorld Expo](http://www.asiaworld-expo.com/html/en/default.html?ref=silkroadintl.net) out by the [Hong Kong International Airport](http://www.hongkongairport.com/eng/index.html?ref=silkroadintl.net). In addition to the general group presentations each day you can book time with any one of the speakers for individual advice and Q&A too. Week One: [schedule](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-ELECTRONICS/CONFERENCE.HTM?ref=silkroadintl.net#Buying)**Tuesday, Oct. 13th and Wednesday Oct. 14th, 12:30 to 3:00,** [**Buying from China: What New Buyers Need to Know.**](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-ELECTRONICS/CONFERENCE.HTM?ref=silkroadintl.net#Buying)Mike Bellamy, Passage Maker**David Dayton, Silk Road International**Johnny Sadhu, BVBenjamin Dolgin-Gardner, Shenzhen CE and ITCharles Kirmuss, Kirmuss & Associates. Week Two [schedule](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-GIFTSPREMIUMS.HTM?source=TSCHOME%5FCSFicon)**Tuesday, Oct. 20th and Thursday Oct. 22nd, 12:30 to 3:00,** [**Buying from China: What New Buyers Need to know**](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-GIFTSPREMIUMS/CONFERENCE.HTM?ref=silkroadintl.net#Buying)**.**Mike Bellamy, Passage Maker**David Dayton, Silk Road International**Johnny Sadhu, BV ### Being a "Boss" in China URL: https://www.silkroadintl.net/being-a-boss-in-china/ Last updated: 2026-07-18T14:48:29.000Z Last week I had the opportunity to eat dinner with three bosses from four factories that we were doing a couple projects with this last month. One owns a large-box printing factory with 200+ employees. Another was the owner of a plastics stamping factory with about 150-200 people. And the most vocal guy was the owner of two factories, a wood furniture factory and a clothing factory.(I’ve written about [bosses](https://www.silkroadintl.net/random-thoughts-from-5-non-stop-days-in-7-factories-in-three-provinces-in-china/) before and I find these guys, a generation of true entrepreneurs in China, to be fascinating.)As we sat around the table they started to tell me how difficult it was to be a boss in China nowadays. At first I took this as the usual “poor me, I’m not making (enough) money on your project” ploy. But as it went on I realized that there was much sincerity in what was being said regardless of why and I started to take (mental) notes that I immediately wrote down once I got in the taxi to go home. Some of the specific issues they shared are these:**Control.** Worker control is more difficult than ever. The “new generation” is more independent and has a worse attitude toward work than previous generations. (Boy, haven’t we all heard this before?!) It’s get worse every year as workers seem to be less willing to do the repetitive daily jobs that are necessary to get production done. It used to be that they could staff the factories with young women, but now they have to have boys, older women and sometimes older men for the more physically demanding jobs. With so many of the migrant labor pool gone now, they have to hire more locals--and locals talk.**Turn over is high and always rising.** This is partly because there are indeed other options out there and people know about them from friends and the internet. But it’s also a result of the maturity of the workforce—they know when something is bad and they don’t have to tolerate it any more. They are increasingly exposed to information about the law and factories and (particularly foreign) bosses have been publicly villainized lately so workers are more courageous/brave.**QC standards are up.** We hear this every time we do QC, so I don’t buy it for a minute. But all these bosses seemed to sincerely believe that they are being held to higher standards now than they were 10 plus years ago. I doubt it. I just think that margins are tighter now so they are looking for reasons other than taking responsibility for waste or mismanagement .**Prices are down.** Actually, prices of raw materials are up but large retailers are keeping prices constant (because of the bad economy) despite the smaller order qtty’s. As someone that is the “middle” of many transactions myself, I agree with this—prices are not rising as fast as input costs are and that means that margins are being squeezed.**Labor costs are up.** Even though there is unemployment this year, labor in Guangdong province specifically is still expensive as compared to more inland provinces. All three of these bosses complained that the quality of employee for the money is lower than before. All of them said they thought that labor cost should have gone down this year but didn’t because so many people left (when back to hometowns) that they’ve had to pay more since there are not so many available.**Management is very rudimentary.** This was the first time that I’d heard Chinese bosses (as opposed to foreign bosses) complain about this. I’ve experienced it, I’ve heard everyone from box-store expats to first-time foreign manufactures complain about it. You read about it in just about every book written (by foreigners) about China. But all three of these guys when on and on about it. There were two main items and a lot of other little stories/comments. First, the fact that while you may have a good manager with years of experience it doesn’t mean that he can solve problems. Over and over these guys gave examples of how they’d personally have to go in and solve problems because no one else could get it done. They all said that this was one of the most difficult and time consuming parts of their job. Second, most of the older (40+ years-old) managers have experience but very little education and with all the new technology they are becoming less and less effective with new processes and are neither the source for new methods nor the solution to new problems.**Theft.** Employee graft is always a big deal and getting worse with the continually bad economy. Not just office supplies but product, recyclable materials, IP, uniforms and phones are the items that go missing the most often. Speaking for myself and our QC guys, outside of the fact that I must have a target painted on my chest (I’ve been robbed so many times if I hadn’t made a list I’d have forgotten them all), we’ve had pretty good experiences staying in hotels and factories (knock on wood). This last month was the was just the second time in the last 6 or 7 years that our QC have had things stolen while staying/working in factories. I’ve never been robbed in a hotel or factory. Train and bus stations and shopping streets are a different story entirely. But factory workers and bosses complain of much more crime within their factory. I was very surprised that they’d talk about this in front of me since we put so much emphasis on protecting our product and our IP. I’m guessing that either they don’t care, can’t control it or just assume that I know this already. Probably some of all three.**No one cares.** There is no desire to do anything well. People just want to do their job, not think and go home. No one really tries to do a good job and no body cares if they do it wrong. I can personally attest to this being a major problem. Most recent example: Last week as we were finishing shipping (late) the last container of a large multi-container project the workers in the factory were required to work over time to get the project completed so that we could get all the containers to the port before the closing date. The boss had mandated the over time, the managers had established the standards and confirmed the processes. But by 2AM the only people in the factory were line workers and our QC—there was no way that two QC could control the quality of more than 150 people both finishing product and finishing packaging. Especially since the workers were only required to work until the container was loaded. Well, you can guess what happened. Broken items, unpackaged items, master cartons filled with unfilled boxes, incomplete product—it all made it into the container. We had to call the boss, get him out of bed and into the factory to get things back under control. He was pissed that he was awakened at 2 AM and that none of his managers were on site. I was pissed too! The only people that will pay special attention to you are your spouse and your mother. Certainly not line workers at 2 AM. Not a factory administration that thinks they’re not making enough money. Even if you are just demanding that you get what you were originally promised (contracted for), be aware that the longer you (indirectly) make people work the more spit you’re going to get on your burger. No one cares about your product as much as you.**Do it or you’re fired!** More than once these guys all said that without this threat they wouldn’t get much of anything done. Since managers can’t solve many problems they are where the proverbial buck stops. They said they use this threat all the time and every now and then actually do fire someone to keep the threat real.**No Transparency.** Every one of these guys says they have a relative running the finance for their factories (one wife, one sister in-law and one sister—all women too) an that they can’t share complete financial information with anyone. If managers find out about margins they’ll “feel unbalanced: and may be angry or quit.” If the government finds out they’ll be hit up for more “taxes.”**Over specialization.** Under-skilled employees are [just too specialized ](http://silkroadintl.net/blog/wp-admin/post.php?action=edit&post=536&ref=silkroadintl.net)and so can’t be counted on to either do other jobs, creatively solve problems and they require a lot of training (e.g. money) to get them to be able to do other jobs. You can hire a ton of people off the street to do simple stuff, but finding skilled professionals for more sensitive positions is much more difficult. I’ve mentioned this before to in relation to finding office employees with work experience in different jobs/industries—especially the equivalent of the mid-level to upper level manager with both advanced degrees and decades of experience. These guys just don’t exist here. Anyone with an advanced degree is under 35 (e.g. no or very little experience) and anyone with experience has no education (they basically didn’t go to school in China in the 70’s). What’s really interesting to me is that this group of bosses are themselves part of this very conundrum. Many of these issues are specific to the cultures that these bosses created themselves, but they are also general problems across industries that I’ve seen in factory after factory in multiple Chinese provinces for years. ### Some Quick Numbers in China URL: https://www.silkroadintl.net/some-quick-numbers-in-china/ Last updated: 2026-07-18T14:48:29.000Z Following on the last post, here are some more interesting numbers coming out of China. Unless Madoff-style or Enron-style accounting is taught in school, I believe that “Accounting in China” should probably be taught as at least as an anthropology class in International MBA schools: this is just the way numbers are run over here—from SOE’s to NGO’s, to local govts, to private companies.**Item 1\. NGO’s are not.** Meaning your donation to the Sichuan earthquake victims actually went to the CCP. [Highlights here](http://www.chinalawandbusiness.com/2009/09/and-people-wonder-why-ngos-dont-thrive-in-china/?ref=silkroadintl.net), and the original article [here](http://www.atimes.com/atimes/China/KI12Ad02.html?ref=silkroadintl.net) (h/t to [China Esquire](http://www.chinalawandbusiness.com/?ref=silkroadintl.net))**Item 2\.** [**SOE’s are making a comeback**](http://thisischinablog.com/2009/0/15/eating-their-young/?ref=silkroadintl.net)**.** Contrary to popular belief, SOE’s are not a diminishing part of the Chinese economy, but rather a ever-growing presence. In the book [Capitalism with Chinese Characteristics](https://www.silkroadintl.net/three-book-recommendations/), Huang discusses this as a mater of policy since the early ‘90’s. In his (always good) blog Bill Dodson discusses how the tax laws, investments in strategic resources and the stimulus package in China is accelerating it too.**Finally the One Child Policy.** The numbers from private groups, again different than the propaganda that the central government is putting out, show that China is going to have a very different set of [demographics in just 20 to 30 years](http://www.allroadsleadtochina.com/2009/09/15/chinas-demographic-roller-coaster-to-peak-in-2030/?ref=silkroadintl.net). And, as the comments point out, there are significant questions about the accuracy of the numbers as the census takers are motivated by politics and countervailing job performance standards than by collecting accurate numbers. But even if the numbers (120-100 girl-boy ratio) are less than that (I’ve read more like 112-104) the result will be the same, just a decade later. [Brubaker’s blog](http://www.allroadsleadtochina.com/?ref=silkroadintl.net) is another that I recommend should be regular reading—always good stuff. The reason for pointing these out is not to make China look bad but to make foreigners coming here for business for the first time (the majority of my clients) look twice (or three or four times). My intent isn’t to bash China, but rather to point out that just because people work in glass an steel office buildings, wear (pant) suits and use cell phones and computers does not mean that they do business the same way. I just think that it’s often times a shock for non-Chinese speaking Westerners to see McDonald’s and Starbucks and then find out that account rules are not the same and might just as well be written in cuneiform. I find the excitement about China to be significantly reduced when the rubber actually hits the road for most people. More often than not China ventures are not as financially successful as they could be (or were expected to be), often because many coming to China don't know what they don't know about Chinese business. Admittedly, I’m in the fixing-problems business so I only hear the horror stories, but I have to think that many problems that foreigners have in China could be managed if not avoided if more education and DD were added into the pre-order processes. Good luck. ### When Good News is Bad URL: https://www.silkroadintl.net/when-good-news-is-bad/ Last updated: 2026-07-18T14:48:29.000Z The news out of China is surprisingly upbeat. Production numbers are up, domestic consumption is up, the housing and stock markets are still rising and car purchases are up too. If you go to any shopping mall in Shenzhen you’d really be forced to ask yourself “what recession?!” [It looks that good](http://www.ft.com/cms/s/0/0d8b710e-9e8c-11de-b0aa-00144feabdc0,dwp%5Fuuid=9c33700c-4c86-11da-89df-0000779e2340.html?ref=silkroadintl.net).Even though I’ve [doubted](https://www.silkroadintl.net/its-not-just-me-saying-this/) [before](https://www.silkroadintl.net/reminde-me-again-when-exactly-does-the-asian-century-start/) that they can keep it up, I’m hopeful that China can keep injecting cash into their own economy. But there is context and other numbers that make me worry that this can't continue. The real telling numbers are these:1\. [Loans are up](http://english.cctv.com/program/bizchina/20090911/110938.shtml?ref=silkroadintl.net) despite the govt tightening. This is a clue as to where the money for domestic consumption is coming from. If FDI is down, orders for export are down but loans and domestic spending are both up, where do you think that money is coming from?2\. And [electric consumption is down](http://www.nakedcapitalism.com/2009/06/chinas-declining-electricity.html?ref=silkroadintl.net). Obviously the money isn't coming from orders.3\. Exports from China are still down year on, Germany and Japan too—meaning world demand is not yet back regardless of what Chinese shoppers are doing. So either the government found the magic pill to get Chinese consumers to actually consume or there are going to be a lot of NLP's in a couple of years--maybe they're the same thing! Want to know what the US housing/stock market crash would look like if it was in China? Just wait. You will.4\. Oct 1 is the 60th anniversary of the CCP. Do you honestly think that they'll allow a bad economy to ruin this celebration? Not a chance.5\. What happens in China stays in China. The RMB is not convertible and can’t be invested outside of the country—cash comes into China but never leaves. The fact that 1.5 billion Chinese consumers don’t have the impact that 300 million recession-hit Americans do is magnified by limits on the export of the RMB. So while foreign companies can make money, no Chinese companies or individuals are going to be investing abroad. (“Chinese companies” that invest abroad are NOT Chinese but from Hong Kong or are from other tax advantageous areas or have special state permission, i.e. support state interests.) By the way, one reason the RMB isn't portable is because if you had all the cash suddenly leave China what do you think would happen to the domestic savings accounts (that the government forces banks to loan to SME's)? What would happen to the stock market? What would happen to the housing market? Since people can't put their money anywhere else, these markets are unnaturally high. Release of the RMB to international markets would be like a pin in a huge balloon--explosion, destruction and then inflation.6\. Almost everything you see here is scripted for [someone else’s agenda](http://www.chinastakes.com/2009/6/again-chinas-electric-consumption-does-not-support-official-growth-statistics.html?ref=silkroadintl.net). 7\. Call it whatever you'd like, PC Accounting, [Accounting with Chinese Characteristics](http://www.foreignpolicy.com/articles/2009/09/03/how%5Fchina%5Fcooks%5Fits%5Fbooks?page=0,0&ref=silkroadintl.net), none of what you read is true. Most businessmen (and many Chinese) conveniently think that business is business and politics is something that is far away in the north. That may be true “back home” and that’s certainly true when it comes to law enforcement here. But the government is involved is a SIGNIFICANTLY larger % of the economy in China than probably just about anywhere you’re coming from. This is true even for “privately” owned factories. Remember, despite the fact that China has more people than any other country on the planet (and combined middle and upper classes the size of the total US population) consumers are a much smaller percentage of the economy than any other developed economy by a wide margin. So any increase in numbers of the Chinese economy (e.g. “China will reach 8% growth in 2009”) is completely a product of government involvement in the economy at best and [government manipulation of numbers](http://www.creditwritedowns.com/2009/07/marc-faber-chinas-numbers-are-fake.html?ref=silkroadintl.net) at worst. (Thanks to John T. for the article link) From the article: > China has predicated its very claim of being the healthiest large economy in the world on faulty statistics. The government insists that even though China's all-important export sector has been devastated -- contracting about 25 percent in the past year -- a massive uptick in domestic consumption has kept factories producing and growth churning along. A close examination of retail sales and GDP growth, however, tells a different story. China's domestic retail sales have risen about 15 percent year on year, but that does not really translate into Chinese consumers purchasing 15 percent more televisions and T-shirts. The country tabulates sales when a factory ships units to a retailer, meaning China includes unused or warehoused inventory in its consumption data. There is ample evidence that state-owned enterprises buy goods from one another, simply shifting products back and forth, and that those transactions count as retail sales in national statistics.China's retail statistics seem implausible for other reasons, too. They would imply an increase in salaries among Chinese people, allowing them to purchase that extra 15 percent. To be sure, the Statistics Bureau reported salaries had increased 12.9 percent in the first half of 2009\. But Chinese netizens complained such numbers were hard to believe -- as did the bureau's chief.A look at GDP growth also raises serious questions. China's economy grew at an annualized 6.1 percent rate in the first quarter, and 7.9 percent in the second. Yet electricity usage, a key indicator in industrial growth and a harder metric to manipulate, declined 2.2 percent in the first six months of the year. How could an economy largely dependent on manufacturing grow while its industrial sector shrank?It couldn't; the numbers don't add up. China announced a $600 billion stimulus package (equal to about 14 percent of GDP) last fall. At that point, local governments started counting the dedicated stimulus funds in GDP statistics -- before finding projects to use the funds, and therefore far before the trillions of yuan started trickling into the economy. Local governments keen to raise their growth and production numbers said they spent stimulus money while still deciding on what to spend it, one economist explained. Thus, China's provincial GDP tabulations add up to far more than the countrywide estimate. > Finally, [the tire (or tyre) clash](http://www.ft.com/cms/s/0/f67c6fe6-a024-11de-b9ef-00144feabdc0.html?ref=silkroadintl.net) that is heating up—who loses out more in a trade war at this point? I think that it’s the US. We need both the cheap products made in China to keep inflation low and the buying power of the Chinese govt to keep investing in our debt. China, will increasingly be trying to decouple their economy from the US and encourage both domestic consumption and exports to other markets and this will fuel that plan. Oh, yea, and this is another broken campaign promise by BO.I may be the only guy whose business is China and who is publicly hoping that my analysis of China’s current situation is wrong. ### Three Book Recommendations. URL: https://www.silkroadintl.net/three-book-recommendations/ Last updated: 2026-07-16T04:58:17.000Z **First**, I have completely loved reading Yasheng Huang's “[Capitalism with Chinese Characteristics.](http://www.amazon.com/Capitalism-Chinese-Characteristics-Entrepreneurship-State/dp/0521898102/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1252371196&sr=8-1&ref=silkroadintl.net)” This is easily the best book that I have ever read on the development (or regression?) of capitalism in China. Just wonderful in it’s explanations of detailed economic events in the context of the very politicized Chinese economy of the ‘80’s, 90’s and today. Be warned: this is not a book for the faint of heart. Huang is a professor of political economy and international management at the Sloan School of Management at MIT. The book reads more like a thesis than a Sunday-morning coffee-house or beach-reading book. In brief, this is the scientific analysis of the question on everyone’s lips, “Just how capitalist is China anyway?” The short (rather surprising) answer? Less now than 20 years ago. The long and very detailed answer is that there have been major policy shifts in the last twenty years that have had significant impacts on the Chinese economy. In combination, these changes have effectively eliminated the rural entrepreneur and increased the role of government in the urban economy exponentially. Further, the undervalued proximity of neighboring Hong Kong (one of if not the most free-market places on the planet) has had an absolutely immeasurable affect on the Chinese economy. Far from the typical commentary that “Hong Kong would be dead with out the business that China runs through it” Huang details the reality that EVERY SINGLE “Chinese” business success story would not have happened at all without the city state’s legal and business systems being so close and available to mainland Chinese entrepreneurs (hence the inability of any other country to successfully copy China’s economic ‘miracle). Other points of significance included the facts that since the policy shift in the 90’s: individual household income is down, education levels are down, access to health-care is down, size of government is significantly larger, poverty is up, government corrupt!on is up. He also tackles the western media perpetuated myth that if the numbers (GDP) are big (8% or higher) than that equals good policies and policy decisions. He takes on the talking heads (mostly westerners) that have lauded China for success by pointing out specifically that they have not only misunderstood but totally misreported China’s current economic situation. If China is your business then you need to read this.**Second**, like Dan Harris at [China Law Blog](http://www.chinalawblog.com/2009/08/china%5Fwhere%5Feast%5Feats%5Fwest.html?ref=silkroadintl.net), I also received a signed copy of Sam Goodman’s book: [Where East Eats West.](http://www.amazon.com/Where-East-Eats-West-Street-Smarts/dp/1439228302/ref=sr%5F1%5F2?ie=UTF8&s=books&qid=1252371313&sr=1-2&ref=silkroadintl.net) Goodman's book is more of a handbook or a how-to manual for China, than a book about China. It’s one of those handy refer-to-often type of reference manuals that you keep in your glove box or within arm's reach on your desk. There is a ‘chapter’ on just about every conceivable problem or question (same same) that you’ll ever come across while working in China. Sam not only has the China chops to dish out these answers but he’s brutally honest and direct when sharing them—something I find very refreshing in this tip-toe-around-the-real-issues PC world that we now live in. This book is great because you can pick it up and open to any page and read for 5 minutes or 30 minutes and not worry about following a story line—there isn’t one—it’s just vignette after vignette of real on-the-ground business experience in China. You’ll swing back and forth between “I have so been there” and laughing out loud at things that sound impossible (only to find out for yourself later that they’re all true). Like your toothbrush and the Imodium, this is a must-have for anyone traveling to China.**Finally**, a book that is less about China today and more about where historical Chinese attitudes of superiority may (rightfully?) come from. [When Asia was the World](http://www.amazon.com/When-Asia-World-Stewart-Gordon/dp/0306815567/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1252371503&sr=1-1&ref=silkroadintl.net), by Stewart Gordon, is a fun and captivating recounting of personally stories of how far reaching Asian trade, politics and philosophy were before the West was even tying their proverbial shoes. It's a fantastic travelogue through the Asia of 1000 years ago. Monks, traders, diplomats, doctors and others all make their appearance in this very readable and detailed account of life in Asia (Mediterranean to China) from 500 to 1500 CE. The individual stories are captivating and together in the context of a vibrant, educated global economy they paint a picture of “the past” that, at least for me, was more “modern” than I had previously understood. Of the three, this is the Sunday-morning coffee-house book or airplane book. Very enjoyable. Next time you're in the Hong Kong Airport, pick up all three! ### UK Telegraph's Peter Foster on SRI's blog URL: https://www.silkroadintl.net/uk-telegraphs-peter-foster-on-sris-blog/ Last updated: 2026-07-18T14:48:30.000Z Had a friend send me a link to a nice writeup about [the SRI blog in the UK Telegraph](http://blogs.telegraph.co.uk/news/peterfoster/100008084/100-per-cent-boss-managing-expectations-in-china-and-india/?ref=silkroadintl.net). > "If you’re interested in the nuts-n-bolts of doing business in China (and even if you’re not) I recommend checking out the excellent blog run by David Dayton at Silk Road International, which is a “project management” outfit that helps companies find suppliers in China and other parts of Asia.Sounds dreary, but his accounts are full of those glorious little details that illuminate the actual business of global trade in 2009, with all its petty, parochial frustrations, language barriers and cultural chasms that bedevil the ‘global’ marketplace in real life." [more...](http://blogs.telegraph.co.uk/news/peterfoster/100008084/100-per-cent-boss-managing-expectations-in-china-and-india/?ref=silkroadintl.net) > Thanks, Peter. ### Huntsman, IP security and two different worlds colliding URL: https://www.silkroadintl.net/huntsman-ip-security-and-two-different-worlds-colliding/ Last updated: 2026-07-18T14:48:30.000Z **First**, Why I think that Huntsman will work as Ambassador to ChinaBasically, all the things that people disliked about him in Utah will be great assets in China. Just another page in the It’s-not-the-same-over-here manual. 1. Most of his critics say that he's into he's into public appearances and not substance. This is perfect for ritual-obsessed China. This was one of the hits that he took regularly in Utah—from his perfect tan in December to his Harley and leather jacket, he was always the best looking politician, but wasn’t always complimented as the most well informed. Not a problem for state dinners here where agendas and solutions are decided well in advance. It’s not like he’ll be leading negotiations on foreign policy, that's Hillary I'm-the-Secretary-of-State-not-my-husband Clinton's job. 2. He’s a business man first and a politician second. Again, great for China and all it's technocrats in Beijing. He came from money and he knows about how to make it. Probably this more than any other thing gives him street cred here. His family/company name has recognition and he has the social status to meet with every important person in China. BONUS: his family's (former) company is said to be [a huge polluter too](http://www.chinastakes.com/2009/5/the-irony-that-is-jon-huntsman.html?ref=silkroadintl.net)\--again, he'll fit right in over here. 3. He comes from a conservative background (OK, people in UT liked this one)—big family with lots o kids. That should play well in China. I feel sorry for his kids as they’ll be mobbed in China, especially the Chinese daughter, but the family concept plays well here and they'll look good at official functions all lined up like the multi-cultural version of the [Von Trapps](http://www.imdb.com/media/rm3196491776/tt0059742?ref=silkroadintl.net). 4. He speaks Chinese well. Very well. 5. He’s very lukewarm, politically speaking—how else do you think Obama could pick the governor of the most conservative state in the nation? (A state where Bill Clinton came in third in ‘92.) Chinese policy makers like consistency. They don’t like waves and they don’t extremes. While middle of the road was a sever criticism in Utah, middle of the road is probably a positive point here in China. 6. He can play the piano (no one in Utah complained about this either), so he can be the default entertainment at state dinners. If for nothing else, foreigners with talents are good for one thing—showin’ off! You think that foreigners in the local bar get an extra round of applause on Karaoke night? Just wait till those Beijing official get a couple of drinks in them and the Ambassador starts rockin' the Piano Man! 7. He can drop big names. Critics say he ran on his name rather than his resume, but he was reelected. I personally think that this last story from the [WSJ article](http://online.wsj.com/article/SB125191530217380465.html?ref=silkroadintl.net) is just a little too Forrest Gump, but it doesn't get any bigger than Kissinger. > "He also recounted his own childhood experience: how as an 11-year-old he was at the White House where his father was working as a staff assistant. It was 1971 and Secretary of State Kissinger invited him to his office and let him take his bag to his car before setting out on one of the path-breaking trips to China, which led to the re-establishment of relations in 1979."The part I remember best was when I said where are you going?" Mr. Huntsman said. "He said please don't tell anyone: 'I'm going to China.' " Though not my favorite politician, he’s obviously a talented guy. And with these credentials and his experience in government he should turn out to do quite a good job. (Of course, I need some visa help too, so the timing of this blog could be called into question.)**Second**, I was at a factory yesterday working on a project that I signed the order for, that I signed the payment for, that I established the standards for with the factory and that I was doing the final print and product color approval for. Why is all that important? Because of the factory’s new rule—to protect client IP no samples may be removed from the factory. No samples means NONE—not color proofs, not production or pre-production samples, not final samples. NOTHING. Now, the line workers/QC people and production managers had no problems giving me samples that I took off the production floor with me. It was just the Sales Manager in the office that said I couldn’t take the sample out of the factory compound. How, pray tell, are you supposed to work within those requirements? I am, for all intents and purposes the client. Like I said, I provide the money, the contract/PO, the art, the QC and all shipping logistics. So why can’t I take one of my “own” samples? No one could answer that. But the final solution, from the Sales Manager himself, was this: “Just put the sample in your computer bag. You’re a foreigner; they won’t check your bag.”So much for IP protection.**Third**, Interesting argument I had with two of my own project managers today. We just found out that a factory that we’ve been working on samples with for about 6 months now can’t do what we ultimately want. There have been changes to the product and the factory has really been pretty good about doing rounds (and rounds and rounds) of additional samples. But the totality of the changes just is too much for them. We’ve raised the price we'll pay them, we’ve paid all the sample fees, we’ve had quite a good relationship so far. So this was a real blow to us. We thought we were “just about there” with them on this item. We’ve gone back to talk with them personally, we’ve called, we've emailed. They really have just decided they can’t do it. So back to the argument. I am, of course, going to tell the client about what’s going on with this factory. My staff thinks I’m crazy. “Why tell them when we can just find someone else?” is their reasoning. Sometimes I agree. When we are just bidding out a project then we can switch up factories and find one that works. But, I told them, we’re way past that stage now and the client has the right to know that their art is going somewhere else. My managers think that I’m just giving the client an opportunity to walk away. “If they think we can’t do it then they’ll find someone else,” is what they told me. I said, “They’ll actually be pleased that we are so honest with them and trust us more, not less.” They think that I’m crazy. They actually laughed at me and told me I was naive. The idea that you can be honest, lose business and still be OK with it because of the larger picture of things is not a concept that is commonly discussed, let alone practiced regularly here. They told me that I’m “too honest. " (Is that an insult or a compliment?)Now don’t get all bent out of shape thinking that I’m trying to pat myself on the back or look like I’m better than anyone else. I'm admittedly far (far far far) from perfect. This wasn’t meant as a comparative conversation and I had no intention of making it an issue of my way vs their way—this was just one of those organic situations where you realize that you and your Chinese counterparts have two completely different ways of looking at a situation. I'm not even saying their position is wrong. There is some serious validity to the point that the client could decide that we aren’t what they want at this point. But should the client’s (expected) reaction be the determination of what we do and don’t tell them? Isn’t that one of the major problem with working in China—problem cover up? I publicly complain about this too much to go there. And I’d feel [guilty](http://www.doceo.co.uk/background/shame%5Fguilt.htm?ref=silkroadintl.net) too. ### Over-Promise, Under-Deliver and the realities of the Chinese Market URL: https://www.silkroadintl.net/over-promise-under-deliver-and-the-realities-of-the-chinese-market/ Last updated: 2026-07-18T14:48:31.000Z Everyone that’s ever had a job in the West learned very early on the value of Under-promise and Over-deliver, especially if you wanted to get ahead, keep clients happy and make a name for yourself. But since I've been in China, I've been convinced that this just doesn’t work in China. Not only is it not really understood, it’s not believed and no one would dare try it. Let me explain. No one in China that I’ve ever told this theory too believes that it could really work here. And believe me when I say I’ve told it to every factory that has ever provided a golden sample and then was not able to recreate it in production—meaning, I’ve told every factory I’ve ever worked with in Asia. They won’t believe that they could ever get any foreign orders with less than absolutely perfect samples. And they’re probably not wrong. First, there is so much competition in China that if you don’t have the very very best sample you’re not going to even get the chance to bid on the job let alone get the job. You’re just not even going to be considered. In China the number of potential suppliers for all but the most specialized products is almost unlimited. The numbers here are like nowhere else in the world. If you’re a foreign buyer this can be a very good thing for your bottom line. But it can be a very bad thing if you’re expecting a factory to choose between making money and being loyal to you (read: IP violations). Second, not only is there a huge number of competitors they’re not all playing on a level field. Like one of the arguments against government health care in the US this summer, government sponsored options do not have to meet the same profit standards as private companies do. (And, when you don’t have to meet profit goals there is no reason to meet quality standards either.) In China, prices from SOE’s are notoriously lower (often below cost) than anything that any other company can do. The reality for privately owned factories is that there is no logic to under promising if you can barely even compete when you incredibly over promise. Third, there is more to it than domestic pressures too. Foreigners, for our part, perpetuate the problem since we typically won’t even talk with factories that don’t provide perfect samples. (And why should we?) I talk with factories about managing my expectations, but they always counter that I chose them because of how good the sample was…so why should the factory believe that it’s true!?Fourth, the larger idea of proactively managing client expectations rather than just managing internal production (costs) is not a concept that I see anyone actively following. (I mean, unless you count hiding mistakes, cooking the books and passing off lower quality components as client management, I don’t see this.) Instead of managing expectations, factories always claim to be able to do everything at the highest possible quality levels. Chinese suppliers are infamous for never saying no, believing that if there is money then they can either figure it out or sub it out. My theory is that if the factory is so honest that they’re willing to lose business by telling me ‘no’ then that’s someone I want to work with in the future. This proactive management is then the same as other concepts like the “if-then” propositions (I’ve been told it doesn’t translate very well in Chinese—it’s not a literal direct linkage scenario like it is in English), forecasting real expenses and extrapolating new solutions based on previous problems; these are just concepts that are getting completely lost in translation. Either Chinese are not understanding the ideas coming from the West or the foreigners are not understanding the implementation of these ideas in Chinese businesses. Either way, expectations are not being met on either side of the agreements. Here’s one example from our work this week. We are managing the production of furniture for a client in the US right now. The factory we are working with is honestly quite good. We really like working with the management as they seem to be willing to solve problems and have helped significantly with design and development. On the whole a good experience. But we’ve had some painting issues recently and the response from the factory hasn’t been as cooperative as we’d have liked or have come to expect. (See, we’re spoiled—expectations were not managed well!)Everyone that has ever worked in China and raised questions about quality has no doubt heard the line “No one can match sample 100%” or something similar. Well we got a newer version this week when questioning painting quality. The boss told me “If you were as professional in woodworking as we are you’d know that this really isn’t a problem.” I laughed out loud. Now, I can admit that he’s partially right. I’m not a woodworking professional. But I do know when I can see and feel that pieces don’t have lacquer on the top of the paint. I do know when paint is too thin and when I can see the wood through the paint. I also know that the samples had more layers of both paint and lacquer than the production pieces. And finally, I also know that paint and lacquer are expensive and the costs of an extra coat or two of each is a lot of money when you’re making 7 containers of furniture. The actual problem is solvable—more paint and more lacquer (and more cowbell! yea!)—and they eventually agreed to fix it. But the frustration getting to “solved” was significant for both sides in terms of time and money and emotion. One of the factory people mentioned to us “We thought we would have problems with you since your QC is so strict.” Of course we never had this discussion until after there were problems—and if they really did think this, why didn’t they prepare for it or mention it to us? Another manager mentioned “We knew that we couldn’t do the order as good as the samples. We thought you knew this too.” This is the whole point—how are foreign buyers supposed to know this without being told? Are we buyers just too optimistic and stubborn? After years of difficult buying experiences shouldn’t we know this already? Conversely, should factories know that after years of fights over QC with foreign buyers that this time isn’t going to be any different either? I suggest to new buyers that they proactively let factories know what to expect. For example, we try to lay out very clearly before we pay deposits that we really are going to be VERY strict and we’re expecting to follow our agreements and standards exactly. We spend a lot of money and time to get people into factories BEFORE we pay any monies just to make these things clear to multiple levels of factory management. We want factories to know that we are not going to under-deliver in anyway on our promises to be really strict when it comes to QC and getting everything as close to 100% as physically possible. I figure I may be a pain in the butt, but at least I’m going to be honest and upfront about it. I just wish that factories would do the same. But they won’t; they’re sure it’ll cost them deposits. Ironically, getting orders with golden samples they can’t match is what will cause clients to seek out other supplier options. Three other goodies this week. 1\. Printing, painting, product colors and packaging are some of those little things that can make good product look great. If you can get your colors and your printing right you can really dress up average product to meet infamous “international” standards. (Just look at what lipstick does for Sara Palin!) I spent the last week working with three different printing factories (each doing a different kind of printing) for three different clients. I was told the same thing at all three different factories—“wow, you really know about printing.” Now, usually compliments from Chinese are about as insincere as Chinese contracts, but when every one said the exact same thing I asked, “What do your other client usually do?” Again, all three basically said some version of this same thing, “Usually nobody ever comes to check printing. But if they do come they are the ones that made the product, they don’t know anything about printing.” It’s amazing to me that foreign companies will spend tens of thousands of dollars on product development and then do the packaging as an after thought. No professional QC on the one thing that everyone will see, the packaging, is just like wasting money!! 2\. A couple of funny comments from factory bosses this week:Plastic injection factory boss to me when I told him that we were not going to accept the current level of product quality. “Plastics is not like wood or printing. It takes skill and it’s very difficult to get right. You can’t get 100%.”Wood factory boss to me when I told him that we were not going to accept the current level of product quality. “Woodwork is very difficult. It’s not like printing; it’s very complex. You can never get 100%.Print factory boss to me when I QC’d my own printing. “Printing is difficult. It’s not like mold injection stuff where you just make a mold and then let the machine do the work—you have to constantly watch printing.”These three comments together this week reminded me of another one of my (crackpot?) theories about “business people” in China. Here goes:Nobody in any office under the age of 25 has ever had a job before the job they’ve got now. Chances are, Chinese people under 35 have only ever worked in one industry in one city since college. They have never had part time or after school jobs or had to put themselves through college. They never rebuilt their first car (or any car) when they were 15\. The can't change a tire, the oil, wiper blades or a taillight. At home, they don’t know how to change the lights, build Ikea-type furniture or wire a stereo/TV or fix anything when it breaks. Why? The One Child Policy and Low Cost Labor. First, if you have one child and 4-6 adults in every house, the kid isn't going to do anything but go to school, eat, play and complain. School is more important than anything else because he (usually a he) has a lot of people to take care of and school is the ticket for all 7 people to retire happily. Second, it only costs 10RMB to have someone from the apartment management office come up and fix anything/everything for them. So why do anything yourself? (For a $1.25 I don't do anything here either.)Third, there is face in NOT doing manual labor type jobs and paying other people to do it for you. Finally, because there is so much cheap labor everyone is incredibly specialized (limited) in their variety of job skills. Basically, everyone does their own (one) job very very well but no one has a clue about anyone else's job here because they’ve never had another job and chances are their parents were farmers (meaning they didn't learn business from their parents/environment growing up). Just one more reason why you shouldn’t just blindly accept sub-contractors or factories offering to make things they’ve never made before.3\. And finally, partial comments from readers to the SRI blog this week. I'm only posting partial comments since this is a family show. “This isn’t unique to China at all.” Yea, you’re probably right, but that doesn’t mean that it isn’t true in (my) China. I’m sure that tons of the things I write about China could be said about 50 other countries—thing is, I’m not writing about those 50 other countries. Just China. You want to make the cross-cultural comparisons? [Knock yourself out](http://wordpress.org/?ref=silkroadintl.net)!“Not all Chinese are dishonest.” So true, so true. But there are enough Chinese who themselves recognize serious ethical issues within Chinese business culture that warnings for foreigners are, I think, warranted. And I don't think that it’s racist to say that the system here is amoral and significantly different from what many Westerners are used to. And why, in this glorious, Obama post-racial paradise can’t I say this anyway?! ### Rio Tinto and Urumqi as Corporate Culture Lessons URL: https://www.silkroadintl.net/rio-tinto-and-urumqi-as-corporate-culture-lessons/ Last updated: 2026-07-18T14:48:30.000Z 22/08/09 UPDATEThis is [EXACTLY what I'm talking about](http://www.pcmag.com/article2/0,2817,2351867,00.asp?ref=silkroadintl.net). What you see in public you're bound to see at lower levels too--it's just that only the Microsofts of the world get the press. > "China's efforts to stop intellectual property theft have been weak and ineffective—heavy on tough talk but light on implementation," U.S. Congressman Howard Berman of California, who has been visiting Beijing, said in a statement issued by his office." > \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_First, the controlling of the situation in [Urumqi in four easy steps.](http://www.usatoday.com/news/world/2009-08-09-china-muslims%5FN.htm?ref=silkroadintl.net) 1, 2, 3, 4. > “During a four-day trip to Urumqi last week, a USA TODAY reporter witnessed the techniques that the Chinese government is using to try to keep an uneasy peace here:**1\. Round them up2\. Insist everything is OK 3\. Identify a common enemy 4\. Show them the money"** > I read this article and realized that these are some of the same things that are done in factories to “solve” problems with foreign buyers. So here's my interpretation and some examples from our experience here in China.**1\. Round them up.** Anyone that knows about production problems is either removed from the floor or threatened with their job if they talk. It’s easy to keep people quite if their job is threatened. We’ve had people imply that talking to our QC or admitting to problems will result in them losing their job. We’ve also seen that when line workers innocently tell us the truth about problems they are dealt with harshly. Other times, specific managers are just not available when we come for pre-arranged meetings. This is just how you eliminate any corroborating stories—remove anyone with information from the line when the 3PQ arrives for a visit. The way to counter this is to just be fair and honest—you don’t need anyone to confirm that there are problems. 3PQ is the standard and their reports are directly tied to payments (or should be). If 3PQ doesn’t like it, it really doesn’t matter if other people in the factory agree or not. This isn’t arrogant or obstinate it’s just a fact—3PQ reports are directly tied to payments and there isn’t really any room for discussion if the product doesn’t pass. Just stick to this and never give in and you’ll be fine. Give in once and every question from there on out will be a major battle. You’ve been warned.**2\. Insist that everything is OK.** AKA: Denial of any and all problems. The most common forms this takes are “Our other customers don’t have a problem with this” and “We always do it like this.” I’ve had people hold product and Pantone color chips and literally tell me that a red color isn’t really red but that my color chips must be old or incorrect or even that the colors match perfectly (even if they are totally the wrong color). My friend Mike tells of story of “red” fire trucks that were actually florescent orange and the factory had no problem with the difference. Remember, if no one admits to the problem then it doesn’t yet exist (at least in the minds of the factory managers). And that’s the goal—to eliminate the idea of a problem rather than solve problems. What can you do about this attitude? Probably nothing. Just agree with the fact that they do indeed do this for other people. But remember, it doesn’t matter what other clients accept or what the factory “typically” does. If it’s not what you agreed to (in your written contract) then you don’t have to pay for it, regardless of how typical it is.**3\. Identify a common enemy.** Once the cat is out of the bag and there is admission that there really is a problem (often a huge first step) then you have to find out both where the problem came from and then how to fix it. My experience is that while I’m interested in getting problems fixed (solutions to meet deadlines) the factory is more often concerned with finding someone to blame—usually a sub-supplier. It's always the sub-suppliers fault. > No matter how many times it happens it’s always amazing to me how factories are willing to throw their sub-suppliers under the bus and assume that they have no responsibility for their quality. Of course, they chose the sub-suppliers (often without telling us they were even involved) themselves and they paid them for work—and there in lies the problem. Factories just assume (or hope in vain) that blaming someone else will end the problem. It's like they expect me to say: “Oh, it’s the sub-supplier’s fault? Well then, we’ll just let it go. Sorry for bringing it up.” Once something has been paid for it doesn’t matter who the buyer is, a foreigner or a local factory, no supplier is going to fix stuff that is “finished” and already paid for and shipped out. Bad quality components most often have to be replaced at the factory's expense since they can’t get their sub-suppliers to pay for them once they’ve taken delivery. > While it may seem antithetical to what you’ve been taught in business school, sometimes letting the factory place blame on someone is not always a bad thing. Regardless of what (or when) the outcome is, someone will pay for the mistake and so getting the blame game over with as soon as possible is often the best way to move on to what the resolution options are. While I never like seeing one person get nailed to the wall (as it’s never comfortable and almost never only one person’s fault) if you can’t avoid it, minimize it by moving on to the solution as quickly as possible.**4\. Show them the money.** This is what happens next. You find a problem, they deny it, then finally admit it, blame the sub-supplier and offer you a discount for the *next* order. Notice, fixing the problem, resolving the concern, changing processes, or giving you a discount for the current (incorrect) product are almost never options. The key is to get you to take as much of the current crap for the fixed price as possible and then spend money (future discounts) on other projects to pacify you. If they can get current product moved at the agreed upon price, the next goal is the reorder—if that means promising discounts now, so be it. There is always time to increase the costs later. Second piece of news is the on going [Rio Tinto saga; it just gets less and less important as a legal case](http://www.reuters.com/article/marketsNews/idUSSYD53982320090811?ref=silkroadintl.net) as the accusations become less and less serious and the Chinese government continues to back off from the original claims of espionage and damage to “State Interests.” It’s now a bribery case—and while that’s serious and illegal in both China and Australia, it’s not espionage. But as [a lesson in Chinese negotiations](http://online.wsj.com/article/SB30001424052970204683204574357303300725932.html?ref=silkroadintl.net) this case is destine to become a classic. Young whippersnappers will be reading about this case in college for years to come.**1\. Business everywhere else is the same as business in China.** This is NOT the same as saying “business in China is the same as business everywhere else.” Business in China is conducted in a very amoral (not immoral) and very “loose” structure. There is very limited amount of public trust, very lax enforcement of rules, a high level of competition, extensive hierarchy and a very small percentage of winners verses a huge number of losers—because of these environmental factors the business mindset it much different here than in the strict legalistic, fruited-plains of the West. Like westerners coming to China with too much trust, Chinese go abroad with carrying their own cultural baggage and working under assumptions based on a Chinese reality.\_\_\_\_\_\_\_\_\_\_ **22/08/09 UPDATE**\--About [the complete lack of trust in China](http://www.latimes.com/news/nationworld/nation/la-fg-china-organic8-2009aug08,0,4473884.story?ref=silkroadintl.net) (and [a scary article about food](http://eileeneats.com/wordpress/?ref=silkroadintl.net) and [here](http://economix.blogs.nytimes.com/2008/11/13/china-a-nation-on-a-diet/?ref=silkroadintl.net)) (h/t [China Law Blog](http://www.chinalawblog.com/?ref=silkroadintl.net)). > "Terry Yu, who owns Lohao City and three organic farms around Beijing, was quoted in the [**Los Angeles Times**](http://www.google.com/search?client=safari&rls=en-us&q=Interest+in+organic+food+on+the+rise+in+China&ie=UTF-8&oe=UTF-8&ref=silkroadintl.net) as saying: “**The biggest problem in the Chinese food industry, is that customers don’t trust the chain, and the chain doesn’t trust its supplier — no one trusts anyone.**”" > If Chinese don't trust anyone in their own system, why should foreigners? You shouldn't!! Stop calling me racist for saying this. CHINESE DON'T TRUST OTHER CHINESE AND FOREIGNERS ARE JUST PLAIN STOOOPID TO DO SO!\_\_\_\_\_\_\_\_\_\_Chinese officials go abroad and often can’t figure out why the hierarchy and government authority that is so dominant in China is not replicated in the West. Chinese students studying abroad often have issues with the independence they are given at school and the creative application of information required outside of structured exams. Business people want to go and meet with government officials, trade representatives and other “high level” connections first.**2\. A big scare is as good as a good as a solution.** This happened to the Rio Tino employees and [it happened to me](https://www.silkroadintl.net/the-joys-of-living-in-china/) when we tried to protest development in Shenzhen. It is really just one of many versions of the bluff—make the problem so big that there really isn’t a solution and shazam! you have the solution, accept the status quo. One of the common responses to problems that we find in production is the exaggeration of the extent of the problem (“everything is like this”) and/or costs and time needed to fix it. We’ve seen this enough times for me to believe that this is a conscious tactic—make the problem seem too big to fix so it’s either an all or nothing proposition for the buyer. But we’ve also found that as we continue to push the issue, the numbers become clearer and the % of rejected project usually drops. And drop dramatically. Of course the factory still has more to fix than they’d like, but it’s ALWAYS less than they first claimed. The key here is don’t freak out. Call the bluff and take the time (usually less than a ½ to count enough pieces to make a point) to find out really what the situation is and then make a case (with numbers) to get things corrected. More often than not, if you do a little research you can have more information than anyone else involved in the negotiations—remember the people that have the authority to make the decisions are typically not the people that caused (and are covering up) the problems. So get the right people some info and you’ll be that much further down the road to real solutions. In Chinese this also known as "Killing the chicken to scare the monkey. " This idiom is referenced regularly as a common tactic in local government dealings. Another example of how we’ve seen it used is this. A problem arises, the factory sits us down (or usually we sit them down to ask for answers) and we are usually told horror stories about “bad” factories and how “they” mistreat clients in similar situations. Then there is this long pause as I wait for the punch-line ... waiting ... waiting ... So I ask what the story has to do with them and our current problem since they are not a “bad” factory. They of course expect me to read between the lines—and everyone that is native-fluent in Chinese gets it. I’ll admit I honestly don’t always get the implied point, but I almost always know when the game is being played—and usually that’s just as good as understanding the point. One advantage of being a foreigner here is that you don’t have to play the Chinese games. Everyone in the room knows the point of the story, but because I’m foreign, I can play stupid. Factory managers are typically not going to make obvious threats, so they have to either say it again (and again) or change their story.**5\. Delay no matter what**. The factory will win unless they get called on it and even then they’re further ahead (or at least farther down the road) then they were when they began. Whether it’s denying problems, downplaying concerns, making cosmetic changes or just wasting time in meetings to “solve” the problem a bluff or a delay is often as good as an answer. I was directly told by a factory manager who was trying to win my confidence for help with a problem with another client/project that when “small problems” arise in production they actively try to delay implementing or even offering solutions so that the deadlines are too tight to make any significant changes. Suppliers know that most Western buyers are committed to specific timelines with box stores and DC’s back home. If they can force buyers to choose between living with “small problems” and missing their deadlines they know they’ll win out and the problems will be accepted 9 times out of ten.**6\. Tie smaller issues to larger ones to increase their impact**. Reading the news about interactions between the Chinese and Australian governments brings this out clearly—The Chinese want to tie all individual issues (trade, HR, T!bet, etc.) to the Rio Case to “put the relationship into proper perspective.”In manufacturing, once a problem is both admitted to and the solution is identified you might think that you’re good to go. But you’re not. You’ve still got to get the work actually done. One of the ways that we see factories stalling on actually doing anything is by claiming that this project is going to affect another. For example, they have a limited labor pool to draw from and repairs require personnel from other projects thus causing delays elsewhere. This isn’t always a game-often it’s true and so, to keep in good with a supplier you need to work with them to come up with the best possible option. Remember, you’re not their only client and they have commitments elsewhere that are just as significant (or more so) than they have with you. But sometimes, this is consciously malicious. Some times a rework request on a large project gets tied, albeit indirectly, to a much larger and more expensive project. For example, when we were packaging Christmas ribbon for a box store order a couple years ago we wanted to have them reprint the spools—the registration was off and it made all the logos look “fuzzy.” To do so would require a completely new print fun for millions of spool stickers. It was fairly expensive, but certainly necessary to meet established standards. We were at the same time and at the same factory packaging another order of bags for a different client. The bags had printed insert cards and master cartons—both much larger and more expensive than the spool stickers. We were told, indirectly, that the total amount of the two orders including the requested sticker reprinting could not go over a specific amount. Basically, re-printing stickers for a completely unrelated project would mean we’d have to accept cheaper materials for the bag project. This is a maddening situation to be put into. It’s not fair and it’s hard to get out of. Resolution required hours of negotiations and usually we have to spend a significant amount of additional hours in on-site QC to make sure that we get the correct materials (in our printing). I’ve said it many times, sometimes you spend more money to get the same standard product that you originally contracted for and you’re genuinely happy about it. ### It's not just me saying this URL: https://www.silkroadintl.net/its-not-just-me-saying-this/ Last updated: 2026-07-18T14:48:31.000Z [China is headed for a melt-down of historic proportions.](http://www.atimes.com/atimes/Global%5FEconomy/KH06Dj02.html?ref=silkroadintl.net) The only question is when it will happen. The only way that it will not happen is if the laws economics do not apply to China. (Warning: massive over-generalization coming up....) And many Chinese already will tell you that the rules do not apply here. I've had well educated Chinese who question some of the numbers themselves still say things like "It's our right/destiny," and "We're not like the West. " All too often questions from foreigners about the wisdom of those driving the economy, the one child policy, currency manipulation, lack of tranparency, etc. are met with ridicule, nationalism and accusations of racism. The current state of the US ~~Ponzi scheme~~ economy is like China's get-out-of-the-discussion-free card. Within China, there is very little rational discussion about the true state of the Chinese economy. Partly because there [isn't very much "true" information](http://www.atimes.com/atimes/China%5FBusiness/KH05Cb01.html?ref=silkroadintl.net) and partly because no one wants to believe anything but the good news--it's been so good for almost 30 years now; an entire generation of Chinese don't know anything but double digit growth. But the problem in China is more than just numbers. The success of China's economy is political. And personal. One of the problems of tying the (economic or Olympic or political or whatever) performance of the country to the national identity is that when you have (economic) problems citizens take it personally. Suicide numbers go up when the national team doesn't qualify for the World Cup (again). They have personal conflict about buying Japanese cars and debate why America is so powerful when it's both religious and thousands of years younger than China. Criticism of China by foreigners to all but the most internationalized of Chinese citizens can be seen as a personal attack. That's one of the reasons why the crash in China, when it happens, will be even more devastating than what's happening in the US now. People will see it as a failure of history, culture, government; and personal failure too. Another great blog on this is at [Zhongnanhai](http://www.zhongnanhaiblog.com/web?ref=silkroadintl.net). The post entitled "[China's Bubbles and Demographics](http://www.zhongnanhaiblog.com/web/articles/384/1/Chinas-Bubbles-and-Demographics/Page1.html?ref=silkroadintl.net)" is a great look at just what I'm saying here--there are serious long term problems ahead. These problems will result in one or more bursting economic bubbles. In the blog there are three specific articles quoted and since sometimes I have issues with filters and blogs within China I've attached the direct links [here](http://thisischinablog.com/wp-content/plugins/wordpress-toolbar/toolbar.php?wp-toolbar-tourl=http://xieguozhong.blog.sohu.com/128798351.html&wp-toolbar-fromurl=http://thisischinablog.com/2009/08/10/the-mother-of-all-bubbles/&wp-toolbar-fromtitle=The%20Mother%20of%20All%20Bubbles&wp-toolbar-blogurl=http://thisischinablog.com&wp-toolbar-blogtitle=This%20is%20China!%20Blog&ref=silkroadintl.net), [here](http://www.businessweek.com/magazine/content/09%5F33/b4143025808870.htm?chan=globalbiz%5Fasia+index+page%5Ftop+stories&ref=silkroadintl.net) and [here](http://csis.org/publication/graying-middle-kingdom?ref=silkroadintl.net). You're welcome. Finally, [Bill Dodson](http://thisischinablog.com/about-bill-dodson/?ref=silkroadintl.net) at the [This is China blog](http://) linked to another article in the [NYT](http://economix.blogs.nytimes.com/2009/07/30/what-to-do-about-a-china-bubble/?ref=silkroadintl.net) saying much the same thing. ### SRI in the HKTDC's Hong Kong Trader URL: https://www.silkroadintl.net/sri-in-the-hktdcs-hong-kong-trader/ Last updated: 2026-07-18T14:48:30.000Z SRI's David Dayton was featured in a piece on [smart sourcing](http://www.hktdc.com/info/mi/a/hkti/en/1X062BGN/1/Hong-Kong-Trader---International-Edition/Smart-Sourcing-in-a-Changing-China.htm?ref=silkroadintl.net) in the latest issue of [Hong Kong Trader](http://www.hktdc.com/info/mi/hkti/en/index.htm?ref=silkroadintl.net), the trade magazine published by the [Hong Kong Trade and Development Council](http://www.hktdc.com/?ref=silkroadintl.net). ### Remind me again, when exactly does the Asian Century start? URL: https://www.silkroadintl.net/reminde-me-again-when-exactly-does-the-asian-century-start/ Last updated: 2026-07-18T14:48:31.000Z I’m firmly ensconced on the fence when it comes to China and it’s future—I love my family and my friends here but can’t imaging a more amoral environment to work in. I am so grateful to be here and to still have business in the current economy, but working here is dangerous, unhealthy and difficult. I see the market growing incredibly but think that the bubble is scary-huge already. 8% GDP growth is amazing, but the current plan of government spending and exports isn’t sustainable. So, knowing where I stand, you’ll understand why I say it’s rare that I find multiple articles that I think are really well written (in terms of perspective and research) and also immediately valuable for use in business and/or personal investment or planning. The two links below are both. Long time readers will also know that I doubt that the China is the next “superpower.” But I do completely agree with believe that China should and will be the largest economy on the planet—just getting 1.5 billion people to a respectable level of education and income will demand that it be so—the world just needs to get used to that. But China is not there yet, as [this FP article points out](http://www.foreignpolicy.com/articles/2009/06/22/think%5Fagain%5Fasias%5Frise?page=full&ref=silkroadintl.net). And there are many issues (increasing poverty, decreasing education) that have been getting worse not better in the last 20 years; hence my uncertainty about China’s future. The combination of so many factors leads me to the conclusion that there are serious troubles ahead for China. For the sake of my family and business (and other people too) I hope that I’m wrong. If you’ve read my posts on the economic situation on the blog and are again thinking “man, this guy just can’t say anything good about the Chinese economic miracle and the fact that it’s the only growing economy on the planet” then you need to read both these articles and some of the other books that balance the China-as-world-savior hype. I’m not saying you should subscribe to the China’s-going-down-in-flames perspective, I don’t; cautious pessimism is more of what I would call my attitude—which I find prudent for doing business here. But as more info comes out, an increasing number of people in a wide variety of business and political sectors are seeing [a big crash coming](http://www.foreignpolicy.com/articles/2009/07/23/the%5Fchina%5Fbubbles%5Fcoming%5Fbut%5Fnot%5Fthe%5Fone%5Fyou%5Fthink?page=full&ref=silkroadintl.net) too. Remember when you read numbers on China—there is absolutely no transparency here. Not in the government, not in public companies, not in private companies, not in tax records, not in corporate power distribution. Nowhere. So everything you read, you have to question both the source and the motive of the source. Further, the terminology used by Chinese and then translated to into English equivalents are often misleading as the baggage/meaning in the English is not necessarily the meaning in China and sometimes completely different from the Chinese. And finally, while the [US and China are sitting down together ](http://www.politico.com/news/stories/0709/25492.html?ref=silkroadintl.net)this week--the Chinese are (rightly) asking the US what the hell is up with the "stimulus" package that inflates both long term US debt and the current deficit?! But the US is asking the right questions too--how can the Chinese government continue it's stimulus if the world doesn't recover to pre-crash levels of consumer spending? Answer? They can't. ### How business is (often) done in China. URL: https://www.silkroadintl.net/how-business-is-often-done-in-china/ Last updated: 2026-07-18T14:48:30.000Z All of these experiences happened to me this last month.**First, If you don’t make it, fake it. This is different from the same old “China just copies everything.” Well, sort of different.**We are working for a client that is buying deli products in China for the US market. They want a PET box or baked chicken. We found 8 different suppliers, visited factories, received samples, got bids and finally placed a PO with one of them. One of the factories we visited had just the box we wanted. But when we placed an order we were immediately told (after the deposit was paid) that “the mold” is broken. Of course we wanted to confirm as the production times for a new mold (or repairs) would significantly impact our delivery dates. We went to the factory; they couldn’t show us the mold. They said it was being repaired off site—we asked to go there too (as we had been previously told it was “next door” to the factory). Guess what? The only mold that has anything to do with our chicken box order is now, for the first time, being made from scratch. The box samples, of which they had quite a few, were actually from somewhere else. Can they make it? Yes. But they haven’t before and now the production will take twice as long as the original bid. > If you’re only seeing samples in the show room, and only one piece at that, you should be wondering about the real source. You need to see more than just one sample—things like molds, plans, rejects, packaging, etc. will confirm that the factory really does make this product. Just a couple of samples in the show room can mean that they’ve never actually made it. > **Second, If it’s not yours to sell, just don’t tell any one when you do.**We’ve been working with a factory to buy some of their overstock and items from canceled orders. With the economic downturn, that’s turned into multiple containers of goods. The supplier had told us they have a (Chinese) contract that states they can sell unfinished product from orders if the orders are canceled. We’ve asked for it repeatedly but it’s never been delivered. In the meantime we picked a number of items and have had them repackaged. The problem came when we told them that it was shipping back to the US. All of a sudden they won’t sell it to us any more. 5 containers of canceled-order product have been sold to other Hong Kong trading companies already—you don’t think any of that will end up in the US? One manager told me (out of earshot of the owner) that the original US customer is putting pressure on them to not sell product to the US market that will complete with the stuff they are still selling.**Third, If it’s not legal, find a work around.**There are many products that have quotas or dumping restrictions when entering the US from China. One in particular that we’re trying to buy now has quite a strict import requirement—qtty’s, materials, number of buyers and Country of Origin (COO) are all strictly regulated by US customs. So the answer to this is not to meet standards or reduce production qttys, but to find a work around. In many cases it’s a shipping solution to a manufacturing problem. Freight forwarding companies will actively help clients search for a “solution” to the COO problem by creatively shipping containers to various world ports, unloading and reloading them and then issuing new documents prior to shipping them to the US.**Fourth, If you have connections you can do whatever you want. Sometimes money works too.** I can’t personal share details here, but if you read the news you can find more than enough corroborating stories. Check out [CLB](http://www.chinalawblog.com/?ref=silkroadintl.net) if the stories in your [Google search](http://www.google.com/search?hl=en&newwindow=1&site=search%3Dchina%2Bcorruption&q=china+corruption&btnG=Search&ref=silkroadintl.net) don’t satisfy you. In a word, corruption is rampant over here. People that are making deals, doing QC or making payments to factories or government officials here know that what’s done on the factory floor is only half the story. Foreigners that don’t speak Chinese that work in offices with English speaking staff often don’t see it. They’re insulated from the realities of China business because of all the “filters” that come between them and actual transactions. News about the arrests of everyone from factory bosses to big city mayors are really just the tip of the iceberg. Talk to the security officials for any MNC or managers of QC teams or purchasing managers or entrepreneurs. Every exposé-type book from some one that works here confirms this—Beijing Jeep, Made in China, Made Poorly in China, Mr. China, Managing the Dragon, Will the Boat Sink the Water, The Coming Collapse of China, and to a lesser extent All the Tea in China, Inside Chinese Business, China Business Etiquette. (Sorry, I'm not going to link to each of these, but you can read my book reviews for each one if you click on the Book Reviews link on the right.)**Fifth, Grey, not Red should be the color of China.** In China, work is done in the gray areas of the law. Meaning, if it’s not being policed for today, it’s probably considered OK. This does not mean that everything is illegal, but it does mean that if you don’t outline the specific legal standards that must be followed, they will not be followed voluntarily. The legal system is specifically designed like this--if it's not specifically illegal then it's OK until someone gets busted and the laws are updated or enforced differently. There are a lot of reasons given (by Chinese themselves) for this. 1\. Lack of education. 2\. Size of the population of China. 3\. Competition. 4\. Everyone else does it. 5\. Misunderstanding of international expectations. 5\. Survival. Whatever the practice, someone can justify it. I remember one night in Bangkok, the owner of a restaurant told me, “You can get absolutely anything you want in Bangkok at any time of the day or night. It’s just a question of money.” It was true twenty years ago in Thailand and it’s still true today in China (and in Thailand today too).**Sixth, Contracts/standards/product will be changed—it’s up to you to catch it. The corollary is this: While** [**contracts are indeed more enforceable than ever in China**](http://www.chinalawblog.com/2009/07/enforcing%5Fcontracts%5Fin%5Fchina%5Fw.html?ref=silkroadintl.net)**—is it worth it?** More often than not, after we’ve negotiated any contract with suppliers with all of our (very high) QC standards written in (and payments tied to said standards), the factory comes back to us and says, “We didn’t expect that you’d really be this strict. This is going to cost us more than we expected.” Their solution to this problem is then always one of two options. One, get us to pay for it—which we won’t do. Or two, cut costs by adjusting the quality and hoping that we don’t notice—which we won’t accept. Even if a supplier has a sweetheart of a deal they will cut costs by careful, conscious incremental quality fade techniques. This last week we were trying to complete a shipment of wire baskets and found that ½ the order was not painted the correct color. The excuse/reason? “Your prices are so low and your QC so strict that we can’t afford to paint this ½ of the order.”Factories assume a number of things when working with foreigners. One, you’ll probably not have on-site QC. Second, your delivery deadlines will trump your need for getting everything exactly correct. Third, there are a number of things that you’ll not catch that can be done to save costs once the samples have been approved. The onus is on you to both establish standards and (continually) confirm that they are being followed. The enforcement corollary is a real problem for small companies like mine. We typically don’t place orders to a single factory for an entire product. But rather buy and QC all the components ourselves and then send them to a fulfillment center. So instead of a $100,000 PO to one place, we have 5 or 6 $10K+ PO’s. Legal fees, at best, are still going to be a couple thousand dollars and results weeks to months out in China. That much time and money can represent 20% to 50% or more of the PO value and really isn’t worth it. The factories know this and so have the upper hand in stalling and holding out. Sure you can sue, but with smaller PO’s it’s just not worth it. Which leaves you working out the problems with the factory. And, with the legal options of the table you are often, as I’ve said before, left being happy getting what you originally wanted at an inflated price.**Seventh, Not speaking Chinese (but understanding it) is often better than speaking yourself.** I’ve found that if I shut my mouth and listen and speak English to an assistant/QC I can get a LOT more information than I would if I was doing the negotiations directly—of course, I understand Mandarin, Thai and some Cantonese, which are the three primary language in which we do business. Chinese are the masters at word games—the language is chock full of twists, turns, idioms and double and triple meanings. That’s what you get when you have a limited number of spoken sounds and written characters. You have to know that that’s the game that’s being played. When you know, you can avoid some of the problems. Ways to avoid misscommunications. 1\. Get two pieces of everything signed by you and the factory rep. Get an agreement (Signed and chopped) that YOUR signed sample that is kept in your office is the standard if there are disputes. 2\. Confirm everything by saying it back and then recording it. 3\. Make sure that your translator is paid for by you and not just the Chinglish speaking sales person at the factory. 4\. Make sure that some one from your office is taking the official copy of meeting notes (in Chinese). Do not leave this to the supplier. You want to control the words that are used and agreed to.**Finally, the people involved in the negotiations will make or break your deal.**There are at least 5 people that I would suggest that you have involved in your China operations in general and in negotiations specifically. 1\. The standard setter and enforcer--this is usually the foreigner, for us. 2\. The translator if you don't speak Chinese. 3\. The negotiator--just because the 25 year-old college grad in your office can speak fluent English does NOT mean that she's a negotiator. 4\. The details/record keeper. This person, for us, is the project manager. 5\. The QC.If you are not here on the ground for the entire time and/or don't speak Chinese you have to have an incredible amount of trust in each one of these people. Anyone of them can negotiate a great deal for themselves at your expense and you'll never know it. They can also save you so many headaches and so much money if they are indeed committed to you. Get good people. Treat them well. Trust them and you'll get so much better deals and solutions. Good luck. ### 6 conversations and a couple of cultural lessons URL: https://www.silkroadintl.net/6-conversations-and-a-couple-of-cultural-lessons/ Last updated: 2026-07-18T14:48:31.000Z I had some very interesting conversations with friends recently about the economy and what they are seeing. Despite the very different industries and even the direction of business they all had the same conclusions—things were bad but are looking up. Cautiously to optimistically up. **First**, a friend from an MNC in China for a week on business said that second quarter of this year seems to have leveled out—we’ve hit bottom. This is about what most of the foreign folks that I talked with all seemed to believe. His company numbers don’t show things getting all the much better in China than anywhere else in the world. But over all things are not getting worse. The hope is that it will last. **Second**, a foreign friend that owns a factory here said that they had a pretty good first half of the year but had done tons of marketing in the previous year and the new business that that campaign brought in is just keeping numbers even. The predictions for third quarter from these two guys were very tentative—most other people I talk with here hope that it will be at least as good as (only as bad as) the flat second quarter numbers. A couple people have told me that they are VERY worried that second quarter was only good because retailers had to refill stocks and had to order for the fall/Christmas seasons. There is still no money in the US/EU and so the worry is that exports from China are not going to improve yet. **Third**, the buying of imported goods, which is still down in China, means the market for foreign companies isn’t necessarily improving with the flattening out mentioned above. A salesman for a US company making testing equipment made it very clear that their company is moving both less total volume (about 85%, he said) and at much smaller margins than before. This was the most interesting (sorry no sharable details) and most pessimistic conversation I had while at a golf course, no less. While all the news is pointing to an Asia first (China-led) recovery this individual was quite the contrarian. **Fourth**, in support of the China-led recovery theory, today a factory owner told me that business is so good right now that they are both building a new building and selling more volume than last year. All of their clients are either foreigners coming to them directly or Hong Kong trading companies bring in foreign buyers. This I didn’t expect and haven’t seen in other factories—although there does seem to be much more optimism now than 6 months ago. **Fifth**, talking with another factory boss today I got another surprise. He mistakenly assumed that I since I was here now (with a Chinese family) I was going to spend the rest of my life, by choice, in China. And so, as a little secret between friends, he told me that the group of factory owners he knows don’t really have any desire to move to the US or even out of China. He said that in the US it’s “too fair.” In China, he said “if you have money you can solve any problem and you can do whatever you want.” You just don’t have that freedom if you move to the US, he told me. Here you can get a massage, you can pay your way out of problems, you have bars, nightlife, cheap girls and you just don’t have any of that in the US. While I don’t agree with all of this, I have to admit that I’ve had this conversation before. Just last month when my in-laws were denied tourist visas to the US my father in-law said, “The US government is worse than the Chinese government. At least in China you can pay to get things done. With the US (embassy) you pay and get nothing!” I had to agree. **Sixth**, we moved into a new office this week—the first one that we’ve owned since we came to China in 2003\. But to move in on an auspicious date we had to end our current rental contract early. (Yes, we hired a fenshui/numerologist to help us both pick a good move-in date and organize the layout of the office. “15 years of good fortune” is the prediction. Woo hoo!) We negotiated the early move-out on the condition that we find a replacement renter and get new contracts signed and taxes all paid up though the end of July. If we met all these conditions we could get our deposit back. We did so but when we brought the new renter to sign the paperwork with the landlord we were told we were not getting our deposit. Of course we pitched a huge fit and got into a long (3-4 hour) protracted argument about the landlords about face. When the new tenant had left after signing all the paperwork the landlord looked at us and said “Didn’t you see me wink?” The whole argument was just a ruse to make sure that the new tenant didn’t expect to get his deposit back if he ended his contract early. The landlord was a bit chagrinned that we had had the argument but told us that our deal was still on and the argument was really our fault for bringing up the details of our agreement in front of the new tenant. We were so surprised that my manager said: “how are we supposed to know that?!” My response was: “If Chinese can’t even figure out their own culture together, how the hell are foreigners supposed to figure it out?!” We all had a good laugh and a nice dinner together after all the paperwork was done. While we were closing up all the legal lose ends with the local tax office I had to show ID and sign some forms and pay some money to end the contract. I did so with my new passport. I was anticipating that there were going to be problems since the numbers on the forms were all from my old passport (which I’d forgot to bring). But the tax official looked at me, looked at my photo in my passport and said “I can’t read any of this. He paid the fee.” She shrugged, tossed my passport back to me and that was it. **Finally a lesson learned and a lesson taught.** I was doing QC for a shipment of product samples going to the US today. The quality of product is quite good. The qtty’s are correct, the packaging is good. We approved each step of the process all the way through the final painting. Everything was correct. The problem? We didn’t watch the paint dry. Really. While drying, the dust and spray from other colored projects blew onto our white product thus giving everything a speckled coat. First lesson, if you don’t approve and QC each step of the process chances are no one else will either. The painting was done off-site at a second factory. So I spoke with the owner about the QC that they did on the painting—he talked with a few managers and then told me that since I checked it last time they hadn’t done anything. Since I had approved it they figured it was OK. Product was paid for and shipped back to the original factory for packaging with no other QC. Now the original factory is in a fight with the painting factory over who will pay for the dirty paint job (and the cost of repainting). Of course the paint factory says that since it was approved it’s not their fault. And the original factory claims that the paint, not the dirt, was approved so they shouldn’t have to pay to have it redone. I completely empathize with the original factory not only because I think that they are right but because I have been here so many times, that I can’t even count them all. **Lesson two**: Chinese factories ALWAYS sub work out to other factories. (And no, I’m not exaggerating. Always is the right word.) But they never do QC. I have not, in 7 years, ever had a factory do QC before they accepted product from a factory that they’ve sub’d work out to. They always act so surprised that we reject sub-standard product that comes from someone they’ve “cooperated with for many years.” I talked with the owner about our own processes (that fact that I live in China for this very purpose — to QC product before it leaves the factories) and told him how much money we save by paying for QC to go out to factories to check components before they are shipped rather than after they arrive at a fulfillment location. To his credit he very honestly told me that if they did that they’d lose face and damage relationships with their sub-suppliers. So, for our products we worked out a deal where they will tell the factory that we have to check the components before they are shipped and they’ll pay for the transportation costs. If they need help with other foreign customers they can use one of our QC for a day and, again, blame the foreigners rather than make waves themselves. ### Stay classy, Dongguan. URL: https://www.silkroadintl.net/dongguan-comes-through-again/ Last updated: 2026-07-16T04:58:17.000Z Some things never change. As nice as that may sound for continuity, this week it’s a bad thing. After visiting two factories, I was riding the bus from Changan back to Shenzhen last Friday night when I came upon [another knife attack](https://www.silkroadintl.net/qc-blog/)/fight. It was right at the bus station this time at about 6PM—in fact the bus that I wanted to board was under attack. There were 4 guys (who I first thought were not Chinese but whom I later realized were just from Western China) doing everything they could to stop a bus from leaving. They were threatening to throw big rocks though the windows and were physically standing in the way of the bus forcing the driver to either run them down or stop (of course, he stopped). The police were just arriving on the scene when I showed up looking for a bus home. (In the end there were a total of 36 police on site—yes, I counted). There had already been a fight too and one guy was still bleeding on the ground. The 4 attackers, friends of the bloody guy, were trying to get the perp off the bus before it left. The police were both on the bus (with the door locked) and sort of trying to keeping the crowed back away from the guys with rocks. Then, a new guy with a long stiff towel shows up. He, very dramatically I thought, unfurls the towel and pulls out a 2 foot long machete. He starts threatening the police, the bus driver and the bus (windows and tires mostly get slapped around). He does this for at least 20 minutes while more and more police show up and tell more an more onlookers to go away. For 25 minutes no one stops the guy with the knife, no one tends to the bleeding guy on the ground, no one moves people away from the swinging machete, no one gets the guy off the bus. NOTHING. It was the most amazing dance/show. It honestly seemed like no one was scared, surprised or intended to help or get involved in any way—especially the police!! Now the green suited police were all about 25 years old, had no crown control devices or weapons and didn’t look like they wanted to be there at all. None of them even talked with the knife-guy. They threatened a few people that stopped to watch—told them to leave and menacingly walked toward the bystanders. But of course everyone stayed to watch. I took photos with my camera and no one seemed to care. So 25-30 minutes into this show, a policeman in a blue uniform and driving a Toyota Corolla shows up and starts taking with the knife guy. The bus tries to leave and more rocks and threats ensue and the bus stops again. The only two people showing any emotion this whole time are the bus driver (fear) and the knife-guy (anger). (OK, the bleeding guys is obviously in pain too.) Anyway, the cop finally convinces the guys to let the bus go and the four guys (and one knife, if you critics at home are counting) wrap the machete back up in the towel and just walk away. The bleeding guy gets some help from a just-arrived ambulance and the crowed disperses and I’m left in a line with about 40 other people that are buying tickets to get on the next bus like nothing happened. This event reminded me of my [experience with the Shenzhen police](https://www.silkroadintl.net/the-joys-of-living-in-china/) last year. It was amazing how much of a show it was rather than an actual protest/conflict with an end goal of resolution in mind. Last year in Shenzhen I was under the impression that we were going to protest until we either were dragged off screaming or until the govt relented and gave us some concessions. But neither was the case for the Chinese. They made a show one morning and then from that afternoon on it was over. We’d made our point and the govt just went ahead and did what they had planned on doing. The knife-guy wasn’t arrested in Dongguan either. The bleeding guy wasn’t taken to a hospital and the bus wasn’t detained or anyone forcibly removed from it. The 4 angry guys got face from being angry in public. The police keep the incident from spreading (and hey, no arrests so no paper work either!), the bus kept running and only one foreigner with a camera-phone probably will ever say anything more about it. ### China, the NBA and some soccer/business thoughts URL: https://www.silkroadintl.net/china-the-nba-and-some-soccerbusiness-thoughts/ Last updated: 2026-07-16T04:58:18.000Z China and the NBA, two of my favorite things, are both in the news a lot more than usual this month. First, I’m really not understanding the logic of the purchase of part of [the Cleveland Cavilers by a Chinese group](http://sports.espn.go.com/nba/playoffs/2009/news/story?id=4202661&ref=silkroadintl.net). One of the reasons that the Chinese investment was thought to be a good idea, or at least the Chinese investment fuel the speculation, was that a Yao trade to Cleveland was in the works. But now that’s forever dead with the sad news that [Yao may be gone from pro ball for good](http://sports.espn.go.com/nba/news/story?id=4295729&ref=silkroadintl.net). Of course [the addition of Shaq](http://sports.espn.go.com/nba/news/story?id=4303047&ref=silkroadintl.net) does a lot for the marketability of the Cav’s over the next 11 months. I’ve seen Yao play at least 5-6 times and he really is a freak of nature—someone that large, playing that much and moving that well. Really amazing. None of the other Chinese ballers can fill his public or professional shoes. I hope, for his own sake, that he can make some sort of comeback. But if he doesn’t [more people than just him](http://www.sltrib.com/sports/ci%5F12727666?ref=silkroadintl.net), the Rockets and the Chinese National team will be hurting. But back to the purchase at hand, the purchase seems to be a Face move more than a wise investment. (Unless it’s LA, Chicago or Boston, is buying an NBA team ever a good investment?) Here are a couple of reasons why I think they shouldn’t have bought Cleveland. 1. Cleveland is a city of [long-term sports losers](http://www.godhatesclevelandsports.blogspot.com/?ref=silkroadintl.net). No offense, Cleveland. Imagine the Chicago Cubs and the Detroit Lions in the same city. Ok, it’s not that bad, but you get the point. The most famous Cleveland sports moment? The Shot! Yup, the Cav’s losing to MJ. How many Chinese investors know about this history? But they should—that’s what they are buying into. It’s like the question that [Bill Simmons](http://sports.espn.go.com/espn/page2/simmons/index?ref=silkroadintl.net) always asks: “Why would you own a basketball team if you’re not going to try to win?!” 2. Maybe it’s still speculation at this point, but who believes that LBJ is going to be in Cleveland for more than another year? Anyone outside of Cleveland? So once he’s gone…what are you buying? How well do you think a Zydrunas Ilgauskas jersey is going to sell in China? 3. While LBJ wants to be a global icon, right now he is not even the most popular NBA star in China. He has lower jersey sales and is lower on the most-recognizable-NBA-player lists than Kobe, Yao, and D-Wade (and even MJ is still more recognizable an in more ads). LBJ, like Yao is a freak of nature that Chinese ballers don’t really identify with—they just can’t ever get that big. They all like Kobe, AI, DWade. So why not buy into some marketing opportunities with Yao or Kobe instead? Heck, the Lakers have Sun on their team already—how is some marketing deals with the Lakers not a better investment? And [Kobe and the NBA in China](http://online.wsj.com/article/SB20001424052970204556804574258222289862830.html?ref=silkroadintl.net) are just getting bigger. 4. Buying the Cav’s doesn’t give you direct and/or unlimited access to LBJ, which I assume is the main goal, anyway—especially if he’s not part of the team any more. Why not have LBJ speak for one of your products instead of buying a team (he’s going to leave)? He’s then yours for the length of your contract, rather than his Cav’s contract. 5. Even if LBJ does stay for a few more years, why would an investor want to be a part of the Cav’s organization long term? Did they make money before LBJ? They are not one of the most popular or recognizable teams in US or world sports with or without LBJ. Can they sustain their current level of popularity when he leaves? (No way.) This seams like a quick fix, a short-term flash in the pan, lots of face, but not a very smart long-term investment. 6. I do think that foreign (Chinese) investors in the NBA is a good idea. Like foreign investors buying Euro football teams (Taksin, Man City). But shouldn’t they want to be involved with an NBA team in a city with a large Chinese population or with exceptional popularity in China, or with a history of long-term success and/or name recognition? Why the Cav’s? How much potential is really there? (Go ahead, my one reader from Cleveland, now it’s your turn. Fire back.) Then again, maybe just the very fact that there may be more Cavs games on TV in China will affect the future in unknown ways that are bigger than the next 5 year’s of NBA Championships. For example, my 4 year-old son said to me last week that he is “black like Kobe. Not white like you.” I told him he was more yellow (he’s ½ Chinese), like Yao Ming, but he was insistent—“No, I’m black like Kobe.” OK. This next part has nothing to do with the NBA, but it does relate to foreign business. Yea, I’m reaching. Anyway, I’ve also been watching a bit more of the beautiful game lately (bummer about the US collapse vs Brazil, no?). Last month while watching a soccer game (RLS beating LA Galaxy) with some friends, a buddy of mine started to list off the reasons that business in Asia is like a soccer game. It was funny, so I took notes (and embellished!). Now, you’ll have to excuse both of us—while we have both done business here in Asia for more than 10 years, neither of us have every played soccer. But, never afraid about talking about something that I don’t know much about, here is our list of why Soccer is like international business. 1. Fields are different. No Hoosiers measuring tape here. Fields are different sizes, just like the figurative playing fields in business are different. Home field advantage means so much more in soccer and international business than it does in any other US sport. (OK, baseball parks are like this too.) 2. No clear set time—only the ref knows how much stoppage time will be added to the game. Maybe you think you’ve won, only to be told that there’s 3 more minutes—that’s what business in rule-by-law countries is like. Just because you’ve got the most points when time runs out doesn’t mean that the game is over. 3. Fouls are arbitrary. Again, if you’re working anywhere that does not have a very strict and efficient legal system you’re bound to get nailed with arbitrary yellow and red cards. 4. Low chance for a “score.” Lots of fishermen but very little catch. I’m convinced that soccer in the US is not popular for this very reason—there are so many other sports with more scoring opportunities that it’s just not as much bang for the buck. 5. Your can run out of bounds and not get penalized. As someone who loves basketball, this always kills me. The guy with the ball can be out of the field of play and as long as they ball isn’t, it’s OK. How many times in business can you “go outside the lines” and still be allowed to “stay in the game?” The answer? Only in Asia!! I’m equally offended that people with connections can literally go around the game and take home the prize without ever really being on the field. 6. Everyone speaks a different language. Soccer is the world sport, and as such teams are built with players from all other the world. Not even English and Spanish are the lingua franca for teams, refs or FIFA. 7. Everyone has a different style of play and business. In south America it’s all about the long pass and the header into the goal. The Euro leagues are much more about surgical strikes. Asia is about speed (and no defense), 8. Your best players can be bought, traded. What’s the difference between headhunters and scouts? Only the name on the door. 9. High work input, low return. There aren’t very many businesses like the NBA where 50% of your touches turn into points. Most of the time business is a lot of work for a single point—much more like soccer. 10. If you score enough points early the game is won before the game is over. Timing is everything. Being the first one to market can be better than being the best production offering. Maybe you don’t field the best team, but if you score enough points early, it doesn’t matter. 11. All the action is NOT in the score. Best moves do not always result in score in soccer, nor in business. Some of the prettiest plays are the set up and ball movements rather than the goals themselves. Any other reasons?Finally, [best quote about American soccer](http://sports.espn.go.com/espn/page2/story?page=hruby/rankings/090629&ref=silkroadintl.net): "Never mind startin' wars, emitting greenhouse gases, wearing fanny packs abroad. If we ever win a global tournament in a sport we barely care about -- and can't even bother to call by its correct name -- the rest of the world is going to be seriously annoyed." ### Poorly Made in China, Paul Midler—BOOK REVIEW URL: https://www.silkroadintl.net/poorly-made-in-china-paul-midler-book-review/ Last updated: 2026-07-16T04:58:19.000Z Like a couple other of my favorite books on China, [River Town](https://www.silkroadintl.net/river-town-book-review/) and [Mr. China](https://www.silkroadintl.net/mr-china-book-review/) specifically, I’m admitting to you now that the reason that I like this book so much is that this is my life in print. This is what I’ve done for the past 7 years in China—solved other people’s problems, dealt with very “cleaver” Chinese factories and played go-between with suppliers and buyers who are not just from different countries but actually from completely different planets. [Poorly Made in China](http://www.amazon.com/Poorly-Made-China-Insiders-Production/dp/0470405589/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1246284674&sr=1-1&ref=silkroadintl.net) tells the stories behind the products. Unlike [Made in China](https://www.silkroadintl.net/made-in-china-book-review/), it’s not an agenda-driven call to political action, but rather a travelogue of successes, missteps, misunderstandings, adventures in manufacturing and scores of “I can’t believe what just happened” moments. If you think that “oh, China’s not so bad anymore” then you need to read this book. It’s a Mr. China for this decade—a direct look into the experiences of a China Hand deeply involved in manufacturing in Southern China right now. Despite the gleaming steel and glass buildings of Shenzhen and Guangzhou, Paul clearly shows that China is not a first world country. It’s the uglier under-side of China where all the manufacturing and (double) dealing really happens; and that’s were Paul Midler writes from. Many books about China are written for the MNC class of China buyers—big companies that have entire purchasing departments. Very few are for or about the rest of us—those entrepreneurs that come to China and work with or for smaller companies (that may or may not sell into the big box MNC’s eventually). This is the boots-on-the-ground advice and perspective that everyone that is coming to China should read at least once. Here's [the review from the Economist](http://www.economist.com/books/displaystory.cfm?story%5Fid=13642306&ref=silkroadintl.net). The book is a quick read if only because it’s so captivating and entertaining. But there are lessons that I’ve underlined and will come back for in the future. Here are a couple of my favorites: - Chapters 8-11\. If you’re going to read this book like a Chinese (sit on the bookstore floor on Sunday afternoon for a couple of hours) then these are the chapters that you just can’t ignore. - “China’s saving culture was so strong that it was at times detrimental to business interests.” - “Typically, the importer negotiated prices in advance of any order. Then, throughout the production process, (the supplier) would look to find savings where it could. If the supplier managed to cut a corner and it worked out, it pocketed the savings. If it did not work out, the supplier then tried to use the fiasco as a chance to raise the prices in some way.” - “Importers were not inclined to pursue legal action when problems arose in a ongoing manufacturing relationship. An importer was not going to place an entire business on hold just to settle the matter of a few containers. Manufacturing problems tended to be small relative to the size of the overall business, and factory owner actually took this into account when they considered whether or not to manipulate quality levels.” - “The importer should have been rewarded for uncovering quality problems, but it was almost never the case. Factories did not see an attention to quality as something that would improve the business prospects, but merely as a barrier to increase profitability. Working to achieve higher levels of quality did not make me a friend of the factory, but a pariah.” - Speaking of faulty product discussions with a supplier, Midler says: “While we were both looking at the same problem, she was simply choosing not to see it. More than that, it seemed, she was hoping that I would share her view. Most her disappointment, it seemed, was reserved for me, because I would not entertain her own versions of reality.” - “Creating the outward appearance of the thing was often just enough to get the order initiated. Once funds were transferred to China, the manufacturer could then work on the part about getting the product right.” - “By now, it was clear to me that such inspections were pointless anyway. Whatever could go wrong with a manufacturing process was going to be seen on a walk-through. If there was something that would raise a serious alarm…the factory owner could easily make sure that it was hidden for a few short hours while the inspectors were in the plant.” - “Factories manipulated quality on a large number of variables, taking small nibbles out of each’ if they were caught in one area, they still had the advantage of others. It seemed at first a little unusual to me. By running so many schemes at once, (the supplier) seemed to be increasing his chances of getting caught doing something dishonest. In an environment where everyone is expected to do the right thing, the smallest indiscretion is a sign of moral failing, but China was a low-trust environment. Local players operated on the presumption that everyone was engaging in some level of game playing, that others would expect a level of misappropriate activity. By spreading the shenanigans around, an operator could make related wrongdoing appear less damaging. No auditor could ever be do diligent as to catch every maneuver, which mean that profit lost on one shortcut could still leave other sources of margin.” - “Factory owners were aggressive more than anything else, and perhaps even a little bit cruel. This one factory owner had encouraged his prospective customer to board a plane in the United States and fly all the way to China. Once the investment in time and money had been made, the factory took advantage.” - “Why didn’t Chinese manufacturers take the (customer is king) approach with their own customers, and why were they eternally focused on short-term gambits? Chinese business leaders were continually preaching how they valued relationships, and yet it was more often foreigners who understood what it really meant.” My take: Why don’t Chinese think about “long-term” relationships? They do, but foreign clients are rightly not whom they think they will have these “long-term” relationships with. They don’t know you from Adam, they don’t know if you’ll place one order let alone the volume and the re-orders that most buyers talk about. And there are so many clients beating down the doors in China that suppliers really don’t need to care. - “Reverse Frequent Flyer” programs—the more you work with a factory the more punitive the relationship becomes. - Mark Elvin’s “Advantage of Backwardness” says that “farmers were so good at finding small ways to increase efficiency through tinkering and that success with short fixes dulled the impetus to build machines that could replace human labor. What is surprising is how little has changed, even as the country has moved from agriculture to a focus in export manufacturing. Factory owners were just as focused on life at the margin. While they worried less about natural disasters, they behaved as though they were struggling to just get through the season. What had kept the nation from creating its own industrial revolution was more than likely this enduring cultural trait—an endemic myopia—and knowing that they suffered from it was what led common fold to welcome the larger and more direct role that government played in their lives.” - “China itself was involved in a similar contradictory pattern; while the nation wanted to become a major global player, there was still too much to be gained by insisting that they were just barely getting by. They wanted to be feared and respected, but at the same time they saw the advantage in being pitied.” Thank you. I’ve been saying this for years—China is schizophrenic. Probably my only complaints about the book was the lack of 3rd party involvement in the stories and a lack of citations. At times, Paul sounds like he was the only man on the planet and dismisses the real and valuable help of 3PQ and other professional services out of hand. Surely, with as much education as he reminds us he's had, he would have known that others had both done this before and been successful at it to boot! Not sure why many in China assume that it's "me against the world" and there are no other solutions. While the stories are fantastic, the lack of any other sources or citations leaves you wondering where the stories and personal opinions end and where the facts and research begin. Certainly theories, quotes and statistics that are discussed in detail (economic numbers, population numbers, development theories) should have been cited. To me one of the values of books is that they lead you to more books. This one just ends. Great stories, great lessons, well written. Highly recommended. ### SRI on NPR URL: https://www.silkroadintl.net/sri-on-npr/ Last updated: 2026-07-18T14:48:30.000Z I did an interview with NPR last week about the shift in status of American buyers in China. We're seeing that Chinese suppliers are doing much more due diligence prior to accepting orders and have much less trust in foreign buyers since, in the last 18 months, they've been left holding the bag more often than not. I've shared a couple of stories about [this type of thing](https://www.silkroadintl.net/notes-from-around-china/) before. Here's [the NPR link](http://marketplace.publicradio.org/display/web/2009/06/12/pm%5Fthe%5Fnew%5Fbad%5Fguys/?ref=silkroadintl.net). ### Quarantined! AKA: "Never tell the truth to anyone but your parents." URL: https://www.silkroadintl.net/quarantined-aka-never-tell-the-truth-to-anyone-but-your-parents/ Last updated: 2026-07-16T04:58:20.000Z When I was teaching at a university in Chongqing in '95 I had a student say something to me that I will never forget, ["at least, well, I haven't forgotten it yet."](http://www.amazon.com/Ever-Tell-Lucky-Classic-Seuss/dp/0394827198/ref=sr%5F1%5F17?ie=UTF8&s=books&qid=1245390479&sr=1-17&ref=silkroadintl.net) She told me that when she was young she had the bad habit of telling the truth. After getting both herself and her family in trouble a number of times her father sternly taught her this lesson, "Never tell the truth to anyone but your parents. "This was one of my first major lessons about how different China really is. There is no "moral code" no "generally accepted morality. " Not even an overly trite "Confucian values" system in place here, really. I believe that one of the lasting legacies of the current government will be that they amoralized an entire country. I'm not talking about the vilification of organized religion I'm talking about the creation of a system that punishes honesty. Anyway, back to the story at hand. China has, in their typical reactionary fashion, decided to be [incredibly strict on H1N1](http://www.alertnet.org/thenews/newsdesk/PEK39076.htm?ref=silkroadintl.net) because the want to show the world that they learned a lesson from their lying and covering of up the SARS epidemic a few years ago. Well, I got caught in the new H1N1 net as I returned from a business trip to the US.Here's my story and the lessons I (re)learned. I'm out. Finally. After 24 hours in lock down, I just got up and told them I was leaving and then just walked out of the hospital. They screamed, tried to stop me and called security (little skinny guy with no socks that wanted no part of a pissed off foreigner that out weighed him by 100 lbs.) but finally said--"ok, but you have to take the is paper with you. " When they said that, I almost lost it. "You mean if I had tried to leave last night you would have let me? " They said no, but when it came right down to it, they admitted they really couldn't keep me there if I had tried to leave. Here’s the time-line of events for the last 36 hours.**Day 1, 6:30 AM HK**. There were two people on our flight (CX873) taken off the plan in HK and taken to the hospital. They were a couple rows away from me. Don’t’ know what they had, only that there was a “suspicion of infectious disease” announcement on the PA and we were held for about an hour before we were let off. I filled out forms and then deplaned. No problems, no delays, temperature scanned at least twice in HK and no issues.**8:00 AM, China**. Crossed the border into China and they pulled out of line for a fever. They took my temp 10x after HK and before the hospital. All the same 37.1-2 degrees. Even their own paperwork that they gave me says that 37.5 is the problem point. "What’s wrong with 37.1? " No answer. Apparently I was right and 37.1 is not a problem, at least not enough of an issue to satisfy the supervisor in Customs. So the nurse lied about my temp when a supervisor came in. I busted her for it; they didn’t know that I spoke Chinese and didn’t like the fact that I was calling them out in public. The fact that they were exaggerating my temp and filling out the forms wrong was apparently not an issue for them and they didn't think it should be for me either. Why did they do this? I have no idea. But the excuse I was told was that “the thermometer was not very accurate so .1 degree off was really the same.” Of course my response was that 37.1 then should be the same as 37 and I should be allowed to go. Right?! If it really is the same, after all. That didn’t go over well. Logic rarely does. So I sat in customs—directly across from the desk for people to fill out forms—for two hours. About 5-6 other people in the same situation. No masks, 5 feet from hundreds of other people going through customs. Like I said, logic is not a commodity. Finally they move us to a “semi-quarantine” room. Some people with masks, some without. Sometimes the doors were shut, sometimes not. Sometimes we were asked to wear masks, other times, not. One HK guy was angry and just got up and walked out—they brought him back about 15 minutes later; he was hoofing it back to HK and was picked up on the bridge. What a joke. Once they fill out all of the paper work and stamp our passports there are 5 of us that sit locked in an ambulance for 30 min with no AC and no open windows in 33 degree heat (with suspected fevers!). Then we were transported across town to a hospital.**11:30 AM** Driven to a complete dump of a hospital. Roaches in the cabinets, spider’s webs on the walls, sink drains onto the floor, no paper towels or hot water, stains on the walls, rock hard bed, no AC, used soap and no towels in the shower. They try to take my temp with a thermometer that’s just sitting on the table—no case, no sterilization, no alcohol or iodine. They want me to put it in my mouth. I tell them no way! They agree to the armpit--I clean it with a wet wipe from my bag first. Then they want to take my blood and bring in unpackaged needles and iodine to do so. I refuse this too. Really, I’m convinced that [hospitals in China](https://www.silkroadintl.net/news-from-the-healthy-department/) make you [more, not less sick](https://www.silkroadintl.net/another-trip-to-the-healthy-department/).Staff in the hospital all have bio-hazard suits on. I’m isolated in a private room in an isolation wing of the hospital. But I can go out on the balcony and talk with the “unsuited” guard and lean over the rail and talk with people downstairs or in the other “quarantine” rooms too. Should I laugh or cry? **6:00PM** They ask me what I want to eat for dinner. I joke that I’d like some pizza and a Coke. They giggle uncomfortably. Pregnant pause while I look at them expectantly. Finally, I say Chinese food is fine, just no bones, please. They bring bones anyway. (Honestly, I can't make up stuff like this.) > I really hate that—if you know you’re not able to fulfill the request, why ask the question?! This happens all the time in factories. Managers ask what we want, knowing full well they can’t do it, but it’s like they’ve been taught in “Dealing with foreigners 101” that they must ask a series of questions regardless of if they can actually do anything. To any Chinese factory salespeople reading this: UNDER PROMISE AND OVER DELIVER not the other way around!!! > At sometime around 6PM the CDC employees go home for the night. Am I told that I won't be getting my results tonight? No. Am I told anything? No, of course not. I call the nurse every hour on the hour and the answer is "we still don't know, but we should know soon. " Bullshit. At midnight I call my wife and tell her I'm not coming home and I try to sleep. **Day 2 7:00 AM** Temp has not been over 37 for over 20 hours now, no new tests, no results, nothing—why the hell am I still here?! When I ask them to tell me what’s going on, the staff (still in bio-hazard suits and using two breathing masks and clear face-guards) tell me: “Don’t worry. There are a lot of people in the same situation.” Who the hell cares how many other people are in the same situation?!?! I want to be told what my test results are! I need to know if I can go to work, if I can talk with my family. No answers. I am told that the CDC people come back to work at 8 AM--ahhhh...Now I know why I was kept over night. Their shift ended.**9 AM**. They tell me that even though I’m in a private room, in an isolation wing with staff that are completely bio-suited I am still required to wear a mask! Who, pray tell, am I going to infect (with my 37 degree fever)?! “It’s for your own safety," I’m told. "If you were really concerned about my health you’d let me out of this dirty hospital! " More uncomfortable giggles.**10 AM**. I’m basically in a Chinese jail. I don’t know how long I’ll be here, what the problem is, or what, if anything they are doing about it. People are trying to stick unsterile things into my body cavities and I have no recourse—I can’t even all a lawyer. I have to admit, though, the staff here is very polite and quite friendly. I just wish that they were as well educated as they are congenial. This place is a pigsty! If I am sick it's because of the hospital, I'm convinced. Got a list of swine flu symptoms from a friend (via my 3G phone—Thank God for technology). Went through the list with the staff and showed them that I don’t have any symptoms. They still want me to wear the mask in my empty room. They're not impressed with my doctor impression or my ability to do internet research in jail either.**10:30 AM** Finally, I’ve had enough. I shower, get dressed and walk out. They scream, try to stop me, call security (little skinny guy with no socks that wanted no part of a pissed off foreigner that out weighed him by 100 lbs.) but finally said, "ok, you can go but you have to take the is paper with you. " And then they let me go. I had to pay for my own taxi to get back home. I'm not so much angry as I'm just in shock at the collective idiocy of this event from beginning to end. I'm not excluding myself from the list of idiots either.**Turns out I did four things wrong.** **First**, I usually don't let police (border agents) know that I speak Chinese. If there is a problem, I only speak English and if they start off in English then I only speak Thai, just to get out of things faster. (Speaking Thai usually works like a charm, by the way.) If they can't communicate they often just give up and let me through. But, when I caught the nurse lying about my temperature to a supervisor, I called them both out in Chinese--that was the mistake. From there on out everything was in Chinese and I was treated just like everyone else that spoke Chinese.**Second** mistake was that I just put my head down and followed orders at the hospital. In China if you do what you are told you get lost in the crowd. When I finally opened up and told them I was leaving I got the attention that I wanted and something was done immediately about my case. Prior to that, though, because I was willing to wait, I waited. I'm sure that if I hadn't thrown a fit I'd still be there. I'm also sure that if I'd thrown a fit last night I could have left last night too.**Third**, I told the truth. Why was I kept in the hospital in the first place? Because I told the truth and offered them as much info as I could about where I had just arrived from--just trying to be helpful and honest. Turns out that the other guy from my flight that was in lock down with me didn't tell them anything and was released last night. I was held so they could confirm with HK that the people on my flight were not an issue. Since they needed 24 hours to confirm that, I was held for 24 too. If I'd just not told them anything about my recent trip to the US I would have been home in my own bed last night.**Fourth**, I assumed that since I was put in the hospital by people in uniforms I was required to stay there. Big mistake. I could have left, they admitted that they couldn't keep me, if I had really tried to leave. Image is as much a reality as law--if you look the part, you can more or less do what you want. Why do you think that China has such a uniform fetish?! People look the part, but very very few of them actually have the authority to make any decisions. In business or in the hospital or at the border, who says yes or no isn't as important as who has the authority to enforce the yes or no. And the enforcer is rarely in a uniform and never on the floor dealing with riffraff.**Lessons learned:1\.** If you have even the tiniest cold, drink cold/fever medicine before you arrive so you can get in. If you are sick in any way at all and coming from the US you’re not getting in—the people implementing the policies on the border are scared for their jobs if they screw up, racist, ignorant of modern health procedures, using outdated equipment and defensive since they were caught lying last time (SARS).**2.** Don't share any evidence that you were on a flight from the US recently (i.e. open passport to blank page). Don't lie, just don't offer any info about travel out of HK/China. This specifically worked for people in the same ambulance I was in that were also on my same flight. I was stupid and actually filled in the form with the information requested. Other people didn’t and were let out 12-15 hours before me.**3.** Don’t speak any Chinese and don't try to understand their English either. If they can’t talk to you, they’ll get frustrated and either let you go or send you to quarantine (where you’re headed anyway). This works well if you can understand what’s going on. If you can’t speak Chinese in the first place you’ll be used to this and so it’ll be no big deal. But as soon as they know you can speak, it’s all Chinese from there on out and you’ll be treated just as badly as they treat everyone else that speaks Chinese. Trust me, you don’t want to be in that group.**4.** If you do speak Chinese, listen to all conversations and double check all documents that are about you or that you are asked to sign. Refuse to sign anything you can't read and/or don’t agree with 100%.**5.** Don’t offer up ANY additional information that isn’t specifically and directly asked for. Answer yes/no and give as little info as possible.**6.** Remember, once you’re in the hospital, the staff are not the problem. They really can’t do anything. The CDC and the border guards are the people to yell at. And yelling at the right people works.**7.** The squeaky wheel gets the grease. In China if you keep your head down and follow the rules you’ll get passed by. Sometimes that’s what you want, but if you’re scared for your life (e.g. in a Chinese hospital, getting the once over at a border crossing) you don’t want to just stand there and take it. I threw a fit and threatened to leave and that’s finally when I got attention. The previously “busy” MD and CDC rep immediately showed up when I grabbed my bags and starting walking out of the isolation unit. ### Notes from around China URL: https://www.silkroadintl.net/notes-from-around-china/ Last updated: 2026-07-18T14:48:31.000Z Had a couple of really interesting discussions about working with Chinese factories today. One was with a Purchasing Manager from the States that buys for his company in China. He says that almost as difficult as dealing with all the unknowns and changes in China is convincing Americans that have not been to China in his company that China really is that irrational and difficult to deal with. For example, the sales team was told that it takes two weeks to produce item XYZ. But in reality over the past year every shipment is at least a week late, if not two. This PM says it's obviously taking 3 weeks to make the products. So, logically, they need to extend their lead times accordingly. But where's the other week going then? Domestic port transfers. Closing dates are on Wednesday or Thursday for Yantian port in Shenzhen. So if you don't get product IN the port by noon on Wednesday you miss the boat and have to wait A WEEK for the next one. And the boats don't leave on Wednesday, that's just the closing date. So even if you make the closing date your stuff won't leave China for another 4 more days. There's your second week. But for some reason, sales people think 1) "Hey?! We can load and clear out a container in one day, why can't they?!" and 2) "Can't we just tell them to do it faster? " This is the secret to working in China. Logical and logistical inefficiencies abound and make every transaction take longer (even if there are more workers and production is actually shorter than in the US). You have to realize that banking, logistics, communications, physical confirmations of product and container loading can take you much longer than what you're used to in the US.Get your head around this reality and adjust your expectations accordingly or be very frustrated for the last two weeks of every order. PM's can help the process by placing orders on Fridays and start counting days on the following Monday. You can also account for closing dates and shipping lead times; add in at least 4-5 days for every shipment or coordinate orders to finish and go to port on Monday or Tuesdays so you know you'll catch the Sunday boat. Understand that there are cultural issues on both sides that are hard for the other party to understand. (For example, why can US companies only cut PO's/checks one day a week? This drives Chinese business people nuts.)The second conversation was about attitudes and perceptions in China with the US economy is still weakening and China (according to official reports) still getting stronger and pulling out of the recession (first). I'm still hearing that this is changing some of the ways that factories are looking at clients/buyers. It's not bad, actually it's good. But for those foreign buyers (especially US) that were used to being treated special, those days are coming to an end. There are other fish (with money) in the pond now. And there are enough stories about foreign companies stiffing Chinese factories that everyone here knows someone who was "unfairly" imposed upon because of the financial irresponsibility in the West. Both this blog and [China Law Blog ](http://www.chinalawblog.com/?ref=silkroadintl.net)have detailed how Chinese factories are more and more sophisticated in their research of potential foreign buyers and their participation in foreign markets. This is all good, unless China was where you came to stroke your ego and feel appreciated. You can also add to this the fact that factories are calling and telling us that if we have clients from the US they don't even want them to visit right now because of the fear of H1N1 (pig flu). They don't want to take the chance that they'll have to quarantine everyone for a week to ten days just because some guy from LA showed up with a cough. Like Rodney says, no respect. Other tidbits. GM to make autos and [ship them to the US](http://www.google.com/hostednews/ap/article/ALeqM5hn9VHtGiDjTa3mjiR5pWleoMMXmAD988DQRG2?ref=silkroadintl.net). Good, bad or ugly? Good, for the domestic market here for sure. Bad for Detroit—but what isn’t other than the Red Wings? And ugly for quality. Everyone’s heard of [Beijing Jeep](http://www.amazon.com/Beijing-Jeep-Unhappy-American-Business/dp/0671620274?ref=silkroadintl.net). But it’s not just [fake autos](https://www.silkroadintl.net/fake-money/) but parts out of China that are really scary.[80% of fake parts come from China.](http://www.motor.com/MAGAZINE/Articles/012004%5F04.html?ref=silkroadintl.net) It’s so bad [India (yes, India) is scared](http://www.financialexpress.com/news/counterfeit-auto-parts-to-touch-6kcr-mark/426164/?ref=silkroadintl.net) of being lumped in with China. Most know that counterfeits are [endemic to the China auto industry](http://findarticles.com/p/articles/mi%5Fm3012/is%5F1%5F184/ai%5Fn6054570/?ref=silkroadintl.net). And that P[rofessionals can't tell the difference.](http://www.asashop.org/autoinc/april2007/mech.htm?ref=silkroadintl.net) What's scary is that poor quality fakes in your car can kill you and the number of products sourced for autos in China is going to rise (especially if the entire car is built here!). This is a good source for[ Black Market](http://www.havocscope.com/tag/counterfeit-auto-parts/?ref=silkroadintl.net) auto parts and other counterfeit news (news about counterfeits, not fake news). Other Econ news. You’ve heard of the bell curve, right? Well, meet [the “W” curve](http://www.marketwatch.com/story/chinas-stock-market-could-see-a-sharp-drop.?ref=silkroadintl.net). No it has nothing to do with George but everything to do with the end of this year. Be afraid. And finally,[ Missing China stimulus money](http://online.wsj.com/article/SB124271601836933765.html?mod=googlenews%5Fwsj&ref=silkroadintl.net) is feared to be in individual bank accounts and stock portfolios. 50% of govt infrastructure programs are not completely funded either. This is how you spell “slower-than-expected” second ½ of 2009 annual growth. ### 04/06/2009 URL: https://www.silkroadintl.net/04062009/ Last updated: 2026-07-18T14:48:31.000Z **Have a nice day.** ### Chinese Sausages URL: https://www.silkroadintl.net/chinese-sausages/ Last updated: 2026-07-18T14:48:31.000Z May 30 Update:"China is a fat, unhealthy kid. Its ignorant friends in the west encourage it to keep eating the same stuff in order to "maintain growth". Sadly, this encouragement might mean that China will stick to its non-viable development model and never grow up. "[Drorism](http://www.drorism.com/blog/2009/05/slanted-eyes-and-chinese-statistics.html?ref=silkroadintl.net)\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_[Chinese accounting sausages](http://online.wsj.com/article/SB124350326977562001.html?ref=silkroadintl.net).There are just some things that are too good to be true. Campaign promises, true love and Chinese #'s are just a few of these things. Other example's include: US Government numbers, supplier's "true costs," protein content, lead paint verifications, auto safety standards. While you may not want to look under the hood, if it's your money being spent in China you'd better look. And look with a microscope too. Here are some common ways that we've seen people massage numbers in China (probably the same in other places too, but we're talking about China).**1\. Kickbacks.** Everybody is doing it! If you don't pay for everything yourself, your probably paying for someone else "bonus. " A friend of mine, a security official for Wal-Mart in China, told me that "you wouldn't believe how many people are running \[kickback\] scams. " He told me a couple of stories and concluded, "It's absolutely everywhere. "**2\. Exaggerated costs**. Unless you have a decent idea of the market prices of the raw materials and labor costs for your product you're going to get hit here. Without some competing bids to give you a benchmark, at least, you've got no clue what your items should cost. Comparing costs in your home market with buying in China is like comparing apples to oranges (not commodities, of course). You need to know local costs (via competing bids and research into local materials prices.**3\. Additional costs.** This is what you get charged for if you don't get a detailed bid from your vendors. When each part of the price is broken out you can compare what each price from each bidding supplier really is costing you. There will almost always be fees and expenses included into each product. Many are legitimate, but some are not. You can't know this, though unless you have a detailed costs list.**4\. Double billing.** This happens quite often for fees and licenses that have already been paid. We also see it in costs for transportation (that was already included in a billing) or for packaging. If an item is not specifically listed out in the invoice then you'll likely see an invoice for it later. Usually these "new" invoices are presented at strategic times, like when other projects are ready to ship and could be held up.**5\. Unnecessary licenses/taxes/fees.** This is a tough one--if you don't know China, and the specific province and city that your supplier is working in, you can have both legitimate and illegitimate "official" fees applied to the invoice once production is completed. Be sure to ask others (other suppliers, other buyers, lawyers, etc.) to find out if the fees you're being asked to pay are legitimate.**6\. Testing fees.** Charges for tests that never happened are all too common. One of the most common ploys is for a supplier to send documents in Chinese--assuming that anything with a stamp will pacify you (especially if you can't read it). Another version of this is to send real testing documents for previously products/materials. Another version is to send altered versions of real documents--old tests with new dates, for example.**7\. Hostage payments.** One of things that happens often in China is suppliers to over promise and under deliver. Often suppliers think that if they've exported before they can do it again. Domestic suppliers, even if they ship exclusive to overseas clients, don't always understand the reasoning behind specific standards or requirements. We have suppliers come back to us all the time saying, "Wow! You really are going to be *that* strict. " If you've been really picky on QC, for example, suppliers my be really angry or unsettled about the deal and 'request' payments earlier than previously agreed to. Often hurt feelings, insecurity about product approval or ability to pay will be covered by a 'request' to pay before anything leaves the factory. Another version is paying for outstanding balances on other projects before shipping completed production.**8\. Cost increases.** Anytime that you have extended production times, for whatever reason (legitimate or not), you can expect factories to ask for additional fees. (If the delays are your fault you can bank on these fees being invoiced to you.) Excuses for extra fees include: storage fees, exchange rate changes, changes in materials costs, increased labor costs--many of these are legitimate, but all of them all the time are not.**9\. Unnecessary middlemen (front companies).** Often there will be multiple levels of buyers in between the raw material provider and the factory. And sometimes a dizzying number of people between the supplier and the buyer too. Sometimes these really do provide a necessary service--QC, distribution, packaging. Sometimes there are a net work of salespeople that "sell" the product to themselves by passing it through another company (real or fake) just to mark it up. Two things that always amaze me about these types of "companies" are the amazingly small margins that they are willing to take and how many different companies can be involved in any single deal.**10\. Flat out lies.** Maybe everything here falls into this category already, especially if you're being really strict. But sometimes it's just worse than others. We've had suppliers make up stories to get more money than what was contracted and use every conceivable method known to man--all of the above, begging for money for their children, money for personal car or house payments and even flat out extortion. I was told once that if I didn't back off on enforcing QC standards that the factory would talk to the govt about getting my visa revoked. The best defense is, of course, a good offense. The keys to not getting snookered include: knowing your market, getting bids from competing suppliers, doing your research on wages, licenses, taxes and personally participating in as much of the process as possible. Double checking on all invoices and using different people for various sensitive portions of the purchase process will help too. Of course all of these "mystery meats" are in every country. And, to be honest I'd take the Chinese versions right now over the ones the US is putting out. The US brand is not only [filled with shit](http://www.ft.com/cms/s/0/71520770-4a2c-11de-8e7e-00144feabdc0.html?nclick%5Fcheck=1&ref=silkroadintl.net), but the [packaging looks crappy](http://bloomberg.com/apps/news?pid=20601087&sid=aIeLg1djbBps&refer=home&ref=silkroadintl.net) too! At least [China will keep buying](http://online.wsj.com/article/SB124347392809361019.html?ref=silkroadintl.net#mod=most%5Femailed%5Fday%5Fasia) (or not selling off) the US sausages so we've put off the day of reckoning for at least the next 4 years, which is really the ultimate (political) goal, right? ### Chinese Branding and Perception URL: https://www.silkroadintl.net/chinese-branding-and-perception/ Last updated: 2026-07-18T14:48:31.000Z This is a collection of random thoughts about the *Perception of China through Chinese Brands* from both inside and outside of China. First, China as a final destination. This is about business opportunities, or maybe it isn't. If you had less than 30% of your foreign exchange students and over seas professionals returning home, would that be a good thing or a bad thing? For China, 30% the highest number they’ve had since they started letting people out in the 80’s. And it’s only this high because of *predictions* that more will be coming back due to the current recession. (All numbers are from a Straits Times paper article last Sunday, that I couldn’t find online. Sorry). My question then, is this: If capitalism is irresponsible (Mr. Hu’s words) and the US/EU is the Great Satan (Islamic and communist propaganda) and the Chinese economy and culture are the end all beat all of life thus far on earth (general attitude in China), why are an overwhelming majority of Chinese who leave NOT coming back? Even my wife, who is Chinese, plans on “ending up” in the US, not China eventually. I know, you’re thinking, “What a loaded question!” But I’m really curious as to the answers. Remember, I left the US and live in China, albeit temporarily (10 years and counting…). I think that the better business opportunities (for me) are here, not back home. So really, what’s the draw of the West for educated Chinese? Another, less loaded question about Chinese power abroad. There has been a lot of news lately about the Chinese increasing ability to project power abroad, both militarily and socially. And while the military question doesn’t really even need to be asked until China can transport a significant number of people/equipment farther away than an adjoining country or permanently scare the [US patrol boats off the coast of Hainan](http://news.yahoo.com/s/ap/20090505/ap%5Fon%5Fgo%5Fca%5Fst%5Fpe/us%5Fus%5Fchina%5Fincident?ref=silkroadintl.net), the social question is, I think relevant. Or can they actually do something about North Korea (which only even exists because of China)? How many people in (pick your home country) can name 10 Chinese brands and know where to buy them? (To be fair, I doubt I could name 10 English, 10 French or brands either. But I’m not thinking that any of these countries are going to become world military or social leaders (again) either.) Ten Japanese or Korean brands, no problem. Maybe even 10 German brands. 1 Canadian brand? Nope. When I was last in the US in March, I decided to see what Chinese brands I could find in Salt Lake City Utah. Nothing scientific, just a conscious decision to make notes in my phone as I shopped and was out in public for two weeks. This is what my ‘research’ turned up: Lenovo (barely), Haier, LG, and Tsingtao Beer--yes, even in Utah. (I am also aware of COSCO and Changhong, TCL and Galanz in much of the electronics and white goods that I saw.) That’s it. Any one else not living in SEA seeing any more? From a good [Businessworld online article](http://silkroadintl.net/blog/wp-admin/www.businessworld.in/index.php/Enter-the-Chinese-brands.html?ref=silkroadintl.net): > “The World Bank says that more than 30,000 Chinese firms have invested more than $35 billion in over 50 countries, and China's top five domestic brands are already worth more than $15 billion. Fiona Gilmore, the editor of Brand Warriors, predicts that in ten years at least one of the world's top 10 brands will be Chinese.Most of this growth has been focused in South-east Asia, but Chinese firms are increasingly penetrating the highly valuable and highly competitive US market.The message seems clear - Chinese companies are determined to become global players. Indeed, China's leaders say they aim to have 10 Chinese companies in the Fortune 500 list of the world's largest firms by 2010.” > So the perspective questions here are these:First, is this ability to sell volume but not successfully create brand awareness good for China? Does moving tons and tons of goods with a reputation for bad quality in the world market help any brand from China? What’s the general opinion of anything “made in China" in or out of China? Second, I’m of the opinion that China would rather have the “face” that comes of having recognizable Chinese brands than the profit that comes from successful businesses. The govt funding for these few big players would confirm that, in my mind at least. Is this a sustainable business model—will these unprofitable brand names be around in 20 years? So then third, which of these companies could be “successful” or at least recognizable without direct government ownership/financing (which is not the same as tax breaks that all major brands get from their home countries)? And then doesn’t imply that companies from China really are “made in China” and deserve the bad rap? And fourth, which of these companies are leaders in R&D or innovation in their fields? The implication being, can sales of follow on products alone sustain high international rankings or recognition? I read in a report from the Shanghai auto show last month that while there are quite a few Chinese auto makers striking out into foreign markets there are two steep mountains to overcome before any of them see any success. The first being “the made in China” brand name. > **SIDE NOTE:** The fallout from the melamine milk fiasco last year is affecting even auto sales abroad. Do you realize what a big deal that is?! Did the California pistachio recall affect your perception of Dodge this last month. No. Of course it didn’t’. Will pig flu make you think twice about buying Mexican avocados? No. But in China—everything is China. This is the unintended consequence of tying everything back to history and nationalism. Everyone and every brand in China all rise and fall together. Well, not everyone, but you know what I mean. > And the second being the inability of Chinese auto manufactures to attract top talent and the subsequent inability to lead out, innovate and be creative. The lack of international level talent is really limiting the Chinese at home and in the US and the EU markets. Like the China market forcing foreign brands to adapt, Chinese brads must adapt to the various world markets they enter into—but without R&D, they just can’t (unless they can copy what’s already been done). For more on these very questions (I read this after I wrote the post), see this [great interview Tom Doctoroff](http://silkroadintl.net/blog/wp-admin/www.huffingtonpost.com/tom-doctoroff/chinese-brands-and-the-fi%5Fb%5F165435.html?ref=silkroadintl.net) gave. Interestingly, the Businessworld article and the Doctoroff interview and 4 other articles under the Google search “Chinese brands in the US” are blocked in SZ (at least they're blocked in my house, my office and Starbucks). But, then again, if you question China’s ability to project its might abroad, there is this: [“We have become a province of China.”](http://www.rfa.org/english/blog/burma%5Fdiary/china-in-burma-04282009113356.html?ref=silkroadintl.net)A couple of final shots at why there are not more Chinese brads despite the size/influence of the Chinese economy. First, the Chinese economy is not as big as the US or Japan so for me to compare them is a bit unfair to begin with. There really shouldn't be as many. Second, while there may not be a large number of identifiable Chinese brands because there are so many unidentifiable ones. Let me explain. China is so huge and there are so many regional players and so many factories outsourcing labor for "technically" foreign brands that they just keep the entire visible Chinese presence in the world market repressed. Third, the idea of independent brands is still in its infancy in China. As noted above, even the current Chinese world players are heavily invested in by the Beijing govt. Capitalism in China, as we see it now, is at most 30 years old this year. They haven't had the time to build yet. But capitalism in the US is 200 years old and Washington DC now heavily invests in autos, banks, insurance and many other global US brands, so who knows?! ### Sourcing in Tough Economic Times--Details! Part II URL: https://www.silkroadintl.net/sourcing-in-tough-economic-times-details-part-ii/ Last updated: 2026-07-18T14:48:31.000Z [China Success Stories](http://www.chinasuccessstories.com/?ref=silkroadintl.net) asked me to flesh out the outline of the [Global Sources](http://tradeshow.globalsources.com/TRADESHOW/CSF/INDEX.HTM?ref=silkroadintl.net) presentation that [I posted](https://www.silkroadintl.net/smart-steps-for-effective-sourcing-in-tough-economic-times/) a couple weeks or so ago on this blog. They've split it up into two parts and posted the first half last week. Here is [part one](http://www.chinasuccessstories.com/2009/05/14/sourcing-bad-economy/?ref=silkroadintl.net). And here is [Part II](http://www.chinasuccessstories.com/2009/05/21/security-for-supplier/?ref=silkroadintl.net). ### Managing the Dragon, by Jack Perkowski BOOK REVIEW URL: https://www.silkroadintl.net/managing-the-dragon-by-jack-perkowski-book-review/ Last updated: 2026-07-18T14:48:31.000Z This is a great story book with a moral at the end, to boot! [Managing the Dragon](http://www.amazon.com/Managing-Dragon-Building-Billion-Dollar-Business/dp/0307393534/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1242689263&sr=8-1&ref=silkroadintl.net) is a this-is-how-I-did-it style book with little hidden lessons found in hundreds of small tales and personal experiences. It's a timely read and a useful tool for anyone coming to China. And there is a [very good blog](http://managingthedragon.com/?ref=silkroadintl.net) by the same name that updates Jack's current status too! No one is going to be able to do what Jack did, but that doesn’t hurt the value of the book. A “smaller” more employee perspective is in another book, [Mr. China](http://www.amazon.com/Mr-China-Memoir-Tim-Clissold/dp/0060761407/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1242689341&sr=1-1&ref=silkroadintl.net), by Tim Clissold ([my review here](https://www.silkroadintl.net/mr-china-book-review/)). The two books really should be read together. Tim worked for Jack and many of the stories in each book are told from a different perspective in the other book. Tim can speak Chinese but isn’t a businessman. Jack is the opposite. Both apparently like to drink. A lot. The only thing that I really I didn’t like was the attitude that what Jack was doing was unique. In terms of $, yea, there probably aren't many other people that will ever do this. But as he starts out, there are thousands of people with the same experiences. The attitude that “I’m the first one here” and “No on has ever done this before” got a little old. He’s not unique, he’s not first, and hundreds of thousands of others, overseas Chinese for hundreds of years, have done similar things but with less exposure. But since he doesn't speak Chinese Jack just didn’t bother to hire someone to look them up. Not to mention all the foreigners that were here before Jack (many of whom he hired!). The story is really great, but Jack’s a bit more than willing to throw people under the bus that he realized (after the fact) were not his best hiring decisions.**General perceptions of Jack and his experience:**\*Jack knows business, but not China (at the start), and he has enough money to fail and keep going until he gets it right. I’m not sure if the point of this is that business is business everywhere or that if you have deep enough pockets and a good head you will eventually get it right.\*You can crack any market with the right connects (and enough money). Jack had connections that no one (without that much money) else will every have access to.\*You too can probably figure out the right things to do if you take two well-funded years off to research first. Most people can’t duplicate what he did. But you can still learn from the experience.\*Managing in China is going to be more difficult than anyone every imagines.**Other more practical lessons:**• You can never really do anything in China unless you have control of the management.• China changes constantly and quickly• China (markets) is fragmented because of size (among other reasons).• Chinese markets and foreign buyers in China want better quality, butter prices and better service than they can usually find local.• Everything is hard, but nothing is impossible.• Chinese factories were (and many still are): “sprawling, state-owned… dirty, not well lit… with too much work in process inventory… highly vertical \[and\] did everything, but nothing very well.”• “If China is important, get your best people there. Whether they have China experience or speak the language is beside the point.”• “I believe that specific industry, product, or technical knowledge should be weighted more heavily than China experience.”• First domestic MBA in ’91\. This means that no local educated MBA has more than 15 years experience. For individuals, this isn't such a big deal. But for entire industries (and entire countries!) the effects are staggering.• Management is the biggest challenge in China.• Chinese managers know China better than foreigners probably ever will!• Taking the time to build quality managers is always worth it.• Nothing is what it seems.• Trust and experience are the keys to by-in/success. Jack is a good writer, has great experience, teaches great lessons and the book is easy to read and apply. ### More of the same, congratulations. URL: https://www.silkroadintl.net/more-of-the-same/ Last updated: 2026-07-16T04:58:20.000Z 1\. Government stimulus monies are [going to SOE's](http://www.chinaherald.net/2009/05/stimulus-profers-soes-over-private.html?ref=silkroadintl.net) and not the private sector. And [FDI is down](http://www.marketwatch.com/m/Story/4bd97b45-e8f7-4339-aa7f-a72d44293478?ref=silkroadintl.net) too. Way down. Which means even less for the private sector.2\. "Counterfeiting is illegal" is just [not understood here](http://www.nytimes.com/2009/03/02/world/asia/02piracy.html?%5Fr=1&emc=eta1&pagewanted=all&ref=silkroadintl.net)\--you've been warned (again). Best line: "But some doubt much will change until China graduates from manufacturing goods to designing them, and has more to lose than gain \[by enforcing copyright laws now\]."3\. The Yuan is set to be [the new world standard](http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5325805/Chinas-yuan-set-to-usurp-US-dollar-as-worlds-reserve-currency.html?ref=silkroadintl.net)? How does that jive with the facts that it's manipulated by a very non-transparent regulatory system with a non-competitive, over regulated and insolvent national banking system and most of the currency reserves are soon to be worthless as the US dollar inflates? Does this make sense to anyone?4\. And finally, local gov does well. [Governor Huntsman of Utah will be the next Ambassador to China](http://www.sltrib.com/news/ci%5F12383314?ref=silkroadintl.net). Should be good for UT; and his Chinese is very good. He was the ambassador to Singapore in the 80's and he's an up and coming Republican (RINO, actually) so Obama picking him is shrewd politically. Here's more: [Politico](http://www.politico.com/news/stories/0509/22589.html?ref=silkroadintl.net), [Fallows](http://jamesfallows.theatlantic.com/archives/2009/05/twitter-scale%5Freaction%5Fon%5Fnew.php?ref=silkroadintl.net), [Roll Call](http://www.rollcall.com/news/34997-1.html?ref=silkroadintl.net) and [The AP](http://www.google.com/hostednews/ap/article/ALeqM5g8-DEMtAE9q4i4ySQ0eV%5FqZefmRQD987514O0?ref=silkroadintl.net). [My wife and I spoke with him](https://www.silkroadintl.net/utahs-chinese-governor/) at a dinner a couple of years ago. Maybe now my in-laws can get a visa to go on summer holiday to Salt Lake City. ### Sourcing in Tough Economic Times--Details! URL: https://www.silkroadintl.net/sourcing-in-tough-economic-times-details/ Last updated: 2026-07-18T14:48:30.000Z [China Success Stories](http://www.chinasuccessstories.com/?ref=silkroadintl.net) asked me to flesh out the outline of the [Global Sources](http://tradeshow.globalsources.com/TRADESHOW/CSF/INDEX.HTM?ref=silkroadintl.net) presentation that [I posted](https://www.silkroadintl.net/smart-steps-for-effective-sourcing-in-tough-economic-times/) a week or so ago on this blog. They've split it up into two parts and posted the first half yesterday. Here is [part one](http://www.chinasuccessstories.com/2009/05/14/sourcing-bad-economy/?ref=silkroadintl.net). Part two comes out next week--I'll post an update here when it's available. Despite the recent numbers (and the recent posts here on the blog) I think that I am honestly more optimistic than I sounded in the piece. Again, context matters, and the presentation was for new buyers coming into China for the first time--it was a cautionary tale meant to encourage homework and due diligence before investment. Enjoy! ### Financial news, some commentary and context and a crazy theory, just for fun URL: https://www.silkroadintl.net/financial-news-some-commentary-and-context-and-a-crazy-theory-just-for-fun/ Last updated: 2026-07-18T14:48:31.000Z First some news with context.1\. [Power consumption is down](http://www.reuters.com/article/rbssEnergyNews/idUSPEK23216320090513?ref=silkroadintl.net). This is really a bit troubling. As the weather heats up there is not additional monies being spent on AC, and, as the govt claims, factories are starting to buy more raw materials but there is less, not more, power-consuming activity. This also means that factories are going to have materials on hand, low demand and extra time to do projects. These can be good things for you--especially if you're coming in to China now with cash.2\. [Trends are up, but April is down.](http://www.google.com/hostednews/afp/article/ALeqM5ji7HP1g0G%5FZYTYl7eE8qNRNQy6HQ?ref=silkroadintl.net) This is certainly my feelings--I believe that we are definitely trending up, but more slowly and without a quite as much swagger as we hear from official quarters. The context of this trend (see below) is that most of the growth before April was in infrastructure (i.e. government expenditures, not private sector growth). And, like we're seeing in the US, tens of thousands of new government jobs and hundreds of thousands of private sector lay offs do not make for a strong sustained recovery. In fact, just the opposite is true--once the govt monies dry up who fills the void?3\. [Fix-asset investment is up](http://www.forbes.com/feeds/afx/2009/05/11/afx6408224.html?ref=silkroadintl.net). Again, if we can strip away some of the earthquake and pre-stimulus government spending, I doubt the numbers would be as rosy. That means that while this news is good, there isn't a lot more spending outside of the govt sponsored projects. China is, for sure, doing a much better job of injecting cash into the economy and helping people with actual economic issues (as opposed to the US where if you don't like the current version of "hope" you're just SOL). But government cash keeps things going in the short term, it's not a fix for a still largely export-driven and weak consumer economy.4\. [Factory output less than expected](http://www.bloomberg.com/apps/news?pid=20601087&sid=aGhFCRBWtkUE&refer=home&ref=silkroadintl.net). Taken alone this would be bad news. But because the economy so dependent on exports but overall numbers show it's not falling further behind, the bigger picture appears to be that China is stabilizing and the trend will hopefully continue. But two more weak export quarters, inflation and the end of stimulus cash (loans are already drying up) could mean more trouble than the "recovery" can take.5\. Problem is, it's [still not a consumer economy](http://www.forbes.com/2009/05/13/china-retail-sales-markets-economy-industrial.html?ref=silkroadintl.net).This is one of my fascinations here in China. There seems to be a ton of money in the East Coast cities and in the second tier cities. But I believe that it's deceptive. Yes, there is a lot of money here but there are so many people in such small places that there seems to be more than there really is. This is my theory (and what it is, and it's mine, too): First, take 200 million Americans and estimate that the [median household income](http://en.wikipedia.org/wiki/Household%5Fincome%5Fin%5Fthe%5FUnited%5FStates?ref=silkroadintl.net) is, say $35K a year. And then take 200 million Chinese with an average income of, say $12K a year (I know, [it's not that high](http://www.google.com/url?sa=t&source=web&ct=res&cd=2&url=http%3A%2F%2Fwww.chinaeconomicreview.com%2Fdailybriefing%2F2008%5F04%5F03%2FUrban%5Fsalary%5Fincrease%5Fhits%5F6-yr%5Fhigh%5Fin%5F2007.html&ei=7IMKSpO-CI6CkQXrkNyuCw&usg=AFQjCNFQOE5HqDNILV4C2H0reOJQQMC66w&sig2=MYI1mE11%5FQ-3%5FfrlrcrY0Q), this is just an example). Now I believe that even with the income disparity, the 300 million Chinese are going to look a lot richer than the 300 million Americans. Why? Because the vast majority of the 200 million Chinese are condensed into about 30 cities and there are two of these incomes for most households--you've got more people with some money in a smaller location. It would be like if all of the cities in the US looked like Beverly Hills. The 200 million Americans are spread out over the entire country, in small towns and suburbs, not high rises surrounded by shopping malls. There are less than [10 metro areas in the US](http://en.wikipedia.org/wiki/Table%5Fof%5FUnited%5FStates%5FMetropolitan%5FStatistical%5FAreas?ref=silkroadintl.net) with more than 5 million people and none over 10 million. There are 5 metro areas with over 10 million [people in China](http://en.wikipedia.org/wiki/List%5Fof%5Fcities%5Fin%5FChina?ref=silkroadintl.net) and 8 over 5 million. The issue of very conspicuous consumption can also be argued makes China look richer than it really is. Maybe you don't agree with my theory, but the Chinese economy is not a consumer economy regardless. And that's not good news for an export dependant economy that is trying to recover. ### Is it Really Bad or Getting better? Or Both? URL: https://www.silkroadintl.net/is-it-really-bad-or-getting-better-or-both/ Last updated: 2026-07-18T14:48:31.000Z **May 13 UPDATE:** Here are the [new China export numbers for April](http://www.forbes.com/feeds/afx/2009/05/11/afx6408237.html?ref=silkroadintl.net) and a bit of analysis from multiple sources on what they mean. **Summary:** Over all it's disappointing, domestic demand is not really here (in China), Govt stimulus is not spurring investment by Chinese companies in China (so where is all the money going? The stock market. Watch out for a huge drop in the near future.).----------------------------------------First, a culture note. If you think that the days of face being a major consideration in business in China are past, or that "it's all business now," or that "business is business no matter where you go," then do I have a link for you! [Apologize Inc.](http://news.sohu.com/20090510/n263873210.shtml?ref=silkroadintl.net) (Chinese) If you can't say sorry, they'll do it for you! Did you piss off your boss? Give them a call. Did you get in a fight with your wife? Here's your ticket out of the dog house. Did you make a spectacle of yourself at the company dinner the other night? These guys are your path back into good social graces! Not only is face still a very big deal in Chinese business, these guys are turning it into money! Conflict resolution with a Chinese twist. It's all about knowing your market. Now, a “[It really is this bad](http://www.forbes.com/feeds/ap/2009/05/05/ap6377372.html?ref=silkroadintl.net)” link. Loan money wasted, no domestic or international growth to speak of, over supply, over capacity, inflation fears, no growth in power consumption (production) and only government stimulated (as opposed to sustainable) spending. Or you could read this [one](http://online.wsj.com/article/BT-CO-20090504-701244.html?ref=silkroadintl.net), approved by the Chinese government. Summary: China-government sponsored think tank release info that economy is up. Xinhua reports companies listed on the Shenzhen and Shanghai exchange showed both gains in the stock market and net earning profits (although still down more than 25% from last year). No link between on-paper profits or the growth in the market and the billions in loans given out by the government in the first quarter though. But Jack himself over at the [Managing the Dragon](http://managingthedragon.com/?ref=silkroadintl.net) blog seems to think that it's not only not that bad right now but [getting much much better](http://managingthedragon.com/index.php/2009/05/06/more-news-on-china%E2%80%99s-recovery/?ref=silkroadintl.net). (I recommend Jack's blog and book--very insightful stuff. Book review coming soon!) I won't argue with Jack about his opinions or the numbers. But I will really question the context and the hope that numbers give when people don't have the whole story (and I don't have the whole story--so I'd really like more, please Jack). Here' my three contextual issues. First, PMI numbers are up. Context: What factory in China has bought any new raw materials in the last 12 months? No one. They've all been living with have finally used up last years (unpaid for) inventory. Retailers in in the West have similarly been using every last bit of inventory before they are absolutely forced to place new (MOQ) orders. AND (yes, big and) it's the start of the holiday season in the West. Back to school, Halloween, the Holidays--these are the biggest retail times in the West every year. OF COURSE orders are up now...but is it a trend?! Is this a hopeful sign or just an MOQ refill in a prolonged recession? I hope that we're going to being coming out sooner or later, but I think that we need to see if orders are continuing an upward trend through August (two Q's of positive growth) to have a lot of hope. Second, housing starts are up. Context: The industry is being massively incentivised, raw materials are dirt cheap, Western China (especially Sichuan) was already scheduled to get a ton of infrastructure money, prices to consumers are low (no demand for the last year) and through Q1 credit has been easier to get than dumplings in China. Is this a positive trend or will it slow down now that loans are going to be limited for the rest of the year, prices rise and once Sichuan is more rebuilt? Third, record auto purchases. Context: Chinese New Year, great incentives on cars, massive over production in the domestic market last year, easy credit and face in bad economic times have all played a big part in the surging auto sales. I'm not trying to be an antagonist, just questioning the context of the "recovery" numbers. I hope that I'm wrong and that it gets better soon. Personally, it's in my best interest for China to recover sooner than later. I'm just not sure that the situation is all that hopeful yet. I know that the stock market is up--[but is it stable?](http://www.bloomberg.com/apps/news?pid=20601080&sid=aSxiLbzaZKMo&refer=asia&ref=silkroadintl.net) I know that are more signs each day that things are changing--[but is it sustainable?](http://www.bloomberg.com/apps/news?pid=20601080&sid=a.HOnXuLvG3g&refer=asia&ref=silkroadintl.net) I'm excited for this if it's for real. And I'm not disagreeing that there is hope as much as I'm trying to be cautiously optimistic (emphasis on cautiously). And in a completely unrelated note. This is my favorite email from a factory so far; I just thought this was too interesting not to pass on. Like, I've said before, it's a great time to be buying just about anything in China!! > Dear Sir / MadamWe are please to offer you directly from the Manufacturer, Buses at World Recession Prices!10M 43+1+1 Diesel Bus from USD 33,900.006M 17+1+1 Diesel Bus from USD 9,600.007M 20+1+1+1 Diesel Bus from USD 16,470.008M 20+1+1+1+1 Diesel Bus from USD 21,540.00Both available in Right hand drive and left hand drive. Contact us for full details. Distributorship offer is still available for some countries. We reserve the right not to supply to countries where we have our own distributor already.Thank you. > ### Thailand—to visit or not to visit? URL: https://www.silkroadintl.net/thailand-to-visit-or-not-to-visit/ Last updated: 2026-07-18T14:48:31.000Z Update 13th May: [Thailand tourist numbers 1/2 of last year's numbers](http://www.straitstimes.com/Breaking%2BNews/SE%2BAsia/Story/STIStory%5F375678.html?ref=silkroadintl.net).-----------------------------If you only read/watch the news on the major sites then you’d probably concede that tourists in Thailand are in a world of danger because of the [ongoing](http://www.bangkokpost.com/news/politics/142537/protesters-demand-dstation-to-be-resumed?ref=silkroadintl.net) political [protests](http://www.bangkokpost.com/news/politics/142314/udd-to-rally-again-on-sunday?ref=silkroadintl.net) there. But talking with people on the ground, I find that quite the opposite is true. I have one friend on holiday there now. No problems. Ditto multiple friends that live and work right in downtown BKK. This [article](http://www.nytimes.com/2009/05/03/travel/03practhai.html?ref=travel) would agree with their experiences. Certainly the long term consequences of the color coded temper tantrums will be significant. Even [disastrous](http://www.nationmultimedia.com/2009/05/08/politics/politics%5F30102224.php?ref=silkroadintl.net). But fears of physical harm to tourists are overplayed by the media looking for a story and subsequent over-reacting governments issuing travel warnings based on “news” reports. (By the way, is there anything more overvalued by it’s own people and less valued by the rest of the world nowadays than the MSM?) You should be much more worried about being poisoned by a mistress/hooker or [beat up by a bootlegger](http://www.bangkokpost.com/news/local/16314/piracy-clash-in-patpong?ref=silkroadintl.net) than being caught up in political violence. Even the Thai's with color-coded blinders realized how stupid it was to shut the airport down, so that's not much of a fear anymore. The point is, you’re in about as much danger as you put your self in. Further to the point that the media has to make up work for it's employees, when I was a student in Israel in ’94 my parents were freaking out watching the news each day just sure that I was going to get blown up while shopping. Other than a few limes thrown at us and a few rocks thrown at our buss, nothing happened for an entire semester. Indeed, the “news” stories that my parents were seeing I’d not even heard about! And I was living there! One more example and then I'll let the poor horse die. I was in Chongqing in ’95 when China was shooting missiles into the Taiwan Strait. Once again, we got a number of phone calls and letters (no email at that our “Communications University” yet, but they’d all read books about it!) full of concern that we were either being bombed or going to be thrown in the gulag and never allowed to leave. If we hadn’t had the riveting and insightful CCTV and the People’s Daily we wouldn’t have even have known it was happening. Now is a great time to go to Thailand; it hasn't started raining yet and you’ll have the place all to yourself! And if there are any more political problems this year, Christmas in Thailand is going to be a fantastic time to take long walks on totally empty beaches too! Foreigners can buy homes/apartments there too and, like most places, it’s a buyers market right now. (No, I don't get paid if you go there.)Just remember to get an on-the-ground perspective before you cancel your factory visit or your beach vacation to Thailand. ### One Week Working in Vietnam URL: https://www.silkroadintl.net/one-week-working-in-vietnam/ Last updated: 2026-07-16T04:58:21.000Z The one thing that was not expecting when I to Hochiminh City to work with factories this last week was the size of the Chinese population. I was told that Vietnam has a population of over [1 million overseas Chinese](http://en.wikipedia.org/wiki/Demographics%5Fof%5FVietnam?ref=silkroadintl.net) and millions more that are half or less Chinese but whose families have been there for two or more generations and who still speak some Chinese as a first or second language. The Chinese here are either from Guangdong, Hong Kong or Taiwan. Like in the other SEA countries, the Chinese dominate the business landscape. They seem to own most of the major factories and talking with management in 4 factories I was working with was all done in Mandarin and Cantonese. One night my wife arranged for me to go to dinner with 6 factory owners, all Chinese. All of them had been in Vietnam for at least 8 years. All of them were making product exclusively for export. All of them had moved factories from Guangdong province within the last 20 years. Two of them spoke Vietnamese. Only one of them had (their primary) family in Vietnam with them. They complained about the same things in Vietnam that I hear most foreigners complain about in China. Highlights, lowlights and surprises from a week in HoChiMinh City.**Horrible infrastructure.** HCM City has no freeways a couple of bridges and no flyovers. All transportation was limited to surface streets. No subways or city trains either.**Millions of Motor scooters.** The fact that there was a city of 10 million people without anything but surface streets was bad enough, but then throw in 4 million-plus scooters and you have a traffic nightmare. As bad as it was, it was nothing like Bangkok in the 80’s and 90’s when you could literally sit, unmoving in a car for hours in rush hour. But still, 50 to 70 kilometers can (and regularly did) take hours to cover. One factory trip, a distance of 54km took almost 3 hours out and more than 3 and a half back.**Quality factories are hit and miss.** There are some great faculties here, but there isn’t anything that’s more than 15 years old. That’s good and bad. New equipment is good, but very little experience is bad. Many new factories are small and many of the best large factories are producing for a limited number of large clients.**QC vs Cost.** Of course the prices of raw materials and even finished goods are great, much better than China for the exact same items, but there are QC expenses that MUST be factored in. Sure you have to do CQ everywhere, China, Thailand, Taiwan. But I was amazed at what was passing for “acceptable” while watching (other people’s) stuff come off the lines. Flights are not cheap, hotels are overbooked and so are very pricey too. Food is more expensive than China as well. Another cost you have to figure in is the lack of options for complementary components. A lot of bits and pieces are moving in from Thailand, Malaysia (lower duties in ASEAN) and China. The fact that materials are cheap should not translate into “doing business is cheap.”**Great wireless access but an information black hole!** I was amazed that my 3G phone with a China SIM card worked better in Vietnam than in China. And unlike Hong Kong I had free wireless almost everywhere I went. Hole-in-the-wall coffee shops and bakeries had wifi. Almost every place we went in HCM City had the “Wifi Free Zone” stickers on the door/window. But even the [HCM City Investment and Trade Promotion Center](http://www.itpc.hochiminhcity.gov.vn/?ref=silkroadintl.net) told me that good information is VERY hard to find (even for them).**Thailand, 20 years ago.** HCM City really reminded me of when I was living in Bangkok in the 80’s. There were only 3-4 buildings over 15 stories high, tons of construction, no zoning laws, bad traffic, high growth rates (meaning lots of visible gap in local incomes), lots of expats and everyone has a shop of some sort in the street level of their home.**Noodles, bread, coffee, and bad Muzak.** It’s like the entire city got together and said, “We’re all going to offer the same food and play the same bad music. Everywhere!” How does this happen? Hotels, restaurants, department stores, banks, factory waiting rooms. It was an a amazing feat of coordination. Traffic comparison Saigon 7AM Sunday vs. Shenzhen 7AM Wednesday, same week. ### Following the Rules is for Suckers. URL: https://www.silkroadintl.net/following-the-rules-is-for-suckers/ Last updated: 2026-07-18T14:48:32.000Z **Example #1\. The Boarder.** Amid all the news that Beijing is tightening up the boarder ahead of the Oct. 1 anniversary, this is what happened to me this morning. Man in line has a problem with the number on his visa. Immigration can’t read it and it doesn’t scan correctly (I can understand the lady and her manager talking about the issues as I stand in the neighboring line waiting behind some unfortunate man and his wife from the Middle East who are being given a hard time). She wonders if there she should reject him because it she doesn't know what to number to type in and it won’t scan in either. Manager says: “Don’t worry about it. Just stamp it. He’s from Singapore.”**Example #2\. The swimming pool.** This is what happened at the pool this afternoon with my boys. Now I’m always bugged that the pool doesn’t open until 3PM. I understand that Chinese don’t like the sun, but there are probably 25 plus foreign or part-foreign families in our complex who have been asking for a year or two for it to open earlier since we do like the sun. I asked in private today, while the manger was mauling my little boys and taking pics of her and them with her cell phone. She tells me: “We can let you in at noon, if you want. But you’ll have to swim alone. We don’t have a lifeguard until 3.”**Example #3\. Commercial Invoices.** Without fail we are always offered or advised by either shipping companies or by factories to produce Commercial Invoices at much lower than actual costs to save money on duties and taxes going out of China and into foreign countries. Yesterday we were told: “You guys pay way more than anyone else we know since you put the real prices on your invoices.”**Example #4\. Traffic.** My wife said to me after a meal with some friends in Dongguan yesterday. “I hate driving in Dongguan. They have so many traffic cameras, you have to make sure to follow all of the rules.”**Example #4a. Seat belts.** Taxi driver on the way to the China/Hong Kong boarder this AM tells me: “When we get past YanTian Rd, please put your seat belt on. The cops are checking taxis for seatbelts today. You can take it off a couple of streets later; we just have to pass the check point.”**Example #5\. R&D.** This is a story that my friend Mike Bellamy ([PSChina](http://www.psschina.com/?ref=silkroadintl.net)) shared at the [GS show](http://tradeshow.globalsources.com/TRADESHOW/CSF/INDEX.HTM?ref=silkroadintl.net) this week. When he asked his factory-owning friends about their non-existent R&D departments they told him they get all the R&D they need at trade shows. There are so many new companies passing out all their plans for new products and requesting samples that the factories don’t need to do any of their own research. Why share all of these? Because all of these experiences happened to me (or were shared by Mike) *in the last 24 hours*.Because this is the attitude that is most common here. Because this is the business environment that you are headed into when you come to China. This isn’t a slam on China—this is just what really happens here. Rules are considered to be for people that are being watched. Rules are for people that don’t have the ability to get around them. You've been warned. ### Smart Steps for Effective Sourcing in Tough Economic Times URL: https://www.silkroadintl.net/smart-steps-for-effective-sourcing-in-tough-economic-times/ Last updated: 2026-07-18T14:48:32.000Z **15 May 09 UPDATE:** This is now been written out as an article and can be found [here](https://www.silkroadintl.net/sourcing-in-tough-economic-times-details/) (SRI) and [here](http://www.chinasuccessstories.com/2009/05/14/sourcing-bad-economy/?ref=silkroadintl.net) (China Success Stories).---------------------------------This is the outline of a presentation that I give at each [Global Sources China Sourcing Show](http://tradeshow.globalsources.com/TRADESHOW/CSF/INDEX.HTM?ref=silkroadintl.net) entitled: [Smart Steps for Effective Sourcing in Tough Economic Times](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-GIFTSPREMIUMS/CONFERENCE.HTM?ref=silkroadintl.net#Smart). It's both an introduction to the current factory situation in China and a review of the list of options for financing in China today.**Know your market**1\. Exports have dropped up to 60% in many industries.2\. Imports have dropped even more. There are a lot of reports saying that buying is up this year—but it’s not consistent across all industries (asset heavy) nor all regions.3\. Chinese factories have been stiffed for payments and canceled orders by foreign companies—don’t go into China with the attitude that “hey, they should trust me, I’m from the developed country, I’m the one that doesn’t trust you.” The roles have been reversed. Dramatically.4\. China says it will hit 8%, no one else believes it. No one. Think more like 5.5% to 6%.5\. Chinese banks and governments are offering incentives and loans. The question is whether or not you(r supplier) can get any of it.6\. Bad economy in China has lead to consolidation, which is not a bad thing. Lots of smaller, borderline quality factories have gone out of business. Big factories have more resources.**Difficulties in China**1\. Banks are not really solvent, but they are flush with cash (from the central government) right now. Banks have given out more loans in 1Q09 than in all of 2008.2\. Money from the banks is mostly pushed through local governments and their connections. The money is targeted to specific industries/areas (e.g. Western China and green and higher tech products).3\. Chinese consumers do not consume, they save. Spending is up, yes but no one knows yet if it’s just Chinese New Year hang over or if people will spend money after the immediate stimulus money is all gone.4\. There is over capacity, under employment and over production in many industries.5\. Trust for foreign companies is low, but hope in the domestic economy is not mature yet either.**Opportunities in China**1\. Well-established factories want orders!! Everyone wants them, but factories that are still in business have employees and need to pay for them so they will be aggressively looking for new orders.2\. Well-connected factories have access to cash.3\. Factories and equipment are for sale/rent at rock bottom prices.4\. There lots of opportunities for JV’s and other partnerships.5\. Product from cancelled orders is available everywhere!**Options for Financing from outside of China**1\. Typical TT’s and LC’s are still the standard.2\. Factoring is an option—it’ helps cash flow in the short term, but will suck out most (or all) of your profit.3\. Loan standards (in the US) have dropped dramatically in the last 6 months.4\. 3rd party financing.**Options for financing from inside of China**1\. Factories are willing to do projects with creative terms—so long as they have some financial guarantees. Cash flow and actual money/orders are the keys now. No one is being picky, just cautious. More than one former suppler has called to tell us they will offer us terms (60 days) if we pay higher deposits.2\. Lower MOQ’s are available. We’re having a ton of former suppliers call us back about previous inquiries and tell us that small orders are just fine now.3\. Additional labor is available to get projects done more quickly. Lots of day labor and fixed time laborers are waiting around for projects.4\. If you’re in the right industry, you may have cash options via your supplier/local govt. Industries receiving money from the government include: technology, education, logistics, green technology, health care, infrastructure, transportation.5\. Middlemen or trading companies have larger volumes and better connections may be able to offer you some financing.**Other steps to take to secure your investment in China**1\. Do all your due diligence (buy company/entity reports) BEFORE you place orders.2\. Be on site as much as possible.3\. Buy from sub-suppliers directly to save your supplier money and to negotiation the prices and quality yourself.4\. Pay for factory audits BEFORE you place orders.5\. Break out large orders to different suppliers if you're concerned about factories going out of business.6\. Get your lawyers involved early (just to be safe). ### More Tradeshow Notes--Week 2 URL: https://www.silkroadintl.net/more-tradeshow-notes-week-2/ Last updated: 2026-07-18T14:48:32.000Z It’s telling, the amount of hassle that you get buying a visa or going through various international customs, about the nature of the country that you’re about to deal with. I really don’t understand the attitudes that I get LEAVING China from various boarder points in Guangdong. Once across the boarder, Hong Kong is a piece of cake. No visa, one short form, no questions that you have to look up the answer for, short (or at least quick) lines. Lots of windows/desks. > Thailand, is easy but slow. No visa necessary but long lines that never end. Not enough windows/desks, poor design in the new airport, crappy traffic control. But at least they are nice and they smile.Vietnam is pretty good too. Fast, no lines, easy form and cheap visas—even for express service. They seem actually excited that you're coming to visit them.Taiwan seems like it was really great about 20 years ago but hasn’t been improved since. It’s moldy and cold (even in the newer terminal). Customs is a pain, visas are both difficult and expensive.Cambodia and Lao are, well...not sure how to catagorize them—My experience with these two customs is just pay for whatever you want and move on through. Really, I’ve paid for at-the-boarder service in both places. The Thai embassy in Lao also asked me what I needed (and how long I wanted to stay in Thailand and Lao before I went back to Thailand) and then gave me just what I asked for. (Obviously helped that I spoke Thai.)For my wife (Chinese) going through the US alone it’s a huge insulting hassle. When she is with me, no problems. But when she’s alone, she comes out almost in tears every time. This pisses me off, big time. Why should it make any difference if we're together or not. I've had her take down agents names and talked to superiors before. > But China is just a mess. [I’ve detailed before](https://www.silkroadintl.net/beijing-wecomes-the-world-to-its-coming-out-party-oh-the-irony/) the randomness of their checks and limitations. I’ve crossed the boarder about 14 times in the last two weeks (speaking at the show fills up my passport quickly). And only last night, coming back INTO China at 11pm was the process at all pleasant. Customs must have a new rule to have all agents to really look at all faces very carefully. What else would explain why they are holding up groups of young foreign students, European businessmen and a group of tourists? Standing in line I saw agents requesting people take out their earbuds and asking women to pull back their hair. They asked me when the last time I shaved was (in my passport pic I have a gotee, but don't now). These are all non-Chinese people that are LEAVING China! What’s the problem? Why are they so strict? I could understand if security was an honest concern, but these are the same boarders that are NOT using their x-ray machines and allowing just about everyone to just walk through (except for Middle-eastern or African looking men with boxes--I feel really sorry for these folks, there is just no chance that they're getting a fair shake in life any more. Really sad to see the extreme racism all over the world toward these people.).15 years ago, I went to Israel and the middle East for a semester in college. The boarders there were INSANE. Crossing back and forth from Egypt to Israel or Jordan took forever and required EVERY item to be x-rayed and the vehicle to be inspected. All of this was done under armed guard. But I’m convinced that getting a bus load of college kids with luggage across the Israel/Jordan boarder was faster than getting 50 foreigners out of China during tradeshow month. And we didn't have to wait at a second boarder check point to get into another part of the "same" country either! Ok, I’m finished complaining. One other issue that you could be of value to you working in China: [Shenzhen Notary Public](http://www.szgz.gov.cn/english.asp?ref=silkroadintl.net). I've used them before, but forgot about the process until I had to get a POA stamped this week. The good news is, if you need to get any documents notarized you can do that in SZ (or just about any other big city). The bad news is, Notary Publics in China are all government agencies. Its not like the US where you can go to a post office or a law firm or your accountant’s office and get a stamp for $15 or less. Here you have to pay about $25, have 3-4 copies of every page of the document, sign every page of every copy of every document and fill out an application. You must provide both the original and a copy of your ID. And, here’s the kicker—you have to have EVERY PAGE OF THE DOCUMENT TRANSLATED before they'll stamp it. If you use the Notary’s translation services the current back up is 7-10 days!!!! If you pay for an approved 3rd party to translate it for you it’ll cost you at least another $50 and you have to wait for them to do it too. So for even a simple one page POA in English you’re paying $75 and waiting at least 24 hours. They can’t just see your ID and notarize that you indeed signed the document in their presence (which is the point in the first place, right?!). They have to know what all the documents say—why is it any of their business?! No notary in the US asks to read documents if you ask for just the notarization of a signature. OK, now I’m really finished complaining. Honest.**SHOW PRESENTATION NOTES:3P’ of Quality from** [**SGS**](http://www.sgs.com/?ref=silkroadintl.net)**:**1\. Product Control—asses the risk. Voluntary standards, specific requirements and other safety requirements/standards.2\. Process Control—managing the supply chain.3\. People Control—ethical issues, training human involvement. Quality and Cost seem to be the most important drivers for sourcing strategies. (Not sure why I noted that little gem, but there you go!)[**Schenker on Shipping:**](http://www.dbschenkerusa.com/index.html?ref=silkroadintl.net)Shipping costs from China to the US look to be about 50% of the price of what they were this time last year. Airfreight too. To the EU is not such a steep discount. I looks like shipping and foreign buying in China is moving up a bit. But the fear in the market is that it’s not a recovery so much as its just retailers refilling their inventories that they let lag as long as possible.**SHOW Q&A NOTES:**Some of the Q&A today was, I though enlightening as to the current state of affairs of the global economy. First, The shows are empty. We have had more people at my individual presentation last week than we did at the group presentation every day except Wednesday. Attendence is said to be down about 25% off of last fall (which was off about 30% from the spring before!). Second, the majority of people that I talked with are doing enough volume that they can (and should) cut out their domestic distributor. But what they don’t know when they do this is that all the warranty, customer service on the sales end and all the QC and logistics on the sourcing end are now their responsibility. There is a reason why everyone doesn’t just go to a show in Asia, buy off the rack sell with huge margins without any problems. The reason is that it just doesn’t happen (successfully) that often. You don’t cut out layers of middlemen with no (positive and negative) repercussions. But the point here really is that small to medium retailers are tired of domestic distributors and are more and more going direct as the economy forces them to make choices. Third, there is still trillions of dollars of business going on—sure the US alone lost a trillion dollars worth of value, but there are still 300 million consumers that have to live. Unemployment is still lower than 10% too (most countries would kill for single digit unemployment numbers). Fourth, many small businesses that were selling to other mom-and-pop retailers and were not working on credit are still in business. They were not killed by the credit crisis nor were they affected by the box stores huge lead times. Smart small businesses were running on cash, still have cash and are still in business. Many of there are coming to shows here in Southern China this week. Fifth, in case you didn’t know (and apparently many don’t know this) there are multiple shows going on this month, not just one show for one specific industry as some of the buyers we talked to thought. Starting about 10 days there are show almost every day of the week from Hong Kong to Shenzhen to Guangzhou (and in BKK and other places too). Smart buyers are hitting multiple shows, getting options from both mainland and Hong Kong venders and realizing that they have both choices and power (since they have money and factories are dying for orders). Sixth, anybody hearing about a black list of foreign buyers being put together by the Chinese government? There are a TON of factories that are stuck with orders that were cancelled in various stages of completion. I've not heard about this directly, but someone told me that a list is being collected. That could be really scary. Let know if you've heard anything specific. Finally, simple pleasures make life better. The French Toast at the [Harbor Kitchen](http://www.hkcec.com.hk/english/restaurants/rest%5Fharbour.php?ref=silkroadintl.net) in the downtown Hong Kong expo center is fantastic!!! Just like I used to get at JB's ([Bob's Big Boy](http://www.bigboy.com/breakfast.asp?Category=1&ref=silkroadintl.net)) when I was growing up. Haven't had toast this thick, battered-up and deep-fried for 25 years. I loved it!! ### Tradeshow and News Round-up. URL: https://www.silkroadintl.net/tradeshow-and-news-round-up/ Last updated: 2026-07-18T14:48:32.000Z **Best piece of advice** that I heard at the show this week was from Ben Dolgin-Gardner of [Shenzhen CE and IT Limted](http://silkroadintl.net/blog/wp-admin/www.szceit.com?ref=silkroadintl.net). In his presentation at the Global Sources seminar “Buying from China: What New Buyers Need to Know” Ben said, **“There is a difference between price and cost.”**That one simple sentence revels a level of understanding about buying from China that most new buyers miss. What he means that is this: Just because the price is better going direct to factories in China, that doesn’t mean that your final landed cost back home will be cheaper than buying from domestic vendors. There is often a very good reason for domestic prices and factory direct prices being so different. Reasons include: Quality control, international shipping, taxes, duties, a return policy, customer service. Other good advice from Ben: - A network of professionals on this side of the ocean who give you personal attention is very important. Don't reinvent the wheel if you don't have to. - Get a sample of EVERYTHING at EVERY stage and for EVERY component/packaging/etc. By the way, **show attendence** seemed to be rather low (I don't have any official numbers). I've been to three different shows and didn't see much at any of them. Even the Canton Fair is allowing domestic Chinese buyers into the show this year (they were not allowed unless they were employees of foreign companies before). **Thailand** has to be the only country in the world where there can be violent, deadly protests one day and then everyone takes two days of vacation before coming back and continuing the protests! Blood in the streets on Wednesday and then water Wednesday through Sunday (Thai New Year festival) for a nice long weekend. Unbelievable. Problem is, international trust and perception didn’t take a vacation. The bad economy is now DEAD. The remaining dribble of FDI still coming into Thailand is now bone dry. When you look at China and say: “more stable, more safe, better political environment” you know that your country (a supposed democracy, no less!) has hit the skids. Tourism is even down now. When back-packers and pedophiles are changing their vacation plans to avoid your country you know you have serious issues.**Vietnam** has really cheap labor but [quality and education is lacking](http://www.latimes.com/business/la-fi-vietnam11-2009apr11,0,2261495.story?ref=silkroadintl.net). Really? No kidding!?**Notes on the Chinese economy.** 1\. [Chinese consumers, don’t.](http://www.bloomberg.com/apps/news?pid=20601080&sid=aSDDFnLloFXs&refer=asia&ref=silkroadintl.net) China is looking for a new stimulus package just to get consumers to spend a bit more. All the first round of government loans went to well-connected factory owners who then invested it in the Shanghai stock exchange in stead of producing more or buying raw materials or even paying off debt.2\. If Chinese factories are not getting paid or not getting orders, who’s paying their bills? Answer? [No one.](http://china-economics-blog.blogspot.com/2009/04/chinese-credit-crunch.html?ref=silkroadintl.net) The future is not so bright.3\. But when the Chinese consumers do buy, [they buy smart.](http://online.wsj.com/article/SB123934751932407099.html?ref=silkroadintl.net) Oil, cars, houses and the Chinese stock market (ok, the stock market isn’t smart, but if you time it right you can make zillions!). Is this a recovery or some digging in (and quick profit taking in the market)? Except for the stock market, it's smart digging in for a longer recession than expected. So many people made so much money in the stock market in '07 that people hope it can happen again. Chinese people buy assets for security and save money so they can take care of themselves--why are Americans not doing the same thing?4\. [China may not reach the govt’s goal of 8% growth this year.](http://www.bloomberg.com/apps/news?pid=20601080&sid=akC9qFXVardQ&refer=asia&ref=silkroadintl.net) Really? No! Let's see...what non-Chinese commentators have been saying this for the last 6 months? ALL OF THEM!5\. And…if that’s not enough. [Chinese Banks are handing out govt mandated money hand over fist](http://latimesblogs.latimes.com/money%5Fco/2009/04/china-loan-boom.html?ref=silkroadintl.net) to just about anyone with a Chinese ID card and a pulse (and to any foreigners with property). Sound familiar?! (Think the US sub-prime mortgage bill in the US in the ‘90’s.) Add this new loan binge to the fact that Chinese banks are mostly insolvent already and you have the makings for another future economic disaster.6\. Steel is also up one of the items that's up (along with oil, autos, cars and housing prices, as mentioned above). Steel?! Really? Why? There is over capacity in industrial, commercial and residential building. Shipping has so much over capacity they will not be using it all up for years to come. Auto sales in China are up—but they had over capacity as recently as December in China (and no one other China has had an increase in sales). Where are they using this steel?! Could it be that no one bought steel for the last 6 months, waiting as long as possible before buying new supplies (seeing prices continue to drop in the meantime) and now finally they have to buy to keep (the low levels of) production going at all?!I hope that the Chinese economy is going to turn things around and can help the rest of the word by buying more imports. But if buying trends continue the Chinese will be buying assest, not imports. And that's not going to stimulate anyone elses bottom line. ### Global Sources Electronics Show 12 April 09--"Buying From China: What New Buyers Need to Know. URL: https://www.silkroadintl.net/global-sources-electronics-show-12-april-09-buying-from-china-what-new-buyers-need-to-know/ Last updated: 2026-07-18T14:48:33.000Z Theres are my notes from day one of the presentations at the [Global Sources Electronic and Components Show](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-ELECTRONICS.HTM?source=GSOLHP) seminar ["Buying from China: What New Buyers Need to Know."](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-ELECTRONICS/CONFERENCE.HTM?ref=silkroadintl.net) Participating Companies in the Global Sources seminar today included:[Silk Road International](http://silkroadintl.net/blog/wp-admin/www.silkroadintl.net?ref=silkroadintl.net), Sourcing and Project Management[SGS](http://silkroadintl.net/blog/wp-admin/www.hk.sgs.com?ref=silkroadintl.net), Third Party Inspections and Testing[Passagemaker](http://silkroadintl.net/blog/wp-admin/www.psschina.com?ref=silkroadintl.net), 3rd Party Secure Procurement, Manufacturing and Assembly[Schenker](http://silkroadintl.net/blog/wp-admin/www.schenker.com.cn?ref=silkroadintl.net), International Logistics100-300 people usually attend each session of the conference. The seminar is free and there will be more held today and tomorrow. My presentation topic today is "Smart steps for effective sourcing in Tough Economic Times. Other presentations include Protection of IP, Eco-design and Negotiations.**1.** Make sure that you’re more worried about specific business issues than you are about general cultural issues. Don’t worry about screwing up the cultural things; the Chinese are great hosts and rather forgiving toward “stupid” foreigners. Having said that now, I do believe that cultural miscommunications will derail your production faster than business miscommunications will. I’m talking about offending people, not handing your business cards over the wrong way. Not giving appropriate face to a manager, not refusing to eat the duck tongue. So be careful.**2.** Specify the details for the packaging for both air and sea shipments as they should be different. People are often very concerned about the product and less concerned about the (outer) packaging. But if the packaging is great for a container load but not sturdy enough for air-freight, all your great product will be worthless by the time it’s delivered to your door.**3.** If you do not start to prepare to protect you IP BEFORE you come to China you will be to late to protect it fully after you’re here. With the lower levels of orders in the last year, there are more and more people that are willing to break the rules to make a Yuan. Either protect yourself or lose your advantage (and your IP—and maybe your whole brand).**4.** According to the folks as SGS (whom I agree with) most of the QC problems can be boiled down to YOU helping your supplier clearly understand their rolls responsibilities, your standards and, above all, clear communications about every change and detail. YOU’VE got to train your suppliers to meet the standards that you’re looking to achieve. YOU then have to follow up to make sure that they both understand their responsibility in achieving that and the process needed to achieve it. Sure, they have to do their part, but you have to both details the standards, enforce the standards consistently and then confirm that the standards are met. This is a harsh reality, you need to act like it’s all your responsibility and take steps that that end. Regardless of which party does or doesn’t do fulfill their part of the contract, it’s your fault, not theirs, if substandard but approved products shows up in your home country. Here are the minimum points where you need to be checking on your factory’s quality.• Raw materials QC and testing,• Sample QC and testing,• warehouse/materials storage QC,• in-line QC and testing,• finishing/packaging QC and testing,• final QC and container loading.**5.** Don’t leave doing the shipping research for last. If you like your profit margins and have done all other due diligence the product could still be a financial dud if you’ve not done all your shipping/customs research. Logistics equates to about 20-30% of the cost of goods sold from China (as opposed to 10% of so for US and the EU). At 30+ days onto that and you have a significant additional expense to consider. Also, taxes, duties and fees can be very expensive. Free (yea!) and 3-6% are certainly tolerable and typical. But duties of 17% to 200% (which we’ve seen kill projects before) are also common and you must prepare for them very early on.**6.** Finally, remember, payment terms and INCO terms are not the same. When you pay (Payment terms) and who is responsible for what portion of the shipping invoice (INCO terms) are completely different. ### Business Leadership in China—Frank T. Gallo—BOOK REVIEW URL: https://www.silkroadintl.net/business-leadership-in-china-frank-t-gallo-book-review/ Last updated: 2026-07-18T14:48:32.000Z I would recommend [Frank Gallo’s book, Business Leadership in China](http://www.amazon.com/Business-Leadership-China-Western-Practices/dp/0470823658/ref=pd%5Fbbs%5Fsr%5F1?ie=UTF8&s=books&qid=1238050794&sr=8-1&ref=silkroadintl.net), to any new-to China manger working for an MNC—that’s who it’s written for and that’s who will probably get the most out of it. I liked the fact that there were a lot of personal examples that show that Gallo has indeed lived the advice he’s sharing. This to me is the most valuable portion of the book. Frank has been here for 8 years and writes from experience—both good and bad. That’s important. He’s not just sharing success stories, but his mistakes and misunderstandings too. It’s easy to point out everything that was successful. It’s much more difficult and more valuable to others to identify where mistakes where made and the follow up remedies. I liked the fact that that there was an attempt to compare the two cultures—this, I think is sorely missing in the literature on international business. There are more than enough books describing Chinese culture to foreigners but very few making side-by-side comparisons. This should be the highlight of this book—any time you can have someone point out to you “we do it like this and they do this” and then identify some personally experienced middle ground you know you have some tools you can use. There is some of this, but it’s limited in it’s application because of how it’s presented and at whom it’s directed. I like that for whom it’s targeted, it’s a quick read. I understand that this was written to be digested in (very very very) small parts and would therefore be valuable to someone that is (very very very) busy and has absolutely no time whatsoever to commit to learning anything about a new culture that will impact business results. Making culture accessible in 5-minute chunks was obviously a goal. And kudos too because the book is just what he claims it is: a starting point for further research into constructing a business model that blends both foreign and Chinese leadership techniques. To this end, the bibliography is a great resource. When you read this you know there is more to learn and that Gallo would be a great expat to sit down and have a discussion with. Personally, I love getting into a book and finding new ideas or ideas that I don’t agree with having a source citation so I can look it up! So, thanks for the new additions to my factory-travel reading list! Now, for the things I didn’t like as much. And please understand, the structure of the book is what I have issues with far more than the content.(I guess) It’s a very MBA style look at how culture affects the corporate environment. Meaning it’s a very very simplified version of Chinese culture that is explained in the context of how it does or does not fit into various foreign business models and theories. You both had to know the theories and be in a place (large MNC) where you can use them for much of the analysis to be useful. And while it does compare cultures, it’s actually very PC look at only one and a half cultures, not really two. What I mean is that Gallo is very deferential to China and Chinese culture and not nearly as nice to foreign cultures. For example, even in the chapter on honesty, he won’t say that any practices in China are dishonest. Not one, not once. He’s not alone in this unwillingness to be (ironically) honest. I’m not sure why people are afraid to call warts warts after they get to China. In this case I assume that he didn’t want to offend any of the Chinese reviewers/interviewees, which was probably a good idea considering how valuable the interviews are to the book. But throughout the book he is more than willing to use terms like “rash,” “haphazard,” “over confident,” “cocky,” “aggressive” (as a pejorative term) and “impatient” to describe foreign business leaders. Maybe self-deprecation is a Chinese virtue he’s trying to indirectly teach foreigners who read the book. What’s surprising is that this book came out of a class that was teaching foreign business practices to Chinese MBA students but the final product is much more about how foreigners need to adapt to Chinese culture than it was about a 50/50 blending of two ideas. This is a VERY common approach in many books, usually justified by “China has a 5000 year history” or “China is a huge market” and “you’re just not going to change it.” And with each of these points I agree. But these answers don’t justify a lack of analysis of Chinese processes or an unwillingness to look at the need for Chinese to adopt international standards in many businesses. For example, when it comes to accounting, no one says, “Hey! Let’s do it the Chinese way!” So why can’t we discuss both sides of the cultural coin on other issues as well? If we are to honestly blend the two why is there not equal give and take on both cultural sides? Is it because we’re in China and we’ve been cowed into thinking that we’re privileged just to be here? Why is it so popular to bash foreign cultures and worship China? Has social relativism infected MBA schools too? Now I’m all for cultural adaptation—I’ve spent years reading hundreds of books about China and SEA, studying Chinese and Thai—but even though I was educated as an anthropologist I do not believe that just because “it’s how things are done here” that that automatically makes it right and so the outsider must change. If that’s the case why not just condense the book down to one page of “When in Rome,” sell togas (chopsticks in this case) and save the executives the time they would otherwise take reading the executive summaries?! I’m just asking for some balance, that’s all. > **Side note on comparing two cultures.** I hate the term “westerner.” Who the hell is that? Can you honestly say that an Italian manager will have the same style as one from California? A German the same as a Mexican? A retired Israeli soldier the same as a Canadian trader? A 50-year-old MBA in a MNC and a 30-year-old small business owner? Clumping “westerners” all together is just as bad as grouping Asians all together. How can you compare cultures when one of the two cultures your comparing isn’t even an identifiable culture!? Just because there was a class in Junior High School called “Western Civilization” doesn’t mean that “Western” is a culture. > Now that I’ve said all that I have to be honest myself. This book is good—not nearly as bad as the organizational issues I have with it make it sound. The content is better than the structure. I just found the structure and vocabulary of the book getting in the way of me appreciating the context. (Apologies to those who read my blog regularly and know how many typo’s per posting I usually have! No, a degree in Anthro didn't teach me how to write well.)Actually I found quite a few useful examples and ideas, mostly from Gallo relating his personal experiences. And I really like the fact that he will get some Chinese culture into the hands of people that he thinks may not have otherwise looked at it at all. That’s a huge plus for this book regardless of anything else it does or doesn’t do. I also loved that he has Chinese managers with foreign degrees talking about Chinese culture specifically to a foreign audience. That, I think is more of what is really needed. I would really like to see an appendix with extended transcripts of the interviews. Those interviews by themselves would be another book that I’d buy (and read). I would recommend this book to a foreigner that is new to China and will be working in a large multicultural and MBA environment. I think that for whom it is written and how it is presented it would connect and be a great introduction (hopefully not a conclusion) to a further study of Chinese business culture. > Finally, for me, this book is also a somewhat humorous look at business executives too. **Open Question to those of you with MBA’s**: Do MBA’s really need to have a 1-page executive summary after a 1-page introduction and only 3-6 pages of text? Is this what MBA school is like? Is everything broken down into bite-sized pieces for quick digestion with little analysis or context? Are all MBA’s really so much busier than the rest of us that they can’t read a real book?! In this book, for example, there only 35 pages of full text (out of 225)! There are huge headers, big quote boxes, bullet point lists and large font on almost every page! I’m left with the impression that going to business school must give you ADD as well as an MBA. > ### Bits and Pieces From This Week in China URL: https://www.silkroadintl.net/bits-and-pieces-from-this-week-in-china/ Last updated: 2026-07-16T04:58:22.000Z **1\. Factories out the Wazoo!**I’ve been in 7 different factories in the last 10 days. Factories making everything from furniture to molded metal office suppliers, from clothing to candle holders, from offset printing to silk screening. Despite their different industries/products they all had a few things in common. One, they all had over 100 and under 300 employees—about ½ of what they all claim to have had this time last year. Two, they were all working at way under capacity—two of them doing nothing but our orders this week. Three, they all had some version of the same story: western client XYZ didn’t pay/canceled order/can’t take delivery—do we want to buy their product? I was really amazed that there really wasn’t more anger. They were all very matter of fact about it, though many were hurting. I suspect that more than one of them will not be in business this time next year. They were all still fishing for export orders and didn’t plan on looking for more domestic clients. I asked if the domestic orders had increase at all and to a man they all said they had gone down as well. They didn’t see the local market being able to step in and offer any significant replacement orders. Just read this on CLB about [Chinese stereotyping](http://www.chinalawblog.com/2009/03/ethnic%5Fprofiling%5Fand%5Fchina%5Fbus.html?ref=silkroadintl.net) too. By far the weirdest comment I heard last week was from one manager who claims that the US will soon start a war with China so that it doesn’t have to pay back any of the debt that China has purchased over the last two decades. He told me wars were generally good for the economy and a war with China would be doubly good (for the US) since the US could stimulate the economy and write of billions of dollars in debt at the same time. He was serious about it too. I responded as politely as possible and shared a couple of jokes to try to lighten him up a bit—I told him that (thanks to the Vizzini the [Sicilian](http://www.imdb.com/title/tt0093779/?ref=silkroadintl.net)) Americans know to “never get involved in a land war in Asia” and that two countries with McDonald’s had never fought a war. More seriously, I tried to explain that our economies are too interdependent and that the physical, human and economic costs of these two huge economies going to war was a far greater loss than not paying back the whatever hundreds of billions in treasury debt that the US owes China. He responded by saying that of course I would that, I’m doing business here. But then left me with the oft-heard chilling factoid “China would win because we have more people and we don’t care about going back for the dead bodies” I was left with little room to respond.**2\. Reading about China**While I travel back and forth from factories I have a lot of time to read. I finished a couple of books about managing organizations/people in China this month and have a few thoughts that I think are important apart from the forthcoming reviews of the books themselves. First, "entrepreneurial" and "innovative" are not the same thing. I agree with Jack Perkowski that “the Chinese are among the most entrepreneurial people in the world,” but I add that they have not yet shown the same successes in innovation. Can they? Yes, certainly. Will they? I don’t know, but I surely wouldn't bet against them. The larger point really is that in many books (especially by Chinese themselves) the two concepts are used as synonyms. Which they are not. If they were, I wouldn’t have a job and Chinese brand names and/or new products would be seen much more in world markets. Indeed, at least 50% of my time in China is spent putting out fires and solving problems (another 40% is spent setting and enforcing standards). Creative and effective solutions to problems are by far the most valuable and rare commodity to me in China today. One of the reasons, and the second important idea here, is that there isn’t a single locally-educated manager (MBA) with more than 15 years of experience in China today. The first MBA program was only just started in 1991\. Think about what that means for any company in China—either your management team are all under 40, or they are foreigners or they were western educated, or they simply don’t have the education that most international business expect. (I do not mean that without an MBA there are no great managers in China over or under 40.) How many millions (?) of Chinese companies are just doing things “their own way,” or “like they’ve always been done,” or by will of the owner’s personality?! This is a big part of the reason why it’s so hard to get international standard product on a regular basis from domestic level factories. Perkowski says that “China has a shortage of more than seventy-five thousand “globally competent” managers.” And “the need for local managers is only going to increase.”Great take on the [current Chinese comments ](http://managingthedragon.com/index.php/2009/03/22/the-reasons-behind-china%E2%80%99s-words-and-deeds/?ref=silkroadintl.net)on world economics on Jack Perkowski's blog today too. And a couple of good articles on [Taiwan](http://www.latimes.com/news/nationworld/world/la-fi-taiwanecon23-2009mar23,0,4462380.story?ref=silkroadintl.net) and the [continuation of corruption](http://www.asiasentinel.com/index.php?option=com%5Fcontent&task=view&id=1784&Itemid=324&ref=silkroadintl.net) in China.**3\. Chinese traffic and Hospitals, part 3,476.**I have a friend (overseas Chinese) who, over the weekend, fell while getting off the bus. (It’s tough for most people, especially ladies in skirts and high heels, to get off a lurching vehicle that’s supposed to be stopped.) She fell and was hurt pretty badly and had to be taken to a local hospital. The bus company admitted responsibility. She had some people help her check in and see an MD at the nearest hospital. First MD says that she has a broken pelvis and a broken femur and will have to stay in the hospital in intensive care for at least a week (with expensive meds) and then have bed rest with hospital care and physical therapy for another 3-4 weeks. She decides that although she is in pain she wants a second opinion. The bus company wants her to get a second opinion too, they don’t want to pay for all the time in the hospital. By the way, any guesses what the bus company's compensation for a hospital stay is? 50RMB a day. Since my friend was a “housewife” that is her official economic value--$7.32 per day. So she goes to a second hospital and gets a second opinion, this time with x-rays. Final prognoses? Bruises. She’s sore, at home and walking now. No broken bones, nothing but standard pain meds. No physical therapy necessary. Just sit on a pillow and move slowly for a few weeks. Like you’re doing with your factories here— bring your own translators and double check everything. Next (believe it or not), I saw another dead body on the way to a factory in Panyu. The accident was on the Guang-Shen Expressway at the Chang An off-ramp about 8AM Saturday. There were not yet any police or emergency vehicles on the scene yet. The bus I was on drove by just minutes after it happened, before traffic was even backed up much. Don’t know exactly how it happened, but the car had been smashed by a bus. It looked like the driver’s side had been hit by the front right corner of the bus. Which probably means the lady driving the car didn’t check her blind spot (what blind spot?!) when changing lanes. As we drove past we could see her neck at a bad angle, no airbag and lots of blood on her face. Really sad. So, like last time, just be careful. That’s the point here. (If you comment on this part of the post, your comments will not be posted—so there! ttthhhbbbbtt) And so we don't end this section on a bad note, here is a much nicer bit about cars and faces. Ferrari F4 for sale here at a show in Coco Park. Asking price? About $500,000 USD. Not sure where you could safely drive an F4 here. It seems to me that owning one in China would be like being the Far Side deer with the bad birthmark. (“Bummer of a birthmark, Hal.) But I’d much rather have these faces stuck in my head than the other one!!**4\. Thailand--bad and getting worse.**Not only is it [bad in Thailand](http://www.bernama.com/bernama/v5/newsworld.php?id=397334&ref=silkroadintl.net) but it was [twice as bad in February ‘09](http://www.iht.com/articles/ap/2009/03/18/business/AS-Thailand-Economy.php?ref=silkroadintl.net) as it was in November ‘08\. Ouch! At least the [government is taking measures](http://english.aljazeera.net/news/asia-pacific/2009/03/200932251443402291.html?ref=silkroadintl.net) that will help both now (investment monies) and later (re-education/training), unlike the US which is spending money that won’t help now or later! And an interesting look at how factory closings are [affecting individuals](http://www.csmonitor.com/2009/0324/p06s01-woap.html?ref=silkroadintl.net). And another bit on [increasingly bad bank loans](http://www.bloomberg.com/apps/news?pid=20601080&sid=aqnGiV3gFDvg&refer=asia&ref=silkroadintl.net) this year too. I guess it’s time for me to suck it up and go to Phuket and see what I can personally do to help stimulate the local economy. Anyone else up for sacrificing a weekend in the name of global altruism? I really think that it’s the least we can do. ### Buying from suppliers online URL: https://www.silkroadintl.net/buying-from-suppliers-online/ Last updated: 2026-07-18T14:48:33.000Z At each of the Global Sources New Buyers’ Seminars ([Buying from China: what new buyers need to know](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-ELECTRONICS/CONFERENCE.HTM?ref=silkroadintl.net#Buying)) and in my inbox probably once each week, I get a question something like this one I received last week: > “Hi, David, I found a few suppliers online that can do what I want but they all want me to wire cash directly. I’m sure that this isn’t the way to do this. What other options do I have? Also, what happens if I send them money and I don’t get my \[product\] or it shows up broken? How would you do it?” > To me, wiring cash (which really is the way that it’s done) is not the part that you should be most worried about. What you really need to do is figure out how to tie the payments that you will be wiring to the quality of the goods. And also how to confirm that quality before you allow any product to be shipped. If I was working by myself from over seas this is what I would do. > **LEGAL NOTE:** If you are going to be doing any type of OEM/ODM work and not just buying stock items then you need to take all the legal precautions you can in BOTH your home country and in China. If you do not protect your name/brand (both in English and Chinese) and your product designs here, you probably will not have the protection in China that you’ll want/need later on. We've used [Harris Moure](http://www.harrismoure.com/overview.html?ref=silkroadintl.net) ([China Law Blog](http://www.chinalawblog.com/?ref=silkroadintl.net)) with great results. > **First**, I’d get prices from 3-4 factories on as many pieces as each one will bid out for you. I’d tell them up-front that you’re talking with other factories and comparing prices but that you’re looking for a single long-term supplier. I’d be very honest about the qtty’s and the quality expectations. If you exaggerate the qtty’s they will cut your quality to compensate for the lower bulk prices they’ve quoted you.**Second**, I’d be very up front about price questions and get as many details as possible. You have to be sure to not only get a list of what is included in the price but also what is NOT included in the prices. Negotiate the prices like there is no tomorrow—the prices you’ve been give are purposefully high, they expect you to negotiate. Don’t ever except the first price you’re given. Don’t offer or even think to give them their higher price in return for “better quality” unless you specify exactly what better quality includes. > **SIDE NOTE: Terms.** Price terms and shipping terms are not the same. FOB and COD on the bid and Pro-forma Invoice are not talking about the same items. Finance terms are simply when you pay for your goods. Shipping terms designate a specific logistical service that is (or is not included) in your final payment prices. Having FOB or CIF shipping terms listed on the contract does not tell you when you must pay. Similarly, COD does not tell you what portion of the international shipping costs you are personally responsible for. > **Third**, before I ordered, I’d pay $50 (per supplier) and have a 3rd party verify the company info. Look up import records (public in the US), talk to any of the suppliers’ clients if you can and talk with others in the industry and see if your potential supplier has any type of reputation. Companies we've used are [Globis](http://www.glo-bis.com/about.htm?ref=silkroadintl.net) and [Verify](http://www.verifyscreening.com/index.html?ref=silkroadintl.net). If you’re doing a) custom work with lots of tooling, b) a single order that is a significant dollar amount, or c) will be doing regular orders that are hundreds of thousands of dollars over the course of months/a year, then I would suggest that you pay to have a standard capacity audit done. This will cost you somewhere in the neighborhood of $650 plus expenses.**Fourth**, you need to confirm with your home county what both the import requirements and product requirements are. If you need to meet specific product safety or health standards then you MUST PAY FOR A THIRD PARTY TO TEST BOTH THE MATIERALS AND THE PRODUCT BEFORE YOU SHIP IT. This isn’t an optional step. This can’t be left to the factory. If you are the importer of record then it’s YOUR responsibility to confirm that the materials and the product meet your country's standards. The factory really has very little incentive to do this for you if you’re already committed to an order. The import requirements are different from the product requirements. To know what is allowed and how much it will cost you’ll need to contact a freight forwarder with offices in both your home country and China so they give you a full list of all the duties and requirements. There are often not just import requirements into your home country but export requirements that must be met to get goods out of China too. Make sure you know BOTH before you order. > **SIDE NOTE: Testing.** You need to have an independent third party test your raw materials, your molds, and certainly both inline and finished production. I’ve used [Intertec](http://www.intertek.com/?ref=silkroadintl.net), [BV](http://www.bureauveritas.com/wps/wcm/connect/bv%5Fcom/Group?ref=silkroadintl.net) and [Pro QC](http://www.proqc.com/?ref=silkroadintl.net). They all have labs in China (and other countries). They will send someone out to pick up the samples, if you request—and I strongly suggest that you do this. If you are not here yourself to pull the samples and you don’t have a 3rd party do it for you, what incentive does the factory have to send samples that may not pass the test? None. Do it right or your just wasting time and money. > **Fifth**, negotiate the prices again, and order initial samples from some (2-3) of your potential suppliers to check the quality and the security and service of each one. Getting your order and finding out that 33% is bad (everything from one supplier) is much better than getting the order and finding out that you picked the wrong guy and 100% is bad.**Sixth**, I’d wire (T/T) the money to them directly if the cost was less then $1000\. If you split up the sample order into 3-4 parts, you’re less likely to lose the entire amount and you’ll learn how responsive/responsible each of them are too. For small orders there is really no other way to do it either. No one in China has heard about Paypal or escrow accounts so don’t waste your time. And no one wants to do LC’s for less than hundreds of thousands of dollars, and even then it’s tough to get one. If you’ve done your DD and paid for research then you should be relatively safe. But, of course, at some point you need to trust people. You should verify as much as possible before you trust, but you will still have to trust at some point—which brings me to the next point.**Seventh**, I’d tell each of the suppliers that product cannot leave the factory until it’s been QC’d by a third party (orders for sure, samples too, if they are expensive). And then copy your 3PQC on the TT and the invoice and the contract (that is, of course, signed/stamped by you and the factory). This will help to make sure that the factory knows that someone who is already in China will be coming out to check the product and can/will provide a paper trail of all important documents and correspondence.**Eighth**, have your 3PQC do at least two/three visits. They should check production (inline) and final product and loading of the container—this is the bare minimum. You should do much more QC and testing especially if you are in a sensitive industry that requires specific health and/or safety standards. The quality rule for product from China is very simple—the more time you spend monitoring the quality of production, the better the finished product will be. Spending $2,000 for QC and testing for a order even as small as $10,000 is better than spending $10,000 and 6 months on product that shows up below standard or wrong or broken. > **SIDE NOTE: Returns.** Getting bad product back into China is expensive, time consuming and almost impossible to do. China has strict laws about sub-standard product coming back in to China (why would they want it?!) and getting your supplier to pay for it will never happen. If you aren’t planning on coming to China and you aren’t planning on have 3PQ check on it, you’re really telling your supplier that shipping garbage is OK—and that’s most likely what you’ll get. Factories know that if they can get it on the boat, they’ll never see it again. And if you’re paying before it ships then you have no recourse—what incentive do they have to give you the best, most expensive quality? None. > **Ninth**, I would NOT continue to buy from all 4 suppliers after the initial sample, try to consolidate orders with one or two. But keep in touch with the other two and place small partial orders with them as the opportunity arises, just to keep them aware of you and your business and to keep you aware of their new products/options. It never hurts to have a back up ready to go just in case. **Tenth**, I’d then plan a trip out here sometime in the next year or so—especially if you are going to order regularly. Visit each of the 4 factories. Time the visits so you can place an order or two while you’re here and see some of the production of your product. Maybe time it so you can attend some [tradeshows](http://tradeshow.globalsources.com/TRADESHOW/TRADESHOW.HTM?ref=silkroadintl.net) while you’re here too.**Finally**, I’d contact a number of freight forwarders that have their own offices in your home state and the region your suppliers are in (for example: Guangzhou or Shenzhen for southern China; Hong Kong is sometimes not “local” enough) and get them to quote you complete shipping costs for both sea and air with all duties and fees included for each order. People are often surprised to realize that there are specific requirements and oftentimes duties and licenses necessary to get product out of China as well as to get product into another country. Sometimes these expenses can double the final cost of your goods. Negotiate rates with them based on your projected volume over the next 3-6 months. Like the factories, choose one forwarder all your orders (unless you also have to have UPS overnight something to you) and stick with them. As you push more and more volume through them, they will get better and better at anticipating your needs and more and more willing to help you with details and requirements. [Schenker](http://www.dbschenkerusa.com/index.html?ref=silkroadintl.net), [Phoenix](http://www.phoenixintl.com/?ref=silkroadintl.net), [Expeditors](http://www.expeditors.com/?ref=silkroadintl.net) and [Maersk](http://www.maerskline.com/appmanager/?ref=silkroadintl.net) are all forwarders that we’ve used. ### The Chinese, by Jasper Becker--BOOK REVIEW URL: https://www.silkroadintl.net/the-chinese-by-jasper-becker-book-review/ Last updated: 2026-07-18T14:48:32.000Z This is a fantastic book. Honestly, I only have two minor issues with [Jasper’s Becker’s book, The Chinese](http://www.amazon.com/Chinese-Jasper-Becker/dp/0195149408/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1237282986&sr=8-1&ref=silkroadintl.net). First, it’s ten years old and I really want an update. If you think that ten years couldn’t be nearly long enough to date a book on populations within a country than you haven’t been to China recently. I’d really like to see an update that included some specifics on the various population groups within the major cities of Shezhen, Shanghai and Beijing. For example of how fast China changes, consider this: I first came to China in ’95\. I taught English at a university on the outskirts of Chongqing for a year. That year was physically the most difficult of my life. I lost 45lbs—there was nothing to eat. Even the parents of my Chinese students told their children not to eat out on the streets because it was so dirty. The teachers told me not to go to the campus health clinic because the university was saving money and buying fake medicines. My parents cried when I came home saying that I looked like I was just released from a concentration camp. But life here is completely different now—and it’s only been 14 years. Shezhen, where I’ve been since ’03, has made me fat. I’ve gained back the 45 and another 10 just for good measure. We have the choice of imported or fake med’s now. Really, I have almost every convenience that I could want from back home. So I’d love to see Becker do an update specifically on the first and second tier cities. Second, other than comments about their visiting presence, there is no mention of the Taiwanese, Hong Kongese or any other Chinese from any overseas community. These populations, which are arguable part of “one China” in anyone’s book, are a major factor in the development of Mainland China over the last couple of decades. But more than that, I wanted a look at them from Becker’s eyes and in the context of the book about other Chinese peoples. I know that Becker is a mainland guy by experience, but these groups aren’t just minor characters in the story of the Chinese people. A discussion of their difference and similarities is very necessary to understand both their participation in China and their resistance to being controlled by China. More than the update, this was the piece of the book that I kept waiting to get to, but it never came. Becker’s book is fantastic though, in what it does do. Becker is able to describe in very personal detail the many different facets of China. Regardless of how long one has been here value of this level of analysis is immeasurable in trying to understand China for doing business or one’s personal life. From the book it’s clear that despite the political rhetoric there is not just “one China;” not even within the continent. In fact, as I sit in a factory outside of Shenzhen and talk about the economy with a manager today, he reminds me that even “inside the fence” and “outside the fence” of Shenzhen are very different places and the countryside is a “whole other world.”While the personal details are great and I was sucked into the individual stories, the ability to then expand those stories into generalities without being to simplistic is what makes this book a useful tool. He takes the exceptional and integrates it into a larger context and historical pattern. Indeed, Becker not only takes individual stories and puts them into a larger modern social context but also fits the lives of real people into the detailed political and cultural histories of each region. Becker knows the Chinese situation—and he knows that there is not just “one China” even on the mainland. Life in Shezhen is completely different than life in the countryside. Life in China when you agree with the political, social and economic systems is also much different than if you disagree; for whatever reason. Education, money, political connections, even ancestors make a difference in the “China” that is described—sure this is true everywhere, but there are few places on earth the inequalities affect so many people. Becker exposes this variety in great detail through his extensive research and captivating writing style. The Chinese is not a beginner’s guide to China. It’s more of a dissertation. At more than 450 pages it’s long too. But like I said above, my only issues with it are that I wanted more. ### Voidable Contracts URL: https://www.silkroadintl.net/voidable-contracts/ Last updated: 2026-07-18T14:48:33.000Z This is another post about Chinese Contracts from Matt Kowalak. There are, unfortunately, times when contracts, for whatever reason, need to be voided. The problem is, when can contacts legally be voided? There are specific circumstances when this indeed can be done. But to make it work, you have to meet specific legal criteria.\_\_\_\_\_\_\_\_\_\_\_\_\_The key to understanding these types of contracts in to note when they are actually voidable. There are three situations in which you have the option of voiding a contract in China.1\. A contract made by a “significant misconception” – This one is tough, because there are not really enough cases on the books in China to even attempt to take a guess at what “significant” implies. Tentatively, if you are able to prove that in some aspect of the contract, one of the parties made significantly misleading promises that are not in sync with industry standards, you may meet this standard.2\. Contracts that are “significantly unfair” – This has more to do with contracts in which some aspect of the agreement has changed significantly from the time the contract began to be effective to the time of performance by one of the parties.3\. A contract signed “under duress” – While this seems like a straight forward idea, no one can somehow force you to sign a contract and force you to perform it, in reality duress can be difficult to prove. Basically, proving legal voidability will come down to three things, how well you know your industry, what the specific standards are and how influential your lawyer can be in arguing that you were mislead, tricked or coerced into signing a contract. The tricky part about these types of contracts is that while they are indeed voidable, they are still valid until or unless the party that is getting the short end of the stick exercises their right to have the contract voided. These contracts are not inherently unenforceable. Chinese courts have treated many cases in which a contract has been created by fraud as a voidable contract. This means that unless you catch the other party to your contract cheating and blow the whistle on them, the contract is still perfectly legal. While this may seem to tilt the field of play in favor of those who will steal cookies all day long and just take their losses when the one time they get caught with their hand in the jar, the Chinese courts have actually rationalized this position by pointing out that it may be in the interest of the party being misled to continue to enforce the contract. While there may be some hypothetical situations in which the party being wronged would benefit if the contract were to be enforced, it seems to me that more often than not, these “significant misconceptions” will not be understood by the party being wronged. The other point of view from the courts is the recognition of the intent of the parties when they signed the original contract, they decided, by free will, to do business with each other in the first place and it should be up to them whether or not they continue to uphold the contract. The most important point to take from this discussion is that, if you find yourself being deceived in a contract, it is up to you to go to the court and have the contract declared void. A similar issue is the right to the rescission of a contract. This right deals with rescission as well as the modification of a contract. In Chinese courts, modification is almost universally preferred to rescission. While modification of the contract is preferred, it is usually too difficult to try to decide what the true intent of both parties was had they been honest when putting together the original contract. The statue of limitations for rescinding a contract is one year from the point one of the parties ought to have known they had cause to rescind the contract. Also, your right to rescind a contract may be waived through an explicit declaration or through your actions, if you continue to perform a contract after the evidence that you had cause to rescind was uncovered. There are also many possible legal consequences to voiding contract. If a contract is declared void, (meaning it does not meet the minimum requirements of a contract) the contract will not have the intended outcome. If part of a contract is void (this is known as severance) you can basically cut that part out of the contract without damaging other parts of the contract that are still valid. Also, the dispute resolution clauses of a contract may still be valid as well, determining arbitration, mediation or conciliation and even the choice of applicable law. Just because the terms of the contract are void, does not mean that the contract disappears, there may still be very real responsibilities that can be costly.\_\_\_\_\_\_\_\_\_\_\_\_Matt Kawalak has worked in manufacturing related positions in Shenzhen for the last 5 years. He studied Chinese at Shenzhen University and is currently an LLM student at The Chinese University of Hong Kong. For further business questions or consulting you can reach Matt at sasinopaths@gmail.com. ### Thai Economic News...Worse Than Expected...ouch! URL: https://www.silkroadintl.net/thai-economic-newsworse-than-expectedouch/ Last updated: 2026-07-12T07:58:29.000Z Worse than expected? That must be really bad![](http://silkroadintl.net/blog/wp-content/uploads/2009/03/mowing-monk.jpg?ref=silkroadintl.net)Really, with all the bad news about the world economy lately, how could anyone be surprised by bad economic numbers from anywhere at this point? [The numbers out of Thailand are indeed “dismal”](http://www.ft.com/cms/s/0/8a86ebe4-0214-11de-8199-000077b07658.html?ref=silkroadintl.net) and the fact that things are going to get worse before they get better is certainly no trivial matter. Quite depressing, to be honest. Why? Because I think that a degree of the drop in the Thai numbers didn’t need to happen. Much of the pain is certainly due to the world wide wipe out. But a good percentage is self inflicted. "This my thinking:"First, Thailand is good at hard-drives, trucks and crafts/home furnishings (among other industries)—these three specific industries that are all but dead right now because of a lack of $ in export markets. Some of Thailand’s other major advantages (low tariffs, educated workforce, good infrastructure) will not entice new orders all by themselves either. So these industries are not going to recover until after you see recover in other regions first. Second, agriculture is Thailand’s export leader. Regional economic depression means that orders for exotic fruit are going to be down. The fact that there were rice shortages last year (poor harvests) means that Thailand (and Vietnam and others) held onto their rice exports instead of selling them thus lowering the export numbers. Third, the Tourism industry, which (I think) is second to agriculture in the Thai economy, is absolutely dead right now. There just are not any more western tourists (or Chinese) going to Thailand right now. I suppose that this could be seen as a good thing if some of the sex-tourism industry dries up. A subset of, and increasing large part of tourism and the domestic economy is medical services (medical tourism). Obviously, anything elective (lasic, tummy tucks, eyelid folds, boob jobs and sex changes) are going to be on the back burner when people are unemployed. Fourth, Banking/finance and logistics services are hurting as banks have no money or are not lending and orders are down all across Asia (and everywhere). Fifth, even before the economic downturn, Thailand was not a low-cost leader in ASEAN or Asia any more. Vietnam and Cambodia have cheaper labor, as does China. Hong Kong and Singapore have busier ports, better banking services and more western logistic headquarters. I think that for 20 years now Thailand’s position has been a question. Are they focused on Agriculture and tourism or are they a banking and logistics hub? In the ‘90’s they actively presented themselves as the banking hub for mainland SEA, and with the lack of development in the other regional countries they are that kind of by default. They have a small but quality electronics sector, but they are by no means a world leader (except for one hard-drive plant). Ditto for most other manufacturing capabilities. But they are better in most than their close regional counterparts. And they often benefit from reactionary anti-Chinese sentiments. Even though we started SRI in Thailand, within one year we had to move to China just to compete—in terms of price, production times and diversity of opportunity. As I’ve said before, Thailand with 66 million people often can’t even compete with Guangdong Province with 90 million. All things being equal, I’m more worried about political stability in Thailand than I am in China. And that’s saying something. Which bring me to…Finally, the self-inflicted wounds. The Thais didn’t help themselves in the PR department last year. ’08 was basically a disaster year for the Kingdom. Boarder war with Cambodia, continued bombings in the south, foreigners arrested for stupid books, international magazines banned, a PM canned for a cooking show, kangaroo courts, Thaksin running all over the world, and the stupid protesters that shut down the airport for a week. If you wanted to scare away business this would be the perfect formula. And they haven’t learned their lesson yet. Now it’s the Red Shirts that are going to [do the same thing](http://www.time.com/time/world/article/0,8599,1881841,00.html?ref=silkroadintl.net) the yellow shirts did (ok, they've stopped short this time). What’s worse is that there are almost weekly reports of new arrests for lese majeste and large political protests threatening to do the “same thing” as the last protests that shut down the airport. > **Side Note:** This color thing has really gotten out of control the last few years. Before blue and yellow were just nice ways of enjoying a holiday and supporting the king/queen. Now, the wrong colors can get you beat up (if you're Thai) or mocked/questioned (if you understand the Thai around you).What's really a shame is that the once tolerant edge of Thai culture is being worn down. True, Thai's are still GREAT (more than they should be) to most foreigners. But no longer can you rationally have a discussion about politics with business people over lunch.Last time I was there (a month ago) it was so sensitive and so in-your-face that even discussions about the economy were difficult because of the political overtones.I have a friend that can’t even read the book The King Never Smiles in his own house because his wife (Thai) would get offended. I don’t say this to bash her, just to point out that the obsession with the king (and really all things political nowadays) is really affecting relationships in Thailand on many many levels. > And, in news that will certainly make world stock markets rise in expectation, Thailand and Lao opened a [boarder train](http://www.bangkokpost.com/breakingnews/137084/thai-lao-rail-service-commences?ref=silkroadintl.net) and Lao and Vietnam opened [cross-boarder money exchange](http://english.vovnews.vn/Home/VietnamLaos-crossborder-payment-service-launched/20093/102298.vov?ref=silkroadintl.net) (classic communist news piece--no news whatsoever, just names of officials)! Don't hold your breath for the [SEA version of the EU](http://www.nytimes.com/2009/03/02/business/worldbusiness/02asiaecon.html?ref=business) though. I joke with people all the time that Thailand is a great place to vacation but a lousy place to do business. We still do work there, but, to be honest, it’s usually when we can’t find what we need in China, Taiwan or Vietnam. Sad but true. At least [the fishing is still good](http://www.guardian.co.uk/world/2009/feb/24/stingray-catch-thailand-fishing?ref=silkroadintl.net). ### Violence in Context URL: https://www.silkroadintl.net/violence-in-context/ Last updated: 2026-07-18T14:48:32.000Z This is a follow up to the Post [QC Blog](https://www.silkroadintl.net/qc-blog/) where I said that we’d experienced some violence in Dongguan. First, STOP writing to tell me “See! China is doomed by social unrest.” And “China’s a hellhole.” This is not true, this is not what I meant when I shared a “security note.”Second, STOP writing to tell me that I “just hate China. Stop sharing stories like this that are just B\*\*\*S\*\*\*.” Every single story I share here is true. Because you read it out of context does not make my experiences any less true.[This is what I said](https://www.silkroadintl.net/qc-blog/): > Second, a security note. Two other people (who shall remain nameless), while in a different part of Dongguan today, saw a group of people on the side of the road hack another person to death (at least they think he died) with a machete. They kept on driving, sped up even, to get out of there as quickly as possible.If you have money or are alone I would highly recommend that you DO NOT go out at night in any of the industrial areas outside of Shenzhen. This would include Songgang, Dongguan, Longgang, Bao’an, Guanlan, Shiyan, Huizhou and other areas with tons of (unemployed) migrant workers and not a lot of policing or economic development.I’ve seen fights, I’ve seen people get robbed and beaten, I’ve seen a woman and child get run over by large dump trucks, I’ve even seen a dead body on the street (at least I think it was dead), I’ve had family tell me about kidnappings they’ve seen, I’ve had family robbed at knife point and I’ve been pick-pocketed numerous times myself. I’ve had clients tell me about huge gang fights they’ve see while making side excursions in shopping malls! I even chased down and dragged to the police station two guys who tried to steal my bike once. But I’ve never seen anything like this before.You need to make sure that being here is really worth it for you. And if you are staying here, you need to take the security threat seriously. The risk is increased with more and more unemployed people loitering around. > It’s sad to me that an honest side comment on danger—meant to be a simple warning—gets all the attention at a time where there should be much more focus on other issues (QC, Finance, general economy, etc). Some people are now using my experiences to justify their description of Dongguang as a "hellhole" (comments on [Fool’s Mt](http://blog.foolsmountain.com/2009/03/05/state-of-global-economy/?ref=silkroadintl.net)). Let me explain the situations and all the events so that you, who are using this to claim the social destruction, can calm down a bit. First, I am honestly afraid of living in China for an extended period of time. But it’s not a hellhole. I’m much more scared of the traffic and the poison food than I am of getting robbed/killed. Honestly, I was much more scared of getting killed while driving in South Chicago in ’98 with Utah plates (Jazz/Bulls NBA Finals) on my car than I am of violence in Dongguan. Second, not all of the events that I listed were in Dongguan and not all of them are this year and not all of them were even in Mainland China. I’ve been here, in SZ, for 7 and in Asia for almost 20 years now and I’ve seen a lot of stuff. Here are the details with dates/places so there is no misunderstanding. - Hacking on the street—Monday, Feb 2, 2009. - Fights on the streets—Chongqing ’96, Bangkok ’98, Gaoxiong ’99, Shenzhen ’04, Songgang ’05, Shenzhen ’07. - Robberies and beatings—Taizhong ’00, Shenzhen ’05, Songgang ‘06 - Attacked by guys with a pipe—Jiayi ‘00 - Dead body--BKK '91, Guangzhou '07 - Woman get run over—Taipei ’01, - Woman and baby get run over—Xiamen ‘06 - Child getting hit by a hit and run driver--BKK '08 - Kidnappings that family saw—Dongguang ‘08 - Family robbed at knife point—Guangzhou ‘02 - Pick pocketed—Shenzhen 3 times in 7 years here, once in Taiwan, once in Chongqing. - Mall brawl—Louhu ‘06 - Bike fiasco—Shenzhen ‘05 Finally, you can see that it’s not all Dongguan. It’s not all Mainland China. And it not all this last couple of months. So yes, be careful, but don’t see the end of the world in this (in the US stock market, maybe, but not in Dongguan). The violence is certainly bad here but it’s NOT getting worse, from my perspective. And it’s NOT worse in Dongguang compared to other industrial areas either. Unemployment is bad now and it’s always been dangerous in the outskirts of Shenzhen; I dare say it's risker now, but I've not personally seen a big change in the last year. Hong Kong news has been reporting things like this for almost 20 years now. I'm just saying: Be Careful. ### Fake Money URL: https://www.silkroadintl.net/fake-money/ Last updated: 2026-07-12T07:58:27.000Z This is my collection of fake RMB (click photo for a larger image).[](http://silkroadintl.net/blog/wp-content/uploads/2009/03/fake-money.jpg?ref=silkroadintl.net)All of these bills/coins I've been passed in the course of regular transactions. So the question is--how in the world did I get a fake 100?! (It's the largest bill available so it's never given as change.) The only place that you can get 100RMB bills is the bank/ATM. This tells me that if you can get the money printed and out of your factory you've got a good chance of getting away with it since even the banks aren't diligent enough to pull the fakes out of circulation; which the guys in this article (in Chinese, sorry) about a [counterfeit RMB bust](http://news.qq.com/a/20090302/001186.htm?ref=silkroadintl.net) in Huizhou couldn't do. Good pic's even if you don't speak Chinese. But having said that, have you ever spent money anywhere in China (street food stalls and taxis are the exception) that they didn't have a machine to check the money? I'm sure that I was passed these in taxis at night, at least the 50 and the 20\. So if everyone is checking for these, and everyone knows you can get stuck with fakes how would anyone dare pass one?! There aren't that many of us stupid white suckers taking night taxis in town are there?!And in a related note, just this week, [China Observer](http://thechinaobserver.com/?ref=silkroadintl.net) (a great blog, by the way) was saying that "[you can't counterfeit a BMW](http://thechinaobserver.com/2009/03/luxury-consumerism-in-china/?ref=silkroadintl.net)." Wrong! You can. Shuanghuan did. [They got sued.](http://www.china.org.cn/business/highlights/2008-07/01/content%5F15916765.htm?ref=silkroadintl.net)[](http://silkroadintl.net/blog/wp-content/uploads/2009/03/2008-shuanghuan-s-ceo.jpg?ref=silkroadintl.net)I even sent pic's of the first one I ever saw to friends in the US 2-3 years ago. I couldn't believe it. So, Ladies and Gentlemen, the [Shuanghuan "CEO](http://www.flickr.com/photos/architektur/1360575760/?ref=silkroadintl.net)." Copy of the BMW X5. Here's [more on other Chinese knock-off cars in Europe](http://www.roadandtrack.com/article.asp?section%5Fid=15&article%5Fid=6765&ref=silkroadintl.net). And to no one's surprise, the CEO is a complete "[safety disaster.](http://www.autospies.com/news/Chinese-quality-disaster-on-the-Shuanghuan-CEO-at-the-Frankfurt-Auto-Show-X5-look-a-like-20934/?ref=silkroadintl.net)" The CEO is currently [banned in Germany](http://www.motorauthority.com/bmw-sues-chinese-carmaker-over-x5-clone.html?ref=silkroadintl.net) but [still legal in Italy](http://wot.motortrend.com/6399969/government/shuanghuan-wins-case-against-bmw-will-continue-to-sell-ceo-suv-in-italy/index.html?ref=silkroadintl.net) and of course in China too. (S-CEO image from [MotorTrend.com](http://wot.motortrend.com/6399969/government/shuanghuan-wins-case-against-bmw-will-continue-to-sell-ceo-suv-in-italy/index.html?ref=silkroadintl.net))[Another](http://www.zhongnanhaiblog.com/web/articles/354/1/The-mysterious-nearly-undetectable-100-Yuan-notes/Page1.html?ref=silkroadintl.net) couple of blogs on [fake money](http://www.zhongnanhaiblog.com/web/articles/364/1/Fake-RMB20-notes-found-in-circulation/Page1.html?ref=silkroadintl.net#postedcomment).The real point of all of this is this: if money and cars can be copied, why not your widget/art/design? The answer is: It all can! You need to take all the precautions you can to protect yourself BEFORE you starting passing around files/samples in China. If you're sending samples to 10 factories for bids and then only have the one factory you choose to work with sign all the NDA's and other contractual agreements what are the the other 9 factories going to do with your samples/art? Work with lawyers in both your home country and China before you come to China. Get agreements signed and chopped before you send artwork/samples. Maintain a regular presence in the factory that has your information. Remove the molds/tooling that you paid for when your project is completed. ### QC Blog URL: https://www.silkroadintl.net/qc-blog/ Last updated: 2026-07-12T07:58:27.000Z “I have your salary envelope right over here; you can take it when you go.” That’s what he said to me over tea just before I left his office to QC the product. Of course, I didn’t take it. I didn’t even let them buy my lunch. And I don’t smoke or drink so they were a little flustered when I rejected their product and they couldn’t think of anything else to offer me. Unfortunately, this wasn’t the first time this had happened. And it certainly won’t be the last. But it brings up an important issue—QC integrity. Do QC get bribed? Of course they do. It’s a naive to even ask. We have fired more QC people in the last 7 years than people we have hired and fired in all other positions in all our offices in three countries combined. Bribes may be as small as a lunch with a nod to getting a less-thorough inspection or as big as a few thousand Yuan cash pay-off to approve bad product. But every single QC is offered something almost every time they make factory visits. I personally have been offered cash, free product, meals, nights in hotels (with “service”), massages (with “service”), bottles of imported alcohol, packs of smokes, European chocolates and airplane tickets. (The chocolates were the most tempting.)So the question really should be—who’s paying your QC (the most)? The answer better be you, or you’re not getting the quality that you’re paying for. (Here’s a [great article](http://www.smartchinasourcing.com/china-product-quality/do-qc-inspectors-get-bribed.html?ref=silkroadintl.net) talking about the some numbers and some of the more formal ways you can confirm with you QC and the factory that your QC are not taking bribes.)Now when I say “who’s paying your QC the most” I don’t mean that you need to match every offer they get or that you need to be paying your QC way above market prices. What I do mean is that you your complete package and working environment better be good enough to retain the best workers and your system better be smart enough to be able to deal with the bribes in the system. Here are some of the other things that we do to ensure good QC.1\. Have a very clear policy in place for offenders. We make very public examples of our firings when we have proof that QC have accepted bribes. Face is a big deal, and the loss of face it a warning to others in the company that we will not stand for this type of behavior.2\. Do as I do. If you’re constantly going out to dinner with factory owners (even if you are the owner/buyer of the product) while you’re on QC visits you are blurring the lines and will not be able to defend your own actions if your get in an argument with a QC guy. When you are doing QC do NOT ever go eat with the factory owners. This will be really hard for factories to understand since you are a foreigner and their client. But you can be very clear about which hat you are wearing which day, if you want too. One day you are the potential buyer/client. A few weeks later you are the QC—and you can be very specific about what you will and will not do on your QC visits. Factories won’t like this but they will understand and they will agree if you are insistent (kind but insistent).3\. Review your QC’s relationships with the factories and with your own company regularly. This isn’t a sit-down formal interview that is just smoke and mirrors. This is a direct conversation with both the factory and the QC about what’s going on—this has to be a conversation that the QC knows is going to happen regularly so that he is not offended or loses face by it. But you’ve got to review prices, quality numbers and QC performance publicly and carefully to try to keep bribes out of the system—this interview is as much to warn the factory as it is to keep QC people on their toes.4\. Have questionable reports looked over twice. If you get a report that is noticeably different from previous reports (so good or so bad that it’s odd) you need to have someone else go and look at the product again. Make this standard policy so that it’s not offensive and make sure that your praise people for doing things right when/if the second report confirms the first.5\. Have a 2 strikes and you’re out policy. Don’t misunderstand this. If someone gets caught taking money or approving product that is bad they are gone immediately. I’m talking about they go out to dinner with a factory even though they know they shouldn’t but the QC standards don’t change. They still need to be warned—this is not acceptable behavior. Maybe the 1 strike and you’re out is the better policy, but I like to make sure that I’m 100% correct on the facts before I fire anyone and with these types of issues, that’s hard to do.6\. Trust your QC completely—until they give you a reason not too. This is where my philosophy differs dramatically from the idea of most Chinese. Yes, I probably lose money on this point. Yes, I know that I’ve been burned a few times on this point. But I also have a couple of GREAT QC guys and some really good office staff that work harder, I think, because they know that I trust them.7\. Have a foreigner go and look at the product. Even though just being foreign doesn’t make us any more/less honest than Chinese, and even though I’ve been offered bribes before, the “foreignness” of a non-Chinese QC is often enough to disrupt the system/process. Often foreigners don’t speak Chinese and so don’t get the hints (or the factory can’t be subtle in English). Many times, the product is the foreigner’s own product and so there is no way he’ll take a bribe. We’ve even used college interns from the US for QC before—they speak Chinese, they’ll lose their school credit if they get fired/sent home early, they often are engineering or business majors and so have a real desire to learn/understand the processes and due to the short time they’re here they usually can’t see any production run more than once. Foreigners get treated differently. My QC never get invited into the boss’s office for tea or a “rest” before they start working—heck, they often never even get past the reception desk at most factories. > **SIDE NOTE:** I hear foreigners complain all the time about how hard it is to resist Chinese invitations to drink/eat/karaoke/etc. They say “I’d never do this at home but I don’t want to be rude here.” I say BS! It’s not rude to refuse a gift or a meal/drink that you really don’t want it. Chinese culture says that they have to offer something multiple times so the recipient doesn’t look greedy by accepting, so they offer and offer trying to be polite for you. So yes, you can decline and they’ll probably be relieved, to be honest. I say no all the time. I force my Chinese QC guys to do it too. So why can’t these other foreigners? I think that it’s only as hard as you make it. Really, it’s only hard to say no if you want to go but know you shouldn’t. When you’ve already committed to yourself that you’re not going to go, then saying no is easy. For example, if shellfish makes you sick, it’s very easy to tell the factory “No, I can’t eat that.” If you were on a diet, you could easily tell the factory “I can’t drink soda pop, I need to lose weight” and they’d just give you water/tea/coffee. So why is refusing a night of drinking baijiu any different? All the complaints about how bad baijiu tastes or how boring a night of Karaoke is or how much all the smoke at a bight club/massage parlor makes you sick is something that you can choose to avoid. I have NEVER in 7 years of QC been forced to do any single thing that I didn’t want to do. I have never been asked more than 4-5 times to try/eat/take something after saying no. If you say no and really mean it, in less than 1 minute it’s all over. > **General QC Guidelines**1\. Have all other factory pieces available for testing. We’ve got a new client that last year shipped in thousands of glass tops from one factory and thousands metal bases from another only to find out that despite correct art spec’s the pieces didn’t fit together! Sending the coordinating parts to the other factory could have avoided this problem before they were all shipped.2\. QC is for what has been done already not what can be done in the future. Often the entire time of the visit is the factory saying, “We can fix that.” But the QC report is about what is done now—and you need to get an accurate report of what they have done, not what they say they can do. You need this report to confirm that changes/corrections/fixes/clean up has actually been done. Often times factory managers don’t want me to record “little” problems because they “can fix those quickly.” But if you don’t write it down, you’ll not ever have the record to confirm the fix.3\. You’ve got to be consistent—if you’re not, they will not be either. If you let stuff slide that is sub standard because “it’s ok, I guess” then they will too. They will be as strict as you are. If you come in, let a few little things slide, get drunk at lunch and don’t do a great job in the afternoon they will do the exact same thing when you’re not there. And then they’ll be pissed off and surprised when you don’t accept the final product!4\. No matter how nice they are, no matter how much discount they offer, don’t every change your standards. As soon as you take a discount for a change they know that there is a price for quality and you will be offered that price for every mistake. Maybe one mistake is minor and you’d honestly rather have the discount than take the time to fix it. But taking the discount once means that that becomes the expectation. And in the future mistakes will be allowed because (if you even catch it) they know they can buy you off.5\. Try to ignore everyone in the factory—wear earphones. Like I said before, there is an excuse for every problem piece and QC visits are often just one manager after another telling me why they didn’t get it right this time and why they will next time. I choose to pick my conversations—I often wear earphones (sometimes with no music/news even playing). This way I can talk about everything that I want to and ignore the rest. 4-6 hours of QC are much more interesting with music or PTI or whatever on your iPod anyway.6\. One QC visit is NOT enough. At least three to be confident. At the very least you need to do one in-line visit at about 20-35% completion. You need to do another when it’s all done. And you need an third for packaging and container loading confirmation. I know that some professional testing companies suggest up to 9 tests/visits starting with samples and raw material test and ending with the container confirmation. I think that for many SME’s this is just too much money to spend on a small order. But you must weigh the risk of the whole order being rejected by customs (or by you) if you don’t do test/QA. Do as much as you can afford, not as little as you think that you can get away with.7\. DON’T EVER BELIEVE THE STATEMENT: “Oh, we thought you wanted B or C grade product. If we knew you wanted A grade there wouldn’t be so many rejects. " Every time that a production run is rejected for having too many major or critical issues we get this excuse. “You should have told us before that you wanted the higher quality goods.” No, if you’ve done your pre-PO work correctly, all your standards should be set out clearly and agreed to (signed and chopped) before you ever get to the in-line QA. Use your contracts. Even though no one in China will ever look at them once you’ve paid a deposit, you included all the details for a reason—and a failed QA visit is that reason. Here are some [good questions to ask your 3PQC](http://www.quality-wars.com/2009/02/09/the-right-questions-to-ask-your-3rd-party-qc-inspection-company/?ref=silkroadintl.net).Here are a few other good blogs for QA/QC information:[3PL Wire](http://www.3plwire.com/?ref=silkroadintl.net)[Quality Wars](http://www.quality-wars.com/?ref=silkroadintl.net)[Chief Asia Inspector ](http://www.chiefasiainspector.com/?ref=silkroadintl.net)MOVED FROM THE TOP DOWN TO ACCOMMODATE NEW LINKSTwo quick notes about Dongguang before the QC blog. First, a photo and note. As I was out at a factory in Dongguang today I saw lines of people looking for work [](http://silkroadintl.net/blog/wp-content/uploads/2009/03/looking-for-work.jpg?ref=silkroadintl.net)outside most of the factories we drove past. This is just one that we happened to stop in front of in traffic long enough for me to snap a quick photo. I counted 25 people or more outside multiple factory gates. I haven’t seen this since 2005. Second, a security note. Two other people (who shall remain nameless), while in a different part of Dongguang today, saw a group of people on the side of the road hack another person to death (at least they think he died) with a machete. They kept on driving, sped up even, to get out of there as quickly as possible. If you have money or are alone I would highly recommend that you DO NOT go out at night in any of the industrial areas outside of Shenzhen. This would include Songgang, Dongguang, Longgang, Bao'an, Guanlan, Shiyan, Huizhou and other areas with tons of (unemployed) migrant workers and not a lot of policing or economic development. I've seen fights, I've seen people get robbed and beaten, I've seen a woman and child get run over by large dump trucks, I've even seen a dead body on the street (at least I think it was dead), I've had family tell me about kidnappings they've seen, I've had family robbed at knife point and I've been pick-pocketed numerous times myself. I've had clients tell me about huge gang fights they've see while making side excursions in shopping malls! I even chased down and dragged to the police station two guys who tried to steal my bike once. But I've never seen anything like this before. You need to make sure that being here is really worth it for you. And if you are staying here, you need to take the security threat seriously. The risk is increased with more and more unemployed people loitering around.(Here is a [contextual update](https://www.silkroadintl.net/violence-in-context/) to the stories of violence related above--necessary since I'm getting tons of "the sky is falling emails)Now on to the QC portion of the blog (this was what I really was going to blog about today--before the other two events happened).\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_4 Feb Update: h/t to Michael S. for sending me this [Economist article about Dongguan](http://www.economist.com/business/displaystory.cfm?story%5Fid=13145129&ref=silkroadintl.net) today in response to the Dongguan stories above.\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ ### “To get rich is glorious!” URL: https://www.silkroadintl.net/to-get-rich-is-glorious/ Last updated: 2026-07-18T14:48:33.000Z **First,** It’s no surprise that [Human rights and the environment are taking a backseat to economics. ](http://www.iht.com/articles/ap/2009/02/25/asia/AS-ASEAN-Summit.php?ref=silkroadintl.net)This is point of the 3rd world’s whole argument with any US/EU sponsored HR and Green legislation—“we’re decades behind you in terms of economics, we need to feed people first and then deal with the fall out (like you got to do).” Yes, I understand the response that the ordered priorities maybe somewhat backward if we expect to have any future at all on God’s green earth. But the point is, when push comes to shove IMMEDIATE economic needs are always going to win out—whether it’s global climate legislation or arguing about the additional levels of quality of any given widget. Find where the money is and you’ll fix your problem much faster. For example… our current problem with colors in factory A. We specifically asked that our supplier make molds and print screens in a certain order. This order, we felt, would help to control color issues. The factory didn’t do it, said that our process would actually make the product color look worse. So they did it their way, despite our protests. We finally agreed (not other choice) but only if they guaranteed the color quality. To no ones’ surprise the colors are horrible. The one sample that they made using our order/process was accepted and now the factory is looking at either a large percentage of rejected final product (using their process) or paying for new molds/screens now. Of course, it’s not really an argument about color at all—it’s an argument about the cost of the molds and screens. Ironically, if they’d done it the way we asked in the first place and if the colors didn’t work, we would have had to pay for the new molds/screens and not them. But now, they are stuck—they can pay now, pay later or lose the order and return the deposit. We knew this would be the problem months ago and so when they refused to follow our processes we had them sign an additional agreement that they’d pay for the new molds/screens if their way doesn’t work. (What will really happen is they will refuse to do it right and refuse to return the deposit and we’ll end up paying for their mistakes since the order is too small to take to court. And they know it.)I’m not usually one for mandating processes as long as correct outcomes can be achieved. But sometimes, you know from experience when things are going to go badly down the line. Sometimes you can see that someone’s face (us questioning the factory’s technical capabilities and suggesting different processes) is going to have financial impacts later on. > **Side Note:** “Very Difficult” vs. “Impossible.” One of the distinctions I’ve learned to make in negotiations in China is the difference in what people can’t do and what they don’t’ want to do. If the can’t do something, because they don’t have the machines or technical ablity or time or materials then there really is only one thing you can do: (“go through their pockets and look for lose change.”) make either spec or supplier change. But the other issue is basic desire—whether for financial reasons or any other issues (and I would argue that there really aren’t any other issues) it’s just more effort then they want to spend—you have to convince or force them to see things your way. This can be tough if you’re on a timeline and have already paid a deposit—in this type of situate they know they have an upper hand. So they wait you out, not doing it correctly for a while until it becomes either too late ($) or too frustrating and you give in. Regardless of what you think the end result will be, the question "is is difficult or is it impossible?" is, I think, a very valid and useful question. > **Second,** [**Gary Locke**](http://www.nytimes.com/2009/02/25/us/politics/25locke.html?ref=silkroadintl.net)—Chinese American, former governor of Washington and now Secretary of Commerce. (You can follow the money here too.) First appointee was a faithful Democrat who got caught with his hands in the state-contract pie—this was a promised return on a campaign favor gone bad. Second appointee was a conservative with budget and business experience but couldn’t get past the political conflicts with the Obama Whitehouse (surprise, surprise)—this was an attempt to get someone who knew what to do into the right position with as little political fallout as possible. So now, we get to Mr. Locke. Locke is known for his support of Chinese-US trade at a time when it seems to be the most important economic relationship on the planet; Chimerica, as some are calling it. Necessity is the mother of invention, or invitation in this case. The word in Seattle is this (from a friend there): > “Nice guy. Squeaky clean. Honest and very earnest. The only bad thing anyone ever says about him is that he is a lightweight. I think he would make a very good Sec. of Commerce. Doesn’t really know China all that well. Doesn’t speak a word of Chinese and hadn’t gone there until he was Governor. Doesn’t really know foreign policy that well either, but overall should be good for US-China relations.” > I guess we'll see what we get. I hope that he was appointed because he knows what he's doing and not because he looks the part.25/Feb UPDATE: Here is [another article](http://seattlepi.nwsource.com/local/6420ap%5Fwa%5Flocke%5Fprofile.html?ref=silkroadintl.net) on Locke from Seattle.27/Feb UPDATE: And another look at Locke, [here](http://www.bloomberg.com/apps/news?pid=20601087&sid=aoVCORLkqr7g&refer=home&ref=silkroadintl.net).**Third, when will China see the bottom of the recession?**When Chinese learn to spend money like drunken Americans! Sure China has a big market. Sure China has lots of savings per capita. Sure China has limited debt and a government committed to say in power (e.g. keep the prosperity coming). But even with all that cash and all those people the economic stimulus package in China will do little if the Chinese people don’t spend any money. Like the banks not lending cash in the US, the Chinese consumers are not going to spend in an environment of fear. They’ve had far too many bad experience; too many political wind changes to think that they can/should just keep spending as the seatbelt lights are flashing. Of course, around the time international orders start to return and the environment gets a little more stable, the Chinese will start spending again—because it’s safe again. But for now, just know that the Chinese domestic market isn’t going to save anyone.**And, finally: Congratulations!!!**To all those who voted for Obama because they thought that Bush made the US look stupid—welcome to the hot seat! There is no way that the US looks any less stupid now than we did before. And I’m not even talking about the most recent poll numbers, just the contents of the non-stimulus package. This week, leaders of at least 4 communist nations either directly or indirectly warned the US not to move toward the socialist and protectionist economic positions that were created in the non-stimulus bill. That’s right—THE RUSSIANS AND CHINESE AND OTHER MILITARY DICTATORS ARE WARNING THE US NOT TO MAKE THE SAME MARKET KILLING MISTAKES THEY MADE. How rich is that?! Here's the highlights.**1\.** [**Pres. Putin said**](http://online.wsj.com/article/SB123317069332125243.html?mod=&ref=silkroadintl.net) the US "should take a lesson from the pages of Russian history and not exercise excessive intervention and economic activity in blind faith in the omnipotence of the government.”“In the 20th century, the Soviet Union made the state's role absolute,' Putin said during a speech at the opening ceremony of the World Economic Forum in Davos, Switzerland. 'In the long run, **this made the Soviet economy totally uncompetitive. This lesson cost us dearly.** I am sure nobody wants to see it repeated.”**2\.** [**A Chinese Commerce Ministry Spokesman said:**](http://news.bbc.co.uk/2/hi/asia-pacific/7892070.stm?ref=silkroadintl.net) “China was deeply concerned about the decision by some countries to include clauses in their stimulus packages that prioritized the purchase of products from their own markets.”3\. **The Leaders of ASEAN** (Cambodia, Myanmar, Vietnam, Lao, Indonesia, Malaysia, Singapore, Philippines, Thailand, Brunei) and some Asian Finance Ministers (and China, Japan, Korea) [pledged Sunday to uphold free trade and investment](http://www.google.com/hostednews/ap/article/ALeqM5gFZZY75FeahsMX-VgRK%5F-%5FyWgNDgD96GRFN82?ref=silkroadintl.net) in the midst of the global economic slowdown. That’s right Communist, Socialist and Military Dictatorships just voted to uphold free market principles while the US plunges headlong into the recognized failures of socialism. Have you tried to have a conversation with Chinese people about the US economy lately? Tried to defend either how congress (Frank and Dodd) forced banks to make bad loans or the pork in the non-stimulus package (that no Democrat who voted for actually read) to Chinese factory owners? How about the bailout cash for auto companies and $29/hr.+ benefits-union-workers that haven’t turned a profit in decades or newly legislated programs/spending that will soon make the US dollar and the treasure bills the Chinese are buying completely worthless? Want to discuss inflation and unrepayable debt to Chinese investors? Contrary to campaign promises, stupidity has been served up on a silver platter this last month—and if you want to argue, check the markets’ reactions to anything (and everything) Obama has said as President. Yup, all down all the time, until the sun goes out. Neither Obama or the Treasury Secretary get any bump when they speak--why? Because the markets/investors don't believe them and/or know the plans wont work. All this Hope may just kill us. But hey…that would be a Change, wouldn’t it?! At least I still get an $80K tax break for living here every year….shhh, don’t tell Obama.\_\_\_\_\_\_\_\_\_By the way, comments should work now. ### Third Party Contracts URL: https://www.silkroadintl.net/third-party-contracts-by-matt-kawalak/ Last updated: 2026-07-18T14:48:33.000Z This is a post by my friend Matt Kowalak, on a topic that just about everyone exporting from China has questions about--What is a Third Party Supplier/Service Provider actually responsible for? This a question that comes up in many of the New Buyer Seminars that I teach for Global Sources. The contracts and disclaimers from sourcing agents, 3PQA or Testing Labs are so explicit in what they exclude that you can question if you're actually paying for anything at all. I'll let Matt explain what options you may have.\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_**Third Party Contracts**Third party contracts cover a side variety of topics that concern people doing business in China. These types of contracts involve;• Contracts of carriage, a contract where you (A) have a shipping company (B) deliver goods to a client (C).• Some types of insurance contracts where you (A) purchase insurance from a company (B) payable to another company (C).• Third party inspection contracts where you (A) hire a company to inspect goods (B) from a supplier (C). What are the obligations of a third party? These contracts are specifically different from contracts in which a task is delegated (subcontracting). These types of contracts are those in which a third party is added to a contract to perform a responsibility or a part of a contract. Under Chinese Law, you are still responsible to uphold your obligation. So, who is to blame when things go wrong? What happens when a shipping company refuses to deliver goods to your client? When an insurance company refuses to pay a claim? When a line of products that were inspected results in a massive recall? In situations where the third party refuses an obligation or performs their obligation in an unsatisfactory manner, what course of action can you take? Unlike the Common Law system in Hong Kong, in which consideration, compensation, must be made before a contractual promise becomes legally binding. In the Chinese legal system, even an orally made promise can be legally binding, as long as the three conditions for making a legally enforceable contract are met. Those three conditions are,1\. The person must have capacity (mentally sound and of age)2\. The person must have intention (no duress or forced conditions)3\. The promise must be legal (no refunds for your illegal drug mules)As long as these conditions are met, any promise that you make can be considered legally binding. So what are the implications for third party contracts? If the intention of the two parties is to place a legal, contractual obligation on a third party and this intention is accepted by all three parties, then the wronged party has a legal claim against the third party. This means that you have a claim against your insurance company for not paying, against the inspection company for failing to inspect properly and against the shipping company for failing to deliver the goods as agreed to. The next time you are finalizing a deal make sure that your intentions are clearly expressed. What are each of the parties’ individually responsible for? What are their obligations? What are the remedies in case anyone should fail to perform in a satisfactory manner? It is better for you to decide ahead of time about the solution to a problem rather than rely on a judge here to take a guess.**Performance of Contract**What are your contractual obligations? How do you know your obligations and what they mean? When you sign your name on the dotted line, it is very important to know what you expect of the other party, but it is also very important to know what your obligations are as well. Besides writing about the specifics of your product, when putting a contract together it is important to remember to note the specific time that something is supposed to happen, the place in which it should happen and the specific price. If you fail to make sure that this is clearly expressed in your contract, Chinese contract law states that you must use the state or industry standard or the market price. So if a supplier ever tries to intentionally keep the exact specifics of a contract fuzzy in the slightest, beware. These “industry standards” become terms of your contract and you may be held liable for failing to uphold them. And they will probably not be the standards that you expect them to be!**Negotiating in Good Faith**Good Faith, this may seem like alien concept to anyone who has spent a long time in China. Many experienced businessmen go into every negotiation expecting the other party to promise you the moon, stars and the sun packaged just the way you want. Those of us who have been here for a while tend to distrust anything that we can’t see, touch or any promise that “the check’s in the mail”. Believe it or not, when negotiating in China, both parties have a legal responsibility to do so “in good faith”. Good faith is a bit of a bailout clause in Chinese Contract Law. If anything is ever unclear in a contract in China, Article 60 of China’s Contract Law the principle of good faith provides for implied terms, including “giving notice, providing assistance and maintaining confidentiality in accordance with the nature and purpose of the contract”Again, the point here is that you must be sure that these terms are expressed clearly in the contract, so that these implied terms, which are probably about as clear as mud, do not become obligations that you need to fulfill. For the most part, Chinese courts have decided that expressed terms will usually trump implied terms.\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_Matt Kowalak has worked in manufacturing related positions in Shenzhen for the last 5 years. He studied Chinese at Shenzhen University and is currently an LLM student at The Chinese University of Hong Kong. For further business questions or consulting you can reach Matt at sasinopaths@gmail.com. ### Q & A about Importing into China URL: https://www.silkroadintl.net/q-a-about-importing-into-china/ Last updated: 2026-07-18T14:48:33.000Z This is a conversation that I had with a friend who is considering getting involved in importing into China. Since I get some variation of this question a few times each month, here's my response. (Original email first.) > Hey David,I am really interested in importing some stuff to China, I have a solid contact in South America that can help me to import several items. I think that it is a good opportunity but so far all of my experience in doing business in China has focused only on exporting from China.From what I have read, importing \*\*\* into China is something that is very difficult to do; there is a high import tax, clearing customs is a pain and there can be huge delays, I also heard that the son of the President of ABC, a large American owned importer, was detained for customs violations.That being said, the potential for growth with items in China has to be better than trying to sell anything to Europe or America. \*\*\* seems like an easier bet, and there seem to be quite a few people interested in purchasing imported \*\*\* here in China.What kind of advice can you offer about how to get started?Teaming up with an importer seems to be the only way to get started, I think that we would have to sell to them and just avoid doing any distribution at all. I have several friends that are buyers but I think that we have to work with an importer, even if I have a supplier and willing buyers.What would my next step be moving forward? How should I approach an importer? > **My thoughts:**First, importing opportunities. I’ve mentioned this a couple of times in the past few years on my blog: I think that this is a very viable option for the future and a great opportunity for any company that is willing to do the initial DD and then stay the course. China can’t support itself and it doesn’t want to and so there will be fewer and few restrictions on bringing things into the country as the economy expands. It’s only going to get better for importers. Right now for importers is like the 90’s were for exporters—a bonanza if you’re hooked up the right way. More on that in a minute.**Why it’s good.** Despite the recent downturn, which will not last forever, Chinese have now and will have in the future more and more disposable income. This is the most obvious reason that people capitalize on when they think of importing into China—and they have been thinking this for 200 years. There is money, Chinese save 30% or more of their incomes. There are markets for mainstream Western products that are not developed yet in China. And there is a real lack of extensive distribution of imported goods across the entire country. Not only do Chinese have money (and will spend more as the economy recovers) they want the quality that comes from foreign brands. Name brands in the US or EU are, in general, popular either because they have better design and/or quality than domestic goods (even if they were manufactured here). In general, Chinese goods lack both of these characteristics. Quality is what people with money want—from clothes to furniture to cars to food. And, they’ll pay more for it. Long history of successful products/business in the West gives bands instant credibility in China. On the other side of the coin. The milk scandal really brought down the Olympic nationalism a couple notches. People openly admit now that they trust foreign brands more than domestic ones. It really hurt Chinese pride and subsequent buying habits (for those with enough money to choose). And these are the people you most likely want to target. You couldn’t buy better press for foreign goods than the milk scandal and the fact that the Beijing govt has now let the FDA set up an office in Beijing. For my money, the growing economy and the milk scandal are probably about 6’s when compared to the need for face. I don’t say this as a a knock on Chinese, but if you read “[Elite China” by Pierre Xiao Lu](http://www.amazon.com/Elite-China-Luxury-Consumer-Behavior/dp/0470822678/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1235013698&sr=1-1&ref=silkroadintl.net) (and I strongly recommend that you do BEFORE you import anything), you’ll see that the numbers agree. Once Chinese have money, they want to spend it on items that give them visible face (conspicuous consumption). Yea, and they want quality too...but face is first and quality is often an assumed given with foreign name brands. If we’re talking about imported items there are a few things that can happen. One, no one will know what it is, but it’s imported so it has some face value to it just because it’s foreign. Of course there are significant marketing barriers to overcome with this (the marketing it is a whole other issue). Or second, it’s a recognized foreign brand and you have a prepared market. Choice is becoming more and more an option for all of China and not just the rich on the east coast cities. Chinese are more and more internet and marketing savvy and realize more and more that they have choice. Choice means feature shopping and not just buying whatever is available. More foreign brands can now compete here precisely because Chinese shoppers are looking for options to meet their specific needs. And since face is such an issue choice doesn’t lower prices as much here (yet) as it would in the US. Until China produces consistent quality products to rival western goods, imports will be able to stay ahead of the price curve (as least relative to their domestic competitors).**Now for the bad news.** Why importing is really really scary. First, distribution. Many foreigners think of China as one big country like the US. It’s not. It’s much more like Europe—a federation of different countries (provinces), each with their own standards, boarders (tariffs), laws (taxes), and requirements. Not to mention that China is HUGE both in terms of population and geography. Finally they don’t’ have the free flow of goods like the US or the domestic infrastructure to make commerce as cheap/efficient as the US. Negotiating China is a nightmare, as importers have found for the last two centuries. Just because you’re successful in SZ doesn’t mean that GZ or SH or BJ or CD will even want the same items even if you can get them there. North China and South are different countries, culturally. Eastern and Western China are different countries economically. The first and second tier cities are years ahead of the rest of the country in levels of education. Distribution to regional chain stores and/or ones own retail outlets then is vastly more complex than getting goods from a couple of factories out of China and into a DC in the US. DO NOT UNDERESTIMATE THE NEED FOR A (VERY EXPENSIVE) PARTNER IN DOMESTIC DISTRIBUTION. These guys know their value, they know the law and they quite frequently take advantage of foreign partners. Danona Wahaha is example #1. One of the horror stories that I hear from folks at some of the larger chains that have regional and national distribution is that a lack of good quality trucking across provinces kills margins, destroys product and adds significant costs to even the simplest products. Stuff shows up damaged, rotten (perishable goods) or regularly missing a significant percentage. Insurance is impossible to collect and losses are then just part of the equation. Add into this the high fees and salaries (bribes and pay offs) that many importers are paying not only to domestic partners but to customs and provincial boarder officials and the price of going from Shanghai to Ningbo can double. We have issues like this regularly as we ship components from one part of the country to another for fulfillment. I personally know people who have been jailed for driving specific goods across provincial lines—not even dangerous/illegal stuff either. Finally, if you do manage to get things in and you do start making money the very next issues you’ll have to deal with are first, paying protection money to either the police or local gangs to keep your retail front “safe.” And second, if there is money to be made, you’ll be knocked off. Congratulations!**Recommendations.**• Read Xiao Lu’s book—no matter what you’re importing. ([My review](https://www.silkroadintl.net/elite-china-luxury-consumer-behavior-in-china-book-review/))• Find a trust-worthy partner. Take the time (months) to do DD on this one. This one person, more than anything else you do, could sink/steal/make your business.• Pick one region or one domestic distributor to start out with. China’s big, don’t get greedy.• Build some serious guanxi with the port and regional officials that you’re going to be using.• Plan on staying in the market for at leat two CNY holidays to see if you can really make it—remember, 40% of all annual luxury sales happen over this vacation. Good luck! Let me know what you think and what happens. ### Sorry, it's not only as bad as the news is saying...it's worse. URL: https://www.silkroadintl.net/sorry-its-not-only-as-bad-as-the-news-is-sayingits-worse/ Last updated: 2026-07-18T14:48:32.000Z I know that I was complaining that Obama was predicting world destruction and had no hope the other day. And I don't want to add to the doom and gloom crowd. But that doesn't mean that people should be seeing silver linings where there really aren't any either. According to some, I won't mention any names, since the CBD’s of most of China’s large east coast cities are still humming along with traffic, full coffee shops and English classes the economy is not really so bad after all. US news rags are actually saying "China got it right. " Individual parrots are saying “My English classes are cram full—so it can’t be that bad.” Or “Downtown \_\_\_\_\_\_\_ is still full of people, traffic, etc.; I don’t see any down turn!”I think that this overly-optimistic reading of the tea leaves is both short-sighted and naïve. I’ll be honest, if I was only doing business in the Shenzhen CBD—only teaching English or going to Starbucks or even working in a large office building I’d probably agree—"Hey, it doesn’t look that bad at street level. I mean, lay-offs here are minimal and I still see about the same number of people eating lunch every day. " I’ve even commented before that over CNY and even before, the shopping malls are indeed relatively full of shoppers. But it’s quite a leap to conclude that because Starbucks is still in business the entire Chinese economy is still moving right along. Here’s my two cents. First some context. I’ve been in at least 15 different factories in the last 45 days, my QC in another 20+. Different industries, different cities, different target markets. Regardless of the factory location or industry, we’re all seeing and being told the same thing—no one is running anywhere near 50% capacity. Even the smart factories that spent last year buying up closing competitors’ equipment are hurting for orders. Electronics are dead. Toys and furniture are going or already gone. Garments and textiles have slowed down significantly. Factory managers and sales people that are still around are openly worried they won’t be able to pay for the cars or apartments or their kids’ schools that they committed to back in ’07 or early ’08. Every factory rep, to a man, has told me the same thing this year, basically: “well, it’s not good, but I’m still here.” (You know it’s bad when face-conscious Chinese are telling you they’re having a hard time.) Now this isn’t empirical and it’s not even real numbers, but it is the real situation for more varied types of industries than is a quick survey of shopping malls. (for numbers see this post by [The Financial Times](http://www.ft.com/cms/s/0/65599c38-f6e1-11dd-8a1f-0000779fd2ac.html?ref=silkroadintl.net) or this commentary by [China Economics Blog](http://china-economics-blog.blogspot.com/2009/02/asia-its-dependence-on-trade-and-crisis.html?ref=silkroadintl.net). > **Side note:** The FT article above makes a small but very important point that I think that almost EVERYONE is missing in the discussions on China—it’s just not that big, relatively speaking. (At least not yet.) The US economy is HUGE—so huge that with all the trillions of dollars of loss in the last year it’s still the largest economy in the world and more than double number 2—and, no number 2 is NOT China (it’s Japan). China’s economy, with 1.3 billion people, is roughly the size of Germany’s who has just over 80 million people! The amount of poverty in China is both a drag and a hook—its 200 million people living on USD$1 a day or less means that it’s still a very poor country. But the annual growth numbers and the (now 300 million strong) middle and upper classes have been inspiring the dreams of entrepreneurs for more than a century. What China really has is an economic paradox that both sides of the “China will save the world” debate use to support their positions. For example: State planned capitalism; A combination of huge cash reserves and corrupt banks; Massive industrial potential and thousands of bankrupt state enterprises; millions of people saving 30% of their income and tight limits on the flow of investment cash out of the country. A society that likes conspicuous consumption but hates spending money. Tons of labor but very low levels of education for most people once you get past management. Cheap labor but rising costs of living. > So just in case you still believe that it’s not so bad here, let me tell you. It is. (Rude email preempt: No, I do not get any joy in this—I live here. My in-laws and friends are here. My employees and their families are all here.) Anyway, here’s the reasons for my take:The cities are not a most accurate judge for the economy for a number of reasons. For one, the lack of funds keeps people home, in this case Chinese people didn’t go home for CNY en masse like they usually do. They save the money and spend it locally instead. So cities look like there is little change—that would explain the slight % bump in retail sales in Jan too. Besides, CNY always skews things. This one holiday can be 40% of some retail shops annual income. The return of CNY also marks the new enrollment period for many night schools. People are either not making as much and/or not working as many hour as they were last year so English or accounting classes are way to fill up evening hours and get a leg up. Remember Chinese people save money—they typically have cash on hand they can use for this type of thing. The fact that there are still 10 million people or more in every big city says nothing about the economy. These people still have homes, kids in school, commitments, (lower) paying jobs, etc., just like they did 6 and 12 months ago. The migrant workers (that you didn’t see on the streets anyway) are the ones that have gone home and stayed home. Not the middle class apartment owners. Cars are not the economy. Yes there was a flurry of new car sales in January. There is every CNY. And, remember housing sales going up in LA last quarter of last year? Yup, just like everywhere else, Chinese people know a good deal when they see one. That doesn’t mean the economy is improving, as the CA govt will attest to. Chinese people have cash savings, the Chinese car market is significantly over supplied due to last year’s downturn, there are multiple government and industry incentives to buy now, and there is almost completely free credit available to people with assets. (Can you see this leading to a repeat of ’98? Me too.) Finally, I’m willing to bet that because of CNY January’s numbers will be an anomaly (never underestimate the power of face). Stats are lies. Remember, China ranks next to Myanmar and North Korea in terms of transparency. As I’ve said before here, the social implications of the presented (as opposed to actual) numbers are at least as important as the actual numbers themselves. This is historically true in China specifically and in socialist countries in general. The numbers are worse than reported, guaranteed. > **Side Note:** A stats example. The recent stat that Guangdong province actually had a net gain in new business registrations over the last year (+38K businesses) doesn’t explain why there are lay-offs to the tune of tens of millions of more workers than the govt expected over the same period. What’s the answer? No, it's not a robust economy. I’m guessing it's an increase in companies set up tax shelters (fake companies), unemployed individuals setting up their own trading companies and factories changing their company registrations/names to avoid debt payments and collections. > Out in the countryside it’s not any better either. There are a lot of workers (tens of millions) that went home and are still home—they don’t have any place to go back to. There’s no work—and they are going to start protesting if they don’t have anything in in the next 6 months. 12 months ago factories in Guangdong province couldn’t pay people enough to stay and work. Now, there are lines for every single job. There are groups of (laid off) workers waiting at the gates of most industrial parks. There are fights to be first in line when a factory posts a new “help wanted” posters. Workers that had their pick of jobs and options last year are taking just about whatever they can find now. Internationally China is the tail, not the dog. The domestic economy has not become the world’s savior as had been hopped. China is still export dependent and export markets rebound AFTER the other import economies recover, not before. That means that there must be a significant and sustained up-swing in international orders before the Chinese economy shows signs of recovery. Further, as I’ve said before, China’s domestic economy is NOT big enough to suck up the exports or the jobs supporting the exports that are now disappeared. China is also no longer importing consumer goods or parts for export from other Asian neighbors either. As demand in the final export markets drop so does the trade with China it’s neighbors—worsening the situation rather than helping anyone. And [the conclusion of some](http://www.chinastocksblog.net/2009/02/12/exports-tumble-as-china-enters-deflation/?ref=silkroadintl.net) is that China is going to get worse before it gets better. There may indeed be pockets of growth, of good fortune and of positive economic news, but China in general and Guangdong in particular are not those places. I don’t want to be a wet blanket, but I’d rather be surprised with better than expected options/numbers than be crushed by unexpected bad news. ### What’s China like? Which one? URL: https://www.silkroadintl.net/whats-china-like-which-one/ Last updated: 2026-07-18T14:48:33.000Z I’m always amazed at the question: “So what’s it like in China?” It’s like asking: “So what’s it like in the US?” Would that be LA or Chicago or Miami or Podunk Utah where I grew up? The question is usually phrased something like this: “I saw this documentary about China…is it really like that?” Or “My friend went there once and said it was \_\_\_\_\_\_\_\_. Is that true?” My parents came over to visit in '07 and they were honestly relieved that I didn’t live in a quanza hut. I live in SZ—12 million people, most money and education in China, no buildings over 30 years old, more BMW’s and Benz’s than bikes. Not to be outdone, I got some great questions from the Chinese during this latest trip home for Chinese New Year: “Do you know Joe? He’s from New York. He taught me English.” Or my new favorite: “Really?! Black people are Americans too?!” And, of course: “What’s the weather like in the US?”In case you didn’t know, China is big. Huge in fact. Bigger than the US in terms of total geographic size (and population too, of course). Because it’s so big there is no way that you can answer the question “What’s it like in China?” without asking a question back:**Which one?**Finally, I’m reading a book that gets this too. Actually, there are lots of people that get this, but for some reason, none of them are writing books (or speaking English, apparently). But Jasper Becker is on the proverbial ball. His book, ironically named “[The Chinese](http://www.amazon.com/Chinese-Jasper-Becker/dp/0195149408/ref=sr%5F1%5F2?ie=UTF8&s=books&qid=1234342904&sr=1-2&ref=silkroadintl.net),” is about just this very concept—there are many many Chinas. Just like there are many different versions of the USA. You can read my review of Jasper’s book next week when I finish it—but for now, know that I’m quite enjoying reading about the various different China’s from Jasper’s perspective. Another book that specifically gets this concept but sets it out in a generational perspective is [Elite China](http://www.amazon.com/Elite-China-Luxury-Consumer-Behavior/dp/0470822678/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1234342939&sr=1-1&ref=silkroadintl.net) by Pierre Xiao Lu ([my review](https://www.silkroadintl.net/elite-china-luxury-consumer-behavior-in-china-book-review/)). I too define my Chinas more by the people that are there than the physical places. I could, I guess, say there is urban, semi-rural, very rural and tourist China. But that’s more a description of buildings (or a lack there of) than of China as a social place or even an experience. I will say that there are some great places to go in China too—only one city, Beijing, would ever make my list of great places, though. Other spots I've enjoyed include: Huangshan, Huangguashu falls, Guilin river, Juizaigou National Park, and of course the obligatory Terra Cotta Warriors and Great Wall. But for the money, I’d rather eat in Bangkok, or take photos at Ankor Wat in Cambodia or sleep on any beach in Southern Thailand. But don't tell my wife I said that. Anyway, back to “What’s China like?” today. “My China” at least. I am living in or at least involved in at least five very different Chinas. The upper-class urban elite China. The Chinese/foreign mixed subculture. The white-collar professional China. Factory China. And finally recently migrated but still very connected to the countryside China.**Urban Elite China.**The Urban upper-class China is materially similar to any other large city’s movers and shakers. Not that I’m a mover and shaker, I'm connect here by association only, but my (foreign) income standards certainly put me in the upper levels of wage earners here (but not in the US). To be honest there is a TON of money here—or at least a ton of conspicuous consumption. Either way, there are a lot (meaning 10’s of thousands) of people spending hundreds of thousands of dollars more than I am every year in Shenzhen. For example, we have in our parking garage more BMW’s, Benzes, Jag’s and Lexis’s (Lexi?) than Hondas or Toyotas. We have multiple neighbors and friends that own multiple apartments here and in other cities—apartments in Shenzhen’s CBD still go for $400K for a 120m2 apartment. And Chinese people don’t typically get a mortgage or a car loan—they pay cash for houses, cars and jewelry. These folks made money as factory owners, landowners who sold out at the right time or got out of the stock market at the right time. A lot of these people are second-generation money in China—many have either overseas experience/visas or at least have kids now studying or immediate relatives overseas. These aren’t the buy-one-name-brand-luxury-bag/watch-a-year type of folk. These are the Tai Tai’s that have each bag of the LV line each season. These folks would be upper middle to upper class people in the US. They are making at least $40K a year--bottom end. Maybe 4x that along with other investments. It’s estimated that there are about 100 million of these folk in China. > **Side Note:** Foreigners, for all the complaining that we do about living in China, are absolutely given differential treatment. [Most of the time.](https://www.silkroadintl.net/foreigners-not-welcome/) We are treated better than others, we are given automatic face/social status probably higher than deserved, we are forgiven for most social faux pas, we are assumed to be well educated/knowledgeable, and are basically pampered and taken care—service that usually only the rich get. > **Expat China.**Which brings me to the second China that I live in—the China of expats and of mixed racial marriages. You could argue that these are two different Chinas in and of themselves, and you’d probably be right. But for here (this is another long post), we’ll just lump them together. The expat world is not really China. I know, that totally contradicts what I said above about generalizations concerning China, but it’s such a shallow and limited section of the pie that it’s really more like living in a suburb of Chinatown in LA than China. Yea, most expats interact with Chinese each day. But the Chinese that we are interacting with are of only three types: service providers (maids, nannies, drivers, waitresses), Chuppies (Young Chinese Urban Professionals) that speak more English than most expats speak Chinese, and finally, maybe some relatives if they have a Chinese spouse. This is the life of private schools, multiple household servants, gated communities and imported western culture/shopping/dinning. And all of this life is in English. At work each day I deal with Chinese—professional, college educated or at least managerial level Chinese. But my social life is almost exclusively foreigners. I can’t talk college hoops, bands/movies from the 80’s, (American) football, or even religion with most Chinese. Politics gets old and contentious too quickly. I spend a lot of time with my in-laws and my wife’s friends, but I don’t socialize with them. There is a reason why there are Chinatowns (Little Saigon, etc) in Western cities and why expats tend to congregate in the same areas here too. I would guess that less than half of expats here, with or without a Chinese spouse, speak Chinese. I don’t care how rich non-speakers say there experience is, they can’t fully know what’s going on without speaking Chinese well (better than me). For context, think of it like this: How much of American culture would you miss if you were not fluent in English? Why is speaking Chinese any different? It’s not. If you don’t speak Chinese you don’t know how much you don’t know. Period. I do almost all of my factory business in Chinese. Probably 1/2 of my office work in Chinese. I can watch movies in Chinese. I can read some parts of a daily paper. I can follow the stories on the TV news (not that I want to, but I can). My Chinese good, not great (because I don't read well). But it's to the point where I now know that there is so much that I’m missing that I didn’t realize before. The Charlie Brown adage is true: The more you know the more you know you don’t know. Interestingly, if you want to go shopping or go to cultural events, I'd call the wives of my expat friends before I'd ask any of the Chinese I work with. These ladies know what’s up (what else are they going to do?!). Best places to shop for art, furniture, western food, best places to take your kids. Concerts, libraries, free stuff. The wives in the foreign community know TONS more than their Chinese-speaking businessmen husbands and more than most local Chinese too.**White Collar Professional China.**The third China that I live in is the White Collar Urban Professional China. Because I speak Chinese I interact with professional sales people, managers, accountants, lawyers, and other service folks pretty regularly. These people are VERY well educated. Very competent. Very bright. Very motivated (by money). They are increasingly skilled in jobs that were once exclusive to expats. They drive their own (nice) cars and own their own homes (outright or with 5-8 year mortgages) and make it a point to have iPhones, Starbucks mugs on their desks, LV bags, Omega watches, etc. They make ½ of what their counterparts in the US make, but they save more, live better and have no debt. These are the young professionals that work for multinational companies. They are the ones traveling abroad. Their kids will be the next generation of overseas-Chinese students. This is the China that you find in the CBD of Shanghai, Shenzhen and Beijing. They are very similar to their counterparts in Hong Kong, Bangkok, and Taipei. They work long hours for financial incentives. They change jobs easily. Their loyalty, as it should be, is to themselves and their immediate families. They are not selfish as much as they are calculated. They are wise in a system that rewards only those who plan, yes even scheme, for the future. Increasingly this Chuppy China is becoming “China” that the world sees through the class/race-envy press of the West. Classic example of media fear mongering: The world is flat. What’s the point of the book? American better get it in gear (I agree) or you’ll lose your job to Chindia (don’t agree). Think about the logic here—there are more well educated Chinese than ever before, the playing field is not level, so of course, if you’ve not lost your job yet you soon will. I think that a gargantuan leap of logic which completely ignores billions of other factors that keep people, jobs, companies and money in the US.For example, the 300 million Chinese living on less than $1 a day didn’t get mentioned in the book. Neither did the fact that while much can be outsourced to China, this group of professionals is not taking pieces of a sum-zero pie as much as they are creating a larger pie. Of course the current US stimulus bill shows that we Americans are collectively stupid enough to kill ourselves without China’s help. So Friedman may be right by default. Anyway, back to the Chuppies. These folks are smart, opportunistic, nationalistic, and not afraid of the West or foreigners. They are certainly a very valuable asset to any business here—if not the most valuable. But don’t count on any of them sticking their necks out for radical ideas or to save someone that is not directly tied to their social mobility. This country may be socialists. The culture may be collectivist. But there is no "team" in China. But there is an "I". This is the Chinese that many foreigners deal with. It starts in Hong Kong at a show or even in the airport and continues through the 4-5 Star hotel, the chauffeured drives to factories and the elaborate dinners with factory owners/managers. If you’re here on an expat package this is the China that you’re interacting with on a regular basis. Import stores, international brands, large(r) homes, inflated social importance and stature and young professionals that either aspire to or are actively participating in the same lifestyle.**Factory China.**The fourth China that I’m part of is the factory workers. Not floor workers, whom I don’t interact with much, but engineers, managers, QC people and some admin folk at various factories. These guys (mostly guys) are older than the Chuppies by 10 years or more. They are less educated but have TONS of bitter life experiences. I know factory owners that built their own buildings. I know a manager that walked from his home province as a teenager to Guangzhou to find work. I know more than one manager that is the first person in his family to own a car or to take any classes post junior high. These are the guys with the best (most interesting/horrific) stories of the past 30 years in China. They have money but are not well educate and don’t live in the cities. They are, I guess, the salt of the earth kind of guys. When you are bargaining with a factory—these are the guys that are making the decisions on the price of your project. When push comes to shove and you need something fixed, these are the managers that you’ve got to deal with. Their China is a mix of unbelievable opportunities and caution due to years of hard times. They typically buy domestic name brands, have multiple generations living together close to or in the factory where they work. They expect their kids will become the next generation of Chuppies and drive them unmercifully to perform in school. This is a China that, I think, impacts more of what gets sent to the West than any other version. They literally control the production of everything in China—whether for domestic consumption or export. This China, the autocratic managers, the late night drinking binges, the hard-nosed negotiators, the nationalistic-manager, the father of two kids in the best schools he can afford, the facilitator of gifts to government connections, this is the China that no one talks about but really should, I think. But this China isn’t flashy like the second-generation money in the cities or the Chuppies in the glass office buildings. They aren’t the pitifully poor in the National Geographic photos. Nor are they the uniformed line workers whose photos make all the Western news rags.**The Rural to Urban Transition China.**Finally, the China that is fluctuating between the city and the fields. I get access to the rural half of this equation via my family connections. It’s a world that I never imagined really existed outside of the pages of magazines until I spent time there. This China is what you thought about when you were told “eat your veggies there are starving kids in China.” Well, those kids are grown up, working in Shenzhen or Shanghai and going back home each holiday to dark houses with no plumbing in small villages across China. Once you’re back into the ancestral homes you realize that there aren’t just different Chinas but completely different planets. The rural half of this China is what keeps domestic China going. Similar to the middle aged managers that left the countryside two decades ago for the factory cities of the East coast, the little villages and towns all across China feed the nation. They are also the bodies in the factories that labor to manufacture everything. Really, everything. When these young people graduate from high school or a local college and leave their village homes and head into the cities for work they usually start at the bottom, in the jobs that we barely recognize—line workers, shop workers. With luck and hard work they can move up into the Chuppy group or the Factory Manager group within 10 years. I’m probably going to get a bunch of hate email saying I’m overly generalizing and/or being racist. But this is really what my answer is to people that ask: “So, what’s China really like?” It’s not an easy answer. If I’ve spent the last week in factories it’s a much different answer than if I’ve been in Shenzhen in the office for a week or on a vacation to an historical hot-spot or even on a family trip back home to Jiangxi. Everyone that works here has a similar set of answers, if they really think about it. If you asked me this same question while I was teaching at a University in Sichuan in ’95 or at a cram school in Taiwan in ’99 my answers would be completely different—still not a single answer, but the groups, the Chinas, would be totally different than what I see today. Ditto for my answers from my missionary or grad school periods in Thailand. I really believe that what you think of China is significantly colored by who you interact with more than where you physically live. If you live in a hole, and I did in Sichuan for a year, it can be livable, even good if you have some people that you love to be with. If you work with professionals and have a couple of maids and chauffour it's not the same China as 10th generation dirt farmers. But it's all still China. ### Post CNY Review--Thailand, China and the Hopelessnes in the US URL: https://www.silkroadintl.net/post-cny-review-thailand-china-and-the-hopelessnes-in-the-us/ Last updated: 2026-07-18T14:48:33.000Z Feb 6 UPDATE--Like I said. "6.8% growth might as well be 0. " And guess what? It [actually was](http://www.forbes.com/feeds/ap/2009/02/06/ap6016640.html?ref=silkroadintl.net) (more [here](http://www.google.com/hostednews/ap/article/ALeqM5j1FZRNA%5Fnf7XY7YePH-Od-tdunFAD965VE081?ref=silkroadintl.net))!\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_I purposefully tried to avoid Asian news for the CNY Holiday. A change is as good as a break, right? It was nice to spend some time both in the US, at shows, and in a little Chinese village to gain a perspective other than President Obama’s Depression forecasts. Back in the saddle, while discussing the recent events with a number of other friends of mine with connections to Thailand we commented on the fact that for Westerners the single most under appreciated or misunderstood concept in Asia, in business or politics or otherwise, is probably the concept of face and the corresponding reciprocal social relationships. In Thailand, the library of academic literature is overwhelming on this—and current politics support it all. A bit further north, I’ve read about a lot of theories about motivations for business success in China, but there isn’t one that, I think, is more powerful than the issue of face. Sure the desire to be rich is a driver for everyone. Yes, people want to be both safe and provide for their next generation. Conspicuous consumption of wealth, which is a superficial express of the larger “face” concept, is certainly a motivator for many. Even nationalism has been, more so in the past I think, a minor motivator to getting rich. (I don't see nationalism really motivating many anymore, without a actual physical threat. In China the hatred for Japan is dying. The Olympics are over. Many, especially in China’s cities, certainly no longer see the West as evil; East-coast China just isn’t that oppressed any more. And those in inner-China never really cared.)But back to face, I usually get a major lesson in face a couple times each year. Just when I’m feeling comfortable here, I get hit with a comment or an issue that puts my business (or even personal) interests in direct and glaring conflict with someone else's face. Often times it’s one of those “Ah ha” moments where I finally see through the circular logic and see that the central issue is not what I’ve been focusing on (usually the bottom line of time or money) but something more personal, for lack of a better term. What’s going on in Thailand is not that simple, to be sure. But so much of what is happening now is the continuing retribution for the loss of face and power from Thaksin’s (certainly corrupt) reign earlier this decade. It seems that in the past 6 months, if we’ve learned anything, is that what’s best for Thailand is not necessarily what either faction really wants. Not that Thai politics are unique in this regard, but in Thailand it has become blatantly obvious that “restoration” of the pre-Thaksin power structure, in the Name of the King, is the singular priority for much of Bangkok’s elite. From the continued inept handling of the unrest in the South, to jailing of foreign authors (who printed 50 and sold only 7 copies) for les majese, to the in ability to resolve boarder issues with Myanmar and Lao, to boarder slap-fights with Cambodia, to the military hauling refugees out into the middle of the Indian Ocean and leaving them, to the physical occupation of the BKK airport, there seems to be no limit to the willingness to sacrifice what’s best for Thailand for political and/or economic advantage. Really, if you want to get into the heads of your Asian counterparts, study their motivations—focus on personal relationships and responsibilities that may seem extraneous to “business” interests and you’ll start to understand what is driving business on the other side. This isn’t a criticism or critique—it’s just how it is for many many people in East and Southeast Asia. One last comment on Thailand. I’m willing to bet that there will be blood in the streets of Bangkok after the death of the King and sometime before or within the first year of the reign of the Crown Prince. He is not liked or trusted and does not have the resume of his father. He is coming into power at a time where the perfect visage of his God-King father has been cracked for the first time. And very publicly too. His mother has alienated half of the country with her attendance at the funeral of the boy killed in last year’s protests and so much of the (generational) respect and good will she could have passed on to her son will now not transfer. His beloved sister, not the Prince himself, manages the Thai-China relationship, arguable Thailand’s most important relationship now. The country, very similar to the US, is now divided into distinct and very polarizing camps but does NOT have a history (despite their Buddhist roots) of peaceful dissent or conflict resolution. Thailand has over and over failed to implement true independent government and judiciary. There is, unfortunately, no reason to think they will be successful on their next opportunity either. Now on to China and the debacle that is Western governmental economic policy. If you didn’t know it before, don’t believe the press coming out of China now. China will NOT save the rest of the world (and not because we are committed to destroying ourselves in the name of “hope” and “equality” either). Mr. Hu is pretty flashy on the world stage in Europe this week, but let’s put his pride into a bit of context.6.8% growth is certainly much better than the US retraction of about he same 6%+ to be sure. But the US economy, even with the permanent loss of trillions of dollars of wealth, is still more than three times as big as the Chinese economy and with only 1/5 of the population. The US lost the equivalent of the Indian annual economy in one day last fall and was still twice as big as Japan. I don’t say this as mater of pride, but just as a matter of context—the US economy for the last 50 years has, in general, been mind blowingly huge. I think that we just take this for granted. The Chinese economy was at 6.8% for the 4th quarter of ’08—but that might as well be 0\. Why? Because anything less than 8% spells social unrest. And you know the books are cooked to make the numbers look better than they really are too. CNY this year was quite at home, in Jiangxi, and much busier in Shenzhen—meaning people didn’t go home. There was no traffic on our cross province drive either. Other indicators: Higher numbers of laid off labors than expected. Exports are down 40%. Luxury goods purchases are down 30%. Auto sales are down up to 20%. Expenditures for Chinese New Year are estimated to be about 30% of last year’s total too. This is CNY spending is nothing to shake a stick at either—typically CNY represents as much as 40%+ of many industries annual income! How do luxury stores that are empty all year survive? CNY.The Chinese economy, rather than being a savior, is actually dragging down other export-oriented neighbors like South Korea and Hong Kong. The NYT ran a class/race envy piece this week talking about how 400 rich Chinese people couldn’t tour the US to buy houses on auction and how Mainlanders were pouring into HK to buy gold and diamonds—no numbers, just cute stories. But not only is this just the annual CNY story that we see from the uninformed US press every year, but the “flood” of mainland buyers into HK didn’t even make up for the drop in spending by local HK buyers. Total sales of gold and diamonds are down over 10%. That’s right—hundreds of millions of rich socialists couldn’t out-spend 8 million capitalist former English colonists. Two can play the spin game. > **Side Note:** Let me say this, if I had to praise one leader, either Mr. Hu or Mr. Obama, for the handling of the crisis so far, my vote, hands down, goes to Mr. Hu. Mr. Hu is specific and proud and has knows how to at least play the role of leader (i.e. sounding hopeful, positive and optimistic). Who is writing the text for Obama? Could his press conferences and public statements be any more dire, negative and (ironically) completely HOPELESS?! I understand Obama’s need to manage expectations, but his words and positions so far not only lack of faith in America but come off as classless, boarder line dishonest, political to the hilt and certainly not helpful (unless you are trying to justify more govt spending…..hmmm). > So is the Chinese Economy going to continue to be slow or get better? Growth in ’07 was 13%. ’08 is expected to come in at around 9% and predictions for ’09 are ranging between 5% to 7.5%. Even the Chinese government doesn’t have enough cash to raise their growth numbers 2-3 percentage points with public works projects. But I will say this, the very impressive thing about China is the fact that they will keep themselves afloat, at all costs. Give them props for having their priorities straight and their financial house (mostly) in order. China will continue to be in positive numbers, but scarily low for controlling social unrest. And the numbers will continue to be higher in print than they are in reality. The Chinese people will, in the East continue to make less and less in comparison to 5 years ago. There will be HUGE movements of industry into the inner provinces as experienced workers stay home and infrastructure and incentives improve. If the recession in China, e.g less than 7% growth, continues into 2010 there will increasingly be more control exerted over the economy and especially international exchange and funds transfers. Control of the media and the currency will continue, regardless. Of course, currency manipulation always helps one’s own economy and numbers and that will continue. Now I’m not saying that China's currency manipulation is the reason for the US economic problems, but the artificially strong currency is certainly helping ONLY China. So here's a challenge to China: If there truly is no currency manipulation by the Chinese, Mr. Hu, then why not let the RMB float? If Chinese officials are truly so confident about the strength of the RMB, then put the Yuan where your mouth is, Mr. Wen. Take the lead of the world economic recovery, prove once and for all the dominance of the Chinese system. Step away from the mic and let the economy speak for itself. Regardless of the value of the RMB, the sad reality of China is that domestic strength in the Chinese economy simply does not translate into external stimulus for Western Economies. Sure the Airbus deals make a small dent, but these orders are not the bulk of foreign transfers of wealth or FDI—something that China is not known for anyway. Chinese do save 30% of their income, but you have to remember incomes are relatively low—middle class in China is $9,000 to $18,000 a year. 30% of that is nothing, even if you do multiply it by 200 million. All this money is either saved in mattresses or spent locally—cars (mostly domestically manufactured), houses, and Chinese New Year gifts of food, clothes, jewelry and entertainment. The Chinese economy is not like the US where EVERYTHING you see in your local Wal-Mart is imported from some other country. Finally, my favorite quote from a Chinese friend this last week: “Obama is crazy! He’s just copying what China used to do. He’s trying to be socialist.” Yup—can everyone but Americans see this? What prompted this comment? The news about the White House wanting to limit CEO bonuses for bailed out companies—“just like what China did with their SOE’s,” said my friend. The unspoken reality of socialism, that Chinese willingly admit but westerner academics do not, is the fact that socialism makes everyone equally poor, not equally rich. Where are the China SOE’s and their employees now and where will US companies (banks, auto manufactures) be in the future? Either completely dead, sold to for-profit foreign businesses or losing money just to keep people employed to stop social unrest. Hello, France! Just because China has cash now and the West is a huge mess does not mean that socialism works. In fact, I think that China is Exhibit A for socialism NOT working. If you think that China in socialist in anyway but in name, you’re wrong. “Socialism with Chinese characteristics” is not socialism. It’s a capitalistic totalitarian state—the best of both worlds; money and power with minimal (relative to 30 years ago) social responsibility. The US is now trying to both gut capitalism and increase governmental social responsibilities at the same time—even if you are fine with this direction, please tell me who’s going to pay for it?!And here's a reward for reading that whole thing (or at least scrolling down to the bottom)! America is now China’s “business bitch.” Listen to “[China Please](http://www.headwatersmb.com/pages/festiveaudio.php?ref=silkroadintl.net)” for a great laugh (unless you’re from Taiwan, then you probably won’t like some of the lyrics)! The page automatically starts playing the first song on the play list--China Please is the last song--just click on the text.**Other News and Blog Links I found interesting this week:**[Asia Sentinal](http://www.asiasentinel.com/index.php?option=com%5Fcontent&task=view&id=1689&Itemid=185&ref=silkroadintl.net)[CFR](http://www.cfr.org/publication/18371/what%5Fopec%5Fteaches%5Fchina.html?breadcrumb=%2Fregion%2F270%2Feast%5Fasia&ref=silkroadintl.net)[China Wall Street Journal Blog](http://blogs.wsj.com/chinajournal/2009/01/23/bribes-and-transparency-on-chinese-holidays-a-primer/?mod=rss%5FWSJBlog&ref=silkroadintl.net)[CN Reviews](http://cnreviews.com/?ref=silkroadintl.net)[China Solved](http://www.chinasolved.com/blog/?ref=silkroadintl.net)[China Supertrends](http://www.chinasupertrends.com/?ref=silkroadintl.net)[China Vortex](http://www.chinavortex.com/?ref=silkroadintl.net)[For sale in China](http://www.forsaleinchina.co.uk/blog/?ref=silkroadintl.net)[Caijing](http://english.caijing.com.cn/2009-01-20/110049795.html?ref=silkroadintl.net)[CFR 2](http://www.cfr.org/publication/18342/chinese%5Fdevil%5Fwears%5Fprada.html?breadcrumb=%2Fregion%2F270%2Feast%5Fasia&ref=silkroadintl.net)[Asia Times](http://www.atimes.com/atimes/Front%5FPage/KA22Aa01.html?ref=silkroadintl.net)[The Economist](http://www.economist.com/world/unitedstates/displayStory.cfm?story%5Fid=13031019&source=hptextfeature)[BBC 1](http://news.bbc.co.uk/2/hi/asia-pacific/7836854.stm?ref=silkroadintl.net)[Asia Times 2](http://www.atimes.com/atimes/Global%5FEconomy/KA21Dj08.html?ref=silkroadintl.net)[The Economist 2](http://www.economist.com/opinion/displayStory.cfm?story%5Fid=13024576&source=hptextfeature) ### The China Price, by Alexandra Harney--BOOK REVIEW URL: https://www.silkroadintl.net/the-china-price-by-alexandra-harney-book-review/ Last updated: 2026-07-18T14:48:32.000Z This is a great book! In [The China Price](http://www.amazon.com/China-Price-Chinese-Competitive-Advantage/dp/1594201579/ref=sr%5F1%5F4?ie=UTF8&s=books&qid=1232689697&sr=8-4&ref=silkroadintl.net) Alexandra Harney has documented all of the stories and rumors that you’ve ever hear about manufacturing in China and delivered them in a captivating and easy to digest format. But its not just the details that are fascinating—the human stories are equally as captivating. Harney clearly defines what manufacturing in China costs the local people, the environment, governments, consumers, economies and of course laborers in China and international businesses. She, to her credit, daringly exposes many of the secrets of manufacturing in China—uncovering the unspoken secrets, lies and deals that make China the manufacturing behemoth that it is. This book should stand along side other great books on China, like: China Business Etiquette, Inside Chinese Business and One Billion Customers as the MOQ of required reading for those planning to do business in China. Contrast this book with others that have similar goals and you will find no comparison. Books like The Coming China Wars (complete crap) can’t compare in terms of analysis, research or readability. Finally, this book resonated with me on both a personal and professional level. I learned much about my wife, who moved from Jiangxi to Shenzhen in 1991, from reading about the factory girls that successfully moved up the corporate ladder from ranks of line worker ultimately to college-educated white-color professional. This isn’t just a book about business it’s the true story of millions of Chinese workers. I highly recommend this book! ### Finding Work in China, Part II URL: https://www.silkroadintl.net/finding-work-in-china-part-ii/ Last updated: 2026-07-18T14:48:33.000Z Here’s what I’ve been telling people about starting a business here.**First, you have to really understand what China means for you.** China is not competitive in commodities. China is not competitive in small qtty’s. China is not a billion people just waiting for (enter-your-brand-here) because it’s a poor country that only wants something (other than money) from the West. While there are certainly culturally specific rules about working (successfully) here, the laws of business, in particular the rules of due diligence, still apply in China. To be honest, China is probably a waste of time/money for many small companies when costs, mistakes and shipping are figured in. Really. Unless you know what you’re doing here, China will kill your bottom line and production quality. For example, I have a client that we just did some QA for (and rejected the order, by the way) who has been trying for over a YEAR, on his own, to work with a three Chinese suppliers to get stock, not custom, but stock items, to meet the suppliers own sample quality standards. Back at home he’s published catalogs and offered product that was either late or sub-standard or both. Sure, the product he’s order from here is cheaper than what he could get from local distributors—but what is a year worth? What are a shipment of bad products and untold numbers of disappointed clients worth?**Second, if you’re going to commit to China, do it completely.** No half-assed jobs (queue Sherry Bobbins). This is an issue that we have with many first time clients and an issue that I talk about with buys at shows a lot. The bottom line is this: are you buying a product or two from China or are you establishing an office in China? More people than will admit it are trying to do ½ of both, thinking they’ll save money. These ½ and ½ companies have a “local” here that they pay (in cash) to keep things going for them. They fly in and out 4-6 times a year. About ½ of what they get out of China is right and the rest is “tolerable” but not quite right. They don’t have a registered office but they are doing more than a couple of projects and more than a couple of different product each year here. If you’re coming to trade shows and buying a few times a year, great. If you’re opening up your own office (even if it’s just with two people), great. But being in the middle, hiring people “off the record” passing business cards with a Chinese phone number and address but no registration is not just illegal, it’s asking for problems. How are you going to go after a supplier that breaks their contract with your pseudo company? How are you going to defend yourself when your “employee” leaves with your computer, clients and factory contacts?**Third, have someone on your team that is 100% against going to China—they make great balance for your enthusiasm.** It’s vital that you have someone checking your China plans. China is risky and someone that is not sold on the whole China venture is necessary to help you (or whomever is pushing the China agenda) take off your blinders and see those risks for what they really are. Many people are so excited about China (the prices, their first trip to a huge factory, how nice everyone was) that they forget that among East Asian countries China is just above Myanmar and North Korea in transparency.**Fourth, If you ultimately do decide to set up here pay someone to do all registration for you so you can focus on #1\.** Just hire an accounting firm to do all the legal work for you. As I mentioned [here](https://www.silkroadintl.net/starting-your-own-business-in-china-some-additional-comments/) before, they are professional, they do it all the time, they are reasonably priced, and unless you’re writing a book about red tape it's unnecessary and so much easier on you. Once you get the initial registration done they can do all the annual re-registration and all the quarterly taxes for you too. These are not some guy at the train station with a briefcase or a taxi driver offering connections. I'm talking about hiring a real company with hundreds of similar clients--there are scores of them in Shenzhen alone.**Fifth, on the other hand you can unnecessarily talk yourself out of China if you try.** I’ve talked with a number of people who knew that they should be here for the sizes of orders and prices they were dealing with but just couldn’t pull the trigger on moving over. There was always something: “there’s no transparency,” or “the engineers are not experienced enough,” or “nothing is ever on time,” or whatever other excuses you can think off. These are all true issues with China, yes. But the rest of the world can deal with it, rather successfully too, so suck it up. Don’t stay away from China because it’s not the US or Western Europe. Thailand, Malaysia, India, Mexico, Russia, Argentina, Brazil are not either. I’ve talked with a couple of people that were just amazed that anyone could make money here. There seemed to be so many reasons with every order and every plant that they saw that they were sure China was just an over-hyped money pit. It is. But that doesn’t mean that you can be on the receiving end of the money. And that doesn’t mean that just because others have problems that you will too (OK, you will, but if you know what’s coming you can avoid/resolve them, right?!).**Sixth, set up a company/bank in Hong Kong.** Not only is HK a great break from China is you are not quite sinocized yet, but HK contracts are enforceable in the mainland, banking services are much better than in the mainland, there are fantastic legal, professional and logistical services that understand the both the West and China, and HK was also just recently named [the world’s freest economy.](http://www.forbes.com/reuters/feeds/reuters/2009/01/13/2009-01-13T063931Z%5F01%5FHKG114503%5FRTRIDST%5F0%5FHONGKONG-ECONOMY-HERITAGE.html?ref=silkroadintl.net)If for no other reason than the banking, you should do it. For example, there are offshore and other banking options in Hong Kong available through HSBC. Many of the big HK banks have overseas offices in many cities all over the West. And online banking in China still really sucks. We’ve got at least three different banks with online services and none of them are as good as the services offered by my local credit union back home in Podunk Utah. The USB keys are clunky and don’t always work. Wrong password entries have to be reset by PHYSICALLY visiting the branch that issued the key and showing ID. Nuts.**Finally, if I was going to start a new business in China I'd be looking to *import* things into China rather than export things from China.** China (the government) and China (the people) have cash. They save. They buy luxury goods, cars and houses with cash. They don't used credit cards (like we do in the West). They are afraid of domestic quality goods and they want the status that comes from imported brands. I know that, in particular, luxury goods sales are down 30% to 40% but they are still a growing market that, after this year or so, will be pretty exciting again. Remember, there are a 300 million plus middle class in China that want more than what they are used to. Specifically, I'd be interested in food and health products, education and children's goods and luxury brands with name recognition and history. Good luck. ### Finding work in China URL: https://www.silkroadintl.net/finding-work-in-china/ Last updated: 2026-07-18T14:48:33.000Z Since Thanksgiving I’ve had 4 people call me about working with SRI or information about new jobs elsewhere, two people talked with me about starting their own companies and a couple others talk with me about networking for other work options. I also met in the airport a new couple just moving over to SZ for new jobs. After the first couple of guys called, I realized that I should be collecting the ideas that I was sharing for a future post. Here’s what I’ve been telling people about finding work here. I'll put the corporate ideas in Part II.First, if you want to work in China, you need to be in China. I’ve heard that finding a new job is a full time job in and of itself. I agree. And how effective is working in China from the US? Less effective, right. So if you’re looking for work here you need to be here. If you’re here you can talk with people that own companies, that are doing projects, that are employed by the companies you want to talk with—you see these people at church, at Starbucks, at the supermarkets, at the schools, at local pick-up ball games, etc. You don’t’ meet these people at home in the US.Plus, if you’re here you can start building your own network of factories and friends and resources for your own future business success. I know more than one guy that had one small project from a neighbor or friend back home and work that first and then another little project and another and pretty soon was doing multiple jobs a month—“pretty soon” is certainly relative; I think it means “a year or so.”Second, Do you want to be in Asia or be in “x” profession? This is the question that I faced personally about 20 years ago. I wanted to be in Asia more than I wanted to do any specific job. I did grad work in Thailand and started working there in ‘97\. I lost my job in ’98 when the economy crashed and had to rethink what I wanted to do. I still wanted to be in Asia, so I left translating/consulting for oil and telecom companies in BKK to teaching 4th graders English in Taiwan? Why? Because I wanted to learn more Chinese and stay in Asia. I spent two years doing that. Then I moved back to Thailand and eventually China with SRI. It was certainly a different career path than some, but in difficult economic times, it was what I could do to achieve my long-term goals of working in Asia. I don’t’ regret it for a moment. Third, what’s the goal of work? Make money or be happy? In my book, work is for money and the rest of my life is to be spent pursuing happiness. This doesn’t mean that I want a bad job that physically hurts me or doesn’t give me any time off. But it does mean that I’ll do jobs (like teaching kids English) that in the short term really kind of suck but pay the bills and, most importantly, teach me skills and give me opportunities. More than half the battle of success, I think, if being in the right place with the right skills AND being willing to jump into the opportunities when they arise. Take a less than ideal job, learn, network, and pay the bills while you actively search for something else. Then leave for something better when you get the chance. Fourth, network, network, network. No secret here. Talk with everyone. I’m amazed at how many people I meet at the airport or on a vacation home or playing ball that need something from China or know someone working in China. And if you’re here, and going to the right spots, you’re going to meet even more. Don’t be afraid to ask for business cards, interviews (for advice, not jobs) or introductions. The worst that can happen is they can say no. Fifth, Jump, but have a parachute. When I left a good paying job for the chance to start up my own company I jumped in with both feet. From the perspective of the first couple of years, the landing was rough. But from a much longer perspective, it’s getting better all the time. So keep your end goal in mind, even when the chips are down. My parachute was a partner that reigned in my enthusiasm. We worked great together because I wanted to jump after every opportunity and he couldn’t seem to quite get over the edge on anything that had much risk. The balance, the give and take, made it both safer and more profitable for both of us. Maybe your parachute is your parent’s basement apartment if it all goes south in 6-8 months. Maybe you’ve got a client already that you can subsist with while you get other things going—I know that I lived on a credit card an $150 a month for more than a year when we started up. Maybe it’s going back to school if you’re attempt doesn’t work out. Just make sure you have that option to either stick it through on a shoestring or get out without hurting yourself or you family. Remember any landing you can walk away form is a good one. In this case, that means that if you learn something, don’t die or get divorced it was probably a good decision. Sixth, pieces are as good as a whole. Maybe you still think that you’ll get a single job and it will be the career your father had—same industry, maybe only one company change in 30 years. Don’t count on it. When I graduated from college in ’95 I was told to expect to change INDUSTRIES 5 or more times before I retired. I’m sure that recent grads are told to expect even more than that today. So take small jobs on the side, if it’s OK with your employer, and do things that you like or that you think will improve your stock for the future. Maybe you’ll be translating for one company, teaching for another and managing projects for folks you know back home all at the same time. Eventually one of these part-time gigs will turn into the real deal or will give you the contacts you need for a better job. Part Two--What I'm telling people about setting up a business in China. ### Expecting the Unexpected, Part II URL: https://www.silkroadintl.net/how-to-expect-the-unexpected-part-ii/ Last updated: 2026-07-18T14:48:33.000Z The much anticipated part II:**6\. No one can control Chinese workers around national holidays.**Despite the iron fist that most use to control their workers the rest of the year, Chinese New Year is the exception. Workers rule with their feet. They leave when they want and come back when they want. With a real labor shortage here for the last two years most workers know that they will have jobs waiting for them when they get back. Whenever that maybe. And, if there still work too close to the holiday, many will just leave. While the three big holidays are now changing into 1 big holiday and a number of other little breaks like the rest of the world, Chinese New Year is still the biggest deal. Imaging having summer vacation, Thanksgiving and Christmas all in the same 10-day period and then x what ever traffic you can imagine by 100% and that’s CNY.This year, we’ve had a number of factories tell us that if we didn’t have our orders and deposits in by Dec 31st then they wouldn’t take them until after CNY because everyone would have gone home (because they had nothing to do). Some factories are already on holiday. Many will leave as early as this week. Some start this weekend. Most start next week sometime. But no one will be back before February and many won't be back until the 15th. For some reason, it seems that CNY is always a big shock to everyone every year. Hello! It’s annual—you can plan for this. Sure, it follows the lunar calendar so it's not a fixed dates but Easter and Thanksgiving back home move each year too and we still manage to get those right. This just takes some planning—admittedly, factories often don’t know before New Year’s day when their CNY breaks will be but you can (and should) block off the two weeks surrounding Chinese New Year months in advance each year.**7\. Everything NOT specifically detailed in the contract will be charged back to you or substituted at the lowest possible cost by the supplier.**This isn’t Chinese, it’s everywhere. That’s the point of contracts, right? But in China it seems like there are myriad expenses and millions of variations in component quality that you’d not even think existed let alone you’d need to specify or contract. The problem here is that often you’re not asked about unspecified details, they just plug in the cheapest option (and maybe charge you for better). So this problem, like most of them, really turns into a communication and presence issue rather than a contract issue. Possession is 9/10ths of the law and that’s how it works here too—if you are here, if you are seeing it, talking about it, watching it—you get exactly what you expect. If not? Someone else with different motivations/agendas is making decisions about your money and product.**8\. Build in extra time for every stage—even if it pushes you past your deadline.**Add extra time into EVERYTHING. Even if it’s something you’ve a number of times before. Especially if production schedules are near any holiday or during typhoon season. You think I’m joking; I’m not. Typhoons along the coast always give us at least one delay a year. If the factory is telling us 20 days, we say 23\. If the shipper says 16 days we say 21\. If the United States Post Office says two weeks, we say a month and a half. (Don’t ever send anything to China via the USPO. If it ever does get here, it’ll be crushed beyond recognition, it will have been poked, prodded and “customed,” it will cost you an arm and a leg even if you’ve already paid for it on the other end—and that’s if they don’t loose it first!). The most difficult times to schedule out are sample times. Don’t ever ever ever commit to a delivery date if part of the time includes time for samples. Especially if the product is a first time item that has never been made before. Factories are notoriously overly optimistic in what they can do and foreigners are notoriously trusting of what people say. That’s a bad combination if you’ve got to get product into Wal Mart within a 24-hour window. Even simple adjustments can take weeks (there’s a reason you’ve never seen your idea before—chances are someone thought it up but couldn’t pull it off). Another thing that we see foreigners do often, never to good ends either, is to assume that since general production times at large Chinese factories are overall so quick that late changes to “one little thing” will not make any difference. WRONG! Even the smallest of changes, if not specified prior to production starts can cause days or weeks of delay. Materials are bought, cut, printed, dyed, molded, painted prior to final assembly and if you change one piece, the color of a molded part for example, you may delay the entire assembly line while they remix paint/dye or while they remake the entire piece because it was all ready all painted.**9\. Either specify up front or fix it later.**Similar to the situation with art and contracts, if you have specs that you’re not totally, well, specific, on then you’re going to have to fix it or change it later. No if, and’s or but’s about it. If there is a dimension or measurement that you’ve not specified someone else is going to have to guess. And you have no clue who that someone is, what their experience is or what their motivations are (Cost? Quality? Timely production?). If you ever think, “oh, this is just obvious, I don’t need to spec it out” you’ve actually just added a delay, a cost increase and probably an argument into your project. Way to go!**10\. Double confirm that you are talking about the same thing.**Unless you are sitting in the factory yourself, there is really no way to confirm that you both talking about the same things. Cameras and art are great, but not everything translates like you expect. Taking a train/plane/taxi for a couple hours to sit down with the factory for a morning is worth the cost—unless two to four weeks of digital communications and a(nother) round of incorrect samples is your idea of a good use of time. Really, talking face-to-face will save you weeks—not days, not hours but weeks. But you absolutely can’t be here to double check yourself then make the factory describe back to you what they are doing. Make them commit, in writing, to the updates/changes/next steps and get a date and responsible individual for each item. Just because you sent a sample, a set of digital spec’s and even CAD or other 3D files doesn’t mean that you are all talking about the same thing nor does it guarantee that, even if you are talking about the same thing, both sides each what the other side is talking about. The more you double check, the less you’ll have to pay for when mistakes are made later. It’s just that simple.**11\. Assume that everything will NOT go according to plan and plan accordingly.**You will not get samples on time. You will not get colors, packaging and art correct the first time. You will not get the quality you thought you were getting the first time. If you know this going in, life is much less stress full later on. So plan on problems and you’ll be happier, more prepared and have the time/temperament to deal with them.**12\. Anything less than a signed stamped “YES” is a “NO.” And even a contract is only as good as the verification/enforcement.**You know contracts don’t mean much here. So if the contract is the beat-all end-all of legal documents why would emails, MSN chats or Skype notes be enough to convey production changes? Hint: they’re not. Like anything else, you first of all want to see it in writing to confirm that it’s both received and understood. Then, second, you want someone that is actually responsible (for more than their sales commission) to confirm that the changes/updates are received and understood. And finally you need at least one, not more, people to confirm what change the change/update will have on both price and production time. Sales managers or reps are not the people that can give you these assurances. They will agree with just about everything you ask for, unless you ask for a signed commitment from them—then they will have to go talk with a manager (which is whom you want to talk with anyway). It’s a small thing to have the sales rep get a manager to sign off on changes/updates, but it can make a huge difference in what you eventually get/pay for. So get all commitments signed, stamped and faxed back to you. Now you'v got it signed, they confirmed it's going to happen. You're safe, right? Nope. You still need to verify that everything is actually done like it was agreed to. Good luck! ### Expecting the Unexpected URL: https://www.silkroadintl.net/expecting-the-unexpected/ Last updated: 2026-07-18T14:48:34.000Z We’re back! No, we were not on vacation for all of last month. Not all of it, at least. We’ve actually been so busy that I’m wondering where the depression I’ve been reading about is. Really. Back in SLC, the stores, mall parking lots, theaters and restaurants were so full that we had to adjust evenings out and shopping trips because seats and parking spots we’re completely full/sold out. I was thrilled to see this. And I’m so glad that, while it’s certainly bad out there, it’s nice to see that it’s just the media that is making it worse—meaning it’s not as bad as we read about every day. Also, I was told that a couple of interviews I did in November were on the CBS Evening News (with Katie Couric) in the US last month. Twice! December 1st and 11th. Thanks for letting me know, CBS. I’ve got a link to [one of the clips here.](http://www.cbsnews.com/video/watch/?id=4680032n%3fsource=search%5Fvideo&ref=silkroadintl.net) Nothing for the other one, though. A little bit of a story here. I interviewed with CBS on camera for 20+ minutes each at of a couple of locations and there was a ton of factory film footage too. I spent 6-8 hours total with them over two days. All that for 5 seconds! I guess that means I’m still due 14 minutes and 55 seconds more of fame. Now for the real blog. We’ve had a number of issues that have come up in production during the last month that individually wouldn’t be huge deals, but collectively they really begin to add up. Not all of these problems happen on every project, of course. But they are common enough on many projects that you’ve got to be aware of the potential for these to pop up at any time. If you don’t know that these things could potentially happen to you, you’ll be caught of guard and the surprise can be almost as bad as the problem itself. So, to help prep for impending issues (which WILL happen, you can count on it), here are some of the common avoidable "surprises. "**1\. Price changes will only make your price go up (except for shipping).**This isn’t as crazy as it sounds. Typically, factories pre-buy a limited amount of product, as do local distributors. When prices are going up, they bid out to you the new, higher price, before it actually hits them since they don’t know when you’ll actually pay a deposit. The reverse is true when prices go down. Since they economy slowed way down many suppliers have been left with stock in their warehouses—expensive stock at that. Now that gas prices are back down they are still holding on to stock that they want to sell first. So the drop isn’t as fast as the rise. The only real exception to this is international shipping, which seems to go up and down just about as fast as other market prices. The answer here is to know as much (or more) about the costs of component parts than your supplier. This may not be worth if for small pieces or small orders, but for anything over $25K you can probably save yourself 1-2% and that’s certainly worth it. An easy way to do this is to bid out the same item with multiple suppliers. You’ll be able to tell what your price should most likely be by throwing out the outliers on both ends.**2\. Mistakes will be your responsibility.**This is probably the most irritating part about doing business in China. No one is responsible for anything that has to do with “your” product. For example, we had a factory bid on a product, totally spec’d out, with material samples and photos. They gave us a bid and we placed an order. Then, just today they came back and said: “Sorry, we made a mistake. The cost is 30% more and there are dye fees for each of the colors (21).” They refuse to eat the costs of their own mistakes despite the fact that we have a contract and PO and have paid the deposit. Or, rather, it’s because we have all this in place already that they can just give us an ultimatum. Why? Because they know that the order, for less than $10K is not enough to go to court over. And we need it as a component in a larger product. And we’ve already paid a deposit. We’re committed and they know it. This is the worst kind of mistake. Productions errors you at least can talk about and often, if you’re on-site, can even fix on the spot. But this type is just something that comes out of left field. Something that can’t be verified and leaves you with few if any options but to pay. I swear that people stay up nights thinking up these types of issues just to make a buck or two.**3\. Delays will be your responsibility (unless otherwise contracted against).**Same as with the costs of mistakes, if you don’t plan for delays, they will be a major hurdle to you completing your project on time. Everything is late and so up front we always build in a buffer for each item. But sometimes you get a component supplier that is just killing you on time and slowing everything down. I’m not talking about big orders. Again. This is little stuff—$5K to $10K worth of component parts for a larger project. My experience is that if you’re not willing to go to court over it then you have very little leverage. This happens MUCH more with our Southeast Asian suppliers than it does for us in China. Honestly, one of the good things about China is that so much of what we do is so close to Shenzhen and can all be done in huge capacities in relatively short amounts of time. The key to keeping things on track is to get not just finish dates but process dates and then to (independently) confirm them. Was raw material delivered on time? Were molds delivered on time? Did production start on time? You should be doing in-line QC anyway, so you’ve got a least one day when you’ll be able to see where the supplier is in terms of production goals. But verification (best way is in person) is essential to getting things done on time.**4\. Art and designs will be changed unless you are involved in the process.**If you are not involved in every step of the mold or (re)design process be warned that production will NOT match art. As far as I can tell, this is due to three factors. Engineer’s ability/experience, willingness of the factory to really do what you want, and material or technological limitations. If we fly someone over from the US we can almost always get exactly what we want—and the factory usually learns a few tricks in the process. If we are asking for a lot of molded items within a short time, we get cut corners. But even simple stuff like the placement of text on printed cards can be “adjusted” by local suppliers, sometimes not on purpose. Often if factories are not using the same software (version) as the US then the fonts or placements will not be the same over here. Last month we were offered a molded sample of “our” new designed product that was the same general shape but nothing else matched. Turns out, they already had a mold from a previous client and just thought that they could pass that piece off on us as our since they were relatively similar. There is just no better solution to this problem them being here. We had a client that asked: “should we send art for factory engineers to work with on their own or should we come over and work with them directly?” No contest. If you’re spending money you should be intimately involved with how it’s spent. We bring engineers and designers over to work with factories many times each year and outside of a few issues of food poisoning, we’ve had great results—much better than if we had just passed along spec’s and waited for product.**5\. Extras and rejects will be resold to others and/or recycled into your final product.**Your exclusive distributor in the EU calls you one day and says “Hey, we’re going to end our agreement with you!! You’ve sold product to another distributor!” You’re lost, confused and know that you haven’t sold to anyone else in the EU. What happened? Yup, all your production rejects found their way to market. Surprise! We’ve had a couple of people come to us with this problem. And, I’ll admit, we know that it happened to us once with a factory in Thailand too. In the normal course of production and printing you’ll have a decent % of rejects—probably a higher % than what you get in the US as process are just not as tight over here in many things. This is to be expected. And most of these will be sold to recyclers or recycled in house. The qttys are so small that they may find their way into the local Chinese markets but no farther than that. Not really a big problem. But when you have a significant % of a production run or even an entire run of products that are rejected you really need to control what happens to them. We’ve heard of people that have watch their product be loaded onto garbage trucks to be destroyed only to find out that the trucks went out one gate and rounded back to another and the product was sold to people who took it out of country and into the client’s home markets. I personally know that multiple factories that I’ve worked with sell functionally correct but esthetically incorrect product to international distributors on a regular basis. Do you really think that anyone outside of North American or Europe cares if the widget is lime green instead of forest green? Well, they don’t. Specify exactly what will happen to rejects, overruns, samples, etc. Have QA confirm it. Build into contracts that if any product that is found outside of the factory will be fined or sued. Sorry, this is getting long….so I’ll break it into two parts and post the rest later this week. Part II will included:6\. No one can control Chinese workers around national holidays.7\. Everything NOT specifically detailed in the contract will be charged back to you or substituted at the lowest possible cost by the supplier.8\. Build in extra time for every stage—even if it pushes you past your deadline.9\. Either specify up front or fix it later.10\. Double confirm that you are talking about the same thing.11\. Assume that everything will NOT go according to plan and plan accordingly.12\. Anything less than a signed stamped “YES” is a “NO.” And even a contract is only as good as the verification/enforcement. ### Happy Holidays! URL: https://www.silkroadintl.net/happy-holidays/ Last updated: 2026-07-18T14:48:34.000Z Merry Christmas, Happy Hanukkah, and Happy New Year--新年快乐! SRI"s annual Christmas gift is now available. Yes, our much awaited annual calendar and screen saver can now be yours--for free (mostly)!The screen saver can be downloaded from our [home page](https://www.silkroadintl.net/) (link on the bottom left) or directly from [here](https://www.silkroadintl.net/b.php)!The calendar can be ordered from either our China or US offices for just the cost of shipping. Let us know if you want one and we'll send it right out to you!And don't forget, as much fun as it is for us to give this to you, we want stuff too! So [vote for SRI](http://www.chinalyst.net/node/10461?ref=silkroadintl.net): Best China Business Blog 2008.Thanks,DD ### How long is your Chinese New Year Holiday and other unresolved China Questions. URL: https://www.silkroadintl.net/how-long-is-your-chinese-new-year-holiday-and-other-unresolved-china-questions/ Last updated: 2026-07-18T14:48:34.000Z This post is a collection of client questions from emails, Skype conversations and other online postings. I've left peoples names off and updated the hyperlinks and correct some spelling to make it more readable. I get these questions, in some form or another, about every week. So I hope that these are helpful general answers.**First Question: When does Chinese New Year start and how long does it last?**Typically CNY lasts about a week. Some factories only give their employees the mandatory 3 official days. Others give them a week. Some will give even more. In the past workers will just leave when they want or come back when they want knowing that there will be jobs waiting. Recently there have been millions of people not returning at all to jobs in the costal cities. They’re going home for the holiday and staying to find similar jobs where it costs less to live and they are closer to family (and certainly where the salaries are lower too). This year is different. Factories are telling us that workers are leaving earlier than usual and they don’t expect them to come back at all. The difference this year is that many factories don’t have work for them to come back to anyway. CNY for some factories may be indefinite. For others it will be 2-3 weeks as business is either very slow or getting enough people to come back and get running full-steam again will take time. If you’re hoping against hope to get your goods out before CNY, you’d better hope that you’ll have your containers loaded by the 15th of January, at the latest. CNY for many factories will last through the end of January.**Second Question: What does this email mean?!**These are two actual emails from a factory to a client. We were asked to step in and translate the Chinglish into Englese. First email: > 1.The product size we may adjust are 12.5\*7cm, this question please have not felt relieved;2\. Whether needs again to pull for you confirmed, only confirmed to David?3.Please consider the box ordinary white box printing + color to paste, color box printing, please provide a more detailed material, thanks > Second email (response to the first): > A few problems I ask you:Extremely happy you to the sample approval, the diameter I confirmed again according to the request express sample to David that, ask this time for David express sample, whether needs to pack the color box;Moreover in yours reply said SCH-RW2 & SCH-RW5 needs to pull, but you said to make the samples for SCH-RW2 & SCH-RW5 using the same finish texture as SCH800.ask is according to the SCH800 manual trace procedure,？or uses the laser to carve the even trace? You also knew the laser and the manual price difference is very far, but also please confirm, thanksIs three section color product color box printing picture all must be consistent according to the product concrete color, also is printing must make three colors the editions? > Just because someone is the “foreign sales manager” doesn’t mean that he can speak a foreign language. There is certainly as many levels of English competence as there are factories, so I can’t generalize that “all factories have communications issues.” But I will say this. If you’re not communicating in Chinese, face to face, over a shared sample, there are things that are NOT being communicated properly that you don’t know you don’t know.**Third Question: How do we get someone in China to stop selling our designs under their name?**This is a Skype conversation that I had with a Englishman about design protection in China. > C: Hi David, read your blog with interest and am looking for some help with a copyright infringement. Is that something you can help us with?D: Well, I may be able to send you in the right direction, but I'm not a lawyer. What's your question?C: We're a musical instrument company that purchases from factories in Huizhou and Guangzhou. I was at the Shanghai show in October and found another company selling a guitar with one of our designs (prints) on it. They're claiming we need to provide a registration certificate in China in order for our claim to be valid. I don't see that we should need a certificate since we can prove it's our design.D: China is a first to file country. That means that unless you've filed for the copyright, you have nothing by just "showing" first to market or original designs.C: Really! That's incredible. OK, I guess we better get on and register it then and put this one down to experience.D: Yes, you need to get registered FIRST. Even if you are the originator of the design but someone else in China files first they get the legal protection, not you. Sony, for a big example, didn't register the Chinese translation of their name here and so they now have issues with a legal competitor with the same name. I've heard that Germany is the same type of system as China, but I don't know personally. I suggest you look up the guys at [China Law Blog](http://www.chinalawblog.com/?ref=silkroadintl.net).C: OK, you've been a great help, I really appreciate it. Out of interest do you have staff skills within your organization to QC musical instruments?D: We've never done musical instruments, no. I played the piano for about 15 years and went to college on a drum scholarship, if I can be of any help.C: Compared to the Chinese we’ve been working with, you're an expert already!D: I'd be glad to contract for some QC work for you if you need it. Just let me know.C: OK, thanks, I'll be in touch. > **Fourth Question: What are the Second Tier Chinese Cities?** > David,I recently stumbled across one of your articles on [Smartchinasourcing.com](http://www.smartchinasourcing.com/?ref=silkroadintl.net).Are there lists of 2nd and 3rd tier cities in China? I asked several people in China and even they have a hard time naming them with any certainty.If you are using migrant workers (and housing them) does it matter if your factory is located in a first tier city? Would they expect more in wages being in a first tier city? How far up the chain do migrant workers usually make it at a factory? Are they always just general labor or do they advance to quality control or supervisory positions?Thanks, > My response > Good questions. Let me take a stab at a few and push to you a couple of resources for the rest.First, the Chinese govt does indeed publish a list of 1st, 2nd and 3rd tier cities. The govt’s ranking are usually based on either levels of federal investment, levels of development or population or some combination of the three. Typically Beijing and Shanghai and Guangzhou are listed as the 1st tier cities. Everything else you’ve likely ever heard of is 2nd tier—Harbin, Dalian, Tianjin, Qingdao, Nanjing, Wuhan, Hanzhou, Ningbo, Xiamen, Shenzhen, Kunming, Chongqing, Chengdu, Xi’an. I’ve seen Shenzhen as 1st tier, Guangzhou as 2nd and Chongqing and Chendu each as third before too. I think the discrepancies have to do with where and when the reports were published. Shenzhen and Guangzhou are certainly first for most lists now. Chongqing and Chendu are definitely 2nd now too.Attached is a [PDF](http://silkroadintl.net/blog/wp-admin/www.usembassy-china.org.cn/fcs/second%5Ftier.pdf?ref=silkroadintl.net) with some lists and sources. Another great resource is a site called [All Roads Lead to China](http://silkroadintl.net/blog/wp-admin/www.allroadsleadtochina.com?ref=silkroadintl.net). He’s got some great work on individual cities—the most detail I’ve seen anywhere.Interestingly, the [UN’s Human Development Index](http://hdr.undp.org/en/?ref=silkroadintl.net) came out last month and said that China’s best cities compare to “poorer European cities” and the worst (Guizhou and Tibet) are worse than many places in Africa. Not surprisingly, this report didn’t get much pub in the Chinese press.Second worker’s wages. Absolutely they will expect more in various higher level cities. Different cities, counties and provinces all have different minimum wage laws. Guangdong province has the highest in the country. Shenzhen is the highest in the province. Factories are moving inland because the same labor pool that has fueled growth on the east coast is now staying home since development has moved inland too. Wages are cheaper inland for the same people. Of course costs of living for the workers is cheaper too.Third, vertical opportunity. Guangdong is special, it’s always been the home of manufacturing and trade and so there has always been migrant labor here. Shenzhen is even more special, being a city of 10m that was created out of nothing just 30 years ago. Basically, no one over 25 is actually from Shenzhen. So here, yes, workers can move up to the very top of the hierarchy because everyone is a migrant worker, to some degree.Zhejiang province is much different. It didn’t have HK and Taiwan FDI or Shenzhen in the 80’s and so most of the factories there are either VERY large foreign or JV’s or small local facilities. It is much harder for migrant labor to move up in either of these situations. Finally, the level of education is the most telling factor for vertical movement, rather than where people are from. True migrant labor, and I’ve kind of blurred the lines with the above comments, is manual laborers with little to no education and they have almost no chance of working up into any real power position at all. But people with skills, experience and education are in demand everywhere in China; no matter where they are from.Good luck. Thanks for asking. > **Question Five: Is my supplier going to be in business next month and how do I make sure?** > Hi David,I have just finished reading your thought provoking article on the [global sources website](http://www.smartchinasourcing.com/?ref=silkroadintl.net). It has certainly presented me with some other dimensions for my business venture.I am writing not just to thank you for the insight, but given your extensive knowledge and experience, I thought you would be a great person to ask about the current situation with the factories in China.I am very close to placing my first order (a specialty glass product) and am now concerned that the chosen company may join the list of those going bankrupt and that, not only may i lose my money but the product I have finally sourced.I am very interested in your opinion on this matter. Should you believe it safe to proceed i would also greatly appreciate any tips you may have, given its my first order.Lastly, you recommend obtaining a Chinese lawyer for contracts and i am wondering how i would go about finding a reputable one.I eagerly await your reply. > My response > Let me first say to you that I’m impressed with your good intentions and premonitions. The economy is scary now and I would very much encourage you to check out your factory BEFORE you pay any monies to them. You should first use a service to confirm that the factory is in good legal and or economic standing. Two options would be: [Glo-Bis](http://www.glo-bis.com/?ref=silkroadintl.net) or [Verify](http://www.verifyscreening.com/index.html?ref=silkroadintl.net).A factory audit can give you some additional information about what’s happening in the factory right now and confirm that they are really there and really working on orders now. A good way to do that would be to have someone SRI run an audit for you. Larger companies, like [Bureau Veritas](http://www.bureauveritas.com/wps/wcm/connect/bv%5Fcom/Group?ref=silkroadintl.net) run a more detailed factory audit for specific industries with engineers, if you need.Here are two law firms that you can talk with. The first is a US firm with an office in Shanghai and the second is a group of western educated Chinese lawyers in Shenzhen. The cheapest is the Chinese guys, but the Shanghai firm is probably some of the best lawyers in China. I’ve used both before.Dan Harris: Dan Harris @ [China Law Blog](http://www.chinalawblog.com/?ref=silkroadintl.net)Li Yan: Liyan @ [JunzeJun Law](http://www.junzejun.com/english/departments/guoji.htm?ref=silkroadintl.net)If you have any other questions, let me know. > ### Save Baby Whales from Starving, Vote for SRI URL: https://www.silkroadintl.net/save-baby-whales-from-starving-vote-for-sri/ Last updated: 2026-07-12T07:58:14.000Z The SRI Blog has been nominated for the Best China Business Blog 2008\. Thanks to whomever nominated us (and no, it was not me or my wife, or my mother, or any of our employees). It's nice to be recognized. I hope you'll vote for SRI, and, like they say in Chicago (and now DC): vote early and vote often! 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Thank you, and God bless.(You can stop talking like Loretta Swit now). Here are some other really good blogs that you should support too. Of course, they won't solve world hunger or give you warm fuzzies like a vote for SRI will, but hey, they still have good stuff![China Law Blog](http://chinalawblog.com/?ref=silkroadintl.net)[All Roads Lead to China](http://www.allroadsleadtochina.com/index.php/?ref=silkroadintl.net)[Experience Not Logic](http://www.experiencenotlogic.com/?ref=silkroadintl.net)[Image Thief](http://news.imagethief.com/blogs/china/?ref=silkroadintl.net)[ Managing the Dragon](http://managingthedragon.com/?ref=silkroadintl.net)[Silicon Hutong](http://siliconhutong.typepad.com/?ref=silkroadintl.net)[ Source Juice](http://www.sourcejuice.com/?ref=silkroadintl.net)[WSJ China Blog](http://blogs.wsj.com/chinajournal/?ref=silkroadintl.net)[The China Economics Blog](http://china-economics-blog.blogspot.com/?ref=silkroadintl.net)[The China Sourcing Blog](http://www.chinasourcingblog.org/?ref=silkroadintl.net)[ The China Vortex](http://www.chinavortex.com/?ref=silkroadintl.net) ### What?! A Driving Test?! You've got to be kidding me! URL: https://www.silkroadintl.net/what-a-driving-test-youve-got-to-be-kidding-me/ Last updated: 2026-07-18T14:48:35.000Z I’ve been driving for 25 years now—since I was 14 actually. I started out with big farm trucks, bailers, swathers, tractors and a 40 year-old IHC pick-up truck that you had to prime with a choke to start. I’ve driven in snow storms on canyon roads, ice storms, in sand, through fields, through herds of cattle and flocks of sheep and goats, over washed out farm roads, in Taipei, BKK, LA and NYC traffic, and, of course over the river and through the woods to grandmother's house too. I’ve also driven for years in Thailand (illegally), Taiwan (legally) and China (I plead the 5th). I remember driving Rout 66 one summer with some friends. I’ve driven back and forth from LA to Salt Lake City probably 50 times. Back and forth from Chicago to SLC another 10 times in my grad school years. I’ve seen it all. And in that time I’ve got a total of four traffic tickets (all for speeding) and hit one wall (last week) and one parked car (when I was 16). I’m pretty confident in my driving abilities. So when I keep failing my Chinese driver’s license test (the written part), I have to admit, I’m looking for excuses. Yea, I know that it’s my own fault that I’ve got 88 points 4 times now (you need 90 to pass). And believe me, I’m taking tons of crap for it too. My wife has told me more than once (OK, more than 20 times) that she thinks I must have bought my MA if I can’t pass a simple driving test. My response is I’ve never studied for a test like this—I’ve never had to memorize the answers to 1500 questions without learning a damn thing before. I told my friend and old China hand, [Richard Jones](http://www.vimeo.com/dickstock/videos?ref=silkroadintl.net), that I was taking the Chinese driver’s license test today and he said: > Driver's TEST????Hahahahahahahahah.Only in China.Do they test you for swerving all over the road and stopping in the middle?Hehehehehe > Yup. That’s pretty much what I think too. China has the most dangerous roads in the world. And not just because they have so many (bad) drivers either. There [a thousand reasons that I’ve shared before](https://www.silkroadintl.net/its-not-all-their-fault-really/) here and won’t list out again now. But whatever the excuses, since I can no longer pay someone to take the test for me, I’m stuck finding time to memorize the cacophony of Chinglish test questions. Over Turkey dinner I told some friends about my poor test results and they, of course, laughed themselves silly. They also shared a ton of stories, many are not publishable, but one that is must be shared. Richard (not the one above) is from Taiwan but lived in the States for decades and driven now in all three countries. He says that he always carries two driver’s licenses with him when he drives in China; one from China and one from Taiwan. If he gets into an accident then he uses the legal one from China. But for any other situation he uses the one from Taiwan. It’s in Chinese, it’s not expired and Taiwan is, as we all know, “part of China.” Richard says his Taiwan license has gotten him out of a lot of sticky situations with only a small “tip” to the officers. Why? Think about it. What are the Chinese police going to say? “Your license is not valid because … um … well … it’s just not!” Yup. Policemen are not going to tell another Chinese that Taiwan is foreign, so they stammer and hem and haw and basically let him go. Richard says he learned this from other Taiwanese that are here in China. One other driving story I was told. The fines in China are relatively cheap, at least for foreigners or wealthy Chinese. So cheap in fact that many just blow through watched intersections or speed past speed-limit signs knowing that the fee is going to be the equivalent of USD$50 or less. Even the fine for covering your license plate is only $25 and/or a warning. I didn’t realize that some of the bad driving here was on purpose. And “everyone on both sides of the Taiwan straight” agreed that the only real traffic rule here is: follow the rules and everyone will think you’re an idiot! Did you know it’s illegal to turn left before oncoming traffic clears the intersection? Or that it’s illegal to continue driving when there are people in the crosswalk? Or that you can’t stop your car anywhere on a public road unless it’s marked for parking? Or that you can’t back up on the freeway or down an on ramp if you’ve missed your exit or taken the wrong exit? Join the club! Neither do any of the other 10 million drivers here. Or they know but just don’t care. Not sure which is scarier. Anyway, as I was studying this week I realized that the manual of questions was a treasure trove of great comedic material. So in the interest of lightening the world’s overall depression and evoking a bit of sympathy for my plight, I share with you a few of the best test questions cut, pasted and unedited directly from the official English manual (Snarky comments are all mine). Enjoy these—just stay off the roads. > 1.1.1.11 The driver may drive a motorized vehicle \_\_\_\_\_\_\_\_\_\_.A. After drinking alcoholB. When he suffers from a disease that impedes safe drivingC. When he is exhaustedD. After drinking tea(*What If I’m not thirsty? What if I don’t like tea, can I still drive?*)Answer: D(**my second most favorite question**) 3.2.1.6 The main feature of pedestrians participating in road traffic is \_\_\_\_\_\_\_\_\_.A. They move slowlyB. The like to get together and look onC. They are not stableD. They walk around at will and can easily change directionsAnswer: D (*I think that “all of the above” would be the best answer here!*)(**My personal favorite**) 5.7.2.2 When the driver senses he will inevitably be thrown out of the vehicle, he should violently straighten both his legs to increase the force of being thrown out and jump out of the vehicle.Answer: Right1.1.1.13 \_\_\_\_\_\_\_\_\_\_\_ of the following are not road traffic signals.A. Traffic lightsB. Traffic bulletin boardC. Command of the traffic policeD. Traffic signsAnswer: B1.1.1.14 \_\_\_\_\_\_\_\_\_\_ of the following are not road traffic signals.A. Warning lightsB. Traffic signsC. Command of the traffic policeD. Traffic markingsAnswer: A1.1.1.19 On the road not divided into the lane for motorized vehicles, the lane for non-motorized vehicles and the sidewalk, the motorized vehicles should run \_\_\_\_\_\_\_.A. On both sides of the roadB. In the middle of the roadC. According to lanesD. At willAnswer: B1.1.2.28 A small motorized vehicle may overtake a police car performing an emergency task.Answer: Wrong1.2.1.79 A driver is not allowed to drive a motorized vehicle for \_\_\_\_\_\_\_\_ running without stopping the vehicle and having a rest.A. 4 hoursB. 5 hoursC. 6 hoursD. 8 hoursAnswer: A1.2.1.80 If a driver has driven a motorized vehicle for more than four hours running, he should stop the vehicle and rest for at least \_\_\_\_\_\_\_\_\_\_\_\_.A. 5 minutesB. 10 minutesC. 20 minutesD. 40 minutesAnswer: C1.5.1.2 With regard to the vehicle that is suspected of stealing and cannot be immediately released, the traffic police may \_\_\_\_\_ on the spot.A. Confiscate itB. Detain itC. Auction itD. Impose a fineAnswer: B1.7.2.8 The person who is addicted to drug taking and injection may apply for a motorized vehicle driving license when he is not overwhelmed by drug addiction.Answer: Wrong3.2.1.5 When running at a high speed, the steering wheel can have a feel of “being deprived” due to the impact of \_\_\_\_\_\_\_. The driver should firmly hold the steering wheel and drives at a lower speed.A. Ice and snowB. Heavy rainC. Side windD. FogAnswer: C3.3.2.1 When driving, the driver should strictly obey the relevant provisions of the laws and regulations and consciously safeguard the traffic order.Answer: Right3.3.2.2 A qualified driver should not only be technically adept, but more importantly have good driving habits and ethical attainments.Answer: Right5.8.1.3 When putting out a fire, the wrong method is to \_\_\_\_\_\_\_\_\_\_\_\_.A. Stand leeward to the fireB. Take off the clothes made of chemical fiberC. Protect the exposed skinD. Do not breathe through mouth or cry loudlyAnswer: A5.8.2.9 Before the driver escapes from a fire disaster, he should turn off the ignition switch, cut off the power switch and the blind, and manage to turn off the fuel tank switch.Answer: Right (*What is the blind and where is the fuel tank switch in any car that was made in the last 50 years?*)6.1.2.3 The gear is designed to smoothly connect and completely separate the engine and the transmission system for starting to move and changing gear.Answer: Wrong6.1.2.4 The foot brake is designed to keep a stopped vehicle from moving.Answer: Wrong7.1.1.4 When there many wounded persons, those who should be sent to hospital last are the persons \_\_\_\_\_\_\_\_.A. Suffering cervical vertebra damageB. Suffering massive haemorrhageC. Suffering breathing difficultyD. Whose intestines and veins are exposedAnswer: A7.1.1.7 The wrong measure to rescue a person sustaining burns all over his body is to \_\_\_\_\_\_\_\_\_.A. Use sandy soil to coverB. Swiftly put out the flames of his clothesC. Spray cool water to his bodyD. Take off his burning clothesAnswer: A7.1.1.8 The first-aid measure to rescue a poisoned person is to \_\_\_\_\_\_\_.A. Take warming-up measuresB. Bring him to a place where air is fresh (*Um...like Canada?*)C. Give him artificial respirationD. Depress the heart over the chestAnswer: B7.1.1.14 The article that cannot be used to stop bleeding by dressing is \_\_\_\_\_\_\_\_\_.A. BondageB. SlingC. TourniquetD. Hemp ropeAnswer: D7.1.1.15 Stopping bleeding with tourniquet refers to ligating an elastic rubber tube and rubber band at \_\_\_\_\_\_\_\_ of the upper limb or the middle thigh of the wounded person.A. One-thirdB. One-halfC. Two-thirdsD. Three-quartersAnswer: A (If you know the answer to this question you are either an Eagle Scout or a paramedic.)7.1.2.12 When putting a bone fracture in the lower limb, the limb must be crooked and tied up.Answer: Wrong (*I always wanted to know how to put a fracture in someone’s lower limb.* I guess this test wasn't a waste of time after all!)7.1.2.19 When a wounded suffers bleeding in the forearm or shank, the rescuers may place a cushion in the armpit or in the rook of the arm, crook the armpit or rook and tie up.Answer: Right7.1.2.20 When using a bondage to dress a wounded person, the knot should be made neither above the wound nor at the back of the body. Otherwise, the wounded person will feel uncomfortable when sleeping.Answer: Right (*Because if you have bleeding wounds that have need of “bondage” sleeping comfortably is a priority.*)7.2.1.1 \_\_\_\_ refers to the material and article that has the danger of overall explosion.A. ExplosiveB. Inflammable solid materialC. Inflammable gasD. Self-igniting articleAnswer: A7.2.1.2 Gun powder, explosives and detonating powder are \_\_\_\_\_\_\_\_.A. Oxidizing materialsB. Inflammable solid materialsC. ExplosivesD. Self-igniting articlesAnswer: C7.2.1.4 \_\_\_\_\_ of the following are a dangerous inflammable solid material.A. MatchesB. FireworksC. Calcium carbideD. ExplosivesAnswer: A > ### Happy Thanksgiving! URL: https://www.silkroadintl.net/happy-thanksgiving/ Last updated: 2026-07-18T14:48:34.000Z No generic "happy holidays" here--we're into the real deal. Thank God for Pilgrims, America, the Founding Fathers, and Deng Xiaoping. I'm thankful for Deng's Opening Up plan that gave me the opportunity to meet my wife. I'm grateful for those in governments around the world that honestly sacrifice their own interests for the benefits of others--though few and far between, I'm please to know some in China, Thailand and the US. Thanks, [Mom](http://www.margaretdayton.com/index.cfm?ref=silkroadintl.net).I'm thankful for good advice--stay out of dept, be prepared for a rainy day and be prepared to help others. I'm thankful for my Danish and Irish heritage. For a great grandmother that immigrated from Denmark in 1913 as a child, who left family and a comfortable life for a new life and a new religion in the US. I'm grateful she taught me to make [kleiner](http://www.recipezaar.com/bb/viewtopic.zsp?t=233931&ref=silkroadintl.net) and [panika](http://www.cookbooksforsale.com/displayRecipe.php?rid=16395&ref=silkroadintl.net) and taught me Danish nursery rhymes that I can still remember (and which I shared with a Danish guy I met on the way to work just this morning!). I'm grateful for my wife's Chinese heritage. For the incredible lessons in hard work, humility, thrift and love that she teaches me. I'm grateful for her family for welcoming in a big fat loud slightly odd foreigner. They are incredible people and for no other reason than so that my children can speak to their amazing grandparents, we will always speak Chinese in our home. I'm grateful for my family's willingness to serve in the military. My grandfather, uncles, my father and currently 6 cousins. I'm grateful that we have a tradition of service. Despite the problems in the US and atrocities of war, I'm eternally grateful for those who put there lives on the line so I can be safe and raise a family and vote and have so many wonderful freedoms an opportunities (and have the freedom to complain about it all too). I'm grateful for being raised in a home of faith. For being taught of God, forgiveness, repentance, charity and principles that do not change with the political or social winds. I'm grateful that I was taught to work, to practice, to love to learn and to love to read. I'm grateful that I had the opportunity for as much higher education as I wanted. I'm grateful for a successful business, many opportunities, wonderful partners and employees. I am grateful for clients and suppliers that I can trust and that trust me. How grateful I am to have work in this time of extreme economic crisis. I'm grateful for friends that are great examples of good lives, successful families, professionalism and who honestly care about others. Truly, good friends are worth more than gold. I'm grateful for my parents, brothers, sisters, cousins, aunts, uncles, nieces and nephews, one remaining grandma and all those that have passed on. I'm grateful for 5 smart, handsome, healthy boys. What's the point of life without family?!I'm grateful for tradition--whether it's football on Thanksgiving, or Old Beatles movies on Christmas or yellow cake on my father's birthday or heartily waving the red-white-and-blue on the 4th of July. I'm writing this post today as a continuation of our family's tradition of sharing what we're thankful for before we gorge ourselves on our annual Norman Rockwellesque Thanksgiving dinner. And finally, I'm grateful for those who write about China on many blogs and in books that I love to read. I'm grateful for those of you who read and comment here. May you have a wonderful Thanksgiving and, with or without turkey, may you take a moment to remember all that you have. Happy ThanksgivingDavid Dayton ### Article Pass-along URL: https://www.silkroadintl.net/article-pass-along/ Last updated: 2026-07-18T14:48:35.000Z Two excellent articles on China from other sites. First, [China in the context](http://cnreviews.com/china%5Feconomy/china%5Ffinancial%5Fcrisis%5F20081125.html?ref=silkroadintl.net) of the world's melt down--it's not only not going to save the world, it's probably going to make it worse. This is a great piece--if you don't read any of the others, read this. Second, [Guangdong province in the context](http://www.atimes.com/atimes/China/JK26Ad01.html?ref=silkroadintl.net) of the current political and economic directives from Beijing--basically, "Beijing is far away and we have our own problems to worry about. "And a couple other pieces from The Economist. First, [China's future](http://www.economist.com/theworldin/displayStory.cfm?story%5Fid=12494522&d=2009&ref=silkroadintl.net). And then the paradox of [staffing shortages](http://www.economist.com/business/displayStory.cfm?story%5Fid=12638634&source=hptextfeature) in a era of factory closings.\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_T-Day Updates:A really good look at the political implications of the [EU Chinese relationship](http://www.guardian.co.uk/commentisfree/2008/nov/27/comment-and-debate-garton-ash-beijing-obama-us?ref=silkroadintl.net).A mixed take on [who will be hurt more by the slowdown](http://news.xinhuanet.com/english/2008-11/27/content%5F10419179.htm?ref=silkroadintl.net), the East Coast or the West of China. And the compete diseaster that currently is Thai politics. Regardless of the PAD's motives or agenda, this current occupation of the airport(s) is doing more damage to Thailand's economy and to the PAD's own support than hope-for coup will ever help. [Basics about the conflict](http://worldblog.msnbc.msn.com/archive/2008/11/26/1689630.aspx?ref=silkroadintl.net) and an [airport update](http://www.google.com/hostednews/ap/article/ALeqM5gXtkIJGFlHXR5qT3LIG2olEVZyFQD94N08FO1?ref=silkroadintl.net). [Breaking news](http://www.bangkokpost.com/breaking%5Fnews/breaking%5Fprevious.php?ref=silkroadintl.net) at the BKK Post too. ### Another Trip to the Healthy Department URL: https://www.silkroadintl.net/another-trip-to-the-healthy-department/ Last updated: 2026-07-12T07:58:11.000Z I spent part of last weekend helping translate for a friend who was in the emergency room of a local hospital. Probably more scary to me than being sick in China is being taken to a hospital in China. My father was a doctor in a small town (the only OBGYN in a couple of counties) so I spent probably weeks of my childhood in the lobbies and waiting rooms of hospital rooms waiting for him to deliver babies so we could get on with whatever family activity was being postponed. (I also endured many many embarrassing comments by girls in highschool who had been to my father’s office.)Yet even in a small town hospital I never saw blood (or dirt or urine) on the walls or garbage on the floors. Nor did I ever remember complaining about how putrid the bathrooms were; because they weren’t. I never got infected with something from someone else in the hospital or from unclean instruments—I never knew of anyone else who did either. Over my years in Asia I’ve been admitted to hospitals in Thailand, Taiwan and China for various issues. And I've even written about it before too ([Aug. 2006 post](https://www.silkroadintl.net/news-from-the-healthy-department/)\--we were told to bring our own syringes!). I can honestly say to you, from my experience, that you’d probably be better off self-medicating or tying a tourniquet and then running for the boarder than checking into a hospital here in China. Yes, they are really that bad. I kid you not that when I say our milk barn (where we would milk dairy cows, yes my father was a rancher too) was cleaner than any of the hospitals that I’ve seen even here in Shenzhen. At least that milk barn was hosed down and scrubbed with a brush and disinfectant soap twice a day. Like anywhere else in the world, the best way to get an infectious disease is to be around others that are hacking, spitting, sneezing, etc. What better place to find a majority of these folks crowded up to counters or in small enclosed places than Chinese hospitals?! (That was a rhetorical question.)So why is it worse here than anywhere else I’ve ever been (and that would include Egypt, Jordan, Lao, Cambodia and others)? Lots of reasons:First there are more people with more diseases in the hospitals than in most other places. Everyone and their Chinese dog is in the waiting room for anything and everything from hangnails to bird flu. Second, the general level of medical education here is so low that people just don’t think to not let their sick kids come up and shake hands with the little sick foreign kids or ask to practice their hack-interrupted English with the sick white guy. Other reasons could include hospital design, like putting the “infectious disease” units next to the parking garage entrance or the “respiratory illness” centers being located next to the emergency room waiting room, for example. I don’t particularly like the fact that I can’t have a private conversation with an MD either—There are 20-30 people in Shenzhen at this time with intimate knowledge of my urinary tract and accompanying kidney stones (I must be drinking too much melamine-laced milk).[](http://silkroadintl.net/blog/wp-content/uploads/2008/11/waiting.jpg?ref=silkroadintl.net)[](http://silkroadintl.net/blog/wp-content/uploads/2008/11/dsc09010.jpg?ref=silkroadintl.net)But my favorite reasons for never ever wanting to go to Chinese hospitals are these:Chinese hospitals are in business to make money. Sure I know, everyone is in business to make money. But the difference is that most hospitals elsewhere have at least a tacit desire to make you well at the same time they are making you poor. Here? Nope. I really think that they believe that the longer they keep you sick the more money they make. And they work hard to this end. So it's not surprising because the hospitals are always so packed full of customers. (Or maybe it is surprising?)China has some of the most dangerous roads, the worst pollution, horribly contaminated food, an incredibly high rate of people who smoke, dangerous working conditions, shoddy product quality and more people than anywhere else all living in the same situation. You’d think that hospitals would be trying to get as many people in and out of the system as fast as possible. Like taxi drivers, its all about dropping that meter if you want to make money. But sadly, no. The goal here is to keep sick people in beds as long as possible. So how do they do it? First, they prescribe antibiotics like they were candy. Taking antibiotics too often makes them worthless. Taking them for too short a dosage period per prescription has the same affect. Chinese hospitals notoriously over prescribe antibiotics—for everything from a child’s cough to an upset stomach. And they almost never give you enough. The point is to make you either stay in the hospital and pay more bed fees or come back in a few days to buy more. Most people can’t afford to stay. So they leave. But then, a few days later, when they are feeling well, and because they have no education about medicine and probably have very little money they just never go back. Another really cynical practice is paying MD’s on commission to prescribe more med’s to patients. This isn’t like pharmaceutical companies treating MD’s to free golf, or passing out free coffee cups or pens if they prescribe their brand of drug—MD’s in the West don’t get more free pens if they prescribe more meds. But in China, the more meds you can get the patients to buy, the higher your take home pay will be. This is bad enough in its own right but add in the fact that much of the medicine in China is fake and you are scraping the bottom of the ethical barrel. I had multiple experiences where I’ve either been warned away from buying fake meds by hospital/clinic staff or been offered “real” medicine for a much higher price. My wife, in taking our obviously ½ foreign children to the hospital, has been asked some version of this question almost every time: “I see that your husband is a foreigner, I suppose that you want to pay extra for real medicine, right?” At least they offer. My friend in the hospital this last week, upon checking, out was just amazed at the size of the bill for two nights in the hospital—more than 8000RMB. So he got a Chinese friend to sort things out. After four hours and trips to multiple departments (multiple times) they figured out that since the MD had prescribed 6 days of hospitalization (for food poisoning) the hospital had billed him for all 6 days—even though he was checking out after only 2! The “logic” for the advanced billing? “This is what the MD says you need. It’s your choice to follow the prescription or not (but you’re being billed regardless).” They worked for a few more hours and got all the expenses for days 3-6 removed, but it was work and it was a hassle and the hospital was clearly not interested in helping make the process transparent or easy. I have to add, my friend did get great attention from the staff. He was even given a bed with clean linen as soon as he asked for it. He was moved to, much to his chagrin, the front of the line for a number of different procedures (because he was white or paying more or both, he didn’t know). And the staff were quite kind, if not a bit behind the times on medical procedure. This is the same experience that my wife and I had with the delivery of our last child here—very nice people, dirty facilities and out of date procedures. When my wife got a post-operation infection we called my father and he was appalled at the techniques and procedures we described to him. He said that they hadn’t done things like that in the US since before the 1960's! But the delivery cost us only a few hundred dollars in China instead of more than ten thousand dollars as another delivery cost us in the US. I guess you get what you pay for. So what’s the point of this story? Entertainment value first. Warning second. China is a great opportunity. But as with every opportunity there are risks involved. Many of the risks that are faced in China are directly associated with business. Many others are not but certainly will affect your ability to be successful nonetheless. I have clients that come to Shenzhen on their way to visit factories and invariable comment on how nice Shenzhen is and how great it must be to live here. I agree. Shenzhen is quite nice, it rates up there with large cities in poorer EU countries, [according to the UN](http://africa.reuters.com/wire/news/usnPEK273886.html?ref=silkroadintl.net). Just remember, visiting on business for one week is one thing--Starbucks, nice restaurants, western hotels and private cars; but raising a family here, or just about anywhere in East Asia, for more than a decade is where the you pay the price for the great opportunities. Good luck. And don't get sick. ### Outliers, The Story of Success, by Malcolm Gladwell—BOOK REVIEW URL: https://www.silkroadintl.net/outliers-the-story-of-success-by-malcolm-gladwell-book-review/ Last updated: 2026-07-18T14:48:34.000Z [Outliers](http://www.amazon.com/Outliers-Story-Success-Malcolm-Gladwell/dp/0316017922/ref=pd%5Fbbs%5Fsr%5F1?ie=UTF8&s=books&qid=1227152192&sr=8-1&ref=silkroadintl.net), is the latest thought provoking book from Malcolm Gladwell. I don’t typically review books that I read that are not specifically about business in Asia here. And this book has, as it’s thesis, nothing to do with China. But there are a couple of really impressive ideas presented so clearly that you have apply them to business here. But, more importantly, before we get to the Asia stuff, I’d recommend this book to anyone with children; I have 5 boys. Gladwell basically claims that "success" is not Horacio Alger but rather a combination of a good environment (home), some great luck, perfect timing (birth), a motivating culture, supportive parents/mentors, and some personal diligence and hard work thrown in to top it off. He doesn’t deny that working hard and lifting yourself up from the bottom by your bootstraps can work. He just says that it’s not the “secret” to the successes of most of the world’s rich and famous. Success can be, to some degree, formulaic. And that’s good news for anyone that wants their children to succeed. Outliers presents and answers some provocative questions like: Why are 20% of the world’s historically richest people born in a 9-year period in the US? Why are Asians good at math? Why are the best lawyers in NY Jewish? Why are all good Hockey players born in between January and March? Why were the Beatles so successful? Was Bill Gates lucky or smart? One of the core answers to all of these questions is the 10,000 hour rule. I'd never heard of the 10,000 hour rule specifically before but the concept is bandied about with other titles by most of us. In short, the rule is this: to be one of the best at anything you need to invest about 10,000 hours in that skill (usually before your 30's). This is the rule in all successes, so the book claims, from MJ to Mozart to Gates. You name the success and do a little research and you’ll be able to count the hours. If you spend 10,000 hours (correctly directed, productive hours) on a specific skill you’ll be in the top percent of people in the world in that skill. 8,000 hours will make you really good, possibly semi-pro or one of the best in the industry. 5,000 hours will allow you to be a teacher—interesting commentary on teachers, huh? Not surprising, many of the answers, says Gladwell, are what middle/upper class American society already knows and does, but the numbers and stories are fascinating. But Outliers not just list of what we already know. Rather it describes the environments and opportunities that parents need to provide for their children to help them be successful in an increasingly competitive world. And that doesn’t just mean just more piano lessons. Now, more specific to China. Four ideas that I found applicable: numbers, power distance, listening and diligence. The numbers I’m talking about here are not in Macao nor are they on the astrological charts. They are, in the minds of Asians and in the languages they speak. It’s a repeatable fact that people have about a 2 second memory “cache” for numbers. And, studies have shown that the cultural or linguistic background doesn’t matter either. What does matter is how many numbers you can comfortably fit into those 2 seconds. Asian languages, being mono-syllabic, can fit more into 2 seconds than can Germanic or Latin based languages. In common rates of communication Cantonese speakers can get 9 numbers in in 2 seconds while English speakers can only get 6! I see this everyday in China—Chinese people can rattle off their 11 digit phone number and other Chinese will get most and just need the last couple of numbers repeated while I’ll still at the 5th or 6th number and need the last half again. I see it almost every time I meet someone new. Further, numbers in Asian language are much more logical than in the Germanic/Latin languages. Not only do Chinese not have to translate “teens” back into the correct order (think about it, in English they are said backwards from the way they are written) but all numbers are said just like they are written. Chinese, for example say two-tens two for 22\. While Americans say twenty two. Ten three for 13 vs thirteen. Math is therefore thought of, spoken and written all in the same way thus making learning math a much more logical and much less language inhibited process. Asian kids can usually count to 40 by age 4 while their English speaking classmates usually can’t do it until age 5\. That’s a one year head start, a huge boost in a school system that awards “genius” with more attention and “advanced” classes at early ages (and therefore self-fulfilling it’s own belief that Asians are better at math even further). Second, power distance. Anyone that has worked in HR in the last 30 years knows about Hoftsteed’s work on the influence of cultures. One of the most striking applications in this work is it’s relation to airplane crashes—yup, people from high power distance cultures were involved in more crashes precisely because they didn’t communicate to superiors as directly or as often as necessary to avoid accidents. Basically, it can be shown that First Mates from High Power distance cultures didn’t speak up to superior officers when they made fatal mistakes. The Captains, from lower power distance cultures, just didn’t get the urgency in the more circular and deferential language used by the subordinates. Now translate that into Chinese factories. How many times have you realized “Man, if the line workers would have just said something we could have fixed this problem days ago!” Or “why won’t the factory tell me there are any problems?!” Now you know. Third, listening. Not only do different cultures speak different languages, they have distinctly different listening styles too. Chinese, for example, requires “active” listening—meaning, the listener is both required to and be able to infer large amounts of cultural information into the minimal words of the speaker due to the context of the people, the conversation, etc. In Chinese it is the listener’s responsibility to understand what is being said. This has variously been called High Context language, meaning context is more important (mandatory) to transfer meaning. But most western languages are the complete opposite. The responsibility to communicate in English, for example, is almost completely dependant on the abilities of the speaker. Transfers of information have little to do with outside context and listening skills and more to do with clearly verbalized details, lots of lists and descriptions. This doesn’t’ deny the importance of Covey’s habit of listening in successful communications. Rather, this is talking about more of the specific baggage (good and bad) that is associated with language of each culture. Thought of this way, it’s obvious that the legal contract is from the West and not from China. So here’s another reason why you don’t get much info from your supplier. You don’t listen in Chinese. Maybe you speak it, but that’s not enough. You have to actively listen to the context of China to understand Chinese. Of all the concepts in this book, this one will directly impact my life the most, I’m guessing. My wife and most of my suppliers are Chinese and I realize that more often than not I only speak Chinese while I still listen like an American (no, listening like an American is not an oxymoron). Fourth is diligence. While I was in college I had a class where we regularly debated if the rise of the Asian Tigers (Korea, Taiwan, Malaysia, Singapore) was due in part to a “Confucian Work Ethic” or generally lucky historical circumstances. The environment of my class was unique in that a majority of my classmates had lived and worked in Asia for years, and so most were fluent in at least one Asian language already. Many of us young whippersnappers agreed that indeed there was something in the water, so to speak. But my professor ultimately concluded that it wasn’t the cause, or at least not a major one. Yet Gladwell today says that it’s been since proven that, for example, Asian students spend up to 40% more time trying to figure out difficult math problems before moving on than do their counterparts in the US.I don’t know if this is Confucian or, as Gladwell claims, related to rice agriculture, but I do know that Chinese are willing to “chi ku” endure difficulties (literally eat bitterness) much more so than most westerners are. It’s not even close, in my book. I’d never live in a factory dorm with 12 other people working 12 hours or more a day for 350+ days a year for less than 200 dollars a month in dirty dangerous conditions just because it was better than the rice paddy back home. Yet hundreds of millions of Chinese choose this every year. That translates, when combined with good timing, some lucky breaks and being at the right place at the right time, into huge pan-Asian success. This is a great book that is informative, entertaining and useful. Concepts present in Outliers will help you communicate better, help you in business dealings in China and could even help your kids become successful. Pretty good ROI for $20 and a few hours. ### Ancient Chinese Secret: Don’t Lie (to foreigners), it’s just not worth it. URL: https://www.silkroadintl.net/ancient-chinese-secret-dont-lie-to-foreigners-its-just-not-worth-it/ Last updated: 2026-07-18T14:48:35.000Z The pearl of wisdom in the title came from my Chinese neighbor in a conversation he and his wife had with my wife about a week ago. A Chinese man of about 65 years of age, he is a multi millionaire who made his money importing machinery from the US and UE into China over the last 20 years. He said, when asked about his experience, that the single most important lesson that he learned in international business was this: “don’t lie to foreigners. Even if the news is bad, don’t lie or cover it up. That just causes more problems.”Before I get a ton of email/comments from Chinese calling me racist, I want to repeat: I didn’t say this and I wasn’t there for this conversation. This was said by a Chinese man to two other Chinese women who were talking about importing some food stuffs into China and relayed to me later. What I will say is this, anyone that has worked in China for any amount of time knows of the regional distrust and stereotypes that are rampant amongst the Chinese themselves. This is not meant to be racist, but rather an insight into business in China provided by Chinese people about Chinese people. Anyway...It takes SRI, on average, about 6 months to really get our suppliers to believe this concept too. We work with suppliers over and over and over and usually about order 3 they finally admit to us something like this: “You know, we didn’t believe you at first, because we don’t ever tell our Chinese customers about problems, but now we know you really do want to know about problems and help resolve them. Now we know that we can call you at 4AM and it’s OK to give you bad news.” You don’t know how great it is to hear that I can expect middle-of-the-night calls. It doesn’t mean that there are not going to be problems, but it means that we now get advanced warning and have the opportunity to change things in-line rather than try to re-work or reject so much bad product. It’s about this time, 6 months in or order #3, that we start getting terms and the relationship moves beyond just the order details. What I also think is very interesting is what my neighbor didn’t say. He didn’t say “don’t lie period,” but rather “don’t lie to foreigners.” He distinguished very clearly one of the major differences in doing business in the West and the East. Again, I’m going to play prevent defense here because I know what’s coming. Don’t get all bent out of shape and start screaming “racist pig” at me. I’m not saying that all Chinese are liars. I am saying that Chinese themselves say that there is a very identifiable ethical difference in doing business with Chinese and doing business with Westerners. Transparency, win-win, partnering to solve problems, honesty is a virtue—these are all very western concepts of doing business and do not have similar historical or cultural precedents in China. In fact I’ve had Chinese tell me that when they were young their parents told them to never be honest to anyone except them, their parents. Telling the truth has been historically dangerous in China. Recently, with intense competition, its seen as being economically dangerous too. I was reminded this week about this again as I talked with a factory about an upcoming client visit. The supplier has a great factory and quality products but has not been able to meet our material requirements. Their solution? Have the client come to their factory for the tour and then ship in correct samples from somewhere else. Sounds like the best of both worlds, right? Wrong. For many suppliers in China, this is a great solution to an otherwise lost opportunity. The supplier, of course, keeps the business, or at least a portion of it. And the buyer does get a quality product, but there is really no way to control QC in this type of situation. And finally for me, this solution openly lies to someone that is flying half way around the world to figure out if they trust me enough to give me money. The bottom line is not that quality will be delivered, because there is no way to control it, but that there are just too many unknowns in the mix and too many “stories” that have to be kept straight—there is just no way that this will run out well when there are real problems. Maybe Donald Trump would agree with the Chinese that business is business, and in a sense it is. But bait and switch, like the factory example above, is going too far, and it’s not just illegal in the West but unethical too. There are a number of reasons they there is such a deep ethical difference between Chinese suppliers and western buyers. First, in China, despite what you’ve been told about how “socially-minded” and “group-oriented” and “relationship conscious” Chinese are, in business the order comes before any thoughts of personal relationship. Yes, Chinese want to get to know with whom they are working. Yes, they will probably want to take you to lunch and maybe out to drinks and Karaoke too. But don’t confuse being polite with building “guanxi.” Chinese want to know who you are to determine if they are going to get paid, first and foremost. Sure, if the relationship develops into something else that is great, but the point of business for anyone, Chinese or otherwise, is to get paid. Everything else is gravy. Second, even after simple business introductions and finding out who you are personally, most Chinese suppliers don’t know you from Adam, or Zhang or Sven or Pedro. They don’t know if you’re going to pay on time. They don’t’ know if your as big as you say you are. They don’t know if they can trust you any more than you know if you can trust them. Chinese suppliers do NOT run D&B reports or credit checks on potential clients. They may have their secretary run a google search on your company, but outside of that they are taking you at your word—and they’ve been burned by “honest” westerners many, many times. What westerners forget is that the West has, in general, been pretty nasty to Chinese for hundreds of years. Chinese are still taught this in school; they haven’t forgotten—even if we were never taught about it at all. Third, there is so much competition in China, particularly in the Pearl River Delta, that they don’t necessarily believe that one order will mean multiple reorders. With the current economic world wide wipeout (the new www) it’s only going to get more intense too. So Chinese suppliers are interested in getting you to sign agreements and pay deposits and are generally willing to promise the moon and figure out how to get it to you later. That’s not considered dishonest, at least no one talks about it like that, it’s just considered business. Think about it like this: half million foreigners come to tradeshows in Guangdong and Hong Kong twice every year. They each talk with hundreds of suppliers at shows and visit, let’s guess, a few factories each. That’s millions of factory visits each year and less then half of those visits and maybe 10% of those supplier conversations are actually going to turn into business. That’s a pretty low ROI for factories. Add to that the fact that labor and material costs are going up; inflation is rising; the RMB has gained 20% in the last 3 years; prices have remained steady or even dropped and now the two biggest China buyers (US and EU) are dead in the water, so to speak. It’s pretty bleak. The bottom line is that there is just no economic logic to betting on re-orders from unknown sources. And so the business-savvy Chinese work only on the currently opportunity until there is proof of more (e.g. subsequent PO’s). This means they do all they can to get the most out of the first order, even if it’s things that you think are dishonest or unethical—this is where social relativism comes back to bite the westerners who embrace it at home. Fourth, there is a very volatile history for economic opportunity in China in the recent past. Political changes aside, the rise and fall of stock markets, the fanatical growth of SEZ’s and the corresponding income disparity, combined with the Chinese propensity to take care of themselves first means that Chinese suppliers have their own interests in mind first and foremost. No one in China knows what’s around the corner 3, 6 or 12 months from now and the resultant attitude is “get it now while the getting is good” or “if you snooze you lose.” It’s expedient in a system that has always provided too little security and too little opportunity. Fifth, there is a growing sense of desperation in China. I’ve written before how people tell us that “it was better three years ago.” The money just isn’t in the orders today that was there in 2000\. The collapse of the Chinese stock market last year and the recent scandals have really sucker punched people that were riding high on the 0lympics and the space mission. Now, growth at 9% or less reminds people of the economies of the late 80’s and early 90’s. Many people that could afford to buy houses in the early ‘00’s cannot now afford their mortgage payments. (Sound familiar?) And unfortunately, the news for all of us just keeps getting worse. Finally, there is a completely different sense of what is right and what is wrong. Western culture is guilt based (my family seems to excel at this) while China is shame based. What this means is that in the west there is a moral sense of wrong that is (supposed) to keep westerners in line even without the legal details or the public humiliation. The legal structure is there go keep “good men honest.” It’s the Spirit of the Law idea. But Chinese see getting caught and the resultant public humiliation as the definition of what is wrong (or at least what’s very stupid). If you don’t get caught it’s just not wrong. The fact that there are many grey areas in the current Chinese legal system, political and business cultures and a serious lack of education about and experience with a rule of law culture means that this is perpetuated through the infrastructure of the system. Business is just not the same here as it is back home. In the west every single transaction is based on trust and lawsuits are there to resolve the exceptions. Yes there are (many) exceptions to the rule and many criminals in the system. But they are still exceptions in a system that is still overwhelmingly based on trust. There is no trust and no system in China. You do what’s best for you right now, whatever that maybe. And that’s the smartest way to do it. Honestly. I’m not trying to justify any of the unethical decisions that I can detail here, but there is logic to the decision making process here. The good news is that where there is logic there are opportunities communicate and to resolve concerns, build trust, establish strong, fair and secure relationships—but you have to know going in that the playing field is not level and is not the same as it is “back home.”Just a couple of notes for the Chinese whose feathers I may have ruffled with this post—I admit that I have only ever been stiffed for payment by US clients (as much as ¼ million USD in a single deal!)—never by a Chinese factory. But I don’t have Chinese clients either. Also I have never had a US client lie to me about the source of a sample, or withhold delivery in violation of contracted terms, or retain molds despite payment because they knew I couldn’t physically pull them from the factory, or substitute sub standard paint for approved, or claim that we hadn’t paid until I personally produced bank records to the contrary, or move my product to a third party sub-supplier after I’d already audited another factory location, or physically hold my QC personnel hostage until I make early payments, or been told one thing in English only to have the exact opposite be told to my staff in Chinese…you get the point. Also, I completely understand that the standard of ethical business should go both ways. It absolutely should. I advise new buyers on a (way too) frequent basis that they never should be doing business in China in anyway that is illegal. No bribes, no back-door payments, no deals that are not contractualized, no use of special relationships. It seems to me that many foreigners are willing to “acclimate” themselves to the less than stringent legal environment in China way too quickly. There is no justification for cheating people just because its being done by others. Further, if you do get these “black” relationships involved in your supply chain and lose your “special relationship” or the uncle’s friend’s cousin of your partner’s wife’s nephew doesn’t deliver then you have no recourse and your supply chain is going to have a serious hole in it; one that you may not recover from, not to mention your home government may now have legal issues with you too. There should be two take-aways from this. First, precisely because there is a different standard here there is an opportunity to do more than just a business transaction here. Train and invest in your suppliers and lift them up to the level that you and their other international clientele really expect. A good example of what can happen when honesty/transparency becomes important: Last week China announced that it’s exported food will now comply to international standards. It’s unfortunate that it took a scandal to get here, but this is step in the right direction (now if we could get them to get their domestic food to the same levels). Second, you must do your due diligence in China. Don’t use the lower standards to justify questionable practices on your end. My friend Mike said it best: Many foreigners come here with the idea that China is risky and so they abandon all standards and safeguards and jump into bad deals and dangerous situations just because “hey, it’s risky” here. The opposite should be true—if there is really more risk here, the there should be more DD, more QC, more factory visits, not less. ### Jeremy Haft’s: All the Tea in China—BOOK REVIEW URL: https://www.silkroadintl.net/jeremy-hafts-all-the-tea-in-china-book-review/ Last updated: 2026-07-18T14:48:34.000Z [All the Tea in China](http://www.amazon.com/All-Tea-China-Money-Mainland/dp/B000ZJUU4M/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1224234751&sr=8-1&ref=silkroadintl.net) is a 21st century version of [Mr. China](http://www.harpercollins.com/books/9780060761400/Mr%5FChina/index.aspx?ref=silkroadintl.net)—and in a handy “how to” format to boot! Jeremy Haft has taken all his lumps and learning in China and distilled them down to a 200 page "how-to" on getting started in China. (By the way, if you’ve not read Tim Clissold’s Mr. China, you really should. Here’s [my review](http://silkroadintl.net/blog/2007/04/15/mr-china%E2%80%94book-review/?ref=silkroadintl.net).)Haft’s All the Tea in China is one of the unique books that meet all of my requirements for a great book: it’s entertaining, it’s informative and it’s useful! I found myself nodding in agreement, laughing out loud and underlining and dog-earing pages like crazy throughout the entire book. Haft’s descriptions of his lessons learned in China are not just entertaining but enlightening--which is were the rubber hits the road. What Haft does in All the Tea, that Mr. China did not, is to take the lessons that he learned the hard way and make the usable to others trying to walk the same paths. Haft provides specific instructions, work flow charts, and lists of processes and documents that are immediately usable for anyone working with China. The usefulness factor is what makes this book better than just a collection of great stories or a to-do list from the BBB. Haft goes to lengths to specifically details what he or others should do or should have done to get it done right the first time. It’s all written quite succinctly too—less than 200 pages and each section is valuable because its applicability. I don’t know for why its so much fun to commiserate with others who have lost (and gained) so much in China. But as I identify with both the headaches and solutions that Haft shares here it’s some comfort to know that I’m not crazy—others, like Haft, have really been here too and you can tell by the stories he shares. It’s also great for the resources that are designed specifically to help new comers to China learn the lessons of the past without having to go through it all themselves. A quick first read, but a very useful book that you’ll come back to over and over. I recommend it! ### One More Day of News Links URL: https://www.silkroadintl.net/one-more-day-of-new-links/ Last updated: 2026-07-18T14:48:34.000Z Since I've been at factories and solving project issues all week, I've not had time to write a "real" blog--so here is another of my (usually) tri-weekly news links list. Enjoy.1\. China on President Elect ObamaFirst, [be careful on Taiwan](http://www.reuters.com/article/vcCandidateFeed2/idUSTRE4A54QO20081106?ref=silkroadintl.net). Second, in the short term, [problems are expected](http://www.channelnewsasia.com/stories/economicnews/view/388078/1/.html?ref=silkroadintl.net). Third, [a generally wary response from China](http://www.china-briefing.com/news/2008/11/05/china%E2%80%99s-obama-welcome-may-be-muted.html?ref=silkroadintl.net) to new US President Elect Obama. Why not too excited? Because [the Chinese don’t know him](http://chinesenegotiation.com/2008/11/chinese-negotiation-obama-the-mystery-man/?ref=silkroadintl.net) from a hole in the ground. Really? Join the club. So what will the [first 100](http://www.diligencechina.com/blog/2008/11/sino-us-relations-the-first-100-days-what-can-go-wrong/?ref=silkroadintl.net) days visa vis China be like? And a better link (than last post) to [more here](http://www.diligencechina.com/blog/2008/11/most-likely-outcome-for-china-%E2%80%93-us-relations/?ref=silkroadintl.net).Believe it or not, the US media thinks that [Asia should swoon over Obama](http://www.bloomberg.com/apps/news?pid=20601039&sid=aMWloutG6cxM&refer=home&ref=silkroadintl.net) even though he's still only the President Elect. But he'll soon be the next two-term President, I'll bet. Timing is everything—in 4 years the [economy will probably be back up](http://www.bloomberg.com/apps/news?pid=20601213&sid=akRyOGDs1EHI&refer=home&ref=silkroadintl.net) and President Elect Obama will get another 4 years. It’s better to be luck than good, eh? Surprise, surprise, surprise! The [same number of people voted this year as in 2004](http://i2.cdn.turner.com/cnn/2008/images/11/06/pdf.gansre08turnout.au.pdf?ref=silkroadintl.net)!! Young neophytes showed up in droves this year and all the pissy old men stayed home. Historic, indeed--it's almost always the other way round. And finally, what does [Thailand think of President Elect Obama.](http://www.bangkokpost.com/071108%5FNews/07Nov2008%5Fnews28.php?ref=silkroadintl.net)2\. The Chinese Economy:It’s [crashing faster than expected](http://www.financialpost.com/story.html?id=940408&ref=silkroadintl.net). Some say China growth will [only be 8% next year](http://www.chinabusinessservices.com/blog/?ref=silkroadintl.net) (with extra links)!! And [some say 6%](http://blogs.cfr.org/setser/2008/11/06/how-severe-a-slump-in-china/?ref=silkroadintl.net)! Yikes. Airline and flyer [demand slowing](http://www.theaustralian.news.com.au/business/story/0,28124,24612210-36418,00.html?ref=silkroadintl.net) in China. And China [stocks keep dropping](http://www.reuters.com/article/vcCandidateFeed2/idUSSHA1367720081106?ref=silkroadintl.net) (and [more](http://www.bloomberg.com/apps/news?pid=20601087&sid=a7b6ybYXVdJI&refer=home&ref=silkroadintl.net)) as do [US stocks](http://biz.yahoo.com/ap/081106/wall%5Fstreet.html?ref=silkroadintl.net). (Comment from a friend in the know about the US economy: “I just came from a bank regulators meeting in DC....it was beyond depressing. There is a lot of pain still left to inflict out there in the economy. The banks have already felt most of it...I suspect there will be more problems but most of the beating has occurred...as it works itself through the economy it is going to be very ugly. ")And [China’s banks](http://english.caijing.com.cn/2008-11-04/110025848.html?ref=silkroadintl.net) are not immune. And the Yuan will continue to [weaken](http://www.forsaleinchina.co.uk/blog/index.php/the-chinese-yuan-will-weaken?ref=silkroadintl.net). The incredible [shrinking Euro](http://www.chinaeconomicreview.com/dailybriefing/2008%5F11%5F07/Slumping%5Feuro%5Fadds%5Fpressure%5Fto%5FChinese%5Fexporters.html?ref=silkroadintl.net) won’t help China either. And China is [backing out](http://www.asiasentinel.com/index.php?option=com%5Fcontent&task=view&id=1531&Itemid=222&ref=silkroadintl.net) of international investments to focus on the home market--not smart. So the Govt wants a [stimulus package](http://www.china-briefing.com/news/2008/11/06/chinese-official-says-radical-stimulus-package-needed.html?ref=silkroadintl.net). I think that Chinese savers need an attitude adjustment, not a stimulus package, to get them to spent. How about some confidence in domestic management?! Most think that China will spend it’s way out of the recession, which is MUCH better than the US idea: borrow our way out (we are complete idiots!). No matter what they do, this recipe won’t help anyone: [Chinese (book) cooking](http://english.caijing.com.cn/2008-11-06/110026624.html?ref=silkroadintl.net)! Mmm, mmm, good. But the bad economy will only last [another 18 months, or so. Maybe.](http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSSHA8429020081107?ref=silkroadintl.net) The most tepid prediction of recovery every. “expected” “should” “potentially” in 12 months. But at least [oil is dropping](http://www.reuters.com/article/businessNews/idUSTRE49B3Y620081107?feedType=RSS&feedName=businessNews&rpc=23&sp=true&ref=silkroadintl.net)!!!3\. Doing Business in ChinaSo what can a china business do to be safe(r)? [Part 1](http://www.chinasolved.com/blog/2008/11/05/new-china-entrepreneur%E2%80%99s-recession-survival-guide-%E2%80%93-part-1/?ref=silkroadintl.net) and [Part 2](http://www.chinasolved.com/blog/2008/11/07/new-china-entrepreneurs-recession-survival-guide-%E2%80%93-part-ii-raise-check-or-fold/?ref=silkroadintl.net).At least [shipping is lower](http://www.forsaleinchina.co.uk/blog/index.php/the-impact-of-the-massive-drop-in-china-shipping-rates?ref=silkroadintl.net). But be careful: Competition is going to heat up. The US unemployed [moving to China](http://sify.com/finance/fullstory.php?id=14792508&ref=silkroadintl.net)?!Some advice from China: [the west needs to change](http://www.breitbart.com/article.php?id=081107145825.op2k0ggd&show%5Farticle=1&ref=silkroadintl.net) their earth-destroying lifestyles. But let’s be real about [climate change in China](http://www.chinadialogue.net/article/show/single/en/2535-Inequality-trust-and-opportunity-?ref=silkroadintl.net). Remind me. Where are 16 of the top 20 most polluted cities on the planet? Good news! Despite the blood in the streets, [China and Taiwan are talking](http://www.iht.com/articles/reuters/2008/11/07/asia/OUKWD-UK-TAIWAN-CHINA.php%20more%20http://www.iht.com/articles/2008/11/06/asia/taiwan.php?ref=silkroadintl.net), that’s always good. 10K’s of protestors and riot police are actually good to—at least in Taiwan they can protest! OK, I guess you can protest/riot in China too. [Shenzhen incident](http://afp.google.com/article/ALeqM5jo6IHdF1ySpDzFk5DmVcDJ8w2sxg?ref=silkroadintl.net) last night; I didn’t see, hear or find any local news on this at all. ### News Round Up--The Best Links of the Last 48 Hours URL: https://www.silkroadintl.net/news-round-up-the-best-links-of-the-last-48-hours/ Last updated: 2026-07-18T14:48:34.000Z I collect news links to read as I travel back and forth to factories. Here is my edited list of hightlights from Wednesday and Thursday. I thought it was especially good reading so I'm sharing. You're welcome. China [stocks continue to drop](http://ap.google.com/article/ALeqM5gUwglaVKa4rA8T7lZA0w4hBgKnrgD9480QKO4?ref=silkroadintl.net), and while you can’t judge a economy by one day, October is [worst month ever](http://www.dailytimes.com.pk/default.asp?page=2008\11\01\story%5F1-11-2008%5Fpg5%5F33&ref=silkroadintl.net). After a day of election euphoria the US stock market took [an historic plunge](http://www.bloomberg.com/apps/news?pid=20601087&sid=aj%5FayFUP0riQ&refer=worldwide&ref=silkroadintl.net) too. Thursday night update--[world stock plunge](http://www.breitbart.com/article.php?id=081106125344.dxzqxkoc&show%5Farticle=1&ref=silkroadintl.net). The Auto and other industries are looking at [60%+ profit drops!](http://www.breitbart.com/article.php?id=081106082217.v53hc2v7&show%5Farticle=1&ref=silkroadintl.net) I hope this is not the “change” that we'll be getting for the next 4 years. In the larger context, the [Chinese economy is still robust](http://www.reuters.com/article/marketsNews/idUSHKG30684620081103?ref=silkroadintl.net) compared to most countries. But, as many have predicted, it’s getting worse. I said that you’d need growth below 8.5% to see social. Others are saying that it’ll have to be worse than that mark but that [“worse” is certainly on the way](http://www.japanfocus.org/products/details/2940?ref=silkroadintl.net).Anecdotal evidence about the bad economy: Canton Fair a[ttendance was way down](http://ap.google.com/article/ALeqM5i9nS3L5WZiXKRvwoRQ7JqnlPVKkAD946J6GG0?ref=silkroadintl.net). You can debate the reasons but it doesn't change the fact that [Southern China is losing jobs](http://www.chinaventurenews.com/50226711/southern%5Fchina%5Flosing%5Fjobs.php?ref=silkroadintl.net), and there is a [significant slowdown in Chinese manufacturing too](http://www.chinastocksblog.net/2008/11/03/the-contraction-in-chinese-manufacturing-accelerates-in-october/?ref=silkroadintl.net).Surprisingly, or not, there is a serious political nature to the Chinese economy which some think [is not helping things](http://www.diligencechina.com/blog/2008/11/when-is-a-recession-not-a-recession/?ref=silkroadintl.net)\--it's hard to debate the State sponsored 11% of the last decade, though. Of course, like everything else, you can (honestly) just [blame the US](http://www.nytimes.com/2008/11/02/magazine/02fda-t.html?%5Fr=2&adxnnl=1&oref=login&ref=magazine&pagewanted=all&adxnnlx=1225838945-ovMfjQyYZ5I/7ArFxMFRhQ) for the mess--we started it and weren't ready for the results. Regardless of the fault, China/India are indeed [making changes](http://www.bloomberg.com/apps/news?pid=20601109&sid=aJJvZ72Ku8ks&refer=home&ref=silkroadintl.net), trying to help their economies. But of course you can’t blame the US for what’s going concerning product quality in China. A great (I mean really great) [Time article](http://www.time.com/time/world/article/0,8599,1856168,00.html?ref=silkroadintl.net) about how you can replace any other scandal with melamine and predict the government's response. By the way melamine is going to get even [worse before it gets better](http://www.bernama.com/bernama/v5/newsindex.php?id=368429&ref=silkroadintl.net). And [here](http://www.iht.com/articles/2008/10/31/asia/01china-update.php?ref=silkroadintl.net) and [here](http://www.businessweek.com/globalbiz/content/oct2008/gb20081031%5F663334.htm?chan=top+news%5Ftop+news+index+-+temp%5Fglobal+business&ref=silkroadintl.net).No surprise then that Wal-Mart’s opinion of [Chinese suppliers’ quality control is not good](http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/3240469/Wal-Mart-launches-stinging-attack-on-Chinese-suppliers.html?ref=silkroadintl.net).The other major issue in the world is the new President Elect Obama in the US. Despite the fact that we’re supposed to believe that we’re now all color blind and “this isn’t about” Obama, I'm still a bit skeptical--I mean, this election taught us that as long as someone's a member of a minority religion or a woman, bigotry is still OK--just as long as were not racist. I'll be sure to tell my direct ancestors that were KILLED in the US for their religion that they can now celebrate this "historic" occasion. Ahem, sorry. Anyway, here are some of China’s reactions to Obama’s win. They range from “moderate” to “neutral” to challenging. I’ll report, you decide. That sounds fair, eh?[Bloomberg](http://www.bloomberg.com/apps/news?pid=20601080&sid=aDt4u9Q4AAEA&refer=asia&ref=silkroadintl.net), [WJS](http://blogs.wsj.com/washwire/2008/11/05/no-strong-reactions-from-chinas-leaders/?ref=silkroadintl.net), [Times of India](http://timesofindia.indiatimes.com/World/How%5Fwill%5FObama%5Fprove%5Ffor%5FChina/articleshow/3678226.cms?ref=silkroadintl.net), [UK Telegraph](http://www.telegraph.co.uk/news/newstopics/uselection2008/barackobama/3385522/China-reacts-cautiously-to-Barack-Obamas-win.html?ref=silkroadintl.net) and [Forbs.](http://www.forbes.com/markets/2008/11/05/obama-trade-asia-markets-equity-cx%5Ftwdd%5F1105markets3.html?ref=silkroadintl.net) And here’s a stab at the [Future of US-China relations](http://www.diligencechina.com/blog/?ref=silkroadintl.net). Very similar to the prediction that I made a month ago too. If you didn’t know already, the China Kool-Aid is just slightly less popular than the Obama Kool-Aid. 3 of 10 of the [World's Next Great Cities](http://www.forbes.com/realestate/2008/10/23/cities-world-ten-forbeslife-cx%5Fmw%5F1023cities.html?ref=silkroadintl.net) are in China. And another list of [China's Fastest Changing Cities](http://www.forbes.com/2008/10/29/cities-china-economy-forbeslife-chinarichest08-cx%5Fmw%5F1029chinacities.html?ref=silkroadintl.net) that's interesting. Shenzhen, Hong Kong and Guangzhou are 1, 2 and 3--need any more evidence that the PRD is in turmoil?!And finally, I thought that this Thai political problem would be like all the others, but I was wrong—this time the opposition (it’s the PAD this time) has gotten wise. Instead of waiting for the military to step in this minority party has figured out that if they cause enough trouble they can force the military’s hand. Both sides are corrupt and culpable to be sure. But regardless of blame, [Thailand’s democracy is now going backwards](http://business.theage.com.au/business/how-thailands-evolution-into-a-stable-democracy-has-gone-into-reverse-20081104-5hqd.html?ref=silkroadintl.net). I hope the military can resist the urge to overthrow an elected democratic government. But it looks increasingly like another military coup is coming soon. So much for the holidays in BKK. ### Will Hutton’s: The Writing on the Wall: China and the West in the 21st Century—BOOK REVIEW URL: https://www.silkroadintl.net/will-huttons-the-writing-on-the-wall-china-and-the-west-in-the-21st-century-book-review/ Last updated: 2026-07-18T14:48:35.000Z This book, [The Writing On the Wall](http://www.amazon.com/Writing-Wall-China-Century-Hutton/dp/0316730181/ref=sr%5F1%5F2?ie=UTF8&s=books&qid=1225757037&sr=8-2&ref=silkroadintl.net), by [Will Hutton](http://www.amazon.com/s/ref=nb%5Fss%5Fgw?url=search-alias%3Daps&field-keywords=will+hutton&x=0&y=0&ref=silkroadintl.net), is just great. It’s only flaw is that it’s at least 100 pages too long—and there is a specific 100 pages that could be cut out with nothing lost. Chapters 1-8 are as good as any book I’ve ever read on China. Even if the pre1980’s history is a bit long winded, it sets up nicely what Hutton attacks in chapters 4-8, namely that China is ill-equipped to have a transparent political or economic system like that of the US.In my opinion, the best chapters are 4-8\. Chapter 4 on the congruencies of the capitalist and communist systems, chapter 5 on the political difficulties facing the state, chapter 6 on economic frustrations within the current system, Chapter 7 on the necessary political preconditions for a fully functioning capitalist system and Chapter 8 on the social infrastructure that is mandatory to perpetuating the current economic growth; all fantastic. I repeat, the first half of this book is spot on in terms of describing, in theory exactly what China is like. The analysis of the systems of cronyism, corruption, weak R&D in the corporate world, a lack of innovation in either the public or private spheres, ineffective leadership and a lack of international presence by China’s domestic companies are not only revealing but useful in understanding much about the larger system within which individual companies must operate. I reprinted (without permission, but with full source citations—is that OK? What are the online rules for this?) [a section on corruption on this blog last month](https://www.silkroadintl.net/almost-everything-you-see-is-planned/). It’s exactly what we see in factories on the ground each day and what many recovering from the post -0lympic hangover are now discovering with the milk scandal. This is China from 30 thousand feet and it’s a fantastic and detailed perspective. It cuts past all the the “china will rule the world” platitudes and focuses not on if or when but what the internal workings of now are. And how those specific structures are prepared (or not) for supporting another superpower. The position of Hutton is that China is decidedly not the “next” hegemonic superpower. Not because there are others to share power with not because China claims to not be reaching for this goal. But because despite the physical infrastructure and fantastic numbers China has serious fatal flaws. According to Hutton, education that promotes innovation is nonexistent. A legal system and the social structures (free press, individual freedoms) that will support a credible financial system are either hollow or corrupt and getting worse, not better. The maintenance of political power at all costs rather than the development of a stable and self continuing political system seems to be the task at hand for the CCP.For some reason, chapters 9-11 (about 100 pages) are really more critique on the US (and almost nothing about the corresponding situations in England, Australia or EU at all). After reading it all, I’m still struggling to try to understand what the point of these chapters is. Sure, it’s nice to understand how the US is fundamentally different from China. And it’s nice to realize that there are some serious current deficits in the US practices that will allow some great opportunities/advantages to China. But knowing that Enlightenment ideas/institutions are necessary for Western style democracy and capitalism and then assuming that nothing short of replication of these in China will sustain their market economy and political system is a stretch, even for an unashamed flag-waving, American like me. My doubting of the accuracy of Hutton’s conclusions does nothing to decrease the value of the description of China and it’s current malaise. Indeed, the willingness to be labeled a China Basher and become a target of scorn and derision for all the Chinese whose feelings will be hurt by this critique is laudable. This book is detailed and honest look into the depths of China’s successes, failures and future. Highly recommended. ### GS Show Final Day Questions and Related QC News URL: https://www.silkroadintl.net/gs-show-final-day-show-questions-and-related-qc-news/ Last updated: 2026-07-18T14:48:34.000Z This new QC program that Wal-Mart is rolling out is not related to the show, but it is related to the questions on supplier qualifications and product QC. That a buyer as big as [Wal-Mart is drawing a line in the sand](http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/3240469/Wal-Mart-launches-stinging-attack-on-Chinese-suppliers.html?ref=silkroadintl.net) is only going to be a good thing. What can China or the buyers say to this new standard? No? No way. They need this to legitimize their future manufacturing in the light of the last couple of years of bad press. Sure there are tons of Chinese-made goods that are up to snuff, but that line of response is just going to be ridiculed by the west and MNC’s. China needs to pick up this gauntlet and answer the call. There is a great review of the Wal-Mart position of China suppliers right now from Bill Dodson at [This Is China! Blog](http://silkrc.com/chinadialogs/2008/10/29/worlds-23rd-largest-economy-pushing-for-sustainable-businesses-in-china/?ref=silkroadintl.net). This, by the way, is a fantastic blog with a lot of good info about what it’s like to do business on the ground in China (from long boring car trips, to bad food, to negotiations, to actually business—that’s what it’s really like). I talked with a friend at Wal-Mart last night and he said that some in the Chinese media are already painting this as Wal-Mart forcing new costs onto the Chinese suppliers. Here's a hint for the overly defensive nationalist local media--this is the wrong angle to take. I've said it before and I'll say it again: until Chinese factories value the lives of their Chinese customers as much as they value the lives of foreign customers there will continue to be quality problems, child labor, pollution and other problems with Chinese made goods. Chinese buyers/customers really need to support the Wal-Mart program and demand it for domestic production too. But finally, to make this QC program work for Wal-Mart (and others) corruption is going to be addressed even more seriously than in the past. Let me just say this about Wal-Mart and QC, I know that they take corruption in QC very very seriously. But there is still much abuse. We have a supplier that we’ve worked with for more than 4 years. They also supply Wal-Mart. They told me, when Wal-Mart came up in a conversation one day (and I told my friend in Wal-Mart’s South China office), that they are getting killed by the tens of thousands of dollars in payments that the Wal-Mart QC people demand. Not only are their margins already low, they told me, but the corruption is not limited to the inspectors but the department heads are in on the take too. They demanded regular payments or threatened to reject otherwise acceptable product. They told our factory that if the they blows the whistle on them the report will stop the order, go through the (corrupt) department heads and basically just hurt the suppliers own margins and times even more. If something was to happen to the QC inspectors, they claim that they make so much money in illegal payments that they can both take a year off if they are fired and still use the Wal-Mart name/experience to get a new job elsewhere (since no one in China calls previous employers when hiring). The factory would not tell me the PO number because they didn’t want to have the order canceled. But they did repeatedly ask me to talk with my friend in Wal-Mart and see if something could be done without hurting the current order or supplier. To Wal-Mart’s credit, my friend tried to get all the info he could from me about the supplier. For weeks he begged for info so they could do something about it. Wal-Mart also has a very active and extensive fraud department that regulates stuff like this. I known a couple of people in Wal-Mart over the years here in China and I can honestly say they are great people—to a man. But their security and fraud prevention obviously has some shortcomings, but they are vigorous about trying to control illegal activities. I’m not bashing on Wal-Mart here. Actually praising them for both taking the QC issues public and directly to those that matter and for investing so much money into the prevention of fraud. I know they fire a lot of people for graft. The problem is that this type of corruption is systemic, as the cases of milk and lead paint (and cough syrup, and tires, toothpaste, and eggs, etc., etc., etc.,). We’re fired more QC people in China the last 6 years than all other types employees from the US, China and Thailand combined. Honest QC are paid handsomely here. Honest suppliers are something you never let go of. Here’s another example, from a large rodent themed entertainment company, I’ll call them Rat Inc. (I don’t know why I’ve never told this story and used the company’s name, I just never have. Story telling mystique? Fear of retribution? Don’t know. But why change now?!)A couple of years ago we managed a project for a buyer that was selling into Rat Inc. They require that all factories are inspected before any products are manufactured with their name or trademarks. So we called their Shanghai office and said “We’ve got 11 sub suppliers making parts for this kit of kids products. They are all in Guangdong, when do you want to go see them?” They told us, directly: “We didn’t hear that you have 11 suppliers, we only want to see one. We want to see it on this day and we want to be gone by noon. Pick the best factory, get us the details and have them ready with all the sub suppliers items already there.”Now I can understand that Rat Inc. wants to be efficient with their inspector’s time. And I can understand that they trust our good judgment and manufacturing quality. But policy is policy, right? And the point of having inspectors in the first place is to inspect, right?! I guarantee you some of the sub suppliers wouldn’t have passed their standards—and that’s the point. They knew it too. But they also knew that the product was, at least with an eyeball test, “good enough” to ship out and there was a very low chance of it coming back, so they just let it slide. These are the issues that you face manufacturing your own products, anywhere in the world, really, but especially in China. The rule of thumb is: the more time you spend in the factory watching, testing, checking, the better the quality your end product will be leaving China.**Show Question #1.** **Q:** I’m about to place my first order with a Chinese supplier but I’m now concerned that the factory may go bankrupt like so may others; I may lose my money and the product I’ve now found. What should I do? Also you recommend using a lawyer in China, how I would I find a reputable one?**A:** **First**, pay $150 or so and get a report on your company before you send any money. It’s easy to do. Get online and talk with either [Verify](http://silkroadintl.net/blog/wp-admin/www.verifyservices.com?ref=silkroadintl.net) or [Glo Bis](http://silkroadintl.net/blog/wp-admin/www.glo-bis.com?ref=silkroadintl.net). Both are US companies. They can get you back ground information and even government tax and registration reports and personnel searches on the owners. I’m sure there are many other similar services like this available if you looked.**Second**, pay another $800 and get your factory audited. This will confirm for you both what the factory is really doing (capability) and it will give you a “live” update as to the current situation of the factory—are they busy, clean, licensed, still there, etc. SRI can do an audit for about $650 plus expenses. [Bureau Veritas](http://www.bureauveritas.com/wps/wcm/connect/bv%5Fcom/Group?ref=silkroadintl.net) has similar charges (I think) and also has engineers if you want specific machinery audited (costs more).**Third**, ask your factory/supplier for some client recommendations that can vouch for the existence and the quality of your potential supplier. Try to get someone from you home country (or that at least speaks your language, obviously) and that has ordered in the last few months. Now, maybe you’re saying: “Hey! I can’t pay and extra $1000 to just confirm what they already told me!” My response is: “What % of your order can be rejected and still allow you to still stay in business?” Yes, it’s that serious. Pay $1000 up front. Pay another $1000 for a few days of QC and you’ll not only be safe, you’ll be set up for your next order and you and your supplier will have standards set for the future. If you are ordering $20K or more, this should be an acceptable margin. And the next order you’ll only be paying $1000 for the QC. The opposite scenario is that you just trust your factory and send tens of thousands of dollars to someone you don’t know, have never visited and works in a very instable and opaque business environment. If the factory takes $20K and runs (and I’ve never had this happen to me, but I’ve heard stories) the $1000 will seem like small potatoes. If 20% of your order is junk, or if 100% just “off just a little,” but enough to make it a 2nd in your market, how insignificant is the $1000 pre-check now?!You learned it when you were a kid and it’s still true now: it’s better to be safe than sorry.**Fourth**, get a lawyer and cover your legal bases in China before you send any info/spec’s/designs/art to China. China is a file first legal system (like Germany, but not like the US which is first to market) so you need to register your designs before you start working in China. Some lawyers you can use are [Harris and Moure](http://www.harrismoure.com/overview.html?ref=silkroadintl.net) in Shanghai/Seattle and [Jun Zejun](http://www.junzejun.com/en/index.asp?ref=silkroadintl.net) in Shenzhen. I’ve used both. Harris and Moure are much better, and much more expensive too. But I have friends who swear by Jun Zejun.**Show Question #2Q:** If I see that factories/suppliers are “certified” or “Verified” or “Trusted” on the online sourcing sites, what does that really mean?**A:** It has a lot of different meanings. **First**, on Alibaba, you can buy the Trust Pass or Gold Supplier status icons. It has nothing to do with quality of the product or legality of the business (though they do claim to do a credit check). I was offered the option of buying “gold” or other levels when we once considered setting up on Alibaba. It’s sold to trading companies, middle men, buyer agents, whomever. Their sales people offered it to us as a way to convince people that we were a manufacturer.**Second**, On Global Sources (and no, I’m NOT an employee or contracted worker for GS in any way, shape or form) the “Verified” means that they have visited the factory and confirmed that they have a business license and have a credit check run. I don’t know how the process works for he other sourcing sites. Search engines like google, Baidu, Yahoo do NOTHING to certify the listings on their results pages. ALL these sourcing sites have NO GURANTEE FOR ANY PRODUCT OR PRODUCT QUALITY! They have simply verified the legal and physical existence of the supplier. The quality of any item that you buy is completely up to you. ### Oh, The Irony! Part 273 URL: https://www.silkroadintl.net/oh-the-irony-part-273/ Last updated: 2026-07-18T14:48:34.000Z First, the irony of people who bought pirated software complaining about the fact that it still works but is not as pretty anymore just kills me. If I buy DVD’s on the street, I don’t complain that they don’t work, I kiss my 5RMB goodbye and wait a couple of months till it comes out on iTunes. But everyone online in China is [mad at Microsoft](http://www.latimes.com/news/nationworld/world/la-fg-china29-2008oct29,0,3703471.story?ref=silkroadintl.net) for defending it self from the worst piracy on the planet! YOU BOUGHT STOLEN PROPERTY!!! Welcome to the world stage that you were so excited to be on back in August! No one in China is mad that IP theft fuels the distrust of China by foreign companies, contributes to the lower-than-there-should-be levels of creativity and kills China’s own successfully branded companies. Oh the irony!!Second, Why [China will not step in and save the world](http://blogs.straitstimes.com/2008/10/28/why-china-may-not-save-the-world?ref=silkroadintl.net). Um…maybe no one is asking them too. I could be wrong, but while I’m seeing a lot of press on the idea that China could do something, I’ve not seen any governments say anything even remotely similar to “they should” do something. [China has enough of it’s own problems](http://english.caijing.com.cn/2008-10-28/110023944.html?ref=silkroadintl.net) (and many more than are readily apparent) to deal with probably would rather not get involved in the tangled webs that have pulled the rest of the world down. I hope that I’m wrong, about China having too many of it’s own problems. A strong China is better for the world economy, my personal economic well-being and global security and stability. But remember, China is supposedly strong because of how insulated it is from the world, not how well connected it is. Why, in the midst of crisis, would it want to burst that security bubble?! Also remember, China wants a “peaceful rise” and does not want to be come a hegemonic power. Now would be the time to move into the role as leading candidate for next hegemon. But it’s not. It’s constrained, in part by it’s own rhetoric, oddly enough, to try to fit in and not stand out too much. Third, [Retail sales are up in China](http://www.chinaeconomicreview.com/cer/2008%5F10/Chinas%5Fconsumers%5Fon%5Fa%5Fshopping%5Fspree.html?ref=silkroadintl.net), but the economy is bad!?! Isn’t it? Here’s some context. Chinese people save 40%. And....It’s not hard to figure out that after a disastrous 2007/early 2008 in the local stock markets that people are not buying stocks in China any more. Nor is it surprising that with slumping housing markets that Chinese people are waiting, cash in hand, to buy a house until things hit bottom. Furthermore, spending on luxury purchases is also down in China. Combine all of these with the fact that for 8 months of 2008 the entire country was on a self-induced, nationalistic high and what do you get? Consumer spending is up 4% year on year!!So…let me get this right. People had money, better attitudes, no bad news and nowhere to put it but in the shopping mall or the bank and they chose to spend a bit more? No kidding? Boy, aren’t those Chinese inscrutable?! I’ll bet you’d find that bank savings rates were correspondingly higher too. They’re still Chinese so the conservative sense that has helped them to avoid mortgages and save 40% of their incomes is still there. But they also were openly celebratory for the first 8 months of this year—and celebrations cost money. Now the Oct 29 [China Economic Review blog](http://www.chinaeconomicreview.com/?ref=silkroadintl.net) says: “The disappointments continue as more Chinese companies' third-quarter reports roll out.” Who wants to bet that 4Q numbers for consumer spending this year track the poor 3Q corporate numbers? Get back with me in February ’09 when the numbers come out. And, in the US, the two worst airlines in the history of the world are [merging](http://www.reuters.com/article/newsOne/idUSTRE49S8BA20081030?ref=silkroadintl.net). Tell me how this is a good thing! ### So, How Does the Carnage Look from Ground Level? URL: https://www.silkroadintl.net/so-how-does-the-carnage-look-from-ground-level/ Last updated: 2026-07-18T14:48:35.000Z **10/31 Halloween Update**: A lot has been made of the seeming difference in my post here (it's bad and getting worse) and another good post on [Shenzhen Undercover](http://shenzhenundercover.blogspot.com/2008/10/shenzhens-greater-plan-no-manufacturing.html?ref=silkroadintl.net) (it's been planned and happening for a while). [China Law Blog](http://www.chinalawblog.com/2008/10/shenzhen%5Fno%5Fmanufacturing%5Fjobs.html?ref=silkroadintl.net) and 3PL Wire both picked on the "conflict. " I'm personal not seeing any conflict. In fact, my 6th point below points out that yes, this movement is both planned and has been happening from at least least year on. I press that things were changing last year, have worsened this year; the timing of the international recession coincided with a year when change in Guandong and national level economic breaks weren't supposed to hurt this much--so it's unintentionally bad and the bleak numbers will continue. Shenzhen Undercover, if I may summarize, details what Shenzhen is doing specifically to move up the product food chain--but doesn't deny that there are economic issues with restructuring the economy. \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ **10/28 AM UPDATE**: Like I said, "Bad and getting worse. " This morning [Will Hutton](http://www.tehrantimes.com/index%5FView.asp?code=180991&ref=silkroadintl.net) (author of The Writing on the Wall) and even the [China Daily](http://www.chinadaily.com.cn/china/2008-10/27/content%5F7144346.htm?ref=silkroadintl.net) agree. \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ I spoke with NPR again this week about the “feeling on the ground in southern China.” And while I can’t speak for everyone, I know what I’m seeing across a large spectrum of industries and in a number of cities. Basically, the euphoria is over. Lack of any real press for the first 8 months of the year and no 3Q numbers until this last week meant that China thought it was immune from the global slow down. Um, it’s time to wake up from the artificially induced “one world, one dream.”What happened in the US with homes happened in [southern China with export factories](http://www.usatoday.com/money/world/2008-10-21-red-dragon-china-factories-economy%5FN.htm?ref=silkroadintl.net). They mortgaged their future on the promise of continued growth and now it’s all gone and debts are higher than the value of inefficient factories and increasingly inexpensive labor. With growth at 9% people are worried. On the street that means a couple of things. First spending will drop and conservative Chinese will save even more. The domestic stock market scared millions of investors 9at least twice in the last decade now) and the US crash compounded that fear. I don’t believe that the domestic economy is as impressive as the govt says. It has never been the savior that MNC’s have dreamed and it’s not going to save the GDP this next year either. People aren’t spending, they aren’t investing, the housing bubble is popping. The milk scandal has totally obscured any of the positives that the 0lympics created. And it just keeps [getting](http://www.theage.com.au/world/china-milk-scandals-huge-impact-20081026-5900.html?ref=silkroadintl.net) [worse](http://news.bbc.co.uk/2/hi/asia-pacific/7692400.stm?ref=silkroadintl.net).For more evidence look at housing prices in the east and now the 2nd and 3rd tier cities—they are all falling. Look at investment rates in stocks (even in HK)—non existent. There is no domestic stock market to speak of anymore. Our neighborhood shopping mall has 32 of it’s 110 store fronts EMPTY right now (33--new closure this AM!). The mall two blocks away has more than 20+ of it’s 150 storefronts empty too. And a third mall is being built next door?!!?Second, the fact that the bottom dropped out of the 40% of the economy that was based on exports means that maybe up to 20% of the total economy is just gone now. And it just will not be back next year either. There is no way that the other 80% are going to remain untouched. A few (or even a lot of) domestic infrastructure projects are not going to make up for that. The buying slow down is going to kill the 4Q numbers too. I have a friend in the technology business. He told me of buyers that came over to finalize Christmas shipments of LCD TV’s for the US market. They usually extract penalties and airfreight for the % of the Christmas orders that are late. Not this year. When the supplier said that 30% of the order would be late they told them to just keep it. There is no market for it any more. If I was a betting man, I’d put money on 4Q numbers being below 8.5% and next years numbers even lower. (Honest numbers will be below 8.5% for sure but “official” numbers will not be that low because of the need to control a bit of the domestic collective psychology—like the US will never have another “great depression” because it sound’s so awful, 8.5% is the magic number that has to be hit just to keep the new entrants into the workforce employed in China. A drop below 8.5% and people will start thinking ‘89 again.)Third, like toys, many industries are now scared of being "Made in China" and will not come back (or will not come back as much as they were here before). In the last year I’ve had three clients in the toy industry tell me that they’ll work with factories anywhere but China. Even Chinese owned factories using Chinese materials in Cambodia, Lao, Indonesia or Burma are fine, said one guy. Just so long that it doesn’t say “Made in China” on the tag. This was happening before the slow down and so there were many factories that were compliments to the toy industry that were hurting and are now being pushed over the edge. Most have seen the story of the [Yantian port numbers](http://news.bbc.co.uk/1/hi/business/7679679.stm?ref=silkroadintl.net) and regardless of the cause, the export bonanza is officially over. Fourth, this is exactly the “[image” problem](http://www.business-standard.com/india/storypage.php?autono=338391&ref=silkroadintl.net) that people are writing about. > “China’s recurring scandals are clearly not stray incidents anymore, but systemic. This is in spite of China professing that it has adequate regulatory safeguards. The lack of transparency and suppression of information is increasingly becoming an issue. China needs to get its act together to improve safety norms, monitoring processes and surveillance. Prime Minister Wen Jiabao’s call to pay attention to “business ethics and social morality” is welcome. With China’s reputation as a reliable factory of the world at stake, and other competing countries offering quality and catching up with China, there is no guessing as to who the loser would be. This time around, an increasingly wary world is watching China carefully.” > Fifth, specific to GD province, the competition from 2-3rd tier cities hurts. It started to show when 2 million migrant workers didn’t come back from Chinese New Year holiday this last year. It’s continuing as people are realizing that being close to home may not only be as good as being on the east coast in terms of money per month, but also much safer as the economy slows down. Sure the government wants to move another 100 million people to the cities in the next few years. But “the cities” no longer mean Beijing, Tianjin, Shanghai, Shenzhen and Guangzhou. “The cities” now means all the 2nd and 3rd tier cities more inland and closer to the rest of the teaming masses. Sixth, combine that domestic competition with the fact that Guangdong province has decided to move up the economic food chain by raising labor rates and focusing grants and incentives on electronics and other higher end industries and you have a lot of factory closures here--"a lot," by the way, means tens of thousands. Finally, it’s going to get worse. China hasn't seen the worst of it and won't until middle of next year at the soonest. In the US, if the democrats get both the presidency and 60 seats in the Senate you will see both increased taxes in the US (e.g. less money in the economy to buy Chinese goods) and more protectionism for local industries (the left’s base has substantial union support). I guess that we can hope that [Obama will be as flaky as Clinton](http://www.nst.com.my/Current%5FNews/NST/Thursday/Columns/2382506/Article/index%5Fhtml?ref=silkroadintl.net) and campaign on one platform and then change immediately upon election and many protectionist policies will not be ultimately enacted. Regardless of who wins, the US economy is not going to “recover” for at least 6 to 8 more quarters—and then who knows by how much or how quickly. Most are saying ’09 is going to be worse and then we’ll see incremental growth starting summer ’10\. That means that if China’s domestic economy can’t pick up the slack (losing 20% of it’s economy) it’s going to a long couple of years for folks in the South. The saving graces are the fact that China can still inject cash and still lower interest and tax rates to prop up the domestic economy. Also the fall in the price of oil and other commodities will help to keep inflation down. But if no one is buying anything out of fear of more turbulence these may not be enough to keep the Chinese economy above 8% next year. ### More New Buyer Questions URL: https://www.silkroadintl.net/more-new-buyer-questions/ Last updated: 2026-07-18T14:48:35.000Z **More Questions from New Buyers at the Global Sources Hong Kong Show:1\. Q: If I’m small can I do the QC myself?** **A.** Absolutely. The reason that you are here in China, at a show is because you know your product better than anyone else (or you don’t have any one else to send). The logic for QC is the same as for the trade show—who knows more than you?! No one, so yes, you certainly can do it your self. Now the caveat. What do you really know about how to do QC, arrange logistics and negotiating with Chinese (factories)? If the answers are nothing, less and “don’t they speak Cantonese in China?” then you’re in a bit of trouble. BUT NOT ENOUGH TO DISCOUNT THIS OPTION ENTIRELY. You need to be very careful about the way you handle this, but it is very doable.**First**, you need to realize that you’ll need testing/QC or at least samples at the VERY LEAST three times in the production process. First, you want to at least see if not test/QC the first production samples that come off the line—these are not the samples that you had built before production started. I’m talking the honest first actual product off the line. Problem is, if you don’t pull them yourself, how do you know they are production and not golden samples? You don’t. Pull them yourself or hire someone to pull them for you. It’ll be worth the money to make sure that these are the real deal. Trust me on this one.**Second**, you need to do some sort of inline QC at about 20% to 25%. This is to confirm that it’s all going well, that the samples, first samples and current production still match. This is also the time to confirm what the packaging will be like. At about 25% production you can start doing the set up and pre-packaging problems solving work on the fulfillment line. This may take a week—confirming production, print checking the packaging, putting the first pieces into the packaging, teaching fulfillment QC what the packaging priorities are and completing some 100% correct standard samples.**Finally**, you need to be there to check the finished product and confirm the truck loading before you pay for anything. This last trip should not be confused with “I’m bring money to pay you” which is what the factory wants to have you come to do. Your first priority is to check the quality of a large percentage of finished goods. Up to this point you’ve honestly maybe seen 1% of your product finished. So now it’s time to look at a random 10 to 20% (depending on how much time you have). If you have done more in-line QC then you can check out less now. If you’ve had more hands-on oversight during the packaging/fulfillment stages than you can do less now too. But if you’ve only been in your supplier’s factory for a day or two at the 25% point, you need to be looking at a lot of product to make sure that you’re really getting what you expect.**A couple of warnings about doing your own QC**. You don’t need to let your factory know you’re coming. If you have a production schedule from them and they know that you’re going to have QC drop in, that should be good enough. Sometimes you want to be polite (the first visit) but you shouldn’t need permission or an appointment to see your own stuff. Second, do not, under any circumstance, accept sub-standard product because you are being pressured or cajoled or even threatened. Third, make copies of all your QC reports/list/documents (whatever you’re using) and get it signed and stamped by the factory manager—now he too knows that what is and is not up to standard to ship. Confirm with whomever is in charge that your issues must be resolved before you’ll pay (and ideally before they do anymore work). Finally take tons of photos and samples with you. Write on them, mark them up, use them to talk with QC and line workers. Sign good and bad pieces and make sure you and the supplier both have a copy of each.**2\. Q: Where should my QC office be?** **A:** As close to the site of production as possible. If you are from the UK, as the guy who asked this question was for example, and you’re doing 80% of your manufacturing in China nowadays, why the hell would you still have your QC office and personnel based in the UK?! Yup, at this point in your business life you’d better be moving your QC manager to China. If you’ve still got a QC manager checking goods as they enter your UK warehouse, i.e, goods that have already been QC’s, packaged, paid for and shipped from China, then you are paying for nothing. It’s too late to do any QC once pre-paid product hits your warehouse; especially if you’re the importer of record! If you’re doing say, three production runs a year and each take 30 days, then maybe you only need to have your QC over here for 30 days a year. Why 30 days and not 15 days? Because 30 days divided by the costs of 3 trips is a much better deal than 12 days dived by the cost of 6 trips (two trips per order). The point is, you get better product for less money if you have someone over here for longer times per trip. The natural conclusion being that a full time body in the factory is both the cheapest and safest option. ### Week Two HK GS Sourcing Show Questions, Oct 20 URL: https://www.silkroadintl.net/week-two-hk-gs-sourcing-show-questions-oct-20/ Last updated: 2026-07-18T14:48:34.000Z More questions from the New Buyers Seminar at the Global Sources Sourcing Show in Hong Kong.**1\. Q: How do I get samples that are packaged correctly before the line work is done (or just by air at anytime)?** **A:** Specify your packaging needs. Packaging for air and sea freight are most likely significantly different—at least they should be. Shipping by air does not usually give you the packaging that you need to compensate for not having a container to protect things. To compensate, you need to specify additional exterior packaging for all items going by air. Remember, the rule for any product or packaging specifications: If you can’t or didn’t write it down, don’t expected it to show up correctly.**2\. Q: How do I choose a 3PQ? A:** **First**, you first find someone that has an office in the same general area as your supplier or your costs will be more expensive. This shouldn’t be a problem as must of the big (and many other mid-sized) 3PQ companies have offices all over Asia. **Second**, you need to find a service provider that has experience in the general product area that you are working in. They may not have experience with the specific product you are buying/manufacturing, but if they have experience in the general product area you can work with them. Which brings us to **step three**, work with your 3PQ to create a QC program that is specific to your product, market and personal standards—remember you are paying them to represent you, so be specific with what you expect. **Fourth**, confirm that your supplier has the licenses and certifications that they need to do business in China an in your product area.**3\. Q: How can I afford to have a 3PQ come in and check the production 3-5 times (or more) if I’m a small business just starting out with production in China?** **A:** **First**, the real question should be this: How can you afford to have crappy product show up at your home country with full payment completed and no recourse for sending it back to or getting it replaced by your Chinese supplier?**Second**, the rule we see is about $1000 direct investment into QC for every $10K of product you plan to ship. This means that at about $300 per day (QC fee plus expenses) you get 3 QC days per $10K. That would be about right—one to two days of in-line QC, one day of finished packaging QC and a day of loading/container confirmation. For a larger qtty order, you need more days of in-line and final QC just to get the same level of assurance.**Third**, I understand the intent of the question—“Wow! QC be expensive, I wasn’t planning on spending that much. I’m a small business and I was coming to China direct to save money, not spend more. What can I do?!” My experience in China tells me you have three options, you can pay for 3PQ to do it for you, like I just detailed, you can fly back and forth to China and do it your self or you can not do any QC and just roll the dice with quality. There is really no other option. Even if you are buying on a strict budget, spending the $600 to get at least two days (one in-line, one final) of QC should just be mandatory. There is a reason why going direct is cheaper—you’re cutting out all the middle men. And while some of them are just adding costs and not much service, some of the people you are eliminating are providing real services—QC and logistics, for example—that you now absolutely must pay for yourself. If you are not going to do QC you might as well be going to Macao instead of buying product. I’m sure your odds are at least as good. ### China, the global financial mess and what it means for SME's URL: https://www.silkroadintl.net/china-the-global-financial-mess-and-what-it-means-for-smes/ Last updated: 2026-07-18T14:48:35.000Z So, what’s really up with China and the Global Economy? Are they immune, hurting like everyone else, headed for collapse or what? Options include:1\. They are fine and will [see few if any affects](http://seattlepi.nwsource.com/opinion/383211%5Fchinaonline15.html?ref=silkroadintl.net) from the world’s economic slow down.2\. They are not only fine but [should help the rest of the world](http://www.theglobeandmail.com/servlet/story/RTGAM.20081014.wcoching1015/BNStory/specialComment/home?ref=silkroadintl.net) out.3\. They may have [some problems](http://online.wsj.com/article/SB122389003110128171.html?ref=silkroadintl.net), but [they’ll manage](http://www.bloomberg.com/apps/news?pid=20601080&sid=aT3ePIGnXZFQ&refer=asia&ref=silkroadintl.net).4\. They are going to be [hurting just like the rest of us](http://ap.google.com/article/ALeqM5gzBuRY4v9N5argv6j%5FNThfg0GU5QD93QD6O00?ref=silkroadintl.net), just for [different](http://www.theaustralian.news.com.au/business/story/0,28124,24502957-30538,00.html,?ref=silkroadintl.net) [reasons](http://www.theglobeandmail.com/servlet/story/RTGAM.20081014.wcoching1015/BNStory/specialComment/home?ref=silkroadintl.net).[ ](http://www.theglobeandmail.com/servlet/story/RTGAM.20081014.wcoching1015/BNStory/specialComment/home?ref=silkroadintl.net)5\. They are [already hurting](http://www.economist.com/business/displaystory.cfm?story%5Fid=12380989&ref=silkroadintl.net), we’re just not seeing it. At least they aren’t at [war with their neighbors](http://in.reuters.com/article/worldNews/idINIndia-35974320081015?sp=true&ref=silkroadintl.net), [themselves](http://www.earthtimes.org/articles/show/236908?ref=silkroadintl.net) and [their own army](http://www.iht.com/articles/ap/2008/10/17/asia/AS-Thailand-Political-Unrest.php?ref=silkroadintl.net). So much for my dream of retiring in peaceful, quiet, Thailand. So what’s the answer? What’s the situation in China? I think that they will weather the storm but be hurt by the surrounding slowdown, no shocker there. But, it’s also going to be worse than official figures will ever let on and it's going to be difficult for SME's throughout. First, they have the capital to survive and the security in the banking markets that the US didn’t have to carry them through tough times. The banks are relatively stronger than the US, but only because a highly capitalized and motivated govt will not allow them to fail. (For more on this read: The coming collapse of China.)Second, they have the ability and willingness to sink billions into public works which not only employ people and infuse cash it builds the infrastructure for future growth (it also lines the pockets of government officials which also helps the high-end economy). But there will be serious bumps. There are 10’s of thousands of factories in the toy and furniture industries alone that have gone out of business in Southern China in the last year alone. This has nothing to do with the economy, but rather higher taxes and the lead paint scandal respectively. When you combine the closure of these thousands with the thousands more that are shuttering as the economy drops to a two-decade low of 8.5% growth and you have a serious situation on your hands. The really interesting part is that we’ll never know exactly what the numbers in China mean because we’ll probably never know the exact numbers. Why? Because once the growth rather starts to reach the “politically sensitive” point, about 8.5%, the interests of the State will kick in to keep bad news out of general public consumption. This is similar to the temperature in Chongqing. When I was working at a university as a teacher in the summer of ’95 the temperature in Chongqing was sweltering. The law was that if the gauge got over 40 degrees school and government offices closed down until it cooled down. So we were stuck at an official 39.5 degrees for more than two weeks before, in an incredible atmospheric inversion in mid August, the official daily temp jumped to 44 degrees every day for the next week and a half and school mercifully closed. Of course everyone’s personal thermometer had already been at 44 degrees for the last month. Back to 2008 not much is different. The fact that China took an 0lympic ego break from bad news for the first three quarters of this year does not mean that there weren’t problems; it’s just that no one was able to talk about them publicly. Now, milk, Skype, mudslides, they are all coming roaring back into the public spotlight. I dare you to run the same public confidence polls (Pew) that were run earlier this year again now. Instead of 83% of Chinese being proud of their country, I’d be willing to bet you get half that number now. If you think that this is the last problem we’ll hear about, that manufactures have learned their lessons, think again. I’ve said before that with the economic squeeze on, there will be more, not less, likelihood of problems with inferior (cheaper) materials being used in production. To understand the levels of, um...complexity involved in doing business in China, read this article about the [lack of any legal action against Sanlun](http://www.nytimes.com/2008/10/17/world/asia/17milk.html?%5Fr=1&hp=&oref=slogin&pagewanted=all&ref=silkroadintl.net) (the tainted milk supplier). What do SME's do? The big guys are going to be more secure in their developed supply chains and supplier relationships. The domestic markets are also going to be getting some federal help. So what about the impact on small to medium sized foreign buyers coming to China? That’s where the pinch will be felt. Smaller buyers are going to be fighting through the remnants of the closing down and the gone but still not closed and the suppliers that are still in business. This group of active suppliers will continue to shrink. The good news is that as large buyers buy less, there maybe room at larger suppliers for smaller orders. You’re going to need to really do more due diligence in vetting suppliers than before. Testing of samples and QC are also going to be even more important too. Starting out in China for the first time, or even having been in China for years and starting a project with a new supplier, the reality is you can’t trust what’s in your product without doing independent testing. This isn’t Sun Tze and it ain’t brain surgery either. It’s just common sense. If the people who are making your product are not invested in your relationship or the quality of the products then they will never be independently accountable for the results. The current global crisis means that suppliers in China (and everywhere), no matter how insulated from the banking mess, are sill being negatively affected. Orders from overseas are down and domestic demand, the mythical panacea for any of the ills of “capitalism” in “socialist” China, has yet to take up the slack. What this means is that more than ever before your suppliers is being squeezed to get as much profit as possible from each piece that comes off the line. As I’ve been warned by many many Chinese friends, there are not yet deeply ingrained ethical standards in China as you may be used to doing business elsewhere. This means that when business is tight, and you’re not here watching the line, there is a great chance you will not be getting exactly what you are contracting for. Even in, or maybe especially in, overly/closely regulated industries people that are willing to do the (western) “right” thing when push comes to shove with local officials are hard to find. There is no recognized financial incentive to be transparent in China—so don’t expect it. Ever. The unfortunate reality of amoral capitalism is that profit is the ultimate end goal. That can be good if there is a long-term mentality that weighs the costs and balances of the current order’s profit potential with the long term client relationship. But in China, whose history is long but experience with capitalism is short, the attitude is often very short term. To help create participation and responsibility in the processes work with your suppliers to build systems and infrastructure for the future that ensure people understand quality standards and are rewarded for achieving quality rather than achieving savings goals. Random thoughts on recent related news articles that maybe of interest/help to you:Continued [news cover ups](http://cmp.hku.hk/2008/10/14/1286/?ref=silkroadintl.net). The question that I asked a few weeks ago, “[is corruption endemic?](https://www.silkroadintl.net/almost-everything-you-see-is-planned/)” is only half of the question. The full question should have been: “is corruption and the subsequent cover up endemic in China?”More than the actual milk scandal, [the cover up is what hurts](http://www.atimes.com/atimes/China/JJ10Ad02.html?ref=silkroadintl.net) China’s soft power and reputation. This [James Fallows article](http://www.theatlantic.com/doc/200811/chinese-progress?ref=silkroadintl.net) says the same thing. Everyone has problems, but China kills itself because it just doesn’t manage the fall out from the problems well. Call me crazy, but I always thought that to ruin one's reputation you had to have a good reputation in the first place!! When was China’s track record on product quality good? Isn’t this the country that went from socialized mass production of crap to capitalized mass production of crap? I, and thousands of others like me, indeed entire industries (3PQ), are in business because of how [consistently bad quality control in China has been](http://www.washingtonpost.com/wp-dyn/content/article/2008/10/06/AR2008100600547.html?hpid=sec-world&ref=silkroadintl.net), is now and will continue to be. My friend Mike was telling me about how factories get all their R&D for free from foreigners at shows and I commented that that’s the real economic miracle of China—FDI combined with free R&D would make anyone competitive! So, where does the US still lead the world? Even China knows that [it’s in R&D](http://www.mei-zhong.com/2008/07/why-is-america-energetically-researching-china/?ref=silkroadintl.net). Which makes [Mike’s story](https://www.silkroadintl.net/new-china-buyers-qa-from-the-hk-gs-sourcing-fair/) about stealing at trade shows that much scarier. Finally, be wary of anyone that claims that moving to Vietnam or Guiyang or Timbuktu will be better for your business simply because "labor is so cheap" or “there is so much potential” there. Good article on Vietnam [here](http://www.asiasentinel.com/index.php?option=com%5Fcontent&task=view&id=1466&Itemid=390&ref=silkroadintl.net). If you can fit these production centers into your larger supply chain, that’s great. We do, and there are real values out there if you already have a developed supply chain. But don’t count on them replacing the Pearl or Yangzi river delta’s as your major supply centers just yet. ### New China Buyers Q&A from the HK GS Sourcing Fair URL: https://www.silkroadintl.net/new-china-buyers-qa-from-the-hk-gs-sourcing-fair/ Last updated: 2026-07-18T14:48:35.000Z Show Questions:**1\. Q: "How do you tie QC to payments to your supplier?** **"**A: First, any 3PQC needs to be paid for by you, not your supplier. We’ve had people that have told us proudly that they negotiated the 3PQ be paid for by their supplier. Bad idea. You want your QC to be completely beholden to you. Understand that suppliers often have no qualms about paying a few hundred dollars to a 3PQC inspector to get a $100K order “approved.” 3PQC inspectors that make only a few hundred to a thousand a month have a hard time not taking the payments too. Having said that, you can certainly charge back to the factory the costs of extra QC necessary to reinspect rejected product.**True story:** We have a supplier that complains that the QC for one of the world’s largest box stores are so corrupt, top to bottom, that they almost can’t afford to work with them even though their volume is huge. Huge, I tell you. The QC are so secure in their ability to extort money from suppliers to pass already good quality product that they basically dare the supplier to expose their corruption. The QC can make thousand of dollars a month on top of their individual salaries and if they get fired they can still use their employer’s name and experience to get a good job in the future. Second, you need to be very clear in your contract that while you may pay for the balance of the order before the goods are released to port you will not make any payments until 3PQC has confirmed with both you and the supplier that the goods meet spec. One of the best ways to do this is to do multiple QC visits. If you are only visiting the day before product is scheduled to leave and you find problems it may be too late to fix the problems and still hit delivery dates. At the very least unpacking items, reworking them and repackaging them are going to damage the retail packaging and increase the number of returns you get from your domestic clients. Finally, with every QC visit you need to have the report signed, stamped, dated by both a manager in the factory and the QC inspector. Then you leave a copy with the factory, have the original return with the QC inspector and you get a faxed or emailed copy too. This makes sure that everyone is on the same quality page from the very beginning. Make these QC reports part of your contracts too--that repairs, replacements, etc must be completed and reinspected prior to final payment.**2\. Q: "Ok, so we need to do product testing, how do we make sure that we don’t test “golden samples” but test actual product?** **"**First, you have to have someone you trust pull the samples from the production line. DO NOT TRUST THE SUPPLIER TO DO THIS FOR YOU. Remember they have no incentive to give you the real thing. Their incentive is to submit something that passes the tests since they’ve already bought the raw materials and started production. If you don’t have anyone that is on the ground representing you directly you can hire someone like SRI or any other 3P service provider to go to the factory, pick the samples themselves and then take it to their own (or contracted) lab and test it and send the results back to you.**True Story:** We had a supplier that created inks for one of their client’s tests that were completely different from the inks that they supplied the client in their products. They did this with the complete knowledge and consent of the client!!! The client bought the cheapest inks possible and requested the supplier provide better quality inks to the testing companies. The supplier had no issues with this blatantly dishonest request from their client. If you do, and you should, you need to take appropriate steps to secure actual products for testing. Second, you need to consider testing at multiple times in the process. Depending on the size of your order (and the size of your liability!!) you should test materials before they are used, test samples before production starts, test in-line samples as production is on going and then test final product before it ships. Remember, liability is ultimately your responsibility.**3\. Q: "Condisering the language barriers between me and my potential suppliers, how do I communicate the technical information that is necessary to manufacture my product correctly?** **"**A: Keep it simple, stupid. Use the same format and processes as much as possible. Let you suppliers know how you expect to communicate and ask them what they expect and what they are used to. Often there are types of software (or the newest versions of software) that may not be in China yet. Talk with your supplier about what you are using before you send them documents they can’t open. Also keep records of EVERYTHING. Copy and past Skype, QQ, MSN or other chats into word documents and email them to your suppliers after the conversation is completed. Type instructions in bullet-point formats so that they can be easly read and more easily understood. Confirm and reconfirm each of the specific/important technical points involved in your product's production.**True Story:** I was hired part time as a Thai speaker to sit in on meetings and make sure that each side is talking about the same things. I did this while I was in grad school for a couple of companies that were working in Thailand and needed someone that could speak Thai. The company would prep me on the technical details and I'd look up the specific translations before the meeting. Then I just listened in to all their calls and made corrections to each party's understandings as needed. It worked out great from the companies (one of whom I later worked with) and I got some much needed cash to supplement my student income.**4\. Q: "How do I know that my factory is certified to meet the standards of my home country?** **"**A: You don't!! Know this: Factory certification does not mean actual compliance. Your factory may have the ability to be compliant but may not know how to exactly achieve it. They may have been “certified” but may not be updating that certification. They may be meeting all that they are asked to do and while that technically gets them the certification certificate but doesn’t really meet standards that you require. So what to you do? You hire third party testing and engineers to work with the factory to do QC at all points of the production process.**True story:** We were supplying a client that needed to ultimately deliver product to one of the large entertainment companies in the US. This company had a factory audit standard that required all suppliers be audited before the PO was issued. We were using at least 11 different suppliers and called and told the entertainment company’s audit company that they’d need to spend at least a week auditing all the suppliers. They told us straight out that they don’t want to know about 10 of the suppliers and we should pick the best factory, prep them for the visit, and they’ll come out for a single visit and leave. Charles Kirmuss of [infinity](http://www.infinitygearradios.com/?ref=silkroadintl.net) tells the story of a factory that he worked with that was technically ISO certified but had no clue how to actually be compliant. He wrote the ISO compliance manual for them! He helped them implement all the necessary procedures to make sure that (at least) his product was both certified and compliant. If you are willing to work with your factories you can both get what you want and develop a lasting relationship that is good for both parties.**5\. Q: "How do I find somebody that I can trust?** **"**A: Here’s [my business card](https://www.silkroadintl.net/).Nobody cares about your product as much as you do—so make the outward commitments to your product quality and factory relationship that will teach your supplier that you really care and expect them to care also. This means you need to participate with your supplier in training and education. My personal theory on QC in China is that there is a direct relationship between the amount of time you personally spend with(in) your factory and the level of quality you will get shipped to you in the end. Finally, **best story of the show**, courtesy of Mike Bellamy ([Passagemaker](http://www.psschina.com/?ref=silkroadintl.net)). Mike asked a group of factory owners/managers how they can produce new designs each year when they have absolutely no R&D budget or department. Their answer? "From foreigners at tradeshows!!" Yup, that info that you're passing out as info to get bids is being used by the factories that don't get your orders to create their "own" new line of products. This, my friends, is the real Chinese economic miracle. ### New Buyers Seminar--Electronics Sourcing Show Q&A URL: https://www.silkroadintl.net/new-buyers-seminar-electronics-sourcing-show-qa/ Last updated: 2026-07-18T14:48:35.000Z October 12, 2008Once again, I’m speaking to new buyers at the [Global Sources Electronics Show in Hong Kong](http://tradeshow.globalsources.com/TRADESHOW/HONGKONG-ELECTRONICS.HTM?ref=silkroadintl.net). If I may, I’m speaking at the good show, out by the airport, not the other one downtown. This is not just my own (biased) opinion, but rather the general consensus from a number of buyers I talked with. With that out of the way, here are the “new” takeaways from the show speakers. Besides myself, speakers included Mike Bellamy from [Passagemaker](http://www.psschina.com/?ref=silkroadintl.net), Charles Kirmuss from [Infinity](http://www.infinitygearradios.com/?ref=silkroadintl.net) and a representative from [Bureau Veritas](http://www.bureauveritas.com/wps/wcm/connect/bv%5Fcom/Group?ref=silkroadintl.net). This presentation will be repeated on Tuesday at 12 noon at the same show location. First, set appropriate expectations. This includes time, communications, price, professional experience, etc. I know that I’ve joked more than once that low expectations are the key to happiness but coming to China probably no general theme could be more true. China is honestly amazing, you’ll be overwhelmed, but not always for good reasons. So manage your expectations and the expectations of those that are paying for your trip (if it’s not you personally). First, you need to understand that you will most likely not be working in factories on an architectural par with the Bird’s Nest or Water Cube. Yes, we all saw those on TV and yes those are in China too—but so are 800 million peasants living in cement houses or huts they built with their own hands. The Bund (Shanghai) is not China, just like Times Square is not America. But if you think of China more like the US than like Singapore you’ll be better prepared for what you really encounter. While you’ve seen the Chinese equivalents of Washington DC, Rodeo Dr. and Michigan Avenue most Chinese and most of your factories are more likely to be in the Chinese equivalents of Corona California, Price Utah, Lander Wyoming, and DeKalb Illinois (all places I’ve lived)—in other words, small towns a ways outside of larger city centers with infrastructure and factory capabilities that are nowhere nearly as nice or modern as you’d think if you’ve only seen China from the MSM.Second, Chinese factories are not going to be nearly as good with design as they are working with counter samples. Know this before you ask them to start working on design for you. In fact, I would go so far as to say that unless you have invested in the design department of your supplier you most like do not want your supplier’s engineers or designers creating/working on anything of yours. China’s value is still in copying, mass producing and finishing things that are designed elsewhere. Are their exceptions to this? Certainly, but exceptions do not make the rule. On a related note, to help you secure your IP, spread the components of your products around to various suppliers. Don’t disclose your end use and requirements rather than the market. And don’t share all your IP/design/ideas with every booth you visit at Chinese shows. Third, don’t assume anything is “just industry standard” or “everyone knows this.” This goes for everything from component parts to color standards to testing requirements to packaging. When you are working across cultures there is no such thing as “common knowledge.”Since this was an electronics show, it’s probably appropriate that most of the audience questions were centered around IP and protection. So here are some issues that you should be aware of in China. First, what kind of IP rights are recognized in China? China has a First To Register (FTR) not a First To Market (FTM) legal system for IP. This means that if you share all your own IP with a supplier and they run out and resister it before you do then legally it’s theirs. For this simple reason you need to put all of your legal ducks in a row BEFORE you start sharing all your sensitive information with potential (or even final) suppliers. Second, can you be successful in a lawsuit in China against a manufacture that has violated your IP? Simple answer, yes. All of us speakers on the panel have had successful experiences with lawsuits in China. But the real question isn’t can you win in court in China but have you set yourself up for success in court or to be taken advantage of. To know the answer to this question you most likely need professional help. I’ve used [Harris & Moure](http://www.harrismoure.com/overview.html?ref=silkroadintl.net) before—they know China. Last, what’s the best way to coordinate your shipping? Don’t do it yourself. There is really no reason why you should be doing anything but paying for your shipping. International shipping can involve up to 15 different entities for a single shipment and there are professionals that can handle all of it for you, door to door, for very manageable fees. ### " And knowing is half the battle..." URL: https://www.silkroadintl.net/knowing-is-half-the-battle/ Last updated: 2026-07-18T14:48:35.000Z UPDATE. Like many in China, I was on vacation this weekend when the Skype story broke. I'm a bit late to the party, but here are some additional links and great analysis at [Rconversation](http://rconversation.blogs.com/?ref=silkroadintl.net) and [Imagethief](http://news.imagethief.com/blogs/china/?ref=silkroadintl.net).All I remember from the old G.I. Joe cartoons of the early 80's is this one line. No character names, villains, stories or the "lessons" that each episode ended with. But this one line, I'm sure everyone in my generation remembers. Well, today I thought of it again. I read these two articles and realized that foreigners are coming to China with way too much trust, to many assumptions based on "western" experience. What I'm not saying is: you can't trust people/businesses in China. What I am saying is: you'd better know who you are dealing with, because they certainly know you. Article number 1\. [Americans don't know Jack (or Zhou, or Zhang) about China](http://news.xinhuanet.com/english/2008-09/23/content%5F10094204.htm?ref=silkroadintl.net). No real surprise here. But the fact that so many thought Singapore, Buddha, Toyota and Nike were "Chinese" is flat out scary. (Fortune cookies, which are from San Francisco, also made this list.) Nike?! More than the war, the economy or the current pres and the two buffoons running for election, this exposing of collective ignorance has to be one of the most embarrassing things to ever be said about Americans. Are we really that dumb? Don't answer that. On a lighter note, over 40 percent of Americans couldn't name a single Chinese brand name, which to me says more about Chinese companies than Americans. Worried about China taking over the world soon? Don't hold your breath. But this does speak to one of the most important causes of foreigners' failures (or at least bad, money losing experiences) in China. As most of my posts on this blog insist, if you know who your working with, what they really can do and what they really expect from you, then your Chinese manufacturing experience has a much better chance of being successful. Article number 2\. [China knows alot more about you than you think they do](http://www.reuters.com/article/newsOne/idUSTRE49238X20081003?pageNumber=3&virtualBrandChannel=10341&sp=true&ref=silkroadintl.net). That's right. They are monitoring VOIP calls and text messages sent via computer by anyone that downloaded the Chinese version of Skype-i.e. your supplier, your trading company, your rep in China. This isn't the same as the ability to wiretap that is mandatory in the US. This is a Trojan horse installed in the downloaded Chinese software that is triggered by keyword usage. Conversations as well as individual computer and usage date are not just filtered, but also saved by net nanny. For more on the media see [this link](http://www.theamericanscholar.org/?ref=silkroadintl.net).If you're like me this could be very scary. I've used Skype for more than 4 years now--since Feb of 2003\. It probably saves me $1000 a month in international phone bills. I use it for chat with factories, QC, clients, and the office staff when I'm out. At first glance, maybe this is not big deal to many people outside of China. But more than the time and money it saves little old me, the fact that everyone else in China uses Skype too make this a really big deal for anyone communicating with people/factories in China. In the past couple years I'll wager that almost every factory I've been too uses Skype--and that would be almost 1000 factories in 11 provinces and Taiwan. Ditto for all the trading companies, project managers, sourcing companies and all the expats I know here. It's scary, but hardly surprising (remember the reality of the Chinese environment: all the phone (land and cell) carriers are nationalized and search engines filter content (Google, Baidu, Yahoo) and Media, email and websites are censored). In addition to G.I. Joe, these two articles also reminded me of [James McGregor's](http://astore.amazon.com/wsjbookscom-20/detail/074325841X/103-5082510-8516662?ref=silkroadintl.net) "Little Red Book of Business. " This "book" is actually a list at the end of each chapter in his still VERY GOOD book, [One Billion Customers](http://www.amazon.com/One-Billion-Customers-Lessons-Business/dp/B0018SWBEG/ref=sr%5F1%5F1?ie=UTF8&s=books&qid=1223089132&sr=1-1&ref=silkroadintl.net). His list at the end of chapter one is particularly applicable to this story. Here are a couple of his points (p.56-57): > The Chinese now understand the outside world much better than the outside world understands them.You will never be successful walking into an meeting cold. Know who you are dealing with what they really want and need.Foreign businesspeople who come to China often have too much goodwill, too much trust and too little patience. > ### Much of what you see in China is planned/fake to some degree (updated 30 Sept) URL: https://www.silkroadintl.net/almost-everything-you-see-is-planned/ Last updated: 2026-07-18T14:48:36.000Z **Update 30/09/08**: others are noticing [the contradiction between walking in space and the disasters on the ground](http://www.atimes.com/atimes/China/JI30Ad01.html?ref=silkroadintl.net) in China. Many are saying that the solution is increased [accountability within the system](http://www.opendemocracy.net/article/china-s-power-china-s-people-towards-accountability?ref=silkroadintl.net).\_\_\_\_\_\_\_\_\_\_\_\_I've said more than once that much of what you see here in China is scripted. The 0lympics should have convinced you of that. But, if you still don't believe it, read this report about recent [Chinese astronauts first night in space](http://www.telegraph.co.uk/news/worldnews/asia/china/3082804/China-fakes-reports-from-space.html?ref=silkroadintl.net)\--published BEFORE their rocket even left the ground!!!Foreigners going into factories for audits, inspections, first visits, etc. need to be very aware of this--I promise you, your Chinese partner is actively "putting their best foot forward" even if that foot is not theirs. Since this is just "business as usuall" from the government down to the smallest factory, from accounting to business dinners, is it any wonder that locals have very little faith that there is someone, be it in government, business or society, which is looking out for the little guy? People here are dependent on themselves and their immediate families and that's honestly about it. About 2 weeks ago there was a great article (in the Times Online, I think) about the difference between the Chinese perception of a "successful" 0lympics and what the West will expect from London. The difference lies in the importance placed on presentation vs "reality. " The best take away from the is the concept that China values clean, smooth (face-saving) presentations while "the west" likes to see raw emotion and "real" human interactions rather than fantastic stage productions. The corollary is that any public presentation in China is known, or at least assumed, to be completely scripted (e.g. fake). What my experience in China and these issues speak to is a systemic lack of trust outside of any given individuals' inner circle of friends, family and close business associates. Here are a few more examples from the news and just this **last one week** of work in China. We know of a factory that will not keep the contractual agreements with the client for shipping/payment terms. The factory has repeatedly held product hostage to price increases and shipping delays. Now that everything is done and finally ready to ship, there is an argument over retention of the molds. The factory will not honor the contract payment terms (balance after FOB) because they think that the client will, as they have done, play games with the payment to gain the upper hand in the mold argument. The client, of course, says that the factory has proven to be untrustworthy and will not pay until the truck is secure in the port. The stalemate requires someone (SRI in this case) to step in and act as an acceptable third party. Next example: Talking with the owner of a small print factory today I was reminded how “normal” this kind of thing is (product held hostage and the milk scandal). I was trying to empathize that on a day that Chinese people should be proud (because of the space walk) there are still thousands (hundreds of thousands?) of people affected by contaminated milk. My point was if you can’t trust people making baby food and the government inspectors then whom can you trust?! The factory owner just shrugged and commented that this is how things work here. If you have connections you can stay away from the contaminated milk, or make a lot of money, or just not have to pay as much to get the things done you need. He listed a couple of example of social and business policies that “everyone knows you just pay officials” and you can get around the law. He was much more resigned than angry. Next example, from the media: the melamine scandal is no longer linked only to milk powder—and it’s still growing. Milk powder, fresh milk, yoghurt, ice-cream and other milk products, Pizza Hut pizza (cheese), cookies (Lotte Koala bears and others), White Rabbit candies, coffee (fresh and canned), bread, protein bars and drinks, cake mixes and [“anything that should have protein in it.”](http://apnews.myway.com/article/20080927/D93F1MIO0.html?ref=silkroadintl.net) Let me repeat that: **anything that should have protein in it is now suspect!!!** [In Thailand](http://www.bangkokpost.com/290908%5FSports/29Sep2008%5Fsport71.php?ref=silkroadintl.net), for example, that includes: “Oreo wafer sticks, Dove milk chocolate bars, M&M chocolate candies, Snickers caramel peanut bars and nougat, Mentos yoghurt candies, and Mao Huad coffee and oatmeal crackers.” [The EU has now banned ALL children’s food imports from China.](http://ukpress.google.com/article/ALeqM5hgt-uSgcoQ9-wQ5mkZVQKLnJbJRg?ref=silkroadintl.net)(Angry side note: do you know that they are stopping any Chinese crossing the SZ/HK boarder with more than 4 cans of milk powder?! Can you believe that? How many times can the average Chinese cross the border in a week/month to buy milk for their children, family members or neighbors? If you don’t have a HK ID it can be a few hour process and most people only have one day off a week. I find this maddeningly insensitive—since the government is at least partially responsible! Sure there will be some abuse of the crisis by people trying to make a buck off the situation. But to limit people who really need it is really pretty cold hearted, I think. Of course, (white) foreigners with more than 4 cans can cross with nary a question asked. Now back to the trust story.)And then, just this morning, the NYT is reporting that eyewitness accounts and photos of the bus attack on the Chinese officers in Kashgar, China last month [differ GREATLY from the official report](http://www.nytimes.com/2008/09/29/world/asia/29kashgar.html?ref=world).So as all of this is happening, I’m about half way through with a GREAT book, [Will Hutton’s: The Writing on the Wall: China and The West in the 21st Century](http://www.amazon.com/Writing-Wall-Embrace-China-Partner/dp/B000WPMBW8/ref=pd%5Fbbs%5Fsr%5F1?ie=UTF8&s=books&qid=1222668137&sr=1-1&ref=silkroadintl.net). It’s well written, well researched, and timely. Read it. I’ll review it next week when I’m finished reading it. Anyway, as I was reading this book and the milk crisis broke out I found myself thinking that everyone should read at least this section of his book (p.130-132)—so here it is! Timely and appropriate section title: > Is Corruption Endemic?Lu Xiaobo, director of the East Asian Institute at Columbia University, take the analysis even farther. IN Cadres and Corruption, he argues that a post-revolutionary party is trapped between its need to become a bureaucracy bound by rules, and its revolutionary purpose—to break rules and bureaucracies. As judge and jury for its own cases, abjuring any external scrutiny, communism cannot easily police its own deviant party members. But that is not the only reason corruption is difficult to eradicate. The organization itself is driven into deviance because, one the revolution is over, there is an unbridgeable inconsistency between revolutionary rhetoric and the compromises of non-revolutionary practice. The morality of revolution—that the ends justify the means—becomes a morality that justifies corruption. And when as many as 40 per cent of officials are not paid regularly they seek self-preservation in a morally ambiguous political climate. This reality, coupled with the growing opportunity for corruption, has characterized China’s development. The deviant officials of the deviant part-state can prey on wealth with no ideological discomfort because of the ambiguity over where the state ends and private life begins.Lu’s argument is similar to my own. China has a well developed concept of the state, but communism cannot permit the conception of an intermediate public domain between state and civil society. In this respect it is the faithful heir to the Confucian tradition of governance with systemic corruption. Absolute power, along with moral exhortation to its official class to refrain from plundering the people, is preferred to offering institutional, legal or ideological protection in authoritarian states; but, founded on the doctrines of communist revolution, official are more powerful and more psychologically predisposed to corruption in a communist one-party state than in any other. I have argued in earlier articles that corruption flourishes where social norms that might induce a sense of shame are weak, where there is a widespread belief that a high income results not from effort or merit butt from effectively working the system and were there is a belief that corruption is victimless—crime involves someone else’s money. In China all three inducements to corruption exists in spades. Add the peculiarities of communism and it is not difficult to understand why corruption is so dominant and so hard to root out.James Kynge, a former Beijing bureau chief of the Financial Times, writes in China Shakes the World that in China ‘trust is a commodity constantly under siege. Poverty and competition for scares resources impinge upon it. The ideological vacuum that replaced communism undermines it. The daily diet of propaganda disorientates it. The venality of officials devalues it. The ascendancy of a value system dominated by money hollows it out. What is left is a society in which describing someone as “honest” can jus as easily be a gentle criticism as a compliment.’The costs of this mistrustful, corrupt environment can be very high. Kynge describes a crooked blood bank scheme in Henan in the 1980s that was run with the full knowledge of corrupt local officials. Donors received blood back, minus its plasma, from a general blood pool that had been infected by HIV-positive blood. The scheme seems to have left as many as one hundred thousand children orphaned. Yet the enriched officials have arrested Aids activists, shut down orphanages and harassed journalists. In another scandal, officials allowed companies to sell fake and poisonous milk powder that caused disfigurement and even deaths; even though officials have been imprisoned, the production has reappeared on the market.Corruption is part of the system’s DNA. Jiang and his successor Hu Jintao have thus been disabled, despite their rhetoric and their attempted actions. Legislative injunctions have to be implemented and policed by the very system which is corrupt and which disallows any external independent agencies because they would challenge the party’s political independent agencies because they would challenge the party’s political hegemony. The party begins successive ‘rectification’ campaigns and inquiries, but these are compromised by the fact that the investigators are themselves corrupt and becoming more so. The climate of psychological warfare creates an atmosphere of fear and uncertainty: corrupt individuals demand even higher bribes because the risks are higher. > The full book can be purchased online at Amazon [here](http://www.amazon.com/Writing-Wall-Embrace-China-Partner/dp/B000WPMBW8/ref=pd%5Fbbs%5Fsr%5F1?ie=UTF8&s=books&qid=1222668137&sr=1-1&ref=silkroadintl.net). ### Recent Chinese Negotiation Tactics: Translated! URL: https://www.silkroadintl.net/recent-chinese-negotiation-tactics-translated/ Last updated: 2026-07-18T14:48:37.000Z The following is a list of tactics presented by managers, bosses or engineers to me in meetings that we had regarding rejected product with a couple of large factories (more than 600 employees each) over the last month. The quotes and the “translations” are from meeting notes that I took (to make sure positions and options don’t change later on (and they quite often do)). By the end of the meeting with the second factory I realized that I was hearing some of the same things from each factory—and many of them I’d head before from others too.1\. “We have a lot of pressure from our boss to get this product moved.”Translation: “We are under internal (financial) pressure, by our boss, to get the product out the door, or we may lose our jobs.” But instead of fixing the problems the position most often chosen is to take a hard line with the client and get the product sold, more or less as is, rather than spend more money to repair/replace it. Some times this is not as bad as it may initially seem—you now have a few folks whose jobs are very dependant on your satisfaction. You have the opportunity to now show them how it’s in their best interest to meet your standards (and move their product). A starting point is often convincing them that you really do want the product. For western buyers going to this level maybe a “duh! Of course we want it” experience. But for Chinese factories who are often burned by buyers who can’t pay for orders this is a very necessary starting point. With the stink that you probably just threw over product quality, they are honestly unsure if you’ll really take it (late and substandard as it is). Once these managers realize that they can keep their jobs if you’re happy you’ve essentially got some people working for you on the inside.2\. “We did our best.”Translation #1: “We’re not exactly sure what you’re complaining about—this level of quality has been fine for other clients (that didn’t do their own QC).” What this boils down to is either the factory over sold their abilities in the bid process or they underperformed in the production process. Of course, neither is acceptable. Further, I almost always doubt this claim because usually reworked product, samples and some of the production all met the contracted standards. So if they can do it some of the time, the problem is QC and the management of inline processes in which case the people you are talking to are most like the ones directly responsible (and the ones least likely to want to admit it). But even if they do admit it, this doesn’t mean that they are willing to or have the ability to fix the problems (in this case sub-standard product). Which is why there is a second translation. Translation #2: “This is as good as it gets from us.” Just because factories have some international experience/clients and have the same machines that you’ve used back home does not mean that they can consistently achieve the same results. Often, specifically because of where the blame sits, factories are completely unwilling to redo product that is “just slightly off.” Remember, going from 85% approval to 95% approval is typically much easier than going from 95% to 97.5%. If you’re already at your factory’s threshold point pushing them may not be worth for either of you.3\. “We’ve already spent a lot of time and money to fix it.”Translation: “We’ve have used up our limited amount of boss-given leeway to redo your product; the costs of doing any more work will be taken out of our salaries/bonuses.” You will never get past this obstacle unless you move up the corporate ladder and get to someone who can both make money decisions and override the managers’ objections. Sometimes you need to work with the people that you’re given and sometimes you need to go over their heads. It’s a tough call, and I’m second guessing myself a lot as to when to piss people off and when to work with them—because that’s really what going over their heads means; you’ve decided your quality is more important then their face. And while it is to you, it’s most likely not to them. The difficult part about going up the ladder is that the higher you get, the less the people know about your project (and the more they rely on the people you’ve diss’d for information). Of course, one word from the boss and you can get all that you asking for too.4\. “The rework is not very good and we were worried about this before we started.”Translation: “This is not our fault, you rejected it and asked that we fix the problems we thought were really non-issues in the first place.” Of course the replacement of rejected product was a choice too, and was what most clients want, but what factories won’t due unless they are under legal pressure to do so. This is an attempt at managing your expectations. Expect to hear this just before doing some QC on re-work. Often, when the rework is done right, this can also be interpreted as humility and/or an attempt at preserving face.5\. “If the client had agreed to these standards in the beginning we could have avoided all the arguments.”Translation: “See, we told you that you were too strict!” This is the classic transfer of responsibility for delays to “unreasonable” client demands rather than poor internal QC. Never mind contracted standards, when things go south what can actually be done becomes the real standard. We hear this all the time as we’re finalizing shipments—original standards can’t be met, we battle for all the rework we can squeeze of the factory and then settle for “as good as it’s going to get” and then the factory says something like this—“see we told you it was already good enough.” Implying that actually trying to achieve the contracted QC standards was a stupid and unnecessary waste of time on my part. Silly me.6\. “We didn’t know this was going to happen when we did X rework.”Translation: “Your client’s request for rework is the source of this new problem (and additional expense), not anything we did.” Probably more than any of the comments listed, I hate this one the most. Why? Because it means there are now new problems, and new problems can turn a late project into a really late and expensive headache. Cost can really rise any time retail packaging is ruined by reopening/repackaging, for example. This is never what you want to hear—it almost always means that you are back to square one in your resolving-concerns-negotiations. This also means that as little as possible effort (and planning/forethought) went into the rework process; and that’s what’s most frustrating about this. With just a little preparation or even an honest desire to do it right the second time this can almost always be avoided. For example, we had to get a factory to remake large plastic lids for a client’s cooler project. The factory had to go into their own pockets for the money to replace a full 50% of the order and what happened after the new lids were made and painted? They put them in $0.03 plastic bags before they were dry and ruined the finish on 20% of them!! They had to buff/polish and repaint hundreds of lids because someone just didn’t care enough to check and see if the paint was dry.7\. “We’d really like to sell the entire quantity.”Translation: “We expect that you’ll buy the entire ordered quantity regardless of your problems with quality.” This is another tricky situation. If you agree to buy everything, and you may have too to avoid losing deposit money and/or current product, you’ve got to both manage rework and control the rejected product (so that you don’t see it on eBay later on). If you don’t agree to buy it all the factory may just take a loss on the project and recycle it (e.g. sell to another “trading company” that will sell it and share the profits). Asking a factory to rework 100% of an order (or even 50%) and honestly letting them know up front that you’ll still probably reject 10-20% of it leaves them with very little incentive to help you out. There are times when it’s prudent to be quite. If you play your card right you may get the final rejected qtty’s offered to you at a discount—you laugh. I know, you didn’t want it in the first place and now that the whole order is sub standard why would you want an additional 10% that’s really substandard? Why? Because sometimes that the best option. Getting out of a bad agreement by taking everything with you and not leaving any sellable product behind can be a very good thing for you. My definition of Chinese Cooperation: Paying more to get less than you originally agreed to and being honestly happy about it.8\. “This is good enough for the Japanese.”Translation: “As everyone knows, the Japanese are the end all be all of QC; you’re being unrealistic in your quality expectations.” You know, for a country that openly hates the Japanese, Chinese people sure respect Japanese work standards. At least they do whenever we reject product. I have to admit, I’m not sure that Japanese standards are as great as they are cracked up to be. I mean, if they would, on a regular basis, accept our rejects then they’re actually pretty low. Or…it could be that the factories are overstating their indignation to get us to back off of our QC demands. No, couldn’t be that. Regardless of what other clients will or will not accept (I really don’t care), my opinion is that your standards should always be as high as possible. You can almost be assured that you’ll have to come down at some point—and the higher you start, the higher your standards will still be when you’re finished. As I’m constantly reminding my project managers, negotiations isn’t about what you want as much as it’s about understanding where the other party is coming from and what they can actually do for you. Understanding what options are realistic for your supplier is a valuable starting point in discussing how you’ll get what you expect (or at least what you can accept). Bonus: here’s our list of [30+ negotiating tactics](http://www.smartchinasourcing.com/china-negotiation/negotiating-in-china-maintaining-your-advantage.html?ref=silkroadintl.net) that we’ve collected over the years working in here in Asia. ### What's the point of getting angry if you don't have a solution to the problem?! (more on melamine and SME's) URL: https://www.silkroadintl.net/338/ Last updated: 2026-07-18T14:48:36.000Z After watching hours of the milk scandal news from China and stock market news from Hong Kong my Chinese wife said to me yesterday, “You know why China is the sick man in Asia? It’s because we are willing to kill ourselves for money.”The “boycott made in china” calls do not seem so racist any more, especially now that [Chinese are making the calls for the boycott themselves](http://globalvoicesonline.org/2008/09/17/china-crisis-on-made-in-china/?ref=silkroadintl.net).I don’t mean to mock the significance of the milk powder crisis in any way, but it’s not all that surprising that something like this has happened (again). After the raucous nationalism of summer 2008 it seems like everyone forgot about all the humiliating recalls of the summer of 2007\. Everyone except for those of us who do QC for a living. As the milk powder scandal shows, out in the trenches, over the past year, nothing’s really changed. Sure, the toy industry is paranoid or has moved on to SEA countries, but no one else seems to be talking much about the recalls from so long long ago. We still have the same issues with factories not meeting agreed upon standards, not understanding those standards in the first place, substituting cheaper domestic products in place of more expensive imported ones, using uncontrolled sub-suppliers, working rejected product back into approved stock, and of course purposeful and natural quality fade issues. Whenever we have to deal with these issues I’m always amazed at how a QC issue can quickly turn into a debate over national superiority. We’ve been in QC or rework negotiations (arguments) on behalf of clients numerous times where we’ve been told something like: “It’s good enough for the Japanese.” Or “Of course these are the correct numbers, do you think that a Chinese manager would lie to you?!” Or “You Americans think that everything has to be the best or it’s not good enough for you.”Of course, QC has nothing to do with race or nationality. But because it is often foreign QC personnel that identify substandard product, these conversations happen more often than you may think. And you can bet they are thought, but not spoken even more often. Like so many other issues in China, nothing will change in the quality of products being sold to the domestic (and international) markets until enough people get angry enough to force a change. And then the change will only be effective if there is enough transparency in government to make sure that enforcement is effective and consistent. Remember this tainted milk issue happed before, just 4 years ago. And while there was anger and temporary outrage, which resulted in rich people buying milk in Hong Kong, nothing else really changed. Reports are that as early as 2005 warnings about chemicals in milk went unheeded and the government actually allowed Sanlu to make milk powder without any inspections!!Another thing that has to happen is that these big-crisis lessons have to become cross-applicable to individuals outside of the dairy industry. Meaning, the lesson that bad-milk-can-kill-people-so-there-needs-to-be-better-regulations,-enforcement-and-QC needs to be transferred to other industries like: poorly built autos and auto parts, shoddy domestic consumer products, clothing with too many chemicals/dyes, all contaminated food products and, farther down the list, non-essential consumer products made for export. But I fear that I may be asking for too much. In my experience, I’ve found that Chinese can be brilliant, talented, capable and thoughtful—just like anyone else on the planet—given the right motivations and opportunities. I’ve also found that the Chinese system (in government, education and business) rarely reward these traits. More often than not, talented individuals do not have experience in cross-application of lessons or “thinking out of the box,” or standing out from the predominant group-think. I don’t mean to say they can’t or won’t or always don’t act individualistically. Just that it’s not common. How many Chinese right now, who are not dealing personally with affects of the milk tragedy, are going to recognize that a lack of enforced regulations across the board in China and the consistently substandard products being passed off as acceptable are a chronic and deadly problem in China right now? When are Chinese people going to realize that they are entitled to the same quality as the rest of the world? How many will realize that while calls to boycott all Chinese goods are often stupid and always extreme there are a significant number of real concerns that are not racially motivated? We’ll see if anything changes here—for those of us that live with our children here, I pray they do. But I won’t hold my breath. OK, off the soapbox and onto what can be done about your individual products in China. I’ve been harping on the test everything, test often mantra so much, I fear that people will get sick of hearing it. But then we have a series of recalls like this and I realize that I’m not crazy and I've obviously not said it enough. Here are some processes (from previous posts and published articles) that will help you immediately with your quality control in China (or anywhere else, for that matter). First, the [rules for working with Chinese factories](http://www.smartchinasourcing.com/supplier-relationships/supplier-relationships-working-with-chinese-factories-effect-2.html?ref=silkroadintl.net).Second, how to [qualify an appropriate factory](https://www.silkroadintl.net/three-and-a-half-kinds-of-factories/).Third, here are the ways to [avoid quality fade](http://www.smartchinasourcing.com/china-product-quality/managing-china-product-quality-preventing-quality.html?ref=silkroadintl.net) and ensure consistently good quality product. Fourth, here are some [tips on negotiations](https://www.silkroadintl.net/negotiating-with-chinese-factories/).Fifth, here’s what you can do to [make sure you get what you ask for](https://www.silkroadintl.net/youre-not-getting-what-you-asked-for-really/).Sixth, [what to do about missed shipping dates](https://www.silkroadintl.net/what-can-you-do-about-late-shipping/).And finally, here are some tips on [returning product to China](https://www.silkroadintl.net/returning-products-to-a-factory-in-china/) if all else has failed. ### What does the milk powder scandal mean for you, an SME, doing business in China? URL: https://www.silkroadintl.net/what-does-the-milk-powder-scandal-mean-for-you-an-sme-doing-business-in-china/ Last updated: 2026-07-18T14:48:36.000Z I was interviewed by Public Radio’s Market Watch segment yesterday and their focus on the general economic conditions (downturn) headed into China got me thinking that there are certainly going to be more rather than less problems in the future. Specifically, Scott Tong asked me, in regards to the current tainted milk powered case, “were you surprised? and do you think that more issues like this will come?” The answer to the first question is “no.” My (Chinese) wife has not allowed us to buy milk powder in China ever. And the regularity of reports out of Hong Kong of rejected Chinese imports of pork, fish, chicken and various veggies has convinced us that living here is hazardous to our health—no joke. We are very cautious about what we buy here but admit that if we headed every warning we’d never eat. Secondly, and more applicable to business, yes. I expect that we’ll have more cases like this and like what happened in 2007 again. Why? Because as margins shrink and as the economy slows down (smaller and fewer orders) there will be more and more pressures on factory owners to increase or at least retain current levels of profits in any way they can. While this may just be business as usual—for which you need to be testing/checking/monitoring to compensate--it means that your product quality is up to you and solely you. As it always has been, actually. The really unfortunate news is the CNN (and other) reports that the govt apparently knew about this before the 0lympics and decided to cover it up to make sure there was no bad news in August. This further entrenches the belief that the laws that slow economic growth in the short term (labor law, green GNP and most other Chinese laws) look great on paper but enforcement will be increasingly lax by local governments that are still measuring success by money. Some people say that this will teach Chinese brands/companies a lesson in capitalism and the power of brand name recognition. But why didn’t the last milk powered scandal teach this? Why didn’t the lead paint, the non-adhesive tires, the tainted cough syrup, etc., etc., etc., scandals teach these lessons already and why is this time different? When push comes to shove in this next year of poor domestic economic performance do you really think that things will be different? Don’t count on it. Great analysis of the crisis at [Image Thief](http://news.imagethief.com/blogs/china/archive/2008/09/15/melamine-in-sanlu-milk-powder-now-that-s-a-crisis.aspx?ref=silkroadintl.net) and [China Law Blog](http://www.chinalawblog.com/2008/09/china%5Fbaby%5Fformula%5Fhere%5Fwe%5Fgo.html?ref=silkroadintl.net).Other good China/ASEAN news:ChinaThe global pinch is [hitting home in China too](http://www.nytimes.com/2008/09/16/business/worldbusiness/16yuan.html?hp&ref=silkroadintl.net). Hmmm, not so independent after all. This is one of the best articles I've read recently on [the Chinese economy](http://www.theaustralian.news.com.au/story/0,25197,24345077-30538,00.html?ref=silkroadintl.net) and what it means for Australia (but it's good for the rest of us to read too).[Industrial output from China is slowing down](http://www.marketwatch.com/news/story/chinas-industrial-output-eases-retail/story.aspx?guid={AC357AE4-9198-460D-9035-7E76985E77A4}&dist=msr%5F39&ref=silkroadintl.net) but how much is just the [0lympic affect?](http://www.ft.com/cms/s/0/63ae7960-812c-11dd-82dd-000077b07658.html?ref=silkroadintl.net)\--We can't really read China data.[Is China a threat](http://www.dailytimes.com.pk/default.asp?page=2008\09\12\story%5F12-9-2008%5Fpg5%5F49&ref=silkroadintl.net) (again)? Hong Kong[Best Courts in Asia.](http://afp.google.com/article/ALeqM5gIkKvk-YnNQ1HVb2n%5FHUUMhncDLA?ref=silkroadintl.net)Thailand[Political problems](http://www.cbc.ca/world/story/2008/09/15/thailand-political-mess.html?ref=silkroadintl.net) means less tourists so Thailand needs to shape up. I guess you know who is influential in govt circles (e.g. military folk that control much of the sex trade).[Logistics to open up](http://www.bangkokpost.com/120908%5FBusiness/12Sep2008%5Fbiz48.php?ref=silkroadintl.net) in BKK.Vietnam[Growing economy](http://online.wsj.com/article/SB122141400912733323.html?mod=googlenews%5Fwsj&ref=silkroadintl.net) but [poor transparency and confidence](http://www.iht.com/articles/2008/09/10/business/10oxan-HSBC.php?ref=silkroadintl.net). ### The Coming China Wars: where they will be fought and how they can be won—BOOK REVIEW URL: https://www.silkroadintl.net/the-coming-china-wars-where-they-will-be-fought-and-how-they-can-be-won-book-review/ Last updated: 2026-07-18T14:48:36.000Z Before you read this, I’m warning you, I hated this book. I’ve rewritten this 4 or 5 times trying to make it “nice.” You’ve been warned. (MONDAY 15/09/08 MORNING UPDATE AT THE BOTTOM)I’ve been accused of bashing China on this blog. I don't agree with that title but I’m certainly no Panda hugger. Regardless of what you call me I felt like I needed to take a bath when I finished reading this book. The author tells us in the introduction, that he wrote this because, as he says, "I can and I must. " Yet there are two other more obvious reasons why this book was written. First to get your money, and second, to scared the pants off you for some unspecified Anti-Chinese agenda. Both jobs are accomplished admirably. The book is the new China Bashers’ constitution. Reading it you just know that every anti-China congressman and union leader in the US are going to be quoting this for the next decade. I’m guessing that’s why it was written (and probably who paid for it too). The book is based on a number of unproven and/or untrue assumptions including, but not limited to these: The US can outspend China, there will be either a hot or cold war with China, China will always be an adversary, China can and will continue indefinitely to grow/spend/pollute like it has for the last 30 years, China can be contained by the US/EU and China cares about international public opinion more than domestic opinion. Basically it’s a collection of every single bad press clipping that has ever been published about China in the last 10 years. And, admittedly, while some of the horror stories are true, some context in retelling the stories or even a superficial nod to objectivity would have been nice. It wouldn’t have hurt to include some actual university/peer review quality research (since the author is a professor) or even a causal mention of alternative points of view. There isn’t a single source citation in the entire book and the many of the ideas and much of the background come from (admits the author) unverifiable internet sites and anti-china organizations. Again, that doesn’t mean that the stories are not true; just exaggerated, out of context, agenda driven and written with more hype than a bad B-movie trailer. But even though it’s very poorly written, it’s a book that you just can’t put down—like a train wreck, you want to know what else could possibly be worse then the previous chapter. China has serious world-affecting issues in many areas, no doubt. And many of these issues affect the US (and other countries) directly and will get certainly continue and some will even get worse. Pollution, [for example](http://news.yahoo.com/story//mcclatchy/20080831/sc%5Fmcclatchy/3031567?ref=silkroadintl.net). But without a solution for solving a single one of the problems presented, what’s the point of reprinting (ad nauseasium) the obvious?!This book does provide a service—it’s the balance to the rah rah China press that constitutes most books on business in China. But it’s written to be more of a scare tactic than an investigation of or solution for major issues. I’m all for raising awareness to issues like these and then proposing something to do about them. But this book doesn’t do that. The book’s conclusions, prefaced with this hypocritical gem: “no problem can be solved until it is clearly understood,” seem to just have been added on as an after thought. Some of his conclusions/solutions into individuals and countries wining a war with China are: > \*Be a conscious consumer.\*Write your congress person.\*Buy Made in the USA products (but don’t be protectionist)\*Buy more copies of this book and donate them to friends and libraries. > I guess that thoughtful consumerism and letters to senators will eventually cripple one of the largest economies/markets/populations the world has ever seen. In addition to that individual formula for success, our governments should: > \*Encourage free trade by forcing trade partners to abide by WTO legislation\*Encourage IP protections (yea, nobody’s trying to do that now)\*Add currency manipulation to the list of unfair trade practices\*Adopt a zero tolerance policy for counterfeiting and pirating and tighten the boarders (no mention about eliminating the #1 market for illegal goods in the world—the US)\*End the blood for oil politics of China (yea, that’ll be easy, let me just finish up with Iraq here first).\*Counter Chinese imperialism with our own “Charm Offensive.” Quick, name one other country in the history of the world with the “soft” power/influence of the current US (culture)?\*Enforce environmental standards in China via trade agreements and contracts\*Resolve the Taiwan issue (No solutions, suggestions or any ideas on how. Just do it.)\*Don’t get the US military involved in any “unnecessary conflicts.” (No shit?! Really?) > There are no workable scenarios, no processes or “how to” steps to get any of these things accomplished, no analysis of current policy or positions to oppose/support, no ideas whatsoever how to get anything done. This book is a collection of the worst news stories that the author could find followed by a list of ideas that was most likely generated on the blackboard at the end of a college IR class. Don’t waste your time or money.\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_**Monday Morning UPDATE-20 good books on China**.Since I don’t want to be just critical and leave you with nothing of value (other than the warning not to buy The Coming China Wars), I figured I’d better give you a list of 21 China books that I liked and recomend.1\. Jonathan Spence’s The Search for Modern China. (History)2\. Mayfair Mei-hui Yang’s Gifts, Favors, & Banquets, The Art of Social Relationships in China. (Anthropology)3\. Susan Shirk’s China: Fragile Superpower. (Politics)4\. James Mann’s The China Fantasy. (Politics)5\. Scott Seligman’s Chinese Business Etiquette. (Business)6\. Donald Sull’s Made in China (Business)7\. Peter Hessler’s River Town and Oracle Bones. (China Stories)8\. Tim Clissold’s Mr. China (Business)9\. Will Hutton’s The Writing on the Wall, China and the West in the 21st Century (Politics).10\. Bergsten et al’s China, The Balance Sheet (Business)11\. John Pomfret’s Chinese Lessons (China Stories)12\. Ross Terill’s The New Chinese Empire and what it means for the US. (Politics)13\. Pierre Xiao Lu’s Elite China (Business)14\. Julia Lovell’s The Great Wall, China Against the World (History/Politics)15\. James McGregor’s One Billion Customers (Business)16\. Ted Fishman’s China Inc. (Business/Politics)17\. Clyde Presowitz’s Three Billion New Capitalists (Business/Politics)18\. Ming-Jer Chen’s Inside Chinese Business (Business)19\. James Lilley’s China Hands (China Stories)20\. Chen and Wu’s Will the Boat Sink the Water (Social Issues)And 10 more books you can probably just as well skip:1\. Navarro’s The Coming China Wars2\. Fernandez’s China CEO3\. Engardio’s Chindia4\. Chee and West’s Myths about Doing Business in China5\. Ross’s Fast Boat to China6\. Sun’s The Long March7\. Menzies’s 14218\. Chang’s Ma0, the unknown story9\. HBR’s Doing Business in China10\. Kynge’s China Shakes the World ### Thailand #13, China #83 URL: https://www.silkroadintl.net/thailand-13-china-83/ Last updated: 2026-07-18T14:48:36.000Z I mentioned on Wednesday that, despite the media that plays up every aspect of violence it can find anywhere in the world, the political crisis in Thailand will have little impact on business. Turns out [I was right](http://www.bangkokpost.com/110908%5FBusiness/11Sep2008%5Fbiz25.php?ref=silkroadintl.net). More [here](http://www.bangkokpost.com/110908%5FBusiness/11Sep2008%5Fbiz27.php?ref=silkroadintl.net) and [here](http://news.mk.co.kr/newsRead.php?sc=30300015&cm=%EA%B5%AD%EC%A0%9C%EC%82%B0%EC%97%85&year=2008&no=560818&selFlag=&relatedcode=&wonNo=&sID=303&ref=silkroadintl.net) too. Unfortunately, I also said (as a comment at a different site) this political mess [will most likely happen again](http://www.bangkokpost.com/topstories/topstories.php?id=130587&ref=silkroadintl.net) and others, it seems, agree with that too. And even more proof that Thailand has the unique ability to destroy its government every few years and just keep on going, new rankings list Thailand as #13 on the list of countries for “ease of doing business.” Only Singapore (1), Hong Kong (4) and Japan (12) were ahead of Thailand in Asia. Taiwan was #61, China was #83, and Vietnam was #91 out of 181 countries. India was #122, Cambodia #135 and Lao #165\. New Zealand was #2 and the US was #3\. The full list is [here](http://www.doingbusiness.org/economyrankings/?direction=Asc&sort=1&ref=silkroadintl.net).What I’d really like to see is a list of countries ranked by how young expats die of exasperation, stress, heart attacks or other job related illnesses. I’m guessing that China would be much higher (and Lao not even) on the list? But I could be wrong. This list does have a lot of other interesting sub categories, like: starting a business, employing workers, getting credit, protecting investors, cross boarder trade and enforcing contracts. China, it should be noted, is 18th on the list of “enforcing contracts.” This means that it will take you approximately 406 days to resolve a legal contract dispute in China. 479 in Thailand, 211 in Hong Kong and 300 in the US.I also made a comparison of Guangdong and ASAEN a couple of days ago. Here’s some more on that. Minimum wage in Cambodia is $50 a month with 20% inflation. Minimum wage in Guangdong is $187 a month with about 9% inflation. Despite the low wages, the inflation is so high that factories (garment factories, the nations major export earner and employer, in particular) are closing as the average [profit margin of 2% is disappearing](http://www.iht.com/articles/ap/2008/09/10/business/AS-Cambodia-Inflation-Woes.php?ref=silkroadintl.net). ### So, how's the economy in China doing? URL: https://www.silkroadintl.net/so-hows-the-economy-in-china-doing/ Last updated: 2026-07-18T14:48:36.000Z Last week, while negotiating some future opportunities, I had the boss of a potential supplier tell me that the slow down in the US (and the EU) is having no affect on China whatsoever. He then proceeded to tell me how strong the domestic Chinese economy was and that I if I didn’t believe him, he could show me one million RMB right then and there. When I mentioned that most of our suppliers are telling us that things are slowing down and that domestic clients are the ones that typically are not paying their bills he told me that because I’m a foreigner he doesn’t believe anything I say about China and that I should pay early to prove to him that I really do have money. That’s what I get for questioning his proposed payment terms, eh? (In the end, we got the payment terms we were asking for, by the way.)Now if you’re equally skeptical about the strength of the Chinese economy, you’re not alone. There are a number of factors that are having serious effects on individual projects right now. Here are a couple of real price-affecting issues:1\. The VAT refund is down 10%.2\. The cost of raw materials is up.3\. The number of orders from the US and EU is down.4\. The number of orders to China is down due to competition from ASEAN and product recalls.5\. The Chinese domestic economy [is not as strong as it was](http://www.guardian.co.uk/business/feedarticle/7782110?ref=silkroadintl.net) in the past years.6\. The RMB rise (recently slowed) hurt Chinese competitiveness.7\. [Labor prices](http://www.lifeofguangzhou.com/node%5F10/node%5F34/node%5F280/2008/06/22/121411491640440.shtml?ref=silkroadintl.net) are [continuing to rise](http://www.dtcchina.um.dk/en/menu/InfoAboutChina/Marketopportunities/News/generalnews/MinimumWageInShenzhenToOvertakeShanghaiAndGuangzhou.htm?ref=silkroadintl.net).8\. Inflation in China is finally [slowing down from record highs](http://www.bloomberg.com/apps/news?pid=20601087&sid=aiZOkJurwCfU&refer=home&ref=silkroadintl.net) earlier this year.9\. Electricity and fuel costs are higher (and no longer subsidized as much as before).10\. Export restrictions are tightening.11\. Many areas of China are trying to “upgrade” the quality of exports buy moving up the production ladder from simple assembly to higher technology. This means provincial governments are giving incentives to tech products first and foremost.12\. I've heard that spending by the Chinese government will slow on social/infrastructure projects now that the 0lympics are over.13\. I've also heard that a [post-0lympic economic hangover](http://worldblog.msnbc.msn.com/archive/2008/08/19/1272286.aspx?ref=silkroadintl.net) (slower growth) will set in the last quarter of this year too. None of these issues are “new” or unexpected. But, there is definitely a post-0lympic let down sweeping through Guangdong province if not the whole country. Of course, the Chinese government says [all is well](http://www.tehrantimes.com/index%5FView.asp?code=177585&ref=silkroadintl.net). While it’s been estimated before that Chinese factories can work for profits as low as 1-3% (or even breakeven), these hits directly to their bottom line will make it next to impossible to continue to do business on such small margins. I’ve heard, from other suppliers and business associates, that there are “thousands” of factories in Guangdong province that have closed down in the past 18 months or are closing down now. We’ve worked with a couple of sub-suppliers that have closed their doors recently. And we’ve had two suppliers ask us to pay early to allow them to have the cash to finish production too. But before you get ready to jump ship and plan your move elsewhere, remember this, there are pro’s and cons to production no matter where you are located. One story from [Richard Brubraker](http://www.allroadsleadtochina.com/index.php/?ref=silkroadintl.net) is [here](http://www.allroadsleadtochina.com/index.php/2008/09/04/sometimes-all-roads-should-not-lead-to-china/?ref=silkroadintl.net). For more examples look at the new about ASEAN countries: Thailand is in the middle of political turmoil and is never as fast at turnaround time as China. Many factories, especially toys, stuffed animals and clothes suppliers are currently overwhelmed with orders that have moved from China in the last year (because of recalls and 0lympic delays). Cambodia is having record inflations, 22%, and has very little developed infrastructure and no port (but Cambodia’s Ankor Wat is THE most incredible historical site I have EVER seen—and I’ve been to Egypt, Jerusalem, Jordan and seen it all here in China). Vietnam has only one deep-water port, high inflation and weak infrastructure. Good news is that Thailand’s over all confidence is still high and trade will continue to benefit the country. [Here](http://www.bangkokpost.com/090908%5FBusiness/09Sep2008%5Fbiz31.php?ref=silkroadintl.net), and [here](http://www.marketwatch.com/news/story/globalization-key-source-bringing-about/story.aspx?guid={82A22306-4AD8-41F0-ACB0-9EE25D3BC3A8}&dist=hppr&ref=silkroadintl.net), and [here](http://www.marketwatch.com/news/story/asian-insurance-focus-vietnam-/story.aspx?guid={56FE645C-2644-4022-9B1D-504E43B34285}&dist=hppr&ref=silkroadintl.net). Vietnam too is improving. HSBC and Standard Chartered are [the first banks to have wholly owned branches in Vietnam](http://www.ft.com/cms/s/0/e9ba2d52-7ece-11dd-b1af-000077b07658.html?ref=silkroadintl.net)—one in Ho Chi Min City and another in Hanoi. Both will be open within the next 12 months. No doubt that other banks are lining up to follow their lead. And, just because this got me thinking about this now, here is a point of comparison between Mainland ASEAN (Thailand, Vietnam, Cambodia, Lao; not Burma) countries and Guangdong province/ Hong Kong: Guangdong/Hong Kong has 95 million residents and another 31+million migrant workers for a total of about 126 million. Mainland ASEAN countries have a combined population of about 140 million. Guangdong has three of the world’s largest and busiest ports, Yintian, Guangzhou and Hong Kong. Not to mention three of the busiest airports (Hong Kong, Guangzhou and Shenzhen). Mainland SEA has two deepwater ports (Hanoi and Bangkok) and one major airport (Bankok). Guangdong is the world’s 17th largest economic unit. ASEAN as a whole wouldn’t be as large as Guangdong (without Hong Kong), Taiwan, or South Korea. While these numbers don’t mean all that much for individual projects, it puts China into perspective. (Just a little more perspective: California is the world’s 7th largest economic unit and the US economy is still more than 3 times larger than China’s with only 20% of the population). Finally, I was in Hong Kong recently to do some tax and banking work and was asked to do a survey at the newly renovated Mong Kok office of HSBC. The bank is now open 8AM to 8PM 6 days a week—how’s that for service!?! Can’t ever complain about longer bankers’ hours. Compare this with US hours—9-6 (some open as late as 7pm and some with partial services on Saturday AM); and with China hours—8-6 seven days a week; and Thailand hours—9-3, with a long lunch, five days a week (but only if there are no holidays or coups; Thailand has the most holidays of all countries on the planet, probably coups too). As a side note, the survey I participated in was in Mandarin, furthering my complaints/perception that Hong Kong is quickly turning into a Chinese only business center (Cantonese or Mandarin). While they offered to do the survey in English, I gave them (two customer service reps) the choice of English or Mandarin—they chose Mandarin. ### Elite China: Luxury Consumer Behavior in China—BOOK REVIEW. URL: https://www.silkroadintl.net/elite-china-luxury-consumer-behavior-in-china-book-review/ Last updated: 2026-07-18T14:48:36.000Z Pierre Xiao Lu’s look into the luxury market in China is probably the best book on the topic you can buy. But even if you are not trying to break into the Chinese luxury market there is great value in this book—as a tool for understanding urban culture, background of employees, partners, significant others, suppliers, customers and friends. For just about anyone working in China today, Pierre’s analysis of the Chinese consumer by age, economic status and location is an invaluable tool. His age classifications are:**The New Generation; born before ‘45.** Witnessed a half-century of incredible change; well educated, in important sociopolitical positions, parents of Transitional generation, about to retire.**The Lost Generation; born before ’60.** Victims of CCP social upheaval, lost educational opportunities in the 70’s and jobs in SOE’s in the 80’s and 90’s, first/most affect by one child policy too. Parents to the One Child Generation.**The Suffering Generation; born before ’70.** First generation to really “see” the world and work with it, also saw the events in T!ananmen Square, conservative, well educated, current source of most of China’s “elite” class and much industry upper management.**The Transitional Generation; born before ’80.** Grew up in stability, reform, opening up, money. They are optimistic, well educated, confident and pushing the “New China” forward.**The One Child Generation; born before ’90.** In or just out of university, internationally oriented but very nationalistic, affluent, trendy, morally relativistic, aspiring professionals. Socio-economic classifications are (adopted from non-Chinese models--After read this, I thought there could be more work done to differentiate Chinese social levels here, but they may be too new and too varying at this point, I don't know.):**The Country Club Establishment**; small number of established families, accustomed to wealth, work as heads of banks or major firms, are prominent physicians or lawyers and trusties for hospitals and universities.**New Wealth**; wealthy but not “established” families, successful business executives, conspicuous users of wealth.**Achieving Professionals**; Yuppies, career oriented, college educated, home is the symbol of achievement, child oriented, conspicuous consumption.**Faithful Followers**; white collar workers, working for “respectability,” typically avoid faddish or high-styleGeographic classifications are:The North, typified by Beijing. The East, typified by Shanghai. The West, typified by Chengdu. And The South, typified by Guangzhou (Hong Kong, Taiwan and Macao included here). Of less value is his discussion on values. While the list of values is extensive it is exactly this variety that lessens the effectiveness of the specific values as marketing/business tools. This is unfortunate as more analysis into the motivations for individual consumers in the luxury (and other) market(s) would be a valuable upgrade. Far too often the “values” are presented as either historical left-overs with little to no urban contextual analysis or are modern constructs with positive characteristics attributed to the current government and negative characteristics attributed to western culture (the good/bad domestic/western dichotomy is, unfortunately, used through out the entire book). The list is valuable, if it can be applied to specific demographics in specific situations. Alone it creates an overly broad template, often contradictory, that could be used for many countries, not just China. Peirre also falls victim to the very common faux pas of talking about (blaming) the mythical “west” as the source of a specific set of values and historical mistreatment of China. If China, with 90 plus percent of its population being Han Chinese, can be divided into specific geographical market segments, shouldn’t at least the same amount of division (respect, research) be given to all of the countries/cultures/peoples west of Israel since 1000BC?Two other criticisms that I have are what’s included and what’s not. First, the islands of Taiwan, Hong Kong and Macao were specifically not included in the discussion of Chinese cultural values. But opinions from citizens of these areas were included in the results. Either these inclusions skewed the results or the same exclusions skewed the discussion on values. Since the citizens of these islands have, in general, higher levels of exposure to luxury brands, higher education and higher incomes it strikes me as disingenuous to include them in the results. But since these peoples have also been exposed to very different and often competing values over the last 100 years, including them in the values discussion would have probably been problematic as well. Taiwan, it should be noted, is listed as “part of, but not administered by, the Mainland” according to Pierre. I'm not arguing this now, just pointing out a bias the comes out in more than one area. Which brings me to the second point. Pierre, like many Chinese authors, is either afraid or unwilling to be critical of the current government in Mainland China and their deleterious affect on market activity. For example: he talks about the unwillingness in the recent past to be ostentatious as resulting exclusively from traditional values rather than giving even the slightest reference to the political climate that persecuted conspicuous consumption and the climate of fear that limited consumption by anyone with money (or even rich ancestors). In another section of the book he attributes the growing consumption by overseas Chinese travelers to their new self confidence in the mainland (as it goes into space, hosts the 0lympics, etc.) but never mentions the fact that less than 30 years ago there were NO Chinese traveling abroad from Mainland and until this decade there were not significant numbers with any money to speak of. The attribution of spending patterns on feelings of nationalism when overseas is almost laughable. National confidence or merely opportunity that almost no Chinese have ever had before? In a similar vein, he notes that the names on the lists of the richest Chinese change every year and attributes that to the large turn over of wealth now in China (which may or may not be true). But he conveniently forgets the (well publicized) fact that Chinese actively try to get their names OFF these lists for fear of extortion, taxes and other threats to family and wealth. Further, the discreet purchasing of large luxury items is attributed to a sense of Chinese social humility (buying a Bently is more humble than buying a Rolls, he claims) and has nothing to do with (political) self-preservation, taste, availability or any other variable. Don't get me wrong, It’s a great book—one that I will refer to and read again for the insight into market segments in China. In addition to it’s great value in marketing, I see this book as being very helpful to foreign team leaders or HR managers or owners/bosses that have a (relatively) diverse group of Chinese employees that they’d like to compensate and gift appropriately. It also explains much to the lay foreigner that is trying to make sense of the conspicuous consumption on the streets of Chinese cities today. I read it with specific suppliers and employees in mind and found the research very helpful in understanding motivations and ways to reward/cooporate in the future. ### Things like this come in 3's URL: https://www.silkroadintl.net/things-like-this-come-in-3s/ Last updated: 2026-07-18T14:48:37.000Z Like Junior Soprano claims, “things like this come in 3’s.” Maybe it’s true. For the first time today I saw a Bangkok license plate on a car in China. (I can't upload the photo for some reason, you'll just have to believe me that I saw it.) Now I know that the Bangkok traffic is a mess, but this is a bit of a stretch, don’t you think—and a in Citrone? I’ve got a French supplier in Taiwan who told me straight out “I’d buy an American car before I bought a French one.”Next, an [actual news article on Lao](http://www.atimes.com/atimes/Southeast%5FAsia/JH30Ae01.html?ref=silkroadintl.net). The only other two “mainstream press” pieces I’ve ever seen on Lao were one on poorly built [Chinese motorcycles taking over the Lao markets](http://www.nytimes.com/2007/12/27/world/asia/27laos.html?ref=silkroadintl.net) and the NYT’s claim that Lao was “The Destination” of 2008\. I’ve been there twice and would hardly call it a “destination.” I have also tried for years to get my wife and friends to join me on a drive from Shenzhen to BKK; but to no avail. Any takers? Lao ranks at the bottom of most international lists, and for good reason. While it is resource rich, it’s very mountainous, has been connected at the hip to Vietnam for 30 years and has less than half the number of people (6.5 million) than the Lao population of Thailand (about 15 million). Quick myth-busting side note: despite what I’ve heard for decades from Thai/Lao friends in the US there are NOT more Lao in the US than in Lao. The US Lao/Hmong population is only about 350K. Until 2002 there was really no economy to speak of in Lao. But today, Lao is the “land-link” of Southeast Asia with China, Thailand and Vietnam all vying for influence and access. Most fascinating to me were the trade numbers. Lao-Vietnamese trade is almost to $1 billion annually. With a GDP of $12 billion and only 6 million people, there are a lot of very rich government officials (and 30% of the population living under the poverty line). And finally, I had a conversation with a potential client last night that included a discussion about “not wanting to be in Communist China.” Her words, not mine. I have no problems with other peoples’ politics or reasons for wanting to be or not to be in China or anywhere else. My position is that it’s their call—but once the decision has been made there are cost/consequences associated with that choice. Sometimes China is cheaper than the ASEAN countries and sometimes it’s not. China’s government has a bad name (communist/socialist), serious social problems but a vibrant economy. Thailand’s government, on the other hand, has a good name (Constitutional Monarchy) but [rampant (political) corruption](http://asiasentinel.com/index.php?option=com%5Fcontent&task=view&id=1408&Itemid=31&ref=silkroadintl.net) and a relatively strong economy as well. Thailand and China are both ranked in the same general level of corruption in [Transparency International](http://www.transparency.org/?ref=silkroadintl.net)’s 2007 report. So corruption and social ill’s are, like I told the client, are pretty much par for the course in this part of the world. The Guardian has a good set of pieces, photos and video (in Thai) on [the conflict in Bangkok](http://www.guardian.co.uk/world/thailand?ref=silkroadintl.net).Coincidence or harbinger of things to come? ### Where to locate your factory? I've been to Shanghai once, China looks good. URL: https://www.silkroadintl.net/where-to-locate-your-factory-ive-been-to-shanghai-once-china-looks-good/ Last updated: 2026-07-18T14:48:36.000Z Here's an interesting twist on the question: "where do you want to be? "OBAMA: “Everybody's watching what's going on in Beijing right now and the Olympics. Think about the amount of money that China has spent on infrastructure. Their ports, their train systems, their airports are all vastly superior to us now, which means if you're a corporation deciding where to do business, you're starting to think, Beijing looks like a pretty good option.”So why if Beijing is such a good option are the Dems so gleefully [bashing McCain](http://politicalticker.blogs.cnn.com/2008/08/20/afl-cio-targets-mccain-on-trade-with-china/?ref=silkroadintl.net) for exporting 2.3 million jobs to China?!?! Sounds like pretty smart business (and [pretty fuzzy math](http://www.chinalawandbusiness.com/2008/08/20/john-mccain-blamed-for-shipping-jobs-to-china/?ref=silkroadintl.net)) to me. But this is more about infrastructure than politics. Everyone’s guilty of political pandering. Chinese infrastructure in many places is newer than that in the US, true. China’s market is larger than the US’s so it should be a bigger draw to companies than the US. Labor is cheaper, regulations are lower (enforcement much lower), cost of living is lower. But “all” of their airports and ports are better than ours? Come on, I can understand a bit of exaggeration when stumping—but “ALL” of China’s infrastructure is better than that in the US? Really? Western China? Guiyan? Inner Mongolia? China indeed does have some advantages and as any free-market, free-trade promoting country will tell you. But I think that we should be taking advantage of it, not complaining about it. Obama has never been to China, doubtless most of his staff haven’t either. There is more to China and to manufacturing than infrastructure on the east coast. But assume he's right--China has a better environment for business than the US. Let me ask those of you who do work in China regularly (all the time!), when was the last time you said: “You know what? The traffic in \_\_\_\_\_\_\_\_, China is so much better than \_\_\_\_\_\_\_, USA!” Or how about this one: “The legal system here rocks!” Maybe you’ve said: “The QC in this factory is world class.” Or: “Human rights/standard of living/political freedoms are totally leading the world here.” Maybe you’ve said: “I just love the free flow of information here.” How about: “Who would ever want more than one child anyway?!”These questions do NOT mean that you shouldn’t work in China nor do they directly answer the infrastructure vs infrastructure question. But there are issues in that maybe significantly different from other locations you are considering doing business. More importantly, international business is not, unlike politics, a zero sum game. What protectionists on both sides of the isle like to forget is that trade is generally very good for both the Chinese and the US economy and the poor, recently homeless, unemployed, flag-waving American consumers too. Take me, for example. I could choose to work at a job in the US (that’s +1 domestic US job). Instead I own my own company and live in China. A net loss for the US? No way. SRI has had, at different times 5-10 employees in the US (+5, just to be nice). Not only that, but how many clients in the US do we support?—more than 25 different US companies this year. A couple of examples, we have three clients who have person by person moved their line workers into warehouse workers and office people. They employ more people and pay them more than they previous did when they did line production/assembly in the US (that would be at least another +30 just counting the people I know). I may be a small example, but I can count at least 35 white color jobs in the US that my small company facilitates by being in China compared to maybe 2 “jobs sent overseas” by “staying home” working for someone else, like I was in ’99\. And, I still pay taxes (corporate and individual) in the US, I travel to and shop regularly in the US and I hope to maintain a residence there soon too. The stupidity of the arguments about the jobs that US companies hire out in China is that they are flat out untrue. Trade generates wealth which in turn generates jobs—trickle down economics ring a bell? When jobs do leave (plant closures), many (not, all, I know) are low-end labor jobs which are, on balance replaced by higher end jobs necessary to coordinate importing. White-collar job flight is a bit different, sure, but (1) “flight to Chindia” is not the disaster the economy that it was predicted to be years ago. (2) Many of the white collar jobs didn’t “leave” as many are only temporarily in China and then will return home to the US, still working for the same companies they were with before they came to China. And (3) the exchange from blue to white color (or even just moving from blue collar to service oriented jobs) is at least a trade off if not an improvement. Finally, (4) the US has had a net job increase (and not in low in labor positions) since NAFTA was signed—which incidentally, coincides with the rise of the Chinese economy. This last point being the most important—NET JOB INCREASE in the last decade despite NAFTA, economic downturn and the rise of China. What no one will say, especially in political events is that most of the jobs moved over here can be traced to foreign companies that are moving their lines to China but keeping offices/HQ in their home countries (and contributing money to both campaigns). Many companies exist because of the jobs that are created from processing imports. Exports (jobs, goods and money) are the price we pay for imports (jobs, goods and loans). Who in the US wants to live without imports, including oil, loans and Wal-mart? No one with a view past their own wallet. So here is that bigger picture view. China in (my) perspective. If China is not the biggest economy in the world there is something wrong. Take the argument that environmentalists use about carbon output and use it on the economy. How can the US, with only 300 million people, have a larger economy than the PRC with their 1.5 billion? India should be included here too. China will soon be the biggest \_\_\_\_\_\_\_ (fill in the blank) like it or not. So get used to it—better yet, prepare for it, embrace it, make money from it, support your family/lifestyle future from it. Or stick your head in the sand. If China does not have newer infrastructure than the US there is something wrong. China had NO infrastructure at all just 30 years ago. Of course everything they have is “newer” than what most of the US has. So what? The US has something like 1 airport for every 900 people (300 mill/3,300), China has something like 1 airport for every 6.4 million people (1.5 bill/250). Their building 100 a year just to keep with the population. The US doesn’t need to “update” all 3,300 airports every two years to keep up. Honestly, the date things were built is not as important for most manufacturing as a few other things (like corporate tax breaks, utility subsidies, cheap labor, income tax rates, etc.). If China doesn’t win the most gold medals there is something wrong. There are a couple of realities that the rest of the world has to face: China is bigger than anyone else. They should be winning most “total” number counts in any competition or business. They have a huge government funded sports program that prepares kids for decades to compete in the 0lympics. Even without this national level program, they have a middle class that is as big as the entire US population not to mention another billion plus people to draw athletes from. If you’re not comfortable with China being involved in just about every global conversation from here on out, you are in for a rude awakening. If China isn’t the largest market on the plant there is something wrong. Again, 1.6 billion people x rising standards of living = biggest (potential) market ever in the history of the world. Who doesn’t want to be here (some in T!bet and T!aiwan excluded)?!Obama's comment shows two things, one, don't beleive anything you hear from politicans this year (or maybe ever). And two, someone commenting on China who has never been here, doesn't work here or isn't involved in business here (regularly working with govt regulations, company registrations, employees, suppliers, logistics) probably does not have much more diversty of perspective than NBC (Nothing But Crap, Jeff Dunham). Finally, you should be in China or India or Vietnam or Thailand or the US for the right reasons; and that is because it works financally for your specific business. And, as I've detailed here before--you'd better be making an extensive study before you make the final decision. ### "How the hell does anyone do business over here?!"* (or China vs. Thailand, pt.274) URL: https://www.silkroadintl.net/how-the-hell-does-anyone-do-business-over-here-or-china-vs-thailand-pt274/ Last updated: 2026-07-18T14:48:36.000Z So let me get this straight…1\. If my factory makes a mistake I get stuck paying for it or lose my deposit or go to court just to get what I contracted for? Right.2\. If my factory can’t hit the quality standards specified I get stuck with lower quality goods, or no goods and no refund? Right again.3\. If my factory can’t understand the language in the contract but sign it anyway, I’m at fault for not realizing what they could/couldn’t do before the contract started? 3 for 3!4\. If my factory is late because of the 0lympics, a typhoon, government raids, not enough laborers, blackouts 2-3 days a week, underestimated schedule or overzealous sales department commitments I’m stuck dealing with missed shipping dates because there is no way in China, to get them to pay penalties except going to court? Yup.5\. If my factory runs out of money because of the bad economy (non-paying domestic clients) I’m forced to pay early to get my product completed or just lose everything? Uh huh.6\. If I want to send samples to a domestic factory or to the US, the (concluded) 0lympic security says that we can airmail flocking but not glitter, and we can't airmail semi-precious stones, batteries or electronics? Is it selfish to already be dreading the [Shanghai Wold Expo](http://www.expo2010china.com/expo/expoenglish/oe/es/index.html?ref=silkroadintl.net) in 2010? Or the [World University Games](http://210.21.197.189/eng/index.htm?ref=silkroadintl.net) in Shenzhen in 2011? Yes to both. One more point on shipping in China, and this has nothing to do with recent security. We have accounts with all the big three express shippers but typically only use one of them. This account has been based in the US for years now. But this last year we have been getting "hints" from the local office that they'd like the billing to be run through them and not the US. Hints like, late delivery, hang ups when we call for customer service, double billing, and now outright threats to stop service if we continue to use the US account/billing. We've called the US office and they claim they talked with HQ in Guangzhou and there is no problem. But the local delivery office in Shenzhen (who I've talked with personally about this a number of times) is insistent that they can't service our account properly unless the billing goes through them directly! Don't ever discount the power of a good extortion play. So if we have 3 accounts why do we continue to use this one? Well first, it's actually a bit cheaper to bill though China. And second, the express provider has a great international network set up. Much better than the other two. So despite the extortion our account will move to China--I guess you could say this is economics with Chinese characteristics. Or maybe just a lesson in getting the same results in a culturally appropriate/different way. Yes, all of these are questions or situations that we’ve either been in or been asked to solve for others these last couple of months in China. Still think it's not worth it to hire someone to represent you in Asia? No way you can solve any of these problems without being here, on the ground, 24/7. But it could be worse. You could be in Bangkok.1\. The new airport really sucks, and [it’s getting worse](http://www.bangkokpost.com/290808%5FNews/29Aug2008%5Fnews21.php?ref=silkroadintl.net).2\. It’s annual protest season again and that means that hundreds of trucks blocked trains, roads and airport access (ok, that’s not so bad) and generally made the GDP sucking BKK traffic even worse. [Poor Aussies](http://news.theage.com.au/national/hundreds-of-aussies-stranded-in-thailand-20080830-45vt.html?ref=silkroadintl.net).Thailand is unique in that they seem to be able to have total political chaos every couple of years and still maintain a relatively stable work envornment, albeit for the week or so of major protests. Here's my take: The protests will get worse next week, there will be a settlement of some type. Taksin will not be returned, investor confidence will remain high, exports will continue as will economic growth, old PM will step down, a new PM will be "elected" and by October, things will be back to normal. In the meantime, getting to from the office or the markets in Sampeang will be tough, but other than that (and wading through all the new political slogans and bumper stickers) things will pretty much go on like it has for the last 25 years. Sabaay, Sabaay.3\. The crisp clean smell of [teargas is in the air](http://ap.google.com/article/ALeqM5hG71oGl1LokvZphtDQZzL44nzc3QD92S0VP05?ref=silkroadintl.net).4\. Inflation is up.5\. So are interest rates.6\. But don’t worry about the economy, political instability is now [the biggest concern](http://www.bloomberg.com/apps/news?pid=20601080&sid=a6%5FajZI7mBsc&refer=asia&ref=silkroadintl.net).At least the beaches haven't washed away. [Yet](http://www.irinnews.org/report.aspx?ReportId=79685&ref=silkroadintl.net).\*The title is from a client who was visiting a factory and hired SRI to try to solve some QC issues. ### Split Personality New Order URL: https://www.silkroadintl.net/split-personality-new-order/ Last updated: 2026-07-18T14:48:36.000Z I'm really trying to get past the 0lympics, but there were just so many good quotes and pieces that I'm still referring to some of them. But this post is about how attitude affects business, and only slightly related to the 0lympics.[Great article by Orville Schell](http://olympics.blogs.nytimes.com/2008/08/01/chinas-olympic-crossroads-orville-schell-on-moving-beyond-old-wounds/?hp&ref=silkroadintl.net) on what the 0lympics could mean for the future of China. It fits nicely with what I’ve been saying here about knowing who you are working with. When you know with whom you are working you can extrapolate much about how they will negotiate and where their intentions may be coming from. One of the best sections of the Schell interview is this: > Q: In the run-up to the Olympics, many in the West have been surprised by displays of intense Chinese nationalism — or patriotism, depending on your point of view. In particular, the young and better educated Chinese reacted with strong indignation over the Tibetan protests. What does this say about the younger generation in China?Schell: This is an interesting question. How has it come to pass that the latest generation of Chinese, who are better informed and educated about the world and more well-traveled than ever, and consequently more deeply involved in the world than at any time since the late 1940s, has ended up being even more nationalistic — sometimes even xenophobic — than earlier generations who lived much more cloistered, isolated lives under Mao in the midst of an anti-imperialist revolution?Part of the answer may well be that in ways which are difficult to actually quantify, the Party’s own propaganda has helped distort their perceptions of history and made them feel a kind of acute “virtual” victimization that, while historically true in the past, is far less true today.But, I suspect equally as important is the innate yearning of most Chinese to once again see their country restored to the status of a well-respected and great nation. However, what often seems to be missing from the equation of this yearning is the recognition that global respect is something that is not earned by “wealth and power” alone, but comes just as much from a country’s constructive deportment as a global citizen in our new multinational world where everyone is now ineluctably connected to everyone else. Here China is far less mature than in the area of development and marketization of its economy. One must raise sensitive questions here such as its opportunistic relationships with the governments like those of Burma, Sudan, Zimbabwe and Iran. > I’m constantly reminded that many managers, 40 years old and up, came from very austere backgrounds and can, quite literally, out wait, out work and out strategize you—because you most likely don’t know where they are coming from and will more than likely underestimate them since they are certainly not as sophisticated as you or their younger employees. But the people whom you may be working with most directly, the mid level managers (30 somethings) and (your) professional staff (20 somethings), also have completely different histories and attitudes. I have always felt that younger Chinese professionals are typically much better educated, more international, patriotic, and very sensitive to any (perceived) criticism of China. Pierre Xiao Lu lists out the generations and their general attitudes in “[Elite China: Luxury Consumer Behavior in China](http://www.amazon.com/Elite-China-Luxury-Consumer-Behavior/dp/0470822678/ref=pd%5Fbbs%5Fsr%5F1?ie=UTF8&s=books&qid=1219972259&sr=8-1&ref=silkroadintl.net)” (excellent info in this book, by the way—review coming next week). Briefly, according to Pierre, the *urban* Chinese generations are: > **The New Generation; born before ‘45.** Witnessed a half-century of incredible change; well educated, in important sociopolitical positions, parents of Transitional generation, about to retire.**The Lost Generation; born before ’60\.** Victims of CCP social upheaval, lost educational opportunities in the 70’s and jobs in SOE’s in the 80’s and 90’s, first/most affect by one child policy too. Parents to the One Child Generation.**The Suffering Generation; born before ’70\.** First generation to really “see” the world and work with it, also saw the events in T!ananmen Square, conservative, well educated, current source of most of China’s “elite” class and much industry upper management.**The Transitional Generation; born before ’80.** Grew up in stability, reform, opening up, money. They are optimistic, well educated, confident and pushing the “New China” forward.**The One Child Generation; born before ’90.** In or just out of university, internationally oriented but very nationalistic, affluent, trendy, morally relativistic, aspiring professionals. > Each of these generations sees China very differently—indeed the lives of the New Generation and the One Child Generation are as different as Mars and Venus. If you count urban and rural populations, each of these generation encompasses 200-300 million people (or just about 1 entire USofA each). Anther good article that addresses the attitude of the Chinese about the Olympics—they were “owed” this. And it was much more than a game—it was about showing the world that they have “arrived” and are a “strong and powerful” nation. Again, if you clearly identify [who your hosts are](http://www.telegraph.co.uk/sport/othersports/olympics/2486937/Beijing-Olympics-China-casts-off-a-century-of-shame.html?ref=silkroadintl.net) and what they are thinking, in general, it helps with negotiations, relationship management and problem resolution. Finally, a very practical piece about [priorities in your China operations](http://uk.reuters.com/article/consumerProducts/idUKHKG19593220080731?ref=silkroadintl.net). How much due diligence are you doing on your factories before you buy in China? I would dare say that it’s not as much as Coca-Cola. Two very interesting items I take from this article. First, the number of factories in the food industry that are substandard (more even scarier food news [here](http://www.slate.com/id/2196837?ref=silkroadintl.net)) that are substandard is enough to make you want to stop eating. (What does this say about other factories in other less regulated industries?!)And second, the level of importance given to employee training by Coke—again what does this say about where money and priorities should be here? This is a heads up! You should be investing in your suppliers. I have a friend in the furniture business that has been here for 20 years. This is his contention too—invest in people and you’ll get what you expect in quality product. More so than a complex contract, more so than even dedicated QC. Investing in the people who are touching the product will get you better results than investment in any other single area of production. ### Yeah! I'm a llama again!* URL: https://www.silkroadintl.net/yeah-im-a-llama-again/ Last updated: 2026-07-18T14:48:36.000Z So now that it's all over, what's next? First a couple of comments on the 0lympics and then some application to doing business here. I’ve said for 8 years—this will be the best Olympics ever—and it appears that it was. Was there any other choice? With more police than foreigners in the capital, control of the weather, no protests (no iTunes), people so happy and proud of China you’d think you were in Disneyland instead of a “real” country. It was bound to be perfect. Congrats to the Chinese. They’re proud of themselves, and that was the goal.[Best Olympic quote](http://www.guardian.co.uk/sport/feedarticle/7749443?ref=silkroadintl.net), by David Zweig, China expert at Hong Kong University of Science: "I think there was over-expectation from the West," Zweig said. "China was authoritarian on the way into the Games and it will be authoritarian on the way out. " This is likely to be the case for many years to come—can your “China strategy” deal with that reality?[Second best Olympic quote](http://news.yahoo.com/s/ap/20080823/ap%5Fon%5Fsp%5Fol/oly%5Fchina%5Fs%5Folympics?ref=silkroadintl.net): "This is the beauty of dictatorship: They can do many things that other countries cannot do," said Guoqi Xu, a historian and author of the book "Olympic Dreams: China and Sports, 1895-2008. " "You have to remember they even controlled the weather. No other country would do this. "The sad thing is not that China held an honestly great event or took the most golds but that Thomas Friedman ([NYT](http://topics.nytimes.com/top/opinion/editorialsandoped/oped/columnists/thomaslfriedman/index.html?scp=1-spot&sq=friedman&st=cse&ref=silkroadintl.net), [The World is Flat](http://www.amazon.com/World-Flat-3-0-History-Twenty-first/dp/0312425074/ref=pd%5Fbbs%5Fsr%5F1?ie=UTF8&s=books&qid=1219716699&sr=8-1&ref=silkroadintl.net)) and others are jealous of the Chinese govt's ability to "get things done. " They whine about the fact that in democracies projects can’t move as fast (due to unions, human rights, legal statutes, contractual obligations and other worthless democratic bullshit). They think that infrastructure and events are more important than people and freedom. Pathetic really. So now that it’s over, what has changed about working in China? Nothing--except maybe the attitude of your Chinese supplier. You still need to ask the right questions to the right people. You still need to be on the ground as much as possible and you sill need to QC, test and recheck everything. But now, you're not so hot any more. China "has arrived. " At least in the minds of 1.6 billion Chinese. Hopefully there are a few other things that we all learned from the 0lympics too First is that China is GREAT at presentation. Know this before you go into a factory. Second, the priorities of your China supplier are most likely NOT the same as yours. You may be “partners.” You may be working for the same physical end results. But do you know what their expectations, goals and priorities are? If you don’t, you’re going to be on the short end of the stick when it comes to price/quality/timing/etc even if you do get what you asked for. Know your partner or, like the IOC, you’ll get caught with your pants down when the final product is revealed. Third best quote about the 0lympics (but I can't remember the source): "Probably not much will happen (with the Chinese gymnasts issue). The IOC just wants to get out of China in one piece. "Finally, English didn't take as a permanent fixture in China, so you'd better hit the Chinese lessons again. I’m a big proponent of people learning Chinese. Not only is the only way to assure you get exactly what you want, it’s polite and it shows commitment on your part. And, as the medal numbers suggest, it’s probably just future smart. Besides, it’s not that difficult—honest. Maybe you’ll never be able to write, but with computers now, you don’t need to. If you can sing you can speak in tones and there is no conjugation of verbs! Grammar is pretty simple. Besides you've got more than enough available tutors who are all dying to trade you English for Chinese lessons--just go to Starbucks, sit down and start smiling at people. Here’s a great example of [what you get if you speak Chinese](http://www.sinosplice.com/life/archives/2008/08/25/buying-an-iphone-in-shanghai?ref=silkroadintl.net). This is a great site, by the way. I don’t always agree with some of Jon's politics, but he plays basketball, speaks Chinese and is here for the long haul, so he must be a good guy. As for the blog, great language postings (most of the time), good business-applicable comments (some of the time, even though it’s not his focus), a fun blog with some fantastic language tools (all of the time)--check out the pages other than the blog. No, I don’t know him. A couple of other sites for either beginners or intermediate learners of Chinese. [Serg](http://www.melnyks.com/?ref=silkroadintl.net) has a great site with simple lessons that start from beginners to advanced. He updates them weekly and you can buy worksheets and activities too. [CSLPod](http://www.cslpod.com/English/Default.aspx?ref=silkroadintl.net) is one of my favorites. You'll have to have at least some basic Chinese to use this, but once you're past 102 level you can lean current events vocab on your own. You can get both of these in pod-cast format too on iTunes (not blocked any more--Yeah! And yes, I bought the T!bet album just because it was blocked--no such thing as bad publicity, eh?).\*The title quote comes from my kids’ favorite Disney movie, The Emperor’s New Groove. (OK, it my favorite Disney movie.) At the beginning of the movie, the emperor is changed into a llama. In the end, while trying to change back to a man, he gets changed into a number of other animals, one of which is a llama, again. Thrilled to back to “normal” he says—Yea! I’m a llama again! Welcome to China after the 0lympics.**Update**\--some other Post 0lympic Articles of value.[Washington Post](http://www.washingtonpost.com/wp-dyn/content/article/2008/08/24/AR2008082400603.html?hpid=topnews&ref=silkroadintl.net)[Asian Sentinel](http://asiasentinel.com/index.php?option=com%5Fcontent&task=view&id=1396&Itemid=31&ref=silkroadintl.net)[International Herald Tribune](http://www.iht.com/articles/2008/08/25/sports/25china.php?ref=silkroadintl.net)[Open Democracy](http://www.opendemocracy.net/article/the-olympics-has-china-proved-ready?ref=silkroadintl.net)[WSJ Online](http://online.wsj.com/article/SB121865176983837575.html?ref=silkroadintl.net)**SECOND UPDATE.** One more [GREAT!! Post 0lympic article](http://www.timesonline.co.uk/tol/comment/columnists/martin%5Fsamuel/article4615162.ece?ref=silkroadintl.net) from the Times Online. This backs up my contention that many (under)educated (or extremely liberal) journalists wish they could just "fix" the rest of us without having to deal with the democratic processes. ### Where should you be? URL: https://www.silkroadintl.net/where-should-you-be/ Last updated: 2026-07-18T14:48:37.000Z I've written a number of times about [Inland Western China vs. Eastern Coastal China](http://www.smartchinasourcing.com/china-competitiveness/china-prices-sizing-up-second-tier-c.html?ref=silkroadintl.net) and the advantage and disadvantages of each and how to decide where to locate. There are certainly hundreds of other city and country specific comparison pieces online too. Some of the best are at the [All Roads Lead to China blog](http://www.allroadsleadtochina.com/index.php/?ref=silkroadintl.net), in particular the reports on [China's Other Cities](http://www.allroadsleadtochina.com/index.php/category/second-tier-cities/?ref=silkroadintl.net). This last week, once again, Richard Brubaker at the All Roads Lead to China blog has listed out some great questions and comparisons between China and Vietnam. Read the [full post here](http://www.allroadsleadtochina.com/index.php/2008/08/19/is-china-no-longer-competitive/?ref=silkroadintl.net). Dan at (China Law Blog) beat me to commenting on this. His post is [here](http://www.chinalawblog.com/?ref=silkroadintl.net).We regularly get requests for info and pricing/production options for factories in Vietnam and other SEA destinations; we have an office in Thailand to take advantage of these very opportunities. In the last couple of years we've done work with factories in Thailand, Vietnam, Malaysia and Cambodia (as well as China, Taiwan and South Korea). Each project not done in China had a specific reason: some for tax/tariff issues, some for publicity, some for price and availability of materials, some for quality concerns and some because of existing relationships. Regardless of the product though, the process of supplier (and city, country) selection is one of the most important things you can invest in pre-production. Oddly enough, I find that it's often a secondary thought for folks coming to Asia for the first time. Often times visiting a trade-show is given more time than selecting the correct local for manufacturing. I can't stress enough how important the location you select can be--it will affect everything from price to how you negotiate that price; from what materials you use and their quality to the quality and experence of managment and labor. This decission should be investigated and invested in (yes, spend $ on chosing your supplier) as a major priority in the production process. Brubaker asks several great questions of those considering a move:1\. What's your China platform? This is a serious question and the one that most people get wrong. Honestly, are you here for a single production run, to buy stock items, or to set up a manufacturing base/logistics and sourcing center. More than one of the "fix it for us" projects we've done is because someone that should have a presence here is using a HK trading company to manufacture custom product.2\. Where is your market?3\. Where are your competitors?4\. Where are your suppliers? News flash--moving to an ASEAN country is not going to get you away from Chinese suppliers. In fact, the Chinese are probably both the suppliers to and the largest investors in your ASEAN factory.5\. Is your product high tech or high labor?6\. Were you previously compliant? I would add a couple of additional questions to this list.1\. Why are you considering moving? Really.2\. What are the domestic and international tax/tariff structures where you are considering moving to?3\. Can you find the professional support (staff, legal, IT, translation, etc.) that you'll need?4\. Are there outside factors (environment, social compliance, media) influencing your move and will these really be resolved by moving somewhere else in Asia? There are of course tons of other product specific questions that you'll need to ask (and answer) yourself. But Brubaker's advice on the various areas within China and his comparisons in his post give you a great starting point. ### Finally, it's cool to be an American URL: https://www.silkroadintl.net/finally-its-cool-to-be-an-american/ Last updated: 2026-07-18T14:48:36.000Z If you've read this blog for any amount of time, you know that I love basketball and the US. (While at the same time choosing to be fat, eat chocolate and live in China. Go figure.) Mixed in with numerous Jazz home games over the years, I saw the US Olympic team play in Guangzhou in '06 and the Orlando Magic play in Macao in '07 and the "Redeem Team" play against Spain last weekend in Beijing. It's corny, but I love this game and I love my country. That's why, when I heard about Kobe's comments about America I was honestly excited--could it be that a superstar was actually going to take a positive (political) stand on the USA?! Yes, indeed. WSJ supporting opinion on the Kobe interview [here](http://online.wsj.com/article/SB121901828943748251.html?mod=djemEditorialPage&ref=silkroadintl.net). Videos are all over the net. While I love that someone famous is taking this position, I'm disheartened that the current state of affairs is such that hating America is the default assumption and being patriotic is so "uncool. " Other people can love their home country, why won't Americans? Would it hurt so much to fight for the positions you believe in, fight against the politicians and issues you dislike and still admit that your country is great or at least likable? I love the US--worts and all. My great grand parents immigrated from England and Denmark to the US; one leaving money and family and living in a grass lean-to on the Central Plains for her first years in the US. My Grandpa was a Air Force Colonel who served in WWII, Korea and Vietnam. My grandmother graduated from college when she was 55 and coordinate a July 4th pageant at her church every year for decades. My mother is a state senator for Utah. I have an uncle and 4 cousins who have before or are now serving in Iraq. I thank God for all of their sacrifices for me. Everyone, Chinese, American, and all others have the right to love their country. Kudos to those who stand up for it in public. While doing business over here, I can both be grateful for the countries that I work in and respect the people while still loving my own heritage and country at the same time. PS-since I'm waving the flag already, here is a list of some great books about the US (sure, there are others too).1776, David McCulloughAlexander Hamilton, Ron ChernowTeam of Rivals, Doris Kearns GoodwinFlags of our Fathers, James BradlyFounding Brothers: The Revolutionary Generation, Joseph J. Ellis ### Reactions from the 0lympics in Beijing/Hong Kong URL: https://www.silkroadintl.net/reactions-from-the-olympics-in-beijinghong-kong/ Last updated: 2026-07-18T14:48:37.000Z I spent the weekend at the Olympics—hey, since I already had a visa, why not?! Here are some thoughts from that experience. The number one topic in Beijing? Michael Phelps. Way to go, Michael. I’m really disappointed in Hong Kong. First, Pearl TV wouldn’t even mention the name “Chinese Taipei” in live broadcasts when they won a medal (bronze). That was disgusting and weak. There is still supposed to be a free press in Hong Kong is there not? Second—what the hell happened to your own Olympic team? Where are they? Where’s the local support?! In Hong Kong (except for one Manulife Insurance ad) everything is about Mainland China's team. If I was on (or related to someone on) the Hong Kong Olympic team, I’d be insulted. If I was a Hong Kong citizen I’d be embarrassed. Finally, as late as 5 years ago it was possible to get around in English in HK if you didn’t speak Cantonese. Now, it’s Mandarin. Even with the Olympic prep, English skills are down in public venues and service industries. This of course is just an informal opinion from my experiences here with a client and my sister (neither of whom speak any Chinese) over this last weekend. This was one of Hong Kong’s advantages—along with logistics, banking, freedom and adherence to international norms and standards. It only took 10 years for Hong Kong to become just another Chinese city. As one foreigner we meet buying tickets in Beijing said: “There aren’t any places to hang out and party. This must be the Serious Olympics. "Pins, which were so much fun to buy and trade at previous Olympics (LA and SLC), were incredibly hard to find here. I asked a number of people for pin trading/buying spots, but no body really knew. Bummer. The one guy, from Texas, who had cool pin brought it from the US and was passing it out to people in China—it’s loaded with religious symbolism and he obviously wasn’t here to collect sports pins. I find it ironic that other “Christians” justify breaking the laws of other countries for a “higher cause.” Nice guy though. Meet a couple from the Netherlands who were thrilled that they were “winning a medal a day!” So what’s the most important—total golds, total medals or just having a great time? Beijing was cleaner and had less traffic than I have ever seen before. I have traveled here for business/pleasure at least a couple of times a year every year for the last 5 years and this was a completely different city. I have never been to Beijing and seen so much sun. After the rain, the weather was so good I got sunburned at the baseball game--really. The architecture in Beijing is amazing--it was a beautiful and different from any of the other 10 plus times I've ever been there. The taxis and taxi drivers were so clean. Kudos to whomever thought to give all the drivers new shirts (and showers). Unfortunately, the manners and English lessons did not take so well with some drivers, sorry to say. Chinese fans may not know much about all the sports in the Olympics, but they are, at least very active fans. But the volunteers leading (the same) cheers over and over again did not, despite their diligent attempts, make the games more fun. But maybe [there’s hope](http://www.iht.com/articles/ap/2008/08/18/asia/AS-OLY-China-Spectators.php?ref=silkroadintl.net).I asked a friend of mine whose company did some work on the Bird’s Nest what it was going to be used for in the future. He told me that the stadium was built so quickly that there are serious foundation problems and the government will close it after the Olympics and have to do “billions of RMB” worth of repairs before it can be used again. Surprised? Thankfully most people have been very safe (except for the dead and injured Americans, of course--my condolences to the family). But I have to say, security was a HUGE pain in the rear. Not because it was there, but because it was different every time. Airports, museums, event venues, all had different standard, and it seemed that some people got it worse than others. Sometime suntan lotion was OK, other times not. Ditto for iPods, computers and SLR cameras—the fact that I had a laptop, SLR camera and iPod in my bag was an issue for the baseball security folk, but not for football. Open umbrellas were not allowed in any of the outside venues but were permitted/ignored everywhere and made jumping up and down a potentially painful experience at the baseball game. The same 3oz. toiletry bottles made it though 4 different Chinese airports last week but not out of Beijing on our last flight?! Which brings me to…Foreigners (white) were more than welcome in Beijing. People went out of their way to smile, help and welcome me and my sister. But black foreigners got not so much love and other Chinese almost none at all. It was really too bad, we overheard more than one (back) foreigner complain about the treatment he had received. And my (Chinese) wife was NEVER allowed into any event seating without being checked/searched/wanded. Not once was my ticket checked after security at any event (5 games in all) but she was stopped every single time. Security at Tiananmen Square, volunteers, helpers on the street corners, no one treated her as well as they treated me. Tells me that the "changes" in China are temporary. Unfortunate. Not one of the “sold out” events that I attended or anything I’ve seen on TV has really been full. Here’s what [others are saying](http://jamesfallows.theatlantic.com/archives/2008/08/emptyseat%5Fmystery%5Fcont.php?ref=silkroadintl.net). I couldn’t agree more. Scores of people at each event are selling tickets—and if you’re willing to miss the start you get them for just double face vale (Y100 to Y200 RMB). We even had friends who bought tickets for the opening ceremony for less than $100 each. I feel so bad for Liu Xiang who not only got hurt but who doesn’t get to compete in the race he’s been preparing for more than 8 years. The idiots in China who are angry with him for getting hurt show that the games in China are not about sports or individual athletes, but about national pride for most people here. Here's [one take](http://www.washingtonpost.com/wp-dyn/content/article/2008/08/18/AR2008081801445.html?hpid=artslot&ref=silkroadintl.net).One last thought. Outside of China do people of other nationalities “feel proud” to be a member of their respective countries when they watch the Olympics? I love the sports, I love the US, but watching Phelps or USA men’s basketball team win doesn’t make me any more patriotic. I’ll admit I love cheering for the US teams/individuals. But I don’t love the US more or less when the events are over. Am I jaded as an American? Am I just used to having international exposure while Chinese are not yet? ### The China Fantasy—BOOK REVIEW URL: https://www.silkroadintl.net/the-china-fantasy-book-review/ Last updated: 2026-07-18T14:48:36.000Z If you’re not ready to face the reality of China’s future and your involvement in that future, don’t read this book. If you’re comfortable with the idea that China is not “changing” in all the ways that the western democracies would like it too, don’t read this book. If you think that 10% of the Chinese population enjoying the fantastic growth of the last 20 years amounts to a change for the entire Chinese population don’t read this book. If you like the last 40 years of US (or English, or Australian) foreign policy toward China don’t read this book. But if you wonder why economic change in China hasn’t lead to political change or why no one seems to mind that every US president has taken a hard line on China to get elected but then reversed course in office then you should read [James Mann's The China Fantasy: Why Capitalism will not bring Democracy to China](http://www.amazon.com/China-Fantasy-Capitalism-Bring-Democracy/dp/0143112929/ref=pd%5Fbbs%5Fsr%5F1?ie=UTF8&s=books&qid=1218792895&sr=8-1&ref=silkroadintl.net).This is the best book about China that is not about China. The China Fantasy is about US foreign policy toward China and why and who influence that policy. It’s about how money, not in China but in western big businesses, is more important than human rights and democracy. It’s about how academic access to China for western intellectuals is constantly more important than the promotion of freedom of expression or a free press in China. The book does a great job of separating the limited access of western policy makers, academics and businessmen to the Chinese middle and upper classes from the realities of the “rest” of China’s 1.6 billion people. If you’ve only been to universities, factories, east coast cities and government offices this book will quickly expose you to the fact that you’re opinions of China are limited far more than you’re likely to admit. Mann calls for a change, not in policy necessarily, but in the justifications for policy. I think that there is too much money invested in keeping the status quo for that to ever happen, as does Mann. But, in the very least, this book will expose the fallacy behind the justifications that many use to come to do business in China. This is not a rah-rah China book and it’s not a China disaster book either—it’s a middle ground, a third path. Mann says that it’s far more likely for China to continue to grow economically and remain repressive politically than any other option. The question is: can businesspeople and politicians and consumers in the west live with that. ### How do most people vote/protest? Typcially with their pocketbooks. URL: https://www.silkroadintl.net/how-do-most-people-voteprotest-typcially-with-their-pocketbooks/ Last updated: 2026-07-18T14:48:36.000Z Whether you live in the US or China, human nature is often the same. People, when they are well fed and have $ to spare, care about different issues than those that are hungry. Now that there is a middle class in China, some people are starting to realize that money is not the answer to everything. What journalists will hopefully learn in the two weeks that they are here is that there is a LOT of money in China and it's not all tied up in 0lympic projects or "communist" work units. While most Chinese are, at this moment, overly patriotic (and justifiably so), life will return to relative calm in the coming months and people will start to talk about politics, other countries, the slowing down of the Chinese economy and the NCAA College Football Season (OK, not so much) with a little more economic rationality and a little less flag waving. One reporter I know asked me "So why don't the Chinese people do something about their government? " The answer is easy--most of the Chinese (middle class) people that get in the press have never had it so good! [Money, money, money](http://www.youtube.com/watch?v=GlS8O257Gi0&ref=silkroadintl.net)\--it's the global language, it reaches across cultures and it certainly makes capitalists out of red-flag waving Chinese. Outside of some land grabs (T!bet and my fishpond, just to name two) there are at least 400 to 500 million that have little to complain about. They have a better legal system then they've ever had. They have more money than they've ever had. They have the highest growth rates in the world. They have a rapidly expanding consumer culture with increasingly more options from all over the world. They have access to more education and information than they've ever had before; thanks to the (censored) Internet. They have both the economic and legal (passports are an option for many/most) opportunity to travel and study abroad. **They are honestly proud of their country and have the money to spend to make their families happy. Not everything is roses. But on balance, it's so much better than it was 100, 50, 30, even 15 years ago.**The issue in the US in the next 90 days is slowing developing into the price of gas and the economy. But for me, it already was. International trade, taxes and general economic policy is what the election is about, professionally. Ditto for most investors and big business folk. Why? Because market forces are more logical to deal with than random government policy. Most American individuals agree: "A new Gallup Poll shows that no matter what their income or political affiliation, an overwhelming majority of Americans prefer economic growth over income redistribution as the best way to fix the economy. " [USA Today.](http://www.usnews.com/articles/news/campaign-2008/2008/07/25/mccain-and-obama-focus-on-the-economy.html?PageNr=2&ref=silkroadintl.net)So [which of the two ](http://detnews.com/apps/pbcs.dll/article?AID=/20080730/OPINION01/807300317/1008&ref=silkroadintl.net)completely less-than-average presidential candidates is more likely to support trade and a strong economy? John I-don't-know-about-economics McCain. I just pray he doesn't learn. His voting record in the past is very pro-trade and I've love to see 8 more years of that. If I stay over here for the next decade and he keeps on not doing anything to change the trade policies in the US it could be a pretty inocuous vote for me this year. (Pretty pathetic that my voting criteria is now: who will do the least amount of damage, huh?). If you are doing business overseas and will not be home for the election you should still vote. Here's a link to an Org that is doing [on-line voter registration](http://www.votefromabroad.org/?ref=silkroadintl.net). DISCLAIMER: The site is really a plug for the Democrat Party (ugh!) and [my mother](http://www.margaretdayton.com/?ref=silkroadintl.net) might kill me for sending people there--but it's a very easy way to get an absentee ballot. And no, the American Embassy is NOT easier. Don't even get me started on American Citizen Services, a.k.a. American Citizen Abuse. Just try to figure out that form/double envelope! So stop wondering when money is going to "change China" or even if China is going to change--it's probably not (for more on this, [read this book](http://www.amazon.com/China-Fantasy-Capitalism-Bring-Democracy/dp/0143112929/ref=pd%5Flpo%5Fk2%5Fdp%5Fk2a%5F1%5Fimg/102-4792720-6267359?pf%5Frd%5Fm=ATVPDKIKX0DER&pf%5Frd%5Fs=lpo-top-stripe-2&pf%5Frd%5Fr=0BRXE6FXXX4NYYSY03JK&pf%5Frd%5Ft=201&pf%5Frd%5Fp=304485601&pf%5Frd%5Fi=0670038253&ref=silkroadintl.net)). Take advantage of the once in a lifetime opportunities going on here--to make money, to make a difference, to see the 0lympics, learn a bit about another country. And remeber to vote at home. ### How "Good" are the 0lympics? URL: https://www.silkroadintl.net/how-good-are-the-0lympics/ Last updated: 2026-07-18T14:48:36.000Z I have maintained for 8 years now that Beijing will host the most spectacular 0lympics ever. There is no other choice but to have the best/biggest/cleanest/...est/...est. That's how things are done over here. It will be grand (est), to be sure. But that doesn't mean that I agree with what's happening. I've been pretty negative about the "don't politicize" excuse for what is already extremely political. I live here and I see the "non-0lympic" China and know that what tourists and NBC will get this year and what the other 340 days of the year offer are completely different. I still think like that. But here is a worthy alternative perspective--questioning not China, but the 0lympics themselves. [NYT Letter From Beijing](http://www.nytimes.com/2008/08/03/sports/olympics/803BEIJING-t.html?%5Fr=1&hp=&adxnnl=1&adxnnlx=1217811723-/UIiLU9E3Eevg7te7raVew&pagewanted=all&ref=silkroadintl.net).But, I'm going to the games. I bought tickets. I'm giving my money to The Chinese Man. Hypocrite or Opportunist? I was not planning on going--until no one else could get visas. I then realized (last week) that not only were tickets available for almost every event but that because of the visa issues, hotels were available too. Since I have a visa already and many factories are closed for at least a couple of the 0lympic days, I'm headed to Beijing next week. My Chinese wife (and my sister from the States) with me. So maybe I should be a bit more critical of the 0lympics and less of Beijing. True to form, they really just played the system better than anyone else. Related 0lympic/Business side notes. Yes, many factories will be closed for much of the 0lympics or at least taking the weekend of the 8th off. If you are lucky enough to have a visa and be doing business here this month, check your enthusiasm and personal patriotism at the boarder. I've been shouted down at non-0lympic sporting events for supporting Team USA (2006 China Basketball Challenge). Of course, while not in factories I'll be purposefully wearing Red, White and Blue every day for the next three weeks. Outside of Hubei Province doing business in China shouldn't be affected too much this month. Yes there will be a few days off this first weekend and visas are hard to come by, but that's about it. The real problems were in May/June when factories pushed non-0lympic orders out of production to get things done in time for the Games. ### Is this really news? It's not new! URL: https://www.silkroadintl.net/is-this-really-news-its-not-new/ Last updated: 2026-07-12T07:57:43.000Z There is a fine between news that caters to the LCD and just a waste of paper. The headlines on this morning’s [Drudge Report](http://www.drudgereport.com/?ref=silkroadintl.net) cross that line. [](http://silkroadintl.net/blog/wp-content/uploads/2008/07/china-news.jpg?ref=silkroadintl.net) Seriously, how is this news? Is this really cause for “[shock and dismay](javascript:NVF%5FtoggleBox%28'771',%20'http://www.youtube.com/v/Hr2M2dESemM','s-exYoZUnI8JbvC005utd5sg:u-AFQjCNGP7H2vQBQDX3zRQ8MvWG-Fw3LH8w:v-7-7-1%5F1231089859',%20'n'%29;),” Senator Brownback? Has no one heard of the Great Firewall of China? Did anyone really believe that individual rights and freedoms were going to trump security and control in 2008 China? Even money, the true Chinese language, is losing out to the twin aces of national security and continued government control. Lest anyone be duped into thinking that One World One Dream really is the goal let me set the record straight: The 0lympics are for DOMESTIC consumption—meaning they need to play well on national Chinese TV. No protests, no disruptions, no problems. They won’t be “green” or improve rights to make the West happy or even make money. At this point they just need to be less embarrassing than the torch run. **UPDATE**—even as I write this more news comes out about [backroom deals to keep Chinese security despite the public promises made](http://news.yahoo.com/s/nm/20080730/ts%5Fnm/olympics%5Fdc;%5Fylt=AvgvegZNrqZH2hNxd?ref=silkroadintl.net). What’s even less news worthy is that [Zhang Zhiyi](http://news.yahoo.com/s/ap/20080729/ap%5Fen%5Fot/people%5Fzhang%5Fziyi?ref=silkroadintl.net) (beautiful, yes; political consultant, no) can’t believe that people are critical of Beijing’s 0lympic tactics. Two very plausible reasons for her reaction. First she’s smart. She knows that more than one actor/actress/athlete has had their career cut short by knocking the political standards of the mainland. Second, she doesn’t think that there is really much wrong with what’s happening in China. There are very few Chinese (few is relative, of course) that complain about side effects of the economic growth that China still enjoys. Even fewer that are sympathetic to the “ungrateful T!betans” or believe that the Internet is really censored. So if it’s not news, why give them more space here? Because they illustrate a couple of key points that are just as true in politics as in business. First, what is written on paper and what actually happens in real life can be very different. Second, China will out-wait you until you have no choice but to take what is offered. Third, you can buy anything you need in China but even after paying for the moon, sometimes politics will even top your money. Fourth, unless you are buying every month, year in and year out, you are less important to your supplier than you think you are. First, paper vs. reality. As if the IOC’s public agreement and now public backroom deals were not enough to convince you that this is how business is often done, I’ll give you two examples of cases we’ve seen in projects we’ve been asked to help resolve. First, foreign company makes contract and PO with Chinese supplier. Quality is not up to specified standard and foreign company indicates problems and requests round two of samples. Round two are still not up to snuff and the foreign company questions the ability of the supplier to do it themselves and offers to come to the factory and help with the sample production to teach the factory how to do what is wanted. Factory not only says no thanks, but also tells the foreign company “your standards are too high. You can take the samples and production as they are or cancel the order.” By the way, if the order is cancelled the foreign company won’t get the money paid for molds or the 30% deposit back. Court is certainly an option—but at what cost. Since this project was under $50,000 it wasn’t worth it go to court. So the foreign company was stuck with the choice: do we accept lower quality or lose $20K and just move on? They moved on. Second, foreign company sends a small ($20K) PO to a Chinese supplier and pays a deposit. The PO calls for specific standards and the factory agrees to the PO standards (signs and stamps the PO). From the very beginning standards are not met. PO standards are discussed with the factory and they really seem to have no interest at all in the paperwork or the standards. Either the samples are good enough or they are not and if they are not then tough luck! When amounts are too small to go to court over or timing is too tight to delay any longer foreign companies are forced to accept lower standard or pull out of the deal. We are asked to step into deals like this at least a couple of times a month. Second, the Iron AssI’m not sure where the term came from, but it’s true. Chinese can out-wait you—so develop an Iron Ass, or deal with the consequences of quick (relative) decisions. China will wait you out until you have no other choice but to take the product offered or lose money. This is classic negotiations strategy that is used all the time in China. Chinese factories know that most businessmen are here on 30/60 day visas and can’t wait more than a week to sign deals because they have to get projects and molds started before they are scheduled to fly home. This is a huge advantage for the Chinese suppliers. If the end customer is Wal-Mart, for example, the delivery day that must be meet can be missed only by hours—not days and certainly not weeks. Christmas season, another example, in the US means that product has to ship before September or it’s too late. The Chinese know this and will use it, as any smart negotiator would. If it’s the choice between, say colors not being exactly correct, and you losing your place in the Wal-Mart distribution queues, which one will you opt for? That’s right. And they know it. The Olympics are similar. What is anyone going to do about censorship now? What could anyone really do about right violations 6 months to a year ago? Nothing outside of moving the games to somewhere else, which we all know wasn’t going to happen. So public hand wringing and/or support until undeniable evidence is proffered is all that can be done. Similarly, you can whine and complain until you’re blue in the face, but if you are not here to do anything about the problem yourself, or if you are here but are reliant on a single factory or individual to perform (with no consequences if he does not) a task that he or his superiors don’t want or don’t care about, you’re in trouble. Third, Money or Political Connections? So what’s more important money or connections? I’d suggest following the law. Yea, you may get delays. It may cost you more than “other people are paying” and it may be a nightmare to negotiate exactly what “the law” actually is, but you’ll always be safe when things hit the fan. And they will. A couple of examples. Buying shipping documents in China has been pretty much matter of fact until this last year. These meant that shipping could be done cheaply, but not legally, if you knew who to talk with. The problems came when China Customs started enforcing the existing laws after the toy scandals of last year. Now the same products cost more to export/ship because you have to do it the “right” way. We know of one supplier that had an entire warehouse (multiple paid orders) of electric bikes that could not be shipped due to new enforcement of existing regulations. So politics triumphed money—and almost always will. But the political wind changes in China are relatively rare (really) and are usually well announced. The problems come when provinces and cities are left to interpret the commands from Beijing. This results in, for example, Guangdong province requiring a special type of photo for residence permits but other provinces accepting regular passport style shots. Individual connections can be really helpful but can leave you stranded too. You should certainly know who the people that affect your shipments are. And great networks of associates and friends can never hurt. But don’t rely on your network connections to do for you the work that you should be doing through regular administrative channels, just like everyone else. Fourth, Who is This About? It’s About ME.That’s right it’s all about me. And in China that “me” is not you. The Olympics are for domestic consumption—what’s most important is how the government looks to it’s own people not necessarily how the world sees China. For proof, look at the recent visa situation (e.g. suspension of all business visas till September) and the resultant loss of business (money) as foreign companies move out of China to SEA to guarantee that they can ship in time for Christmas. This is often the case with Chinese factories too. Even if you are the largest client of any give factory, your current status as top dog is temporary and your supplier knows this. Product life-cycles are short, often no more than 1year, and that means that while you may be throwing cash around now, it will most likely be gone next year. I have to admit, that as a “middleman” working with Western buyers and Asian Suppliers, I’m often shocked at the self-important attitude that a $50K project gives Westerners. I’ve heard more times than I can count “Fine! If they don’t want my money, I’ll go somewhere else.” They do want your money, but not the attitude that accompanies it. You have the right to demand everything you contracted for. No argument there. But you must also understand that you are not the only client (and usually not the biggest). In the West that may not matter, but here it does. Regular clients, big projects and projects from the owner’s “friends” will take precedence. A couple of examples. We were working with a supplier on a project that was more than $200K. In the middle of the project production just stopped. People were pulled from packaging even though we were an “A” level client (one of the 10 biggest for that factory for the previous year). But we were nothing compared to a half million-dollar book deal from Euro Disney. We had to fight and argue and beg (and swear a lot) just to get a minimal amount of work done. Ultimately we had the factory move the project to a sub supplier of theirs. Example number two. We were working with a factory just this last May when they informed us that our re-orders would be postponed until July or later because their factory had been selected to do some 0lympic projects. The orders were NOT as big as ours but that didn’t matter. This was a contract from the government and it was national pride at stake. Again, this isn’t new and it’s certainly not news. But it does need to be shared, in context, so that people know what to expect. And what is that? Expect to get good quality product from China. Expect to get good prices too. Expect to have to spend more time (and probably money up front) to get it and expect to have to be involved in much more of the process than you may be used to. ### (maybe) China Will (not) Rule The World URL: https://www.silkroadintl.net/maybe-china-will-not-rule-the-world/ Last updated: 2026-07-18T14:48:37.000Z John Pomfret, previous Bureau Chief for the Washington Post, has [a great article](http://www.washingtonpost.com/wp-dyn/content/article/2008/07/25/AR2008072502255.html?ref=silkroadintl.net) that summarizes why so much of the hype about China is just that-hype. In this year of hype and media feeding frenzies, it's nice to read a voice of reason. Like John, I'm not a China basher--I live here by choice and my family are Chinese. This is my home, and I'll be here for a long while longer, no doubt. But I'm not deluded by the numbers into thinking that China will be much more of a super power in 50 years than they currently are--which is to say, they are not. Mr. Pomfret's analysis centers on 4 points (all of which have been made by SRI at times in the past on this very blog--maybe he's a reader too?!). First, China's demographics are terrible. The county is getting old, fast! To those of us relying on cheap labor for assembly this means that cheap is realtive and it's already not so cheap. With the increased development of the inner provinces there will be less and less cheap labor available in each factory (on the east coast). This is already a problem, last Chinese New Year more than 2 million labors did not return to jobs in Guangdong province. Second, China's economy is huge--but it should be. With a population exceeding 20% of the entire number on the planet, China's economy should dwarf the US economy. But it doesn't. Even if China does pass up the US economy in total size, there will still be hundreds of millions (yes up to twice the US population) living on $1 a day--the UN's poverty line. China will be a huge economy simply because it's finally risen from the ashes of it's recent history. With the largest population on the planet and a relatively prosperous economic standard (the goal of communism, no?) China would and should naturally be one of the largest single economies ever. Third, what's worse than the poverty always lurking in the background? The ever present pollution. This is what will kill China's dreams of the future, literally. I was reminded by an old college professor of mine at a lunch last month that the US was pretty dirty in the 60's too and the legislation in the 70's has really done a great job of cleaning it up (and the current administration has really done a great job of pushing back the standards, but that's another story). The difficult with this analogy is that China in the 21st century is not post WWII US. In terms of numbers, demand, depth of pollution or ability/willingness to make a change. China is scary dirty and yet growth is still the number one priority for most governmental agencies and businesses (and individuals, for that matter). Finally, who besides Americans depressed about the current state of the nation, is buying the "China is a soon-to-be world power? " Outside of China themselves there's Burma, North Korea, Nigeria, Sudan, Lao, Iran and a couple of others that no one can remember without a list. Now before you say, the EU, South American and the Aussies are hot on the idea too think about this: moving your manufacturing to China to save money and equating that with new superpower status is not the same thing. For example, quick, how many Chinese brand names do you know of the top of your head? One? Two? Anyone that is not a Chinese scholar or businessman can call me for dinner if you can name more than 5\. This point is, China doesn't export ideology as well as they export low-end goods. Read the article and then, if for no other reason than to balance out the 0lympic year hype, read "[The Coming Collapse of China](http://www.amazon.com/Coming-Collapse-China-Gordon-Chang/dp/037550477X?ref=silkroadintl.net)," and "[Will the Boat Sink the Water](http://www.amazon.com/Will-Boat-Sink-Water-Peasants/dp/1586483587?ref=silkroadintl.net)," and "[China, Fragile Superpower](http://www.amazon.com/China-Superpower-Internal-Politics-Peaceful/dp/0195306090?ref=silkroadintl.net)."Now, before I get all the emails claiming I'm bashing China--remember, my professional goal is to help small and medium sized business move TO China and work here effectively (i.e. spend more money in China!!). I sell China to the world--but I don't over sell the future or hide the blemishes. Odd, but I get bashed for "stealing US jobs" when I talk with some (ignorant protectionist) people in the States and I get bashed by (overly nationalistic) Chinese for saying "be careful when you move to China. " Which is it? ### Announcement: We are Now Following the Laws URL: https://www.silkroadintl.net/announcement-we-are-now-following-the-laws/ Last updated: 2026-07-18T14:48:37.000Z Sorry for the lack of posting this last month. Contrary to popular opinion (wishful thinking?) I was not arrested for protesting. I was on vacation, and then at two different trade shows in the US, and then in a couple of factories for almost all of the last week. Some interesting mail arrived over the vacation and I thought I should share. This is a letter from an actual supplier: > DEAR ALL CLIENTS:VERY IMPORTANT NOTICE!IN FUTURE, ALL THE BUSINESS SHOULD BE DECLARED AT REAL PRICE AND REAL AMOUNT, CAN'T BE DECLARED AT SMALLER AMOUNT!BUT WE CAN STILL HELP TO ISSUE THE SMALL VALUE INVOICES!!PLEASE NOTE THAT WE CAN'T DECLARE LESS AMOUNT, BUT CANISSUE SMALL VALUED INVOICES!FROM NOW ON, CHINA GOVERNMENT FORBID ANY PAYMENT TOCOME TO CHINA WITHOUT A CONTRACT, AND THE CONTRACT HAVETO BE REPORTED TO THE GOVERNMENT, ALL THE DEPOSIT AND PAYMENTRECEIVED HAVE TO BE SAME AS CONTRACTED!SO IN FUTURE, THE PAYMENT AND DEPOSIT HAVE TO BE PAID ON TIMEAT RIGHT AMOUNT! OTHERWISE, THE BUSINESS WILL BE DIFFICULT TO GO ON.CHINA'S RMB CURRENCY APPRICIATED TOO FAST BECAUSE OF TOO MUCHFOREIGN CAPITALS FLOW TO CHINA, DISTURBED OUR FINANCIAL SYSTEMTOO MUCH!THAT'S WHY CHINA GOVERNMENT NOW PUSH HARSH MEASURES TO FORBIDDEN SUCH HAPPENING AGAIN.THANKS FOR YOUR KNID ATTENTION, > This is telling for a number of reasons. First, obviously standard practice for many companies in China is to lower the invoice amount to avoid declaration penalties (save money). If this is a problem for you (and it should be since it’s illegal in the US and other countries) then you need to be involved in the shipping process even if you are buying product FOB.Second, public announcements of compliance with legal standards are necessary to at least appear to be following the rules (i.e. the default assumption is that no one is). To be sure that your suppliers are following the standards you require you need to confirm samples and double confirm production and have additional independent confirmation for each step in the process that you will be held accountable for. Third, prior to this year exporting from China was relatively easy and buying (read: not necessarily qualifying for) the licenses, clearances, export visas, etc. was relatively common. Since the clampdown last year on toy factories there has been a concerted country-wide effort to require that everything leaving China has a confirmed factory of origin. Things are certainly changing for the immediate future and hopefully for the long term. But in the mean time you still must continue to be working under the assumption that the bottom line is driving production/purchasing decisions. Despite the increasing stringent legal standards if the RMB values higher against foreign currency and domestic inflation increases this will increasingly be the case. ### Book Review-What Does China Think, by Mark Leonard URL: https://www.silkroadintl.net/book-review-what-does-china-think-by-mark-leonard/ Last updated: 2026-07-18T14:48:37.000Z I have to say the introduction of this book scared me. Mr. Leonard prefaces his writing by admitting that he knew so little about China that he hoped a trip or two could help him “learn the basics” and then allow him to go home. But maybe the lack of info on China is what made the book readable. It’s written from a perspective of “this is what I think that leaders are thinking” with no preconceived notions of what’s already by known Sinophiles. The book is short, and reflects a number of different strains of thought competing for supremacy within the bureaucracy. Hence the title is misleading as it does not answer it’s own question—what does China think? It does advance the theories of a couple of prominent scholars in a couple of general issues—but leaves us wondering about a number of things including who’s listening, what do the masses think, are any of these opinions shared (en masse) by groups such as the new rising middle class, and how much of the thoughts presented are purely Chinese in origin and how much is Leonard’s own amalgamation of collected research? The book is quite a good introduction to Chinese political thought. Namely it reviews (and reinforces) the idea that “China feels it’s due superpower status;” it confirms that China is only recently learning to both play by the international rules and that China is consciously trying to change the rules (as do all powers). In this sense it’s not unlike books that I read 10+ years ago as an undergrad studying Chinese International Relations—which is where I think this book may be of value, in a undergrad class. While it is a good review, the book also glosses over the problems of China’s international influence and consciously amoral stand on international relations with rogue nations. Maybe this is because the people Leonard spoke with don’t think that China has a problem; but surely all the intellectuals he spoke with don’t think the recent changes in policy toward Dufar, Burma and North Korea are all based on (miraculously) coincidental changes in China’s immediate economic advantages. Yet, Leonard presents the shift in position on sticky issues as a rather conscious recognition of the need to compromise rather than an acceptance of pressure from the international PR disasters that these events indeed have been. The best part of the book, I thought, was the contrast between different schools of thought and the description of how that debate ultimately results in a relatively unified national direction. Recently a lot of attention has been give to the idea that China is not monolithic in its power apparatus. I couldn’t disagree more. While there are most definitely cliques and ideologies within the Party that differ and a wide distribution of power at local and provincial levels that quite actively revolt against policies made from above there is no international face for China other than CCP and the national level leaders. I also found it difficult to separate Mr. Leonard’s own analysis from his presentation of “what China itself thinks” in his conclusions. Some of the analysis is certainly not Chinese in origin and so I’m left wondering, again, whose thoughts are these, really? At 140+ pages it’s a nice primer for Chinese IR. A nice road-trip book. But it certainly needs to be read in context—and in my opinion that context needs to be both the thoughts of the other 1.3 billion people within China (whom are mentioned only in passing) and what the rest of the world will be saying and doing about China’s ideas. ### Beijing "Wecomes" The World to its "Coming Out Party! Oh, The Irony! URL: https://www.silkroadintl.net/beijing-wecomes-the-world-to-its-coming-out-party-oh-the-irony/ Last updated: 2026-07-18T14:48:38.000Z As if visa restrictions and embassy staff weren't discouraging enough, from the [NYT](http://www.nytimes.com/2008/06/24/business/worldbusiness/24visa.html?%5Fr=1&hp=&pagewanted=all&ref=silkroadintl.net) today:"...when an American called the China Travel Guide Tourist Agency last week, a sales clerk even discouraged the person from visiting Beijing during the Olympics. “You really don’t want to go there,” said Lorna Liu, the sales representative at China Travel Guide. “Why don’t you try Xi’an or Shanghai and visit Beijing a little later?”If you can get in, there will be no party; they've all be canceled due to security concerns. Since I'm already "in" and the hotels are empty...hmmm...maybe this is not such bad thing after all. It's also not just Olympic travelers that are having issues. Entire tradeshows in Guangzhou have been canceled and the part of the Chinese economy that is bassed on [exports is taking a hit too](http://travel.latimes.com/articles/la-trw-chinavisa23-2008jun23?content=will+issue+a+visa+with+no+problem.%22&single%5Fpage=y&ref=silkroadintl.net). Doing things legally, I was able to get the necessary visas for myself and family with no problems in the US in March. But others are not so lucky. If you go to Hong Kong, the usually just so-so busy consulate in Wanchai is PACKED to the gills (with new security and new crowd controls). And the official China Travel Agencies have lines stretching out the doors and around the blocks. Tons of "businessmen" from all over the world are hanging out in Hong Kong waiting for visas. The only hassles I've ever had was getting stoped at the HK boarder for an hour or so with other noticalbly foreign foreigners (yea, I have a beef with the fact that "Asian" foreigners are not stopped too). We were stopped, asked to provide documentation and then questioned about the number of visits in our passports. Nothing sinister but tourists without confirmed hotel reservations were turned back. The biggest annoyance was the at the top of the hour, when the boarder guard shift changed, we were all just let through. The new shift just didn't want to deal with us. ### So are you Hunanese or Sichuanese? URL: https://www.silkroadintl.net/so-are-you-hunanese-or-sichuanese/ Last updated: 2026-07-18T14:48:37.000Z A couple of really good articles that indirectly have some significance for business in China. First, of course, if you didn’t know, gas prices in China just went up 18%; but they are still relatively lower than the EU or the US because of remaining government subsidies. While the domestic consumer market is not expected to revolt, the impact to prices for everything manufactured here is going to go up. In addition, if you’re working inland and you have to truck in either materials from other provinces or you have to truck product out to a sea port your through-port costs just went up. By the way, the fact that 18% increase in gas prices is not expected to cause massive revolts nation wide gives you an idea of how “non-Chinese” the big East-coast cities are—meaning you see photos of Beijing, Shanghai, Guangzhou, Shenzhen, and Hong Kong, but these really aren’t the “reality” for most Chinese. Second, why [being polite is more than just an 0lympic trend](http://blogs.wsj.com/chinajournal/2008/06/20/saying-hello-to-ni-hao/?mod=googlenews%5Fwsj&ref=silkroadintl.net). This article explains very clearly the business environment that most Chinese are familiar with—close personal, inter-provincial relationships. Historically there has been very little movement between provinces (hence the hundreds of regional dialects). What this had bred in addition to language variations is both a mistrust for other (Chinese people from other provinces) and an real inability to communicate with strangers on personal level. If you’ve worked in a factory for any length of time at all you probably noticed the province and regional cliques among the workers. These are not just for convenience in communicating or because they like the same foods. But there is a tangible mistrust for “others” that these groups guard against. When things go bad, when bad news is shown on TV, when someone tells of getting ripped off, one of the first things that happens is people are “stereo-typed” by where the perpetrator was from. “All Funan people are just like so and so,” or “All Hong Kong people are such and such.” It can get down right nasty and racist (can you be racist within your own ethnic group?). Certainly this is not unique to China, but since most foreigners don't speak Chinese and have a hard time telling the difference between the various Asian ethnicities it blurs the degree to which this happens. This happens all over Asia (and everywhere else too, I know)—every province in China looks down on some other one, none of the other Chinese like people from Shanghai, Taiwanese in the North look down on their Southern “country” cousins, Thai’s look down on the Lao, Cambodian and their own Esean (northeastern) neighbors. Quick comedic sidebar. This is the one and only episode of King of the Hill I've ever seen. My brother showed it to me once after I told him about one of my trips to Laos. Quotes from "Westie Side Story. " Written by Jonathan Aibel & Greg Berger, Directed by Brian Sheesley. > BILL: They look Japanese.DALE: Nope. I think they're Chinese.BILL: How can you tell?DALE: Japanese guys usually have glasses and a suit and a tie, and stuff like that.BOOMHAUER: Yeah, man, them Chinese, man, you can't understand a dang-ol' word they say, man, just try, dang ol' whole upside-down and whatnot.HANK: So, are you Chinese or Japanese?KAHN: I live in California last twenty years, but first come from Laos.HANK: Huh?KAHN: Laos. We Laotian.BILL: The ocean? What ocean?KAHN: We are Laotian. From Laos, stupid! It's a landlocked country in Southeast Asia. It's between Vietnam and Thailand, okay? Population 4.7 million.HANK: So, are you Chinese or Japanese? > OK, so what does this little anthropological foray have to do with business? Specifically, it means that if you are working in Jiangsu and you have someone from Jiangsu you’ll get more attention and probably better pricing. If you are working in Guangzhou and your project manager speaks Cantonese you’ll get much more of what’s going on that if you rely solely on Mandarin. If you are foreigner working with (any) Chinese the affect is magnified. So does this mean that you need to hire a person for each province where you are working? Yea, it probably does. And why not? If you are going hundreds of thousands of dollars of business in Guangzhou but your office is a mandarin only office in Shanghai you might want to rethink you positioning. Ditto for a Shenzhen based Cantonese speaking office doing work in Ningbo and Jiangsu. If you are moving into China’s second and third tier cities you’d better really study your positioning before you move. I double-checked this article’s theory with my resident Chinese expert (my Chinese wife) and she agreed and volunteered a few of my Chinese cultural missteps as examples (so helpful). She says that when we first got married that I said “please” and “thank you” so much to my in-laws that they thought I didn’t like them!! In Chinese society, the more polite you are to people the larger the relative social distance. She says they understand now that I’m being police because I do like them, not the opposite. She also pointed out that I am way too polite to line workers and office employees. I try to always proceed a request for work with a “please” and end all emails and most conversations with a “thanks.” Managers/Owners just don’t talk like that to people on lower economic/professional/educational/social levels. It not only is contextually not appreciated by the thanked parties, it can also be misinterpreted to mean more than was intended. Finally, I was sent a [map of Chinese development](http://kk.org/ct2/2008/06/china-is-an-island.php?ref=silkroadintl.net) that I really liked. I don’t agree with all the analysis and there are some cities that are now expanding the edge of the “west coast” of the Isle of China (reclaimed land?), but it’s a very visual way to express the relative development of China. ### Which is worse for the future of the US Chinese relations? URL: https://www.silkroadintl.net/which-is-worse-for-the-future-of-the-us-chinese-relations/ Last updated: 2026-07-18T14:48:38.000Z Not sure which is more foreboding for the future of the US Chinese relations. The fact that the [Chinese publicly don't think that Obama can handle the pressure](http://www.breitbart.com/article.php?id=080616071018.gi7x8kd9&show%5Farticle=1&ref=silkroadintl.net) or make any significant change (smarter than we give them credit for, eh?). OrThe fact that ["it's the economy, stupid"](http://www.nytimes.com/2008/06/17/world/asia/17china.html?%5Fr=1&hp&oref=slogin&ref=silkroadintl.net) and McCain is economically stupid, by his own admission! Scary. Could the two US political parties have put forward two worse options for President? Our choice as voters is either an extremely liberal political neophyte or a economically challenged bitter centrist. Whiners on both sides will say "But he's the first black president! " or "But he's a war hero! "So what?! How about this for novel voting criteria: "Is he competent?!"I remember in 1992 when Clinton was elected I had some family traveling in Europe. While there, they were constantly mocked due to the fact that the US people just elected BC--they couldn't believe how stupid that vote/selection was (smarter than we give them credit for, eh?). Most liberals claim that Bush was the (only) one that made the US lose face internationally--that would be true only if US history started in the year 2000 and if the Clintons and Carters never existed. Wave the flag and pass the apple pie, it's the next President of the United States. Thiibbbbttttt ### The Joys of Living in China, Part II URL: https://www.silkroadintl.net/the-joy-of-living-in-china-part-ii/ Last updated: 2026-07-12T07:57:39.000Z More events today and some more on yesterday's hullabaloo. Start Reading Part I, [here](https://www.silkroadintl.net/the-joys-of-living-in-china/).The landlords were all agitated about the upcoming destruction of the fishpond scheduled for today. We planned to stand arm in arm, old people in front, women second and men in the back (seriously). They called as many papers as they had numbers for. We waited, some police showed up and then left for lunch. It rained and everyone went home. A few hours later, totally unnoticed, the fishpond was torn out. Not a policeman or complaining landlord in sight. Yea, pretty anticlimactic to be sure. Now more from yesterday (the action!). Before the police showed up at the front gate they showed up at the complex's security office. They turned off all the cameras, all the external power and removed all the (privately employed) security guards from the offices. According to the guards they pushed, dragged and otherwise bullied the guards out of the offices by force. The previously not-so-helpful security guards have been great for the last 24 hours--even giving us video of the police that they took from security stations on the roofs and gardens of the complex. After the police left about 12 noon all was quite. But the landlords here had a series of meetings to determine what to do next. They came up with a couple of options. One, flood the media with the news--problem is, no reporters in SZ really wants to touch it and foreign papers aren't interested until there is blood in the water. So...I'll keep posting here. Option two is to petition the government each and every day with the maximum allowed "group" of 5 people. (That's right. Groups of more than 5 people are illegal--so watch out next time you have a NBA Finals/World Cup/Super Bowl party in your living room.) Since these two strategies have help us so much so far, I'm not holding my breath. I have to admit that the government knows how to kow people into submission--this is has been practiced into a fine art. Incremental encroachment and unpublicized events are a great way to keep most people out of the loop. Having major events in the middle of the work week and surrounded by (massive) police presence insures that the fewest possible people will be around and those that are will not dare to do much if anything. They were very systematic in advancing (edited verb here) on the complex too. They blocked roads that were only internal to external access, they dug up roads in specific locations to make sure that no one from the outside could get in, they fenced off more area then they previously said they needed and made sure to pad-lock gates, they parked all the trucks in the only remaining access road, and posted scores of police at each of the four gates. The show of force yesterday did exactly what it was supposed to do--get people out of the way for the real dirty work today (and in the days to come). But seeing it logically doesn't make it any easier to deal with. I'm still a bit tee'd off that they would send that many police and surround the complex--apparently they had dogs too. There is a nursery school and hundreds of families (with kids and grandparents) living here. Did they really need to be that intimidating to people who have very few if any options for retaliation? The good news is that the guys who where arrested yesterday AM were released with out a charge against them yesterday afternoon. No surprise and it confirms what I thought about yesterday--arresting a foreigner (for nothing) would probably do more (PR) harm then good. Calls to two well-known and experienced law firms again proved fruitless as each of them basically said: if the local lawyers and reporters won't touch this, you're probably SOL. One went so far as to say that SZ is not nearly as, um, law-abiding as Shanghai or Beijing and we should probably be careful about making too much noise. Now some joe-on-the-street analysis.1\. The police that showed up today were much less interested in arresting people and even offered to help make a small gate in the wall. Not compensation by any means but clearly new directions from above. For the demolition of the fishpond (scheduled for today) they only sent 5-10 policemen too. They even brought an engineer who coordinated the (cosmetic) adjustment of some fences to make it easier for people to walk to the market. The benevolent dictator--once the peons are in their place gifts from above excuse the prior cruelty.2\. Chinese know the rules for group engagement with the police. It's a coordinated dance, much like negotiations between countries and even companies, with give and take and specific lines and roles that are to be respected and followed. For example, yelling at police is fine, as long as you also do what they ask. The police pushing people out of the way is what happens, but abusing people is going too far. Taking photos of groups is one thing, but singling out individuals is specifically forbidden (anonymity in China comes in being part of a group). The more I think about this the more I realize that this is learned group behavior that you don't get in reading books about China. In the few confrontations that I've been in in China I've realized after each one that there were rules and that I usually had crossed the (invisible) line at some point without noticing it. Some times people have pointed it out to me later. Other times, like yesterday, I realize that I'm the only one standing in the middle of the street.3\. Chinese groups still respect seniority over good ideas.4\. It was very interesting to hear people talk about the distinction between the government and the 'bad' individuals that were causing the problems. The group singled out most often was the police--but it was as if the Chinese were more disappointed than angry that they, as protectors of the people, would condescend to being used as thugs for 'corrupt officials.' I was more than a little surprised by this selective attitude--and it certainly was not held by all in the meetings. Indeed more than a few of the people in attendance were not nearly so willing to give the "government" a free ride.5\. As a foreigner, I was given an inordinate amount of respect. This is something that was unexpected. Sure Chinese are usually very polite, but in a situation like this would a "foreigner" in the EU or US be treated "special? " No way. Mostly because you can't tell who's foreign like you can here--I was the ONLY non-Chinese in a group of 4-500 people. I stood out a bit.6\. I don't know how to protest in China and really don't want to lose my ability to do business here. I hope that there isn't an update on this topic sometime later this year.7\. Police coming and going all day--more than a bit unnerving. Have you ever been surrounded by hundreds of police? Have you ever walked back to your house and seen, around the corner another 50-100 policemen hiding in the bushes? The fact that people are more powerful that laws here makes the presence of police even more scary. The power play worked, it rattled a lot of people.8\. People are angry about two things. First that what was done was not "fair" or legal. This is in my mind the legitimate reason for complaining-illegal, that is. Not unfair. There is a legal clause in the Chinese constitution that gives private people the right to own property. There is also a clause for eminent domain, but there is legal precedent and other laws that give people rights here in China. The second thing is that there isn't much that anyone can do. The helplessness is indeed maddening. Getting sucker punched is physically painful, but knowing that it could happen again at any time without warning and without just cause is emotionally disturbing. Finally, in talking with other Chinese about this I find it odd that they are genuinely embarrassed by it. It's not "them" or anyone that they elected. But the fact that it's China and they are Chinese and this is happening to foreigners (or that foreigners are seeing it happen to other Chinese) is taken more personally, I think, than I would take things done by the LA City government/police, for example. The identification as part of China is personal to many--for both good and ill. ### The Joys of Living in China URL: https://www.silkroadintl.net/the-joys-of-living-in-china/ Last updated: 2026-07-12T07:57:38.000Z Yup. Woke up this morning to the SZ police force outside the gates of our apartment complex, Zhonghai Huating. They brought 6 riot vans and two busses full of police to make sure that the housewives, maids and others at home wouldn't disrupt their appropriation of land for the SZ metro company. (I was asked by other landlords to edit this paragraph--this is not the original version). I've talked about the "process" we've been involved in with the SZ govt and the Metro before. It's process in name only--I mean, how much respect can you give a system where, in a meeting in the offices of the local government, the head of the SZ Metro delegation says: "you can die for all I care! And if you protest we'll arrest you just like we arrested the others. "Guess he's made good on his threat. A couple of landlords were indeed hauled away this AM. I came out later and starting taking photos and was immediately pushed and ask/told to leave. Of course being a bull-headed American, I didn't. We argued about the fact that I'm not only a landlord but there are no signs prohibiting me from taking photos of my own property (that the police were standing on). After 20 or so minutes, a call came and the police said that I could take photos. So I immediately started snapping pics of the guy who tried to stop me in the first place. Round two of "no pictures" started immediately. "You can take pictures" means, I guess, I can take photos of everything but the guy who told me no--you can see him with his hand up in the photos--more photos went to a couple of newspapers already. Now, I understand eminent domain. But there are both limits and requirements on what can be taken. First we were not offered any compensation for our land. Second, we were not told of the timing of the construction. And third, we weren't given any health studies on the construction of the exhaust fans that are going to be put in our fishpond/garden. Further, 300+ police with water cannons and riot gear (in the trucks) for a construction project in the middle of a Wednesday AM at a private residence? Me thinks they over reacted just a bit. Some interesting reactions from the mornings events. First, Chinese neighbors cheered when I showed up and started taking pictures. They chanted and told me they supported me. I wasn't looking for anything but some good shots as I've pretty much resigned myself the the fact that the government doesn't care (the "you can die" comment sealed the deal for me weeks ago). They cheered when I made a smart (ass) comment and screamed in the face of the policemen that were trying to stop me. They knew that being foreign means being different--sometimes thats a good thing. Second, the police were not as willing to arrest a foreigner as they were the locals earlier. They threatened to arrest me and I put my hands behind my back and offered myself up and they backed off and just told me to leave. Indeed, they wanted me out of the way as quickly as possible. Again being foreign kept me out of jail when others were tied up and hauled off. Third, the police were very very intimidating to the locals. The local screamed and yelled but except for the couple that got hauled off, they did exactly what they were told to do--stand back, leave the work alone and go home or go to jail. Surprisingly vitriolic but at the same time passive. Fourth, the words used to talk to me came in two very distinct styles. First, was from an assumed power position. I was told/asked things like: "Do you know who I am? " "Do you want me to arrest you? " "Leave now! " "You can't take photos here--you have no right! " "I'll give you some face, you just leave now. " The second position came later as the people were more riled up and after I had offered to be arrested. "Please leave. " "Please support our work here. " And of course "OK, you can take pictures now. "The problem is, I don't support the work. I'm very much against the land appropriation by the SZ government for a company (the SZ metro) when we were given nothing but threats as compensation. If you think that I'm just down on China or that this is really a new, modern China and I just don't get it, think again. Much in China is recent, clean and different to be sure. But much of the current problems are the same horror stories you read about 10 years ago. There are great opportunities and scary problems here side by side. Illegal land appropriation by local governments is not unique to our housing complex--it's happening thousands of times a year all over China--famous stories include the old lady in Chongqing, the Beijing Hutongs and the riots/arrests in multiple cities in Guangdong province late last year. I'm here for the opportunities...but at what price? Continue Reading [Part II](https://www.silkroadintl.net/the-joy-of-living-in-china-part-ii/). ### Neither of these things are good news for business in Asia. URL: https://www.silkroadintl.net/neither-of-these-things-are-good-news-for-business-in-asia/ Last updated: 2026-07-11T16:09:57.000Z First, Google News in China today:[](http://silkroadintl.net/blog/wp-content/uploads/2008/06/china-google-17-june-08.jpg?ref=silkroadintl.net)And this article about Thailand--um...[banking on the stars](http://edition.cnn.com/2008/WORLD/asiapcf/06/16/thailand.astrology.ap/?ref=silkroadintl.net)? Ok, we did have Nancy Reagan, but this is the defacto-PM himself. Scary. ### A new Chinese adventure. URL: https://www.silkroadintl.net/a-new-chinese-adventure/ Last updated: 2026-07-12T07:57:38.000Z [](http://silkroadintl.net/blog/wp-content/uploads/2008/06/img%5F5554.jpg?ref=silkroadintl.net)For whatever reason(s), we just went back to my wife’s family’s village for the first time this past week. We drove from SZ to Jingdezhen in Jiangxi, about a 12 hour trip each way. Along the way up and back I gained a new appreciation for driving in China. We drove up the off ramps since the truckers completely blocked the on ramp of every service station. We waited in gas lines (truckers waited for hours!), we saw fights in gas lines (and almost got in our ourselves). We saw at least 6 MAJOR accidents on the way and a couple of dead (or at least really bloody) bodies. The fact that freight ever even gets to port in this country is a miracle! My wife had always told me her village was small, but I didn’t realize that “small” meant it was less than 100 people and no roads. It was the only village for about 10-15km’s in any direction; surround by mountains and tea fields. There was running water, electricity and satellite TV though. They killed the fatted pig (literally), we passed out tins of cookies, smokes, drinks and red envelopes and took tons (500+) pictures over the two days. We hiked through the freshly planted rice paddies to the tombs of ancestors. We drove from the family village to the next valley where the village had a street and a restaurant. We fed 45 relatives from 4 generations a huge lunch. The little cousins got into a fight over a toy in the (open) kitchen of the neighbor next door to the restaurant and most of the other people on the street stood outside the door and watched the meal. Over the course of two days my brother in law had to call a friend in the municipal government to get the police to let him go for driving our car (foreign plates, local driver), we had friends call the mayor of the largest area town and request permission for me and another brother in law (HK citizen) to go into some Chinese-only national park-like tourist areas. We had family call officials to get us lower prices for museums and other attractions and had a huge dinner courtesy of a local judge (friend of the family). Quite a weekend. Now let me put that this little family adventure into context for you. My wife not only built part of her village home with her parents when she was ten years old, but she has since lived in Shenzhen and worked for multiple MNC’s for almost 20 years now. She is not alone in this life changing move from village to high-rise living. Most middle class urban immigrants come from similar backgrounds. The point is this: your average urban Chinese person older than 25 has probably had a similar life experience. These “average” urban Chinese are the middle and upper level managers of most to all of the companies that you’ll be working with in China. This generation has a deeply ingrained set of beliefs and ties. Here’s some of the concepts held by the people we met that were either told to me directly or presented themselves clearly in the course of the week’s events.1\. No one will take care of them but themselves. Working 24/7 for twenty years is not just justifiable but necessary.2\. Every opportunity is a one time shot that needs to be taken advantage of fully before it gets away (or is taken by someone else). This precludes creation of new long term guanxi (with foreign clients) which is supposed to be the hallmark of Chinese business culture.3\. Strong, binding relationships with family and a few close friends are the only lasting “valuables” that you can count on maintaining throughout your life.4\. Uncategorically, property and cash are the most important things you can have for your own future and for your children. EVERYTHING in business is done within this mental framework of stockpiling these assets for the future.5\. The economy was better a few years ago than it is today—more evidence in support of banking on items 1, 2 and 3.6\. Despite all the recent nationalist rhetoric, a “faith,” in or commitment to the current government is not nearly as strong as the desire to “just make life better” economically—an almost palpable practical-ism that precludes ideology in China.7\. The further you get out of the big cities the more personal connections matter in getting things done. Do these beliefs affect negotiations and business? The real question should be how do they not. They affect everything. First, when negotiating in China, the prevailing concept is probably “scarcity” rather than “abundance.” This means that when you negotiate, your Chinese partner is almost certainly NOT looking for win win. Don’t misread that as “your Chinese partner is looking to have you lose,” he’s just not equally concerned with your profit margin as he is his. Even in this age of factories being busier than they can handle, most don’t believe that this will continue forever—and the slowdown this last year confirms that. (The move by many factories to inland provinces and other SEA countries further confirms it.)So to make the deal more palatable, it needs to be structured to benefit them in the short term and you later on, if at all possible. You can see this style of negotiation in lots of deals in Asia—the Olympics and North Korea being the biggest examples I can think of. Secondly, you have to realize that if there are problems (and my experience says there ALWAYS will be) the “customer first” theory will NOT be practiced. You are not going to get anything banking on it’s “the right thing to do” or because it’s “good in the long run.” Again, don’t misread this as “you’ll get screwed by your supplier” as many people claim. It’s more a matter of immediate self-preservation in a very insecure system—and by nature, you look after yourself as your supplier looks after himself. Third, never pay bribes, never take kickbacks and fire anyone who works for you that does. Draw a very clear line in the sand and make firings for this offense as public as possible. At the same time, never be afraid to pay more than you agreed to just to get what you want. The difference is the legality of the payments. Cash is king and if you have the cash you can run the show. For example, incentives (publicly and legally) paid to key engineers, managers and other individuals can make a big difference in the level of attention to detail that you’ll experience. Buying drinks for line workers in a factory without AC is another way to win point and get better results too. Fourth, be very very careful about what you say about politics. Just because some Chinese (very rarely) criticize their own country in public doesn’t mean you can—even in personal, private company. Misplaced comments spoken in what you think is agreeable company can reinforce taught stereotypes and make partners less willing to cooperate and more intransigent on sensitive issues or requests for help. In the current environment, it’s just not smart to talk about politics or the 0lympics (unless you’re positively thrilled about each). The rule I was given by my first Chinese employer, a university in Chongqing, was: say nothing about Religion, T!bet, T!ananmen or Ta!wan. Some things have certainly changed, but it’s always better to be safe than sorry. On a related note—it never hurts to know the right people. This isn’t an endorsement for pulling personal strings to get access to opportunities that otherwise would not be available to you. But it is an absolute acquiescence to the reality of the power of well placed political individuals in a relatively weak legal system. Finally, let me say that I’m not trying to insinuate that Chinese are all about money and themselves. But I am trying to convey the notion that background experiences color the perceptions and positions of the Chinese partners that you work with. Understanding and emphasizing with that background will always be an asset in negotiation and working with your Chinese partners. ### Getting Rich and Banking on "Randomness" URL: https://www.silkroadintl.net/getting-rich-and-banking-on-randomness/ Last updated: 2026-07-18T14:48:38.000Z I find it more than a bit ironic that in this post earthquake age of the "new," "open," "mature" and very 21st century Chinese government there is absolute domestic silence here on anything historical (e.g. 19 years ago today). But who am I to buck the system?! I have self preservation online as a priority too. So here's a completely benign book review. I've not had time recently to do full book reviews on some of books I've finished but here are two highlights. First, Duncan Hewitt's ["Getting Rich First, Life in a Changing China."](http://www.amazon.co.uk/Getting-Rich-First-Changing-China/dp/0701178973?ref=silkroadintl.net) This is a modern storybook. Nothing revelatory or really specific to doing business--but a lot of great stories about real people. The thing I like about reading books like this is that it helps to humanize the staggering list of statistics that is usually presented as "China. " It also has Shenzhen on the back cover, I I think that Shenzhen gets bypassed too often with people running from Hong Kong to Dongguan. As with any personal story or even any statistic, the snapshots in the book tend to simplify the enormity of the China experience and the diversity of available stories--but Hewitt does his darndest to get as many stories as he can in--the book is almost 500 (large) pages. If you're just reading business books and newspapers about China this is a refreshing break from the numbers. The stories are interesting and unique and will add some soul to lines of workers you see in factories. The other book I've just finished is Nassim Nicholas Taleb's "[Fooled by Randomness.](http://www.amazon.com/Fooled-Randomness-Hidden-Chance-Markets/dp/1587990717?ref=silkroadintl.net)" This book is very different than just about anything that I've read before. Set mostly in the context of trading is a very thought provoking deconstruction of systems in favor of randomness. Instead of random events being something to throw out because they skew the average, these events should be considered stongly if not counted on to certainly happen. The results being: "it does not matter how frequently something succeeds if failure is too costly to bear. "He is very anti media and "experts" going so far as saying "What sounds intelligent in a conversation or a meeting, or, particularly, in the media, is suspicious. " On risk managers he is even less kind. He takes on statistics, Darwinism (survival of the fittest) and it's social science offshoots, learning from history and ultimately the "market"--it's not only not always right, it's positively dead wrong. This is one of those books that I need to read two or three times to being to comprehend and apply. He has a [website](http://www.fooledbyrandomness.com/?ref=silkroadintl.net) too. ### ASEAN Tidbits URL: https://www.silkroadintl.net/asean-tidbits/ Last updated: 2026-07-18T14:48:37.000Z [One visa for all countries in ASEAN](http://globalnation.inquirer.net/news/breakingnews/view/20080523-138363/RP-Thailand-to-push-single-visa-for-ASEAN-tourism?ref=silkroadintl.net)—great idea! The fact that you’ve got Thailand,Malaysia and Vietnam all fighting over the same pool of potential business clients and ton of tourists going to both Cambodia and Thailand (and to a lesser degree Vietnam) this is a great deal for Thailand—as the largest regional city/airport Bangkok becomes more and more the de-facto hub for all SEA travel. With the new road connections from China, this would boost travel and investment into Lao too, no doubt. Now if ASEAN could just do something about Burma…A very [interesting perspective on Thai culture](http://upiasiaonline.com/Society%5FCulture/2008/05/23/the%5Fprice%5Fof%5Fspeech%5Fin%5Fthailand/1363/?ref=silkroadintl.net) and the lack of any real political progress in the last decades. Even more interesting now that there are signs of [yet another coup in the works](http://news.xinhuanet.com/english/2008-05/31/content%5F8287157.htm?ref=silkroadintl.net) this week ([more here](http://www.atimes.com/atimes/Southeast%5FAsia/JE31Ae02.html?ref=silkroadintl.net)). If you could clean up the sex trade and straighten out the government processes in Thailand, it might just be heaven on earth. Dare to dream…Wow!! Let me get this right…thousands of factories close in China in the previous two financial quarters and Thailand, as the regional investment hub for SEA, has [5.7-6% per quarter growth](http://www.pr-inside.com/the-thailand-economy-got-off-to-r605823.htm?ref=silkroadintl.net)! Well, fancy that. If you've ever done business in Thailand you know a couple of things. First, it's a great place to go on vacation. Second, Mandarin and Cantonese are just as useful as Thai when talking with most factory management. And third, investment, ownership and raw materials are, in large part, all coming from China. 2008 Global Competitiveness Rankings. China and the rest of SEA are just eating up the European countries and Singapore may just knock the US out of it’s 15-year top spot next time around. Brief article [here](http://www.businessweek.com/globalbiz/content/may2008/gb20080516%5F388650.htm?ref=silkroadintl.net). Methodology and details [here](http://www.imd.ch/research/centers/wcc/index.cfm?ref=silkroadintl.net). The world it is a changin'. And finally a not-directly-related-to-SEA piece of news; more on the impacts of the quake to Chinese and global finance [here](http://www.feer.com/features/2008/may/Chinas-Economic-Aftershocks?ref=silkroadintl.net). ### Sharon Stone, Karma and what Chinese are saying URL: https://www.silkroadintl.net/sharon-stone-karma-and-what-chinese-are-saying/ Last updated: 2026-07-18T14:48:38.000Z I don’t agree with what Sharon Stone said (here’s some [apology news](http://www.nytimes.com/2008/06/01/fashion/01stone.html?ref=fashion)). But a lot of Chinese actually do--it's not just PC for a Westerner to point it out. She is not the only one saying it publicly either. I would dare say that more Chinese people are themselves talking about it than foreigners are even thinking it. Take, for example, my wife’s niece. She is a 22 year old college student in Guangzhou. At a family dinner last weekend she said: “this is supposed to be China’s lucky year (08) and the government said that it’s supposed to be a really good for China because the 0lympics are coming. But it’s been the worst year that I can remember.” I asked her if that was her opinion or if she heard if somewhere else. “Oh, most of the people in Guangzhou are talking about it.”So, that got me thinking are other people saying that too? Sure enough, just mention how this supposed to be a lucky year to just about any Chinese and you’ll certainly get “yea, right” type of response—try it. I’ve talked with neighbors, employees and restaurant and factory workers and all have basically the same response. The most detailed response was from a taxi driver who said that his life is worse now than it was a couple years back. He said that inflation and the number of private cars and the subway have really cut into his business. He said “the big money times” are over. I asked my (Chinese) wife about his comments when I got home that night and she immediately agreed. Someone else did a blog about a paint supplier with the same opinion a few weeks ago—but I don’t remember who or where—sorry for not citing you to whomever beat me to the punch on this topic. While I don’t believe that it’s the end by any means, here’s a quick list of what’s happened so far this year.1\. [Snow storms strand millions](http://www.msnbc.msn.com/id/22882150/?ref=silkroadintl.net)2\. [Train wreck kills 70](http://www.msnbc.msn.com/id/24364665/?ref=silkroadintl.net)3\. [Foot and mouth disease kills children](http://news.gc.ca/web/view/en/index.jsp?articleid=400039&ref=silkroadintl.net)4\. [T!bet Riots](http://www.guardian.co.uk/world/gallery/2008/mar/14/1?picture=332974845&ref=silkroadintl.net)5\. Torch fiasco. It was so bad [they won’t do it again](http://online.wsj.com/article/SB121147509858514621.html?mod=googlenews%5Fwsj&ref=silkroadintl.net)!6\. [Sichuan quake](http://news.xinhuanet.com/english/2008-05/30/content%5F8287069.htm?ref=silkroadintl.net)—90K dead or missing, 7000+ collapsed schools, umpteen millions if buildings collapsed, 5 million homeless.7\. And now more [dam(n) problems](http://ap.google.com/article/ALeqM5gBr%5FdOzJ9Pnc%5FU9gSgtTgE-cR-KwD9102PI00?ref=silkroadintl.net)8\. [Torrential rains](http://www.news.com.au/heraldsun/story/0,21985,23787830-5005961,00.html?ref=silkroadintl.net)9\. [Inflation in China](http://in.reuters.com/article/asiaCompanyAndMarkets/idINPEK24654220080530?ref=silkroadintl.net) at 8.5%.10\. [Post-quake political intrigue](http://www.iht.com/articles/2008/05/27/asia/quake.php?ref=silkroadintl.net). The PR honeymoon is officially over.11\. [Food shortages](http://www.upiasiaonline.com/Economics/2008/04/22/rice%5Fshortage%5Fthreatens%5Fasia/4679/?ref=silkroadintl.net)Remember that China is a very superstitious society—there is tons of weight given to lucky numbers, fortune tellers and fengshuai—my children were named by Chinese fortune tellers (who cost a small fortune!) and my office is organized according to fengshuai and in a building with “good fengshuai.” The Shenzhen government building was designed according to fengshuai principles (good for the government, the people in the buildings directly across from the pointy roof are mad as hell that they get all the bad whatever that shoots out from the corners—their property values dropped!). Historically natural disasters were seen as a sign that a particular dynast was over—don’t discount the impact of this concept in the interpretation of the current cycle of “bad” events. ### Help! My goods are stuck in China. URL: https://www.silkroadintl.net/help-my-goods-are-stuck-in-china/ Last updated: 2026-07-18T14:48:38.000Z In the last two weeks we’ve worked with two factories and talked with a number of other people about the reality of the new export responsibility enforcement in China. (New since the lead-paint problems of last year.) Yet, recently (since about Chinese New Year) the enforcement seems to have been ratcheted up another notch. Example 1, we’ve been looking to export some electric bikes to the US for a client. But, unlike just about any other time in the last 10 years, some factories can export them and others really cannot; not right now at least. Very simply put, without an export license factories are not registered to export from China—rarely has that ever been a limitation on actual exports, though. But since China is trying to make sure that everything that leaves the country is traceable back to the site of production, it’s now limiting exports to factories with licenses (or good connections, more on that later). The market for electric bikes in China is huge and the bikes from a number of domestic factories are both good quality and available in foreign markets. The problem is that enforcement of the rules are at best sporadic but getting stricter. So factories that were indeed (with out a license, through a 3rd party) exporting before have recently taken orders from foreign clients but the products are stuck in the factory and can’t leave the country for the foreseeable future. One of the bike factories is exporting like crazy—orders have gone up because they have a license. Another is telling us their warehouse is full of orders that they can’t get out of the country. Example 2, dust, powders, fine particulates are currently restricted for export. Some can’t be air freighted, some can with visas and some, well some are just the luck of the draw it seems. We do a lot of craft glitters and flocks for export and have been hit with a weird series of regulations this year (not last year). Glitter cannot be exported by air in bulk qtty’s. “Bulk qtty’s” could be as small as qtty's of 5grms per unit. This law seems to be cut in stone. Glitter by sea, no problem. Flock, in similarly small qtty's is OK for both air and sea. An associate of mine says that his coffee exports are being similarly affected by this but that sufficient testing and paperwork solves most of his problems. Example 3, some types of products are restricted but only in specific qtty's or packaging. Ribbon, for example can be exported without a visa if it's in pieces smaller than 20mm and clearly marked with the word "SAMPLE" on the packaging. Different materials don't matter. If it's classified as ribbon, it's either going to require a visa or must be chopped up and labeled. We learned this the hard way. We were told by UPS in China that larger samples were no problem in small qtty's. So we shipped a carton of samples to the US and indeed had no problems. But one month later, a second carton was held up and cost us hundreds of dollars to get out of US customs. The lesson is--don't trust your Chinese freight forwarder on US requirements and vise versa. So what to do? The easy answer is you should do the same things now that you we’re doing before—following the laws. If you were using factories that didn’t have export licenses before, now may be difficult for you. I feel your pain, but can’t sympathize much. Domestic factories are cheaper for a reason—and now with exports controlled more tightly foreign buyers are finding out what that reason is. We buy a lot of materials from domestic factories and ship to domestic locations for final assembly, manufacturing—making sure that all our final factories can export. More helpful advice is to check out customs in both the export and import countries. Talk with freight forwarders on both sides too--My experience is that freight forwarders don't talk to their own offices on the other side of the ocean as much as you'd like to think. You make the calls and you'll be safer--and have confirmed answers. Also, confirm BEFORE you order that your factory can really export on their own. A quick and relatively painless (few hundred USD) company report from and company like [Verify](http://silkroadintl.net/blog/wp-admin/www.verifyscreening.com?ref=silkroadintl.net) can confirm independently that you’re working with someone that can ship your products regardless of the enforcement status in [Chinese Customs](http://www.customs.gov.cn/YWStaticPage/3972/c4538048.htm?ref=silkroadintl.net).So how long will this enforcement of the rules continue? At least until the end of this 0lympic year, for sure. Hopefully longer. While the cynic may say that once the 0lympic hoards are gone so will be the enforcers, but I hope that's not true. It's in every-one's best interest to make sure that the goods leaving China quality tested products. And that if there are problems, solutions can indeed be found and implemented and individuals and factories can be held responsible. ### You're not getting what you asked for? Really? URL: https://www.silkroadintl.net/youre-not-getting-what-you-asked-for-really/ Last updated: 2026-07-18T14:48:38.000Z We’ve had requests for assistance work from 3 different companies in the last two weeks. All three have projects that were started independently and have since been canceled, rejected, or are held up for various reasons. All three are at least 6 months late and at least ten thousand dollars over budget. So let me reiterate a couple of rules that should be engraved on the forehead of every international purchase manager. These are not jokes, although you may laugh if you’ve seen this before (or you may cry if you’re stuck in the middle of it now). And my experience is that if these rules are not followed the results are anything but funny. These rules could just as easily be applied to manufacturing that you’re doing anywhere, not just China. But since China is what we’re talking about, China is the example here (so save your “stop picking on China” feedback).1\. If you’re not here, you’re not getting what you ordered.1a. The corollary to this is: “Any money saved from not coming to China (multiple times) will be lost in missed delivery dates and/or labor paid to repair product.”2\. If you don’t speak Chinese you’re not getting what you asked for.3\. If you don’t personally and physically confirm that samples match production you’re not getting what you asked for.4\. In the midst of problems, if you get angry and try to threaten the factory using your final payment as leverage, you’re not getting what you asked for.5\. If you don’t pull production samples yourself and have them tested by an independent third party you’re not getting what you asked for.6\. If you’re sending IP to various factories to get bids and/or samples and you’ve requested that, after a difficult and unfruitful sample process and no orders, the factory give back all the IP and never look at it again (especially if there is tooling involved) you’re not getting what you asked for.7\. If you don’t have perfect samples of every single part and a perfectly completed pre-production sample neither does your factory (i.e. you won’t be getting what you asked for).8\. Beware of the request for cooperation. “Cooperation” in Chinese means that you happily pay more for lower quality product delivered later than what you’ve contracted for—obviously, you’re not getting what you asked for.9\. If the answer to any question other than “Can I have a Coke instead of tea?” is “No, Problem. Of course we can do that.” you are not going to get what you ask for.9a. The corollary to this is: “Any factory that, when offered money/orders, tells you “No, we can’t do that.” is a good factory and you should keep them on file for future projects.”10\. Nobody cares about your product as much as you do, but if your supplier sees you regularly, knows how much you care and also cares about you/likes you, you just might get what you are asking for.11\. There will be problems. Plan for them in your delivery schedules and budgets. ### Thailand vs China, part II URL: https://www.silkroadintl.net/thailand-vs-china-part-ii/ Last updated: 2026-07-18T14:48:38.000Z I'll admit, I'm biased. I would much rather live in Thailand than just about anywhere else on the planet. And news today of Thailand's world #47 ranking in medical technology. And Thailand costs (better than Korea, Japan, Malaysia, and China) supports my desire. [Article here](http://english.donga.com/srv/service.php3?bicode=040000&biid=2008052034718&ref=silkroadintl.net).The only concern I have is if an ambulance was needed, could it get through the traffic?!On a more serious note, I've had three different companies come to me in the last two months asking for help with manufacturing "anywhere but China. " Their words, not mine. Two of the clients are in the toy industry and another in home decor. Their reasoning? First, the lead paint scares last year are not yet forgotten in the Toy industry. This means that regardless of the quality available, high end Toys can't have the "made in China" label. Second, the costs of labor in China are rising so rapidly that re-orders are priced to high to keep up with a hot selling toy. Third, marking, marketing, marketing. Fair or not, there are enough consumer groups targeting "made in China" that it's too sensitive to risk right now--particularly if children's items are involved. I moved the majority of production that we do from Thailand to China in 2003 because China had both better prices better/more options. Particularly in Guangdong province. Since then, I've seen the prices rise and many factory options (and laborers) move to other provinces within China and many back to SEA (mostly to Cambodia and Vietnam). What is interesting to me is that China is still the source for much of the raw materials that are used in SEA factories. And, unless labor is the major cost contributor to a project the Pearl River Delta still has many advantages over Western China and SEA.So, for the present and foreseeable future, I'm still going to be living in Shenzhen and working, mostly, in China. But for vacations and plastic surgery I'm definitely going to Thailand! ### What will the earthquake cost outside of Sichuan? URL: https://www.silkroadintl.net/what-will-the-earthquake-cost-outside-of-sichuan/ Last updated: 2026-07-18T14:48:38.000Z [China Economic Review](http://www.chinaeconomicreview.com/dailybriefing/2008%5F05%5F19/Guangdong%5Flabor%5Fsupply%5Ftight%5Fas%5Fmigrant%5Fworkers%5Freturn%5Fto%5FSichuan.html?ref=silkroadintl.net) notes that labor prices are going to rise due to so many workers from Sichuan going to home. Richard, at [All Roads Lead to China](http://www.allroadsleadtochina.com/index.php/2008/05/13/economic-impacts-of-sichuan-quake-on-china/?ref=silkroadintl.net), had some immediate post earthquake thoughts on economic impacts too. [China Herald](http://www.chinaherald.net/2008/05/guangdong-wants-wages-to-raise-12.html?ref=silkroadintl.net) noted two weeks ago, before the earthquake, that prices were already set to rise 12%.Workers with ties to Sichuan are certainly going to be interested in going back home, now that there will be jobs there, there will be no reason for them to stay in the East. The reconstruction work on schools and public buildings alone will take years to complete. Then there are the roads, utilities and other public infrastructure that must be repaired. Prior to any of that is the massive clean up effort that has to take place. Since Sichuan is the most populous province in China, this will mean millions of people and jobs. here's hoping that the governments in Sichuan give priority to local workers to help them rebuild their lives and families. Food prices, already at uncomfortable highs for many, will continue to rise as the earthquake strains both domestic food resources and the central inflation controls. The 5 million homeless will need to be taken care of for months to come. How many more don't have jobs (there may be an answer for some of these) and more than 250,000 are injured (i.e. homeless, jobless and unable to work). The shift in resource allocation is going to last through the end of the year, at least. On the 14th, [John Ng](http://www.atimes.com/atimes/China/JE14Ad01.html?ref=silkroadintl.net), from Hong Kong wrote that Toyota and other manufactures in Sichuan had suspended operations and that market reaction to the quake was mixed. The [BBC updated](http://news.bbc.co.uk/2/hi/business/7407959.stm?ref=silkroadintl.net) this by saying that Toyota was back in business this week and the cost of construction materials are already rising, by as much as 10%. The article also points out that the quake is costing companies close to 10 billion dollars. [The China Post](http://www.chinapost.com.tw/china/national%20news/2008/05/15/156467/China-earthquake.htm?ref=silkroadintl.net) doubled the cost estimate. So what does this mean for the SME who's using a factory in Dongguan? For manufactures in Guangdong this amounts to a perfect storm of price increases. When coupled with the effects of the mature industrial base already here and the addition of China's new labor law you can see why options to move elsewhere are so attractive. The quake will directly impact production costs form most of China's east coast provinces that rely on cheap labor from other provinces. I've said before that unless you can pull complimentary suppliers with you moving to a second tier or third tier city in China is difficult. But the bottom line is moving without a fully developed supply chain can cost more than you ultimately save--it could also be the ticket to better margins; it will depend on what you manufacture, where you are now and how much of that production process you can honestly duplicate elsewhere. ### "Working Toward a Civil Society" URL: https://www.silkroadintl.net/working-toward-a-civil-society/ Last updated: 2026-07-12T07:57:33.000Z In the spirit of being fair and balanced, since my public cursing out at the hands of torch watchers, I have to admit that I have really been touched by the generosity of the millions of everyday Chinese people (and foreigners too) who are taking action, spending their own time and money and helping the people in Sichuan.[](http://silkroadintl.net/blog/wp-content/uploads/2008/05/chinese-charity-sz.jpg?ref=silkroadintl.net)There is a great article [here](http://www.theglobeandmail.com/servlet/story/RTGAM.20080516.wchina17/BNStory/International/home?ref=silkroadintl.net) about the same things. It has been really neat to see Chinese helping people they don't even know--this is not a knock, but this is type of "renqing" (or charity/human emotion) is very rare in China. Book after book comments on the lack of philanthropy in China and even other Chinese communities outside of China recognize this as a distinct difference between mainland and overseas Chinese. This could prove to be much more of a coming out party for China than the Olympics. Congratulations, China! Welcome to the 21st century; welcome to the world. On a somewhat related note, I'm not surprised to find that those kids who participate in sports growing up know how to compete and win and then do so later in life. The Article in [The American](http://www.american.com/archive/2008/may-june-magazine-contents/little-league-huge-effect?ref=silkroadintl.net) is specifically about America, but how much of it will translate to Chinese kids in the next decade or so?! The competition in China is already fierce and will only get more so. Parents looking to give their little emperors an edge may now want to consider soccer instead of the oboe. Now having said that, I have to share part two of the continuing saga that is our apartment complex vs. the Shenzhen subway company. Yup, another wonderfully productive meeting today about where the pollution fans are to be built (not in our garden, we hope). Instead of telling us that if we died they wouldn't care or that if we protested they'd lock us up "like the previous protesters," today they just told us to be careful of what we say and who we say it to. What's the context of this warning? We put up large signs on Sunday afternoon on the apartment buildings facing the street that were, hours later that night, taken down by the police because "they detracted from the look of the downtown area. " No shit?! That was pretty much the point. Good thing I took photos before the signs were taken down.[](http://silkroadintl.net/blog/wp-content/uploads/2008/05/zhht-signs.jpg?ref=silkroadintl.net)So Kudo's to the Chinese people--and I hope that the Chinese that do read this realize that I am impressed by their individual efforts but still very wary of any government with absolute power. PS> The title of this post comes from a political sign that used to be in Shenzhen (Binhai Rd, Louhu Area). It read: "Struggling for a civilized populace, working toward a civil society. "\*\*yes, I know the pictures are sideways. I'm working on it.\*\* ### Donate, please! URL: https://www.silkroadintl.net/donate-please/ Last updated: 2026-07-18T14:48:38.000Z If you're not here or have not lived through a disaster yourself, you have no idea of the scope of damage and devastation to millions of individual lives. It is truly heart wrenching to think that possibly more than 200,000 people in China and Myanmar have died in just the last couple of weeks. So, thanks to [Sourcejuice](http://www.sourcejuice.com/?ref=silkroadintl.net) for the link, here is [a page with 20+ different charities](http://cnreviews.com/uncategorized/china%5Fearthquake%5Frelief%5Fand%5Fdonation%5Fguide%5F-%5Fwill%5Fupdate%5F20080514.html?ref=silkroadintl.net) that you can donate to. In '95 I lived in the area of the quake, Chongqing actually, for a year as an [English teacher](http://www.cqupt.edu.cn/english/index.php?ref=silkroadintl.net). I have been to Chengdu, Dujiangyan and other damaged areas and have friends, former students and co-workers from the area--some of whom I've been able to contact and some of whom I have not. Our prayers, thoughts and financial support go out to all those affected (directly or indirectly). ### Non-earthquake China News of Import URL: https://www.silkroadintl.net/non-earthquake-china-news-of-import/ Last updated: 2026-07-18T14:48:37.000Z First, I used to live in Sichuan and my heart goes out to those folks who are suffering there. If you would like to help the people of Sichuan, go here: [Chinese Charity](http://cszh.mca.gov.cn/article/english/?ref=silkroadintl.net). Don't let the concern "I don't know if the money will really get to the people" stop you from doing the right thing. " People do need help. Second, if you want to know about the “Great Firewall” go here: [Chinese Internet explained](http://www.networkworld.com/news/2008/051208-china-internet.html?ref=silkroadintl.net). It’s quite a good article, even if it's a bit simplistic and tries to be very PC and non-judgmental (which I hate; he he he). Third, [Burma is China’s problem](http://www.timesonline.co.uk/tol/comment/columnists/david%5Faaronovitch/article3919327.ece?ref=silkroadintl.net). As are Sudan, Nigeria and North Korea. But Burma is looking at more than 100,000 (some say up to 400,000) people dead and more on the way as disease and malnutrition start to impact the survivors. Support of this regime is a business decision for the Chinese government. Fourth, except for most of paragraph 3, this [WSJ article](http://online.wsj.com/article/SB121063718854786789.html?mod=opinion%5Fmain%5Fcommentaries&ref=silkroadintl.net) is complete crap. Unfortunately, even good publications in a free society have the right to publish garbage. Fifth, labor rates are going to go up again in [Guangdong](http://www.chinaherald.net/2008/05/guangdong-wants-wages-to-raise-12.html?ref=silkroadintl.net). I guess I’ll be moving soon. Sixth, you want to know why you can’t compete with China? [The factory is making zero.](http://www.feer.com/essays/2008/march/why-profit-zero-works-in-china?ref=silkroadintl.net) Really. Side note, if you’re not reading [FEER](http://www.feer.com/?ref=silkroadintl.net), you should be—of course it’s expensive and the online tools you have to use to read it digitally really really SUCK! But the info is great. Seventh, If you’re not selling in China, you should be. As deflation from low China prices helped the US economy over the last decade, the [new buying power](http://www.bloomberg.com/apps/news?pid=20601087&sid=arKIIOB5UbTU&refer=home&ref=silkroadintl.net) may help pull the world’s largest exporter (yes, it’s still the US) out of its economic slump. ### Negotiating with Chinese Factories URL: https://www.silkroadintl.net/negotiating-with-chinese-factories/ Last updated: 2026-07-18T14:48:38.000Z Some tips from recent negotiations.1\. If you are here you can better manage both what you want and when you get it. Not being here leaves all of the confirmation and compliance in the hands of the supplier who may or may not have an interest in meeting your requirements.2\. Many factories see negotiations as a zero sum game. This attitude must be overcome before you can get to other tangible results. If you have not fully and in extensive detail resolved this issue, you will either not get the results you want or you'll get them on paper only.3\. Don't ever give the factory a reason to believe that you're leaving (even if you are). Don't lie. But informing a supplier that the relationship is over effectively ends any leverage you may have in completely current products. If there is no relationship (I mean money) there is no need to cooperate.4\. Anger is a good as saying you're gone. Because competition is so fierce in China, and because there are so many other options out there, angry emails, arguments and blow ups, unless carefully managed, tell the factory that you've moved on (why else would you burn personal bridges?).5\. Detailed contracts in English are never read and even less often understood. OK, so there is a slight exaggeration here. I should say "almost never read." But you get the point. You may think that you have covered your bases but the contract probably means very little to your supplier.6\. Be clear, simple and concise in communications--especially long distance communications. Very simple. Overly clear. Short, bullet point specifics and no more.7\. If you don't have photos, samples, art and the supplier isn't touching a sample there will be gaps in communications--think blind men and elephants. Don't assume that anyone knows what you are talking about. Even if they make a similar product.8\. If it gets to the point that you have to choose to take bad product or move to another location to do it all over again, DON'T burn the bridges. You still need samples, tooling, and may be product to be reworked. If you are up against tight timelines, moving may not solve your problems. It is almost always best to work through issues first before fleeing the problems and starting the process all over again.9\. Search for better answers. This means that what you are told is probably only a surface or primary issue. If production on products worth 10's of thousands of dollars to your supplier are just sitting around because of a minor issue, you can be sure that there are other causes for the delay.10\. Finally, paying more to get what you originally contracted for is not always a bad thing. Sometimes it really is the win-win. ### Foreigners not Welcome URL: https://www.silkroadintl.net/foreigners-not-welcome/ Last updated: 2026-07-18T14:48:38.000Z It's not just [Beijing](http://www.theaustralian.news.com.au/story/0,25197,23672845-30538,00.html?ref=silkroadintl.net), either. In the morning was talking with a friend in Shenzhen about the relay going through town and he expressed the desire that everyone just let China alone and give them a chance to have a nice day in the sun. I didn't agree, but thought about it for a while afterward and decided that my boys, 1/2 Chinese, should get to see things even if I don't necessarily agree. So yesterday afternoon I took my two boys, ages 1.5 and 3, to see the relay as it was passing just a few blocks from our home here. We lined up along the main street along with everyone else. As it drew near I was very distinctly told (in Chinese): "Effing foreigner. Go home. This 0lympics is ours. "I was shocked. I turned around to see who would say that. Behind me were a group of relatively well dressed office people, seemingly just out of the office for the festivities. I turned back and they said it again. I'm surrounded by thousands of rabid, flag waiving patriots and I'm holding two babies, (both of whom are Chinese!!!)--what could I do? I just ignored them. But I'm posting this article I wrote last week and had previously decided not to post. Attitude in ChinaI’m, once again stepping into uncharted waters and going to involve politics a bit more than usual. I find it odd that the political (theoretical, fluff, hot air) pieces I write attract more attention than the business pieces. I always thought that people voted and acted out of monetary motivations first and then emotional concerns second, at least in public. But since the political seem to draw so much more spit and vinegar I’m left to believe that either I’m so right about Chinese business that no one can argue or that I’m so wrong about Chinese and US politics that people can’t refrain from commenting. Both could be true, I suppose. A third options could be that my underlying assumptions that people are rational could be completely wrong too. In which case on-line retailers really need to rethink their positions—it’s all about emotion, guys. Now, on with the show! I can honestly say that I have rarely if ever been mistreated in China. I don’t count the arguments over quality or the multiple times I’ve been the target of random theft. I mean, I’ve hardly ever been treated badly by my Chinese hosts in terms of politeness and acceptance. But that changed this last week. Three separate experiences have really damaged my opinion of the depth of Chinese hospitality. First is the excoriating, racist and downright scary language that is being thrown around in China right now towards foreigners in general and the US and France in particular. From actual riots to virtual (internet) lynchings, from racial comments vocalized without knowing I can speak Chinese to outright bullying and intimidation of foreigners shopping at Carefoure. China is moving farther from its goal of “one world” than it has in more than a couple of decades. You may say I’m over reacting. You may point to the fact that there were riots against the Japanese two years ago and the physical destruction of the US embassy after the US bombed the Chinese embassy (by accident) in Yugoslavia—certainly those events were a bigger deal than now, right? But those two incidents were controlled burns. They were allowed specifically to help Chinese citizens with no other legal outlet for release blow off some steam. That’s how China works. But today is different. I’ve been saying for almost 15 years that China has national-size insecurity complex. They’ve had it for at least 30 years (if not 100 years), but now you see it daily. They want to be welcomed onto the world stage as a player, but can’t handle the heat from the spotlight. They want the world to think that they have arrived, but expect a free pass for their xenophobic view of domestic and world history. They have the glass and metal buildings and freeways and factories, but except for cheap labor, what inside is really “Chinese?” As one client of mine, who recently came to China, asked: “What do the Chinese believe in other than money?” Well the superiority of (presently constituted) China and the Chinese race, for one. China claims that it’s not their fault they have a bad attitude; that the world has hated and abused China for the last 100+ years and the world is now scared of the rise of China. I say bullshit to both. Sure China was colonized, what country other than England was not?! (I’ll grant the lingering dislike of the Japanese may be justified) Africa has a much worse history of colonialism and abuse by the West (and now by China) than does China, but the rampant racism and love-it-or-leave-it attitude doesn’t exist there. Similarly there is no hatred of Japan, Taiwan, Korea, Thailand in the West—all Asian Tigers that swamped portions of the US and EU economies in the last 40 years. Sure there were fears of Japanese financial take over of New York in the 80’s. But even a nuclear-capable Japan is not seen as a “threat” simply because they are a financial power. You can’t blame western support of the T!betans on a fear of a financially powerful China. And how come the race card is played against China but none of these other states? And to even say that its racist is simplistic, at best. If you want racism all you have to do is quote the Chinese President on T!bet—to paraphrase, he’s basically said that without the “parentage” and protection of the Chinese the other 55 minorities in China would be lost to feudalism. China will pull its minorities (dancing and singing) out of feudalism whether they want it or not! More? OK, ask any Chinese if they think that the US should have a black president. Or ask them if they would willingly do business with or even touch a black person. You learn a lot about China when you speak the language. The famous quote by Liu (the Chinese gold medal hurdler) that he proved that “yellow” people can run just as fast as blacks and whites is a much more damning report on the Chinese mindset than it is on anyone from the West. Does anyone even care what “color” the various Olympians are for their country? Certainly the multi-racial West cares less than the monochromatic Chinese. The arguments by Chinese to support their racism are not only conflicting but weak. They claim that Westerns don’t understand China, and at the same time claim that the West is trying to split China because we know that all Chinese dynasties split from within rather than fell from without (a very Chinese version of world history, considering the Mongols and Manchus were not “Chinese” until after hundreds of year of assimilation). They claim that the West doesn’t want a powerful China, yet the financial grow (FDI) has, up until the last few years ALL come from either the west or other Asian Democracies. You don’t invest in your “enemies.” What most Chinese aren’t willing to believe is that most foreigners also believe that a rich and powerful and responsible China is in the world’s best interest—but take out “responsible” and you have the US invading Iraq—and nobody, including China, wants that. China and many of it’s overseas supporters cry foul when anyone says that the Chinese government is this “monolithic” united force. Yet China’s view of a hegemonic western power (the EU and US?) or (even more laughable, a monolithic government controlled media) fighting with both propaganda and military strength is equally absurd to any one that has been educated anywhere outside of China. The Chinese government can and does control a country (and press core) larger than that of the entire EU or US. Yes there are ebbs and flows in the ability to control various parts of the country, but to claim that because the government arm doesn’t always reach as far as Beijing wants shows that China is more egalitarian than monolithic is not just ignorant, it’s completely stupid. A weak dissemination of power does not make China more democratic—it just makes it more volatile. By contrast, the US can’t even keep two candidates within the same political parties inline let alone agree to a plot for world domination with the EU. As recently as two years ago polls showed that the US disliked the French more than Iran (or China). And does anyone outside of the British government even like the US anymore? How is that a hegemonic plot to suppress the rise of China?! It’s not. No matter how much US citizens act like we are the rulers of the planet or the Chinese blame us for being such, neither the hegemony of the US nor the egalitarianism of China are realities. Just so we’re all on the same economic page: China’s rise is in the world’s best interest—as a market, as a stable power, as a mature State and any one that thinks otherwise is ignorant, issues of resource scarcity notwithstanding. Grow China grow! Anyone that says otherwise is either a global warming wacko (i.e. falsified green statistics are more important than human lives as the current bio-fuels instigated world food shortages proves) or has their head in the protectionist sands of the past. CHINA—WELCOME TO THE WORLD STAGE—NOW DEAL WITH IT LIKE THE REST OF US.Now back down to a personal and business level. First, I am acutely aware that I am a minority in China. Most of the time this is either no big deal or a bit of a help. Maybe I stand out as a target, but I also get some special treatment because of my different looks (and presumed higher economic status). This means that most Chinese are fantastic hosts and overly polite. It also means that my prices are higher than local would be charged for almost everything in China that is not scanned at a register—and yes, I was here when they still had official “foreign” pricing so I know its relatively better but the attitude is still pervasive. My family (Chinese in-laws) joke all the time that they should never send me to buy anything in China as it will cost more. Secondly, recently, being a foreigner has been, to be honest, at bit scary. Crime against foreigners is high. Anti foreign sentiment is rising fast. Now in China I’m not even a “normal” person (of course not special), now I’m “bad” and I’m “them” and sometimes I even get called “French.” Yuck. Why is this scary? The crime isn’t much worse than a year ago. The race riots are, unfortunately, now becoming almost annual. So why scary now? Because the government may not be able to or willing to control it as the hype for the 0lympics draws near—how do you shut down nationalism in the next 100 days as the 8 year hype of the 0lympics finally crescendos? And instead of shutting it down (and some chats are closed, I realize) they are instead telling Chinese to just not talk with or share “sensitive” information with foreigners—yes, the new official line is to “exclude” anyone that is not Chinese from conversations about real issues. Or just don't giv them visa's any more. Welcome (some of you) to China, please shut up, spend your money and then go home as quickly as possible. Nice. Drawing a line in the sand and saying that “all foreigners are untrustworthy” is a scary position for a government to take—especially when that government has for 50 years also promoted the idea of Chinese racial/national superiority. (At least the US government abuses everyone, citizens and non, equally in our post 9/11 fear of foreigners.) If you don’t think that this is a big deal, look at the crowds supporting the torch relay in Australia, New Zealand or South Korea—do you see anyone supporting the torch that is not Chinese? NONE. And, despite the fact that “all Chinese and right thinking people around the world” condemn the violent nature of some of the protest in England, France and the US what are the Chinese supporters doing in New Zealand and South Korea? Violently pushing out opposition. Yup, China, you’ve arrived. Glad to see you meeting the Lowest Common Denominator for world “communication” standards. The 0lympics might turn out to be One world, One race if things keep up. What happens when China loses to the US in basketball in round one? Or when they lose to the French in Cycling? Or to the Koreans in football? What happens if a Chinese athlete of T!ibetian decent wins a medal for China—can they cheer for him/her? How about when the Hong Kong team wins medals? How do they support that? Third, this week I was thrust into the reality of the Chinese State’s “real” attitude toward individuals. As I’ve mentioned before, our apartment complex is trying to fight the building of an exhaust fan for a new subway line in the middle of our garden. The government and subway company are totally unwilling to even talk. Yesterday the subway company, in a meeting with some landlords in the Shenzhen city government offices said to us: “We don’t care if you all die from the pollutions (exhaust). We have to build the fan. You can protest if you want but if you do we’ll put you in jail just like we did to the other protesters last year.” They are telling this to foreign landlords! I’m not making this up—how does this equate with China being a responsible world power?! It doesn’t it. The news is all just so much garbage until it hits you personally in the face. I consider myself slapped. I shared with is a long-time China hand and lawyer friend of mine here in China and he said: “as I tell people who only see the soft side of China, do not be fooled. This is an authoritarian state. It will get less authoritarian only when the citizens insist on something different. It has nothing to do with being a world power and it has nothing to do with us foreign guests.”Yup. That’s scary stuff. Finally, last I was working with a factory in Xiamen. Great facility, great equipment lousy service. They are busy, they are profitable, they don’t need new clients. They told me straight out, over lunch, they don’t want me to come do QC. They are professional and export to the US and if their own internal QC isn’t good enough for me then they don’t need my business. I told them that if their product was a good as their talk we wouldn’t have any problems. Of course, it wasn’t. They repeatedly said to me, when I brought up actually quality issues, things like “this is good enough for our other US clients,” and “this is so small, your client will never see it.” They couldn’t get the registration right on the printing and they were both frustrated and embarrassed that I called them on it. I have to say that this was, by far the worst treatment that I have ever had by a factory. I’ve never been talked to like this before. Had we not already signed a contract and paid the deposit for this order I would have walked out and flown home. The reality is two fold, the factory is so busy and foreign client standards are so low (really, no one is rejecting this stuff, so it’s acceptable) that suppliers don’t have to provide any quality service or even quality product. They are so busy that “cha bu duo” (good enough) is good enough and since it’s at a reasonable price and on time, clients are fine with that. Conversely without any check on quality the reputation of both the factory and my company that uses them will eventually suffer. Call is quality fade, call it arrogance, call it ignorance of standards. It’s cooperation with Chinese characteristics—you pay full price and don’t complain and we’ll do a so-so job and claim “difficulties” because we’re a developing country or that your standards are just too high. Whatever you call it, it’s tough to get quality when you are in an environment where you are both socially a pariah and professionally unwanted. Don’t misunderstand me. I’m here in China because there are opportunities and for the most part, it’s been a very good place to be for the last decade. Further, I don’t agree with violent protests against China but I do not agree with violent suppression of contradictory opinions either. But I still believe, as I’ve said before, if you don’t think that events unfolding now will affect your business in China, then you are not fully aware of who you’re working with in China. ### What I Learned in Church on Sunday. URL: https://www.silkroadintl.net/what-i-learned-in-church-on-sunday/ Last updated: 2026-07-18T14:48:38.000Z I went to church on Sunday, as I do on most Sundays. It was nice, as it is on most Sundays. There are many great reasons to go to church, whatever “church” is to you. For me, the opportunity to take a break from the world and sit in quiet meditation is always welcome. But this week, after the service was over I got an extra lesson. More than one of the guys that attend church was, after the meeting, sharing some of the current difficulties they have with working in China. Here’s a smattering of thoughts from guys working in the furniture, house-wares, sporting goods, electronics, crafts and garment industries as well as a few guys working for major retailers too.1\. Beware the golden the sample. No matter what industry you’re in, no matter what you eventually wind up with for production and no matter where your supplier is located—the golden sample is the bane of all manufactures. The golden sample can pass every test devised by man and it can be delivered on time (it has been said to even be able to walk on water!). So what is there to be scared of? Once the golden sample is approved you will never see production that meets those standards or looks that good or is delivered on time again.2\. Confirm the destruction of samples, old color standards, old CAD files and rejected product or you’ll be seeing it again. Maybe not directly in your market; maybe not for a couple of years. But as sure as God is great, you’re going to see them again.3\. The number of times you come to China directly correlates with the quality of product you get. If you live here (hire someone, open an office) you will get much better product than in if you come once or twice a product cycle (or once or twice a year). There is a reason why prices are so cheap going direct—all the QC has been removed!4\. Regardless of the size of your operation, there are things that you have to check for and incorporate into your processes: Quality Control, if not done by you will most likely not be done by anyone else. Product testing, including materials testing, in line testing and testing for specific market standards, needs to be done by an independent third party. International style/quality project management systems, unless you bring it with you, teach it, live and invest heavily in the people involved you’ll not get the quality of management that you’re used to “back home.”5\. Vietnam ain’t all it’s cracked up to be just yet. If you can afford to build your own factory and are big enough to draw in with you the necessary support industries then Vietnam (or even many Western Chinese provinces) could be right for you. If you are buying stock or slightly customized items that are reliant on additional manufacturing/labor/finishing and accessory items (packaging, for example) you may still need to wait a few years. If you are buying material intensive product that has little additional packaging or components (wood furniture) then Vietnam could be good for you now. ### SQL Attack Hits SRI, Twice URL: https://www.silkroadintl.net/sql-attack-hits-sri/ Last updated: 2026-07-18T14:48:37.000Z For at least 5 hours each, at two different times today, SRI was off line due to a confirmed SQL attack. The server that hosts SRI in the US was overwhelmed with traffic that shut down the entire server (multiple sites). No email, no website, no blog, no online project access. If you tried to contact SRI today/yesterday and have not heard back, please contact us again. We're back on online now! ### Who is Winning the Lottery of Life? URL: https://www.silkroadintl.net/who-is-winning-the-lottery-of-life/ Last updated: 2026-07-18T14:48:38.000Z A. The BritishB. The ChineseC. The AmericansD. Anyone/everyone else. Answer: [B?](http://www.dailymail.co.uk/pages/live/articles/news/worldnews.html?in%5Farticle%5Fid=559133&in%5Fpage%5Fid=1811&ref=silkroadintl.net)Regardless of what you think the answer should be, the article puts the rise of China into an interesting light. ### Sorry Rick URL: https://www.silkroadintl.net/sorry-rick/ Last updated: 2026-07-18T14:48:39.000Z If your name is Rick and you called me on Saturday from the US and are still waiting for me to call you back--I'M SO SORRY. I've lost your number; it didn't record in my phone and I've just been praying that you'll call me back on your own--please do. Sorry, Rick. And sorry to the rest of you for making you read this post. ### Where is the IPR violation really coming from?! URL: https://www.silkroadintl.net/where-is-the-ipr-violation-really-coming-from/ Last updated: 2026-07-18T14:48:39.000Z Chances are, a lot is coming from YOU! Think about what samples you are sending to your Chinese supplier to “copy” or “make adjustments too? Yup, that’s right. If you’re in the business of buying 6 or 8 items and copying aspects of each one to create your “own” design/product you are in fact contributing to the rampant IPR violations that is China today. For example, I just spent the day negotiating some new contracts with a factory for a printing project. We signed NDA’s prior to transferring information and art. Once the negotiations were done (it’s taken a couple weeks to get this all completed) we walked through the factory with the manager and owner and looked at all the “samples” from US clients that they were “copying” on request from each of their US clients. The factory says they sign strict NDA’s with each of their clients and so they don’t share any product or art with others. But they also get “boxes of samples” of both product they’ve manufactured themselves and product from other factories each week from their US clients. The factory is quite good about limiting information; they wouldn’t drop any names, and wouldn’t give me any samples (I always ask to see what they’ll really do when they want a new order) either. But every one of their clients is sending bucket loads of competitor’s product to the factory and directly asking for copies to be made—some with major some with very minor changes. Indeed we found 4 SKU’s of one of our products in the factory from another one of our own clients (when we have NDA’s we don’t share client names/product with other clients either). It just made me laugh—clients in the US are so worried about Chinese factories stealing their IPR but at the same time are more than willing to violate any and everyone else’s IPR to some degree with the copying of samples. How many times have I been asked "we just have to change this 10%, right? "Could it be that the evil empire has learned it’s diabolical practices from the very folks complaining about the practices in the first place? ### Global Sources China Sourcing Show Questions and Notes, April 23, 2008 URL: https://www.silkroadintl.net/global-sources-china-sourcing-show-questions-and-notes-april-23-2008/ Last updated: 2026-07-18T14:48:39.000Z More questions from buyers at the [Global Sources China Sourcing Fair](http://www.globalsources.com/?ref=silkroadintl.net) in Hong Kong. This was the last day of the show so I'll be back to more of the usual fare starting next week. But I think that the questions poised were helpful in illuminating some of the common misconceptions and concerns about sourcing and purchasing in China.1\. Buyer Question: My quantity’s are small, how do I get good prices from Chinese suppliers? You don’t. There are reasons for being in China, and small qttys is not one of them. If you are not buying in quantities as large as your current domestic distributor (or will soon be buying these qtty) you are probably not ready to be in China. Just because you know you can get things cheap still doesn’t mean that China's right for you. China is best for millions of the same thing. Not thousands of hundreds of things. Or, as one buyer talked with me about, a couple of 10-15 things. Even if your product items are large dollar value item (hundreds of US dollars per piece) you are probably still better off buying from a domestic distributor than from a China supplier. Further, because you are getting lower cost you need to understand that there is a trade off in a lack of oversight/QC as well as logistics and importing responsibility. If you are buying small quantities and you can’t afford to do some of the QC and shipping/importing yourself then you shouldn’t be buying in China. If you are just starting out your own retail business and you are going to be buying stock items in quantity’s that are appropriate for a small retail you will most likely find China a bit beyond what you can realistically manage or afford. Chinese suppliers want to run large lots, one time, for confirmed orders. Typically suppliers’ margins are small and within the environment of changing exchange rates and domestic inflation suppliers lose money to product goods and then wait for a buyer. They do not like to carry any stock and so buying in small quantities is tough.2\. Wow. I can’t believe how good the prices are here. I should have come sooner.(Yea, I know it’s not a question, but everyone says this and so I wanted to respond a bit.)First, yes, the prices are better than what you get from your home distributors, but what’s missing? Quality? Shipping? Duties? QC? All of these important things are what you’re cutting out by going direct. Second, don’t be too excited. Play it cool or you’ll never get any better pricing (and you should). I prep all my clients coming to China that they should act disappointed and a bit frustrated when visiting factories. It’s almost impossible to negotiate prices with a factory who knows that the client is already thrilled about prices. Third, what are the quantities that are required to get this great pricing? Often at the show you’re expected to order “a full container” as an MOQ. I've never bought "a full container" as a qtty of anything. Ever. But at the show (with costs for int'l travel, shipping, booth registration) they want to get as many big orders as possible. Once the show is over the MOQ will be more manageable, but it's still not going to be small (see above) so don't get you're hope up for 100's of a few pieces and don't get mad if they don't want an order for a retail shop.3\. I’m working in a very price sensitive market—how do I get the best prices and still keep the quality I need to have? You can have two of the following qualities in your production: good quality, low prices or very fast delivery times. You don’t get all three. Ever. So if low price is your priority, you need to be a bit flexible on times or quality. This means that the farther out you can prepare and the longer that you can wait for delivery the better quality and lower prices you can get. Another way to get better pricing is to order larger quantities. Larger quantities with good lead times can help you save significant amounts of money per piece. For example. Last year we made some Christmas ribbon for two different clients. One client had 4 SKU’s with 3 different ribbons in each SKU. Each SKU had more than 10,000 yards per ribbon. The second client had 12 SKU’s of ribbon with 6 ribbons per each SKU. Each SKU had 5000 yards per ribbon. For both client, each SKU had a total of 30,000 yards. But the cost and time per SKU for the first client was ½ of the other. Because of the smaller number of pieces within each SKU, the first client had lower costs per yard as well. Sure the second client had 4x the total quantity. But because of the high number of SKU’s and the higher number of different pieces per SKU the order was seen as much more difficult and much less per ribbon-production-run than the first client’s order. Chinese suppliers want orders that are large total quantity’s and a small number of SKU’s and small number of pieces per SKU.My experience has been that negotiations in Chinese (i.e. hiring a Chinese rep) gets you better prices. A foreigner walking into a show booth in Asia to buy says a couple of things. First, I’m not local. This implies (to the Chinese supplier) that you have more money than the locals. Second, it says I’m only here for a week so I need to get this done ASAP. Suppliers know that you don’t have a lot of time to negotiate and have money to spend. Third, I’m used to prices that are much higher than what I’m seeing here so I’m only going to bargain half heartedly and maybe for only a very small percentage off of the offered prices. If price is really the motivator in your market then you need to invest in some time--come to the show and then go the factories and spend weeks, not hours, here in China bargaining and negotiating prices and quantities.4\. Best advice at the show for saving money and time NOW: Don’t waste time trying to manage your own shipping. Just give it to a 3PL like [Schenker](http://www.schenker.com/index%5Fen/index.html?ref=silkroadintl.net) from the very beginning. Negotiate rates up front, but once you’ve done that let the 3PL do all the rest. Focus you time and energies on your own job and let the 3PL manage all the customs, logistics and international paperwork. ### Intertek's Mr. Francis Yuk--Great Info for New Buyers URL: https://www.silkroadintl.net/interteks-mr-francis-yuk-great-info-for-new-buyers/ Last updated: 2026-07-18T14:48:39.000Z Notes from the [Global Sources Show ](http://www.globalsources.com/?ref=silkroadintl.net)in Hong Kong, 21st April. Best new presentation of the show was from Mr. Francis Yuk, the Vice President, North America of [Intertek](http://www.intertek.com/?ref=silkroadintl.net). It's too bad that this isn't a recording as the presentation was really enjoyable. But here are my notes; it was a great overview of the issues that now influence your testing/QC needs in producing in China. Here are some highlights. - Recently, in the last 10 years, there has been a shift of priorities from simple price/function/quality to include the issues of Social Compliance/Environmental Protection/Intellectual Property. In addition, there is a much shorter time for the overall production cycle. And despite the increase in the number of smaller buyers, in general, there is increasingly more centralization rather than decentralization in the overall process. - Because in Western law, the Importer of Record and buyer (who puts it on the shelf) is liable for any safety issues, you need to pull samples yourself—don’t just trust a report or a factory rep to pull something for you. In general, when you test samples, Minor defects should not be more than 4%, Major no more than 2.5%, and Critical cannot exist (0%). - Mr. Yuk stated that he was traveling last week with Allen Shaw, former head of the US [CPSC](http://www.cpsc.gov/?ref=silkroadintl.net). He says that there is a bill in congress now to change lead standards from 600ppm to 99ppm—that basically means everything is going to have to be 100% lead free. In addition, China now has it’s own shipping standards for toys and lead content. This has created a huge delay in the shipping of toys out of China (since last year’s recalls). Finally, there is a new US standard for standards violation: 3-strikes and you get criminal prosecution. There is some great information for vendors on the CPSC website. - China’s new Labor Law is also showing some real teeth already too. In the first quarter of this year, more than a 1000 factories have been closed in Guangdong Province in alone. - The US C-TPAT has also increased the number of random open-container inspections for ships coming from China into the US. - And even with all that, it’s going to get even more complicated. The new standard bring promoted by some of the big box stores (Wal Mart, M&S)—is the carbon footprint. This will require suppliers/vendors to document their entire supply chain. - But remember: QUALITY IS A KNOWN QUANTITY—IT CAN BE TESTED, IT IS ESTABLISHED BY GOVT STANDARDS, IT CAN BE KNOW AND IT CAN BE CONTROLED. It’s all up to you. ### More from the GLobal Sources Trade Show in Hong Kong URL: https://www.silkroadintl.net/more-from-the-global-sources-trade-show-in-hong-kong/ Last updated: 2026-07-18T14:48:39.000Z More questions from the [Global Sources](http://www.globalsources.com/?ref=silkroadintl.net) Q&A sessions in Hong Kong this week. How do you know in if you are working with a trading company and what value do they really provide?1\. Your relationship with any middle man should work to get you the best possible quality product. For example, as a production manager, If I ship to you and you don’t like it—I eat it. It is in my financial best interest to ship you only approved/quality products. This is an invaluable service that you will not get from a factory, a buyer or anyone else (other than you doing the local work yourself).2\. Your trading company should tell you up front who they are, who pays them and what their relationships with the various factories are. You should never have to wonder if you are working with a trading company if you thought you were working directly with a factory. If you are paying for introductions only, it may be be of much value. Unless, of course, you can't come here yourself. A couple of oft forgotten things that will affect your price in China.1\. QC and testing will/should take about 3% of the price of the product.2\. Shipping will average about 25% to 30% of landed costs (assumes sea, not air freight). Some Common Issues with Chinese Factories, via [BV](https://www.iaaqaservices.bureauveritas.com/Welcome.do?ref=silkroadintl.net).1\. 75% of Chinese factories have issues with correct wage payments and overtime payments. This gets bigger each year as the international community gets more and more involved in the production process.2\. 15% of Chinese factories with child labor; usually 13-15 years old on “part time” work. Relatively speaking, this is not as big a problem in China as is the unpaid overtime issue. ### Show Questions URL: https://www.silkroadintl.net/show-questions/ Last updated: 2026-07-18T14:48:39.000Z More New Buyer Questions from the GS show in Hong Kong this last week. Q. What do we do about MOQ’s? Do we tell the factory that we want 100K or 1K?A. Just like you, if you were told that your price changed just before you made a purchase, factories don’t like bait and switch. If you really do want 100K but need to see 1K first, build that into your PO and negotiate with the factory to make the 100K piece order contingent on the quality of the first 1K. But don’t ask for a bid on 100K and then order 1K and leave them hanging. The factory most likely will not sell you 1K pieces at the 100K price anyway. Q. Do I need to speak Chinese to work here? What if English is my second language too? A. Certainly not. If you can it helps, just to listen in and find out more of what’s going on first hand. But it’s not necessary, no. If you don’t speak English well, and chances are your factory doesn’t either, then you need to just hire a translator. If you are doing a lot of complicated mold work or if your product is very technical you’ll want to hire an industry expert rather than just a kid with a college degree in English. You can always just "talk" with a calculator and calendar, but it will take much longer, leave you with a ton of questions and will be very difficult to confirm quality. Typically, show buyers employing this method are shipping to third-world destinations were quality is not their first concern. Q. I can’t come back to China so how do I confirm that quality is achieved? A. Unless you hire someone to check it for you or you come back yourself, you will never be able to confirm the quality. 3PQ is relatively cheap, a few hundred a day, to give you at least the peace of mind that you got the product in the correct quality/quantities and in the container like you ordered. [Pro QC](http://www.proqc.com/?ref=silkroadintl.net) or a hundred other folks can do this for you. Don’t chance it. Q. I’m thinking about managing my own shipping to save money, how problematic is the Chinese Customs for exporting? A. Very. Why would you ever even consider this?! Unless you’ve got enough quantity to have your own in-house shipping department (and yes, it’ll take more than one person to do all your tariff codes, paper work, logistic coordination and VAT refunds), I think that you’re nuts to do this yourself. There are at least 10 if not 20 different people you have to coordinate with to ship any single shipment and with all the forms and info (in Chinese) you’ll never save time or money doing it yourself until, like I said, you’re big enough to have your own shipping department. Finally, I had a very nice conversation at the “Ask the Experts” Q&A Sessions yesterday with a rather worried new buyer. Basically he said: “I’ve made samples and placed two trial orders already with 4 different factories. I didn’t like the quality I got and I’m currently not working with any of them. But now I’m worried that they may be violating my IP.”My response: “Don’t worry, they are. You’re best case scenario now is to hope that they don’t’ file for trademark or patent registrations in China before you do.”Remember China is a file first country so you’d better be the one that files first! That means file BEFORE you give your art to the factory. ### What can you do about late shipping? URL: https://www.silkroadintl.net/what-can-you-do-about-late-shipping/ Last updated: 2026-07-18T14:48:39.000Z Here is a question (and the answer, bonus!) from the GS show presentation that I thought would be valuable to anyone that is working in China. “What do you do about late shipping?”1\. Contract out dates and penalties before hand. Certainly get your dates and penalties written down, but also (explicitly) review them with your supplier and get signed confirmation from a manager.2\. Review and confirm the specifics again, with a qualified manager, at another time to ensure that those shipping dates and penalties are indeed agreed to by the factory. Do this more than once.3\. Personally confirm production capacity and times for your product when you visit the factory and do the scheduling math yourself. If you run the numbers and present them to the factory you will have a valuable discussion into the details of how they figure out production times.4\. Make sure that you get a check list, from the factory, of dates and items that you and they need to hit to ship on time. Keep those records up-to-date and copy every decision maker in the factory on the on-going history of those items.5\. Physically confirm (on-site) the production check-points and quantities throughout the production process. What happens when you miss a date or under produce? Ask the very day you find out, not later on when it may be too late.6\. When it starts to get close and your own numbers are telling you you may be late, bring the issue up as early as possible. Take the initiative yourself to make things happen on time. Don’t be worried about face—be polite, but certainly ask—remember, it’s your money, you should get the answers that you want/need.7\. At the point that you know that your supplier will for sure be late, start negotiations immediately to fix the problem, speed up final production or begin compensation options, etc. Talk only to people that can make decisions—don’t waste your time with sales people.8\. If necessary, involve legal action earlier than later. Don’t make empty threats, but don’t be afraid to get a lawyer to help you out either. This assumes that your contracts and PO's are executable in China and all your paperwork and business registration are legal and up to date.9\. Understand that if your orders are small and if you let the production process go until the very end without checking on things yourself, you will almost certainly be left out in the cold. Unless there is incentive ($) for the factory to serve you, they won’t do it. If it doesn't seem like it's a priority for you it won't be for them either.10\. In your contracts, make shipping on-time an incentive for your supplier—be fair, be specific and make sure you’re not cutting the legs out from under your negotiations by making the penalties overly punitive.11\. Worst-case scenario: get what you can, when you can and call it good. To do this and not lose your shirt you have to plan ahead—and I would do this no matter what. Give yourself a couple of extra weeks (without telling your supplier) to ship for the “just in case” that will almost certainly happen. This means you get what you want, that’s the plus side. It also means that you won’t be able to hold your supplier to tight dates on the next order since he knows you’re padding your schedule.12\. Finally, things not to do. Mike Bellamy of [Passage Maker USA](http://www.psschina.com/?ref=silkroadintl.net) says that asking for your deposit back is like saying: “We’re done with you. We’re moving on and we don’t even want the product you’ve already produced either.” In other words, it’s a death nail in your relationship coffin. At this point the factory has no incentive to work with you to resolve concerns. Don’t play your biggest card up-front leaving you with no negotiation tools later on. More goodies tomorrow! ### New Buyers Seminar in Hong Kong URL: https://www.silkroadintl.net/new-buyers-seminar-in-hong-kong/ Last updated: 2026-07-18T14:48:39.000Z It’s that time of year again—The semi-annual Global Sources Tradeshows. This week is electronics and swimwear and lingerie. It don’t quite understand the category groupings, but great for the techies that don’t mind taking a break from gadgets for the fashion show. Silk Road is presenting at the New Buyers Seminar all this week and next at the Hong Kong Shows. I'll post updates and information from my presentation from others' as the shows progress. The theme of the talks this session seem to be “Trust but verify.” I figure if it’s good enough for the US/ Japan/South Korea in negotiating with North Korea, it’s good for working here too. Like the shows in Shanghai and Hong Kong last year, there are more than a hundred attendees per day at the seminars so far. Excellent information too, if I do say so my own humble self. The jokes and slides were the same too. Attending the show there are usually two kinds of buyers, one is the Purchasing Agent who may not be well versed in the production process. The other is the manufacturing expert. This second buyer know what the product both needs to do and look like and also may be the designer and original engineer too. In either case, remember that buyers have a significant amount of info to include into the process but may not be as familiar with specifics of how things are done here—even similar engineering process maybe different here. Regardless of which buyer you may be, it’s your money and your product and you can be involved as much (or as little) as you want. One of the presenters, Michael Hetzel, from Pro QC International has some great advice for getting the most out of you QC. Their website is [here](http://www.proqc.com/?ref=silkroadintl.net), some highlights are here:First, remember that “quality drift” can be due to fixed prices. So if you demand on fixing prices over a long period of time (even a month) the change in exchange rate has to come from somewhere and if the factory can’t raise the price they are going to cut the quality. Second, language is a major reason for problems. Translations are often inexact. In addition Chinese is a high context language English and other Western European languages are low context languages. Professional/industrial interpreters are worth the cost. Third, buyers need to be thinking about managing the entire supply chain and not just doing spot-check QC. Remember, quality is tied to timing, costs and logistics; literally EVERY step of the process. Fourth, certifications like ISO, SA8000, etc. are a good starting point, but does the supplier just have the certificates or do they really manage the processes. Also, these business process certifications are not QC processes. Don’t confuse paperwork with quality control. I would add that these certifications (at least a paper certificate) can be bought. Fifth, if you have your own QC staff you need to be aware of “assimilation of QA into local processes and factory cultures.” One of the way’s around this is to use multiple QC; your own and one or two 3PQC firms. Finally, there are inspectors and there are engineers and you know that they are different. Inspectors may not necessarily be engineers. They can count boxes, test for some quality issues and confirm qtty’s and loading. And sometime this is exactly what you need. Engineers are more technically trained and can both report problems as well as test for technical issues and help resolve technical issues. I would add another word on semantics here. Within “testing” companies the difference between “testing” and “evaluating” your product may be clear to everyone but you. Just because you pay for a “test” to be done on a product does not mean that that product is ever actually tested. Most “testing” is actually “evaluating” which is a nice word for simply matching info from factories with published standards. So if you’re not getting actual “testing” done of what value is the “evaluation?” Not much, I don’t think. An evaluation doesn’t confirm what’s in a product, it only confirms that factories know what standard they are supposed to be meeting. Scary. Another presenter, Charles Kirmuss, of [Infinity Gear and Technology](http://www.infinitygear.com/?ref=silkroadintl.net), had some great advice on protecting you IP.1\. Execute the legal work in China. If you do not, you’ll be waiting until the factory rep comes to visit your (foreign) location.2\. Put the technical and logistical information in escrow with a 3rd party to protect against companies going out of business.3\. Use a “black box” operations to separate pieces of sensitive products to keep the final product unknown to questionable suppliers. One operation of this type is [Passage Maker](http://www.psschina.com/?ref=silkroadintl.net), who's own Mike Bellamy also presented at the show. More information from all of the presenters, including me, can be found at Global Sources' [Smart China Sourcing](http://www.smartchinasourcing.com/?ref=silkroadintl.net) website. ### Mekong Meetings URL: https://www.silkroadintl.net/mekong-meetings/ Last updated: 2026-07-18T14:48:39.000Z In 2001, when I was running a tour company, I was warned by an industry insider “If you want to go anywhere in the world you’ve got about 10 years to go before everywhere will be completely run over by Chinese tour groups.” If you haven’t experienced this crush of Chinese tourists already, you’re about to. If you have gone touring anywhere in Asia, you know that they are just about everywhere! At the end of 2007, the NYT proclaimed Lao [the travel destination of the year](http://www.nytimes.com/ref/travel/20071209%5FWHERE%5FGRAPHIC.html?ref=silkroadintl.net), mostly because it was “like Thailand 30 years ago” and because it was had very few visitors. I guess whomever wrote the article couldn’t tell the difference between the local Lao and the visiting Thai and Chinese. Figures. Well, whatever the other flaws with the NYT may be, today this week officially ends any semblance of “very few visitors” and any dreams of Lao remaining like “Thailand of 30 years ago.” See [here](http://news.xinhuanet.com/english/2008-03/31/content%5F7892681.htm?ref=silkroadintl.net).Lao has 6 million people and no economy and as a neighbor, this is a godsend to resource-poor China. So let’s just call this what it really is, China just bought itself another province (and Thailand will continue to rent a goodly portion too). If traveling Beijing to Singapore were a) feasible for freight, or b) used only for tourism this might be a good thing. As it stands it will be used for sending power and resources to China and returning cheap goods (see [here](http://afp.google.com/article/ALeqM5iTcOH5Lw6QreJ8Fm%5FUwsUMP49T0A?ref=silkroadintl.net)) and relocating Chinese people to SEA.The Mekong meetings are really just the extended exasperations of the SEA countries—they’ve been trying for years to stop China for damming up the river. But like all issues that are physically inside of China’s boarders, China claims it’s purely a “domestic issue” and repeated says it has nothing to do with Lao, Thailand, Cambodia or Vietnam. This would be like Illinois damming up the Mississippi river and tell all states south that it was absolutely a state issue alone. Not just arrogant, but mean too. So China will take all the water (before it gets there), then take all the minerals (via mining rights) and all the timber and then sell to the Lao Cheap goods in Chinese department stores. You’re right, Mr. Hu. It’s sounds like a win-win for everyone! ### Three and a Half Kinds of Factories URL: https://www.silkroadintl.net/three-and-a-half-kinds-of-factories/ Last updated: 2026-07-18T14:48:40.000Z It goes without saying that not all factories are created equal. Not all factories with international experience are equal either. Certainly there is a level that you’d prefer to work with if price was constant. But this isn’t a perfect world so we need to talk about with whom you actually choose to work. If you’re not here on the ground every day, it’s helpful to know some generals about the differences in factories that are available here. This is certainly a sweeping generalization as there are possibly millions of factories in China. But I’ve worked with, audited and visited hundreds and hundreds of different factories here, in Thailand and Taiwan. And some generalizations are possible, I think, if for nothing other a base-point to start the discussion. So, here is my simplified overview of factory options with in China.**Purely Domestic.**Like the name implies they service the Chinese market. This nomenclature relates more to the clientele than the capabilities, but I find that they are analogous in many important aspects—quality and customer service being two of the most important ones. These factories may have some really modern equipment and talented people. They may have a lot of investment capital and new buildings. My experience is that they are aggressive in sales and have decent facilities and equipment but don’t have the skills or experience to work immediately with international clients. They may not have the correct licenses to export product either. There has been a rise, a fall and a new rise in these types of facilities over the last 10 years in China. Starting in the 90’s every factory that wasn’t specifically built by an MNC fit into this category. In Guangdong province the numbers started to fall off as the markets and the industrials zones matured. At the same time, in the last 10 years, a rise in these smaller domestic facilities happened in Zhejiang, Jiangsu and other coastal areas around Shanghai. In the last two years I’ve seen more and more of these faculties come on line as the domestic market builds and the export economy decreases in relative importance. Most factories that I visit/use in this category have anywhere from 20 to 200 people. They have typically been in business for 5 years or less. One of the owners/managers knows the industry well and has worked in it for years. There are typically a few similarly experienced engineers but most employees are either relatively new and/or migrant laborers that are new and significantly less experienced. Working with these factories can be both very rewarding and very frustrating. Usually they are excited about foreign business. They are willing to learn and they go out of their way to be good hosts. The problem is that they often don’t know what they don’t know about international standards. They think they know: “Foreign clients are going to be more strict than domestic clients.” But when it comes down to it, 9 times out of ten they either can’t or won’t meet the standards that are expected. Whether for (unexpected) cost overruns or simply the inability to achieve the necessary quality standards most orders with these guys end in disappointment. They try. They want to do it. They are the lowest price. They may have equipment every bit as good as bigger players in the industry. They are often really nice guys. But you can’t sell bad product no matter how nice the people making it are. On a macro level to make it work out usually takes more time to finish production than foreign markets are willing to wait. And on a more personal level, it probably takes more patience and trips to China than most foreigners are willing to invest. The odd time when it works out it’s really great—it’s like Chinese fate smiled and the stars aligned. You get good product at the lowest cost and the factory learned from the experience and can now parlay this successful experience into more international sales. But, as in all cycles, things are out of line more than inline, and success is the exception rather than the rule. The fact is, that as long as these factories are offering the lowest prices and foreigners are doing limited DD there will be both a continuation of the 9 failures and 1 success. (That should be a CCP political slogan—maybe we can get Mr. Hu to use that one some time. Say it again, “9 failures and 1 success.” It’ll grow on you.)Use these guys under two circumstances only: First, if you don’t really care about the quality of the product you are putting out. If you don’t care about quality, these guys will be quick, dirty and cheap—and sometimes that’s what people really do want. This isn’t a slam. Low-end product has it’s place in the market and, obviously, people continue to buy it. Second, if you have the time, money, desire and long-term foresight to help someone to develop from the bottom up this is a fantastic opportunity to develop a loyal supplier. But in all the years that I’ve been working here I’ve only seen one company pull this off successfully—and they came here ahead of the market with the intent to do just this very thing. If you need product now and you think that you can bring someone along while you’re producing product to sell you need to either have very (very, very, very) long lead times or be willing to accept lower quality on the first few production runs.**Mostly Domestic, Partly International**The difference between these guys and the purely domestic factories is experience and clientele. They can be just as small, just as young in the industry and with equally few really talented engineers. But for whatever reason they have experience working with international clientele, usually via a Hong Kong trading company. What does a little more experience mean to you? It’s means your costs will be a bit higher. But it also means that your higher standards will be mostly understood and expected. Most importantly, it means that the skill level necessary to achieve your quality standards should already be in place. If you are looking for the “bargain” in China, this is it. These guys have the skill but not the market positioning. They know they can compete internationally but they don’t have the exposure and are still hungry for bigger clients and more money. Often they are tired of being limited to the clients provided by trading companies and want both the margins and the face that comes from having their “own” international clientele. Usually these guys will have some sort of “international” sales department. This usually consists of one of the owners' relatives that has graduated from college or a non-related English major. This is both good and bad. It’s good because (if you can’t speak Chinese) you have some one to help you out, someone to talk to inside the factory. But chances are the English major was hired specifically because they have an English degree and my not have a clue about whatever your producing or even how most of the factory works (or even be able to speak much English). Other benefits of working with these guys include: they’ll most certainly have an export license. They should have connections with other factories that provide supplemental products (packaging, printing, etc.) that domestic only factories often do not have. Often they have available labor for finishing/packaging so you don’t have to move everything to a third party. They are usually located in more user-friendly areas of China and have Internet access too. One of the biggest problems that I have had with factories at this level is IP violations. They are still basically working on a Chinese domestic price structure but they are doing QC at more of an international level—they’ve just not done the price analysis to understand the direct cost impacts fully. So if you have major issues or a great-selling product, these guys are the ones that are going to be willing to sell you out, literally. They see what they are missing out on with international retail pricing. They can do the market research (or at least Google searches) and get a pretty good idea of what you’re making on the product they’re manufacturing. I work mostly with factories at this level. Why? Because I’m here and I have QC that is in the factory 4-5 days a week. We speak both Mandarin and Cantonese so we know (as much as is possible) what is going on in the factory. We do both factory audits before we start projects and unannounced QC visits during projects. We pull molds out of factories when we’re done with production. We coordinate and confirm disposal of rejected goods. We sign contracts in China, work with lawyers in China, and we expect to get the local prices and the international quality—why? Because we put a lot of value-added into the relationship. I would NEVER work with factories at this level if I was not here or had someone here representing me. Some people do and pull it off. To them I say, “more power to you.” But I won’t take the risk. There is not enough trust or safeguards to ensure that I can get exactly what I want unless I’m here to confirm it directly.**Purely International**The last type of factory is the kind that you’ll find on the higher-end sourcing websites like Global Sources. Their business is completely export oriented. They are in full or at least half foreign owned and may have a large client with a major ownership stake. OR they are partial or fully (Chinese) state owned. And while ownership may sound insignificant if you’ve never worked in China before, those who have worked here know that this often does make a difference. This “foreign” ownership, even if it’s other Chinese owners from Hong Kong, Taiwan, Singapore or Malaysia, is different from purely domestic ownership in a number of important respects. First, even if they don’t actually do business like you’re used to in the West they understand and have experience with international standards in the past. They will at least have had a dose of western style education to boot. Second they most likely have an overseas office and may still have a factory in another location; which means they are easier to track down if there are problems. Interestingly most foreigners doing business here seem to support this idea—just the fact that ownership is not local means that there is a different attitude (varying degrees from factory to factory, of course) in the business relationship. Conversely most Chinese I talk with have the exact opposite sentiment. I don’t think I’ve ever heard a good word from a Mainlander about an owner or boss from Taiwan, Hong Kong or Singapore. I’ve also worked with a couple of for-export Chinese State Owned Enterprises (SOE’s). One was a listed company on the shanghai exchange and the other one should have been listed at the local morgue. This disparity in SOE’s is common. While they are typically all relatively (to extremely) large, and have multiple “sub” companies their quality of management, level of debt/loss, professionalism, international experience and clientele couldn’t be more different. The first SOE we worked with was in Jiangsu province. They have thousands of employees and at least a hundred (I am not exaggerating) smaller companies and factory locations under the corporate umbrella. Their admin people had worked on trade negotiations between the US and China in the late 80’s and early 90’s. Their clientele spans all of Western Europe, the US, South America, the Middle East and even some in Eastern Europe. Minimum order qtty’s are in the 100,000’s of thousands of pieces per SKU. They had their own research and development department and proudly showed off the products that they had invented themselves and sold to clients in the West. They willing worked with LC’s and expected us to do both extensive and strict QC throughout production. The had the latest equipment, western trained MBA’s and one of our clients’ mentions that their equipment was better than anything she’d ever seen in the US.Now slow down a bit before you start thinking, “See, I knew it! If you just find the right factory you can get the same level of service and quality as you’d get in the west.” I will say that I think that once you’ve done DD on a factory of this size and reputation you may just be able to let them do their work and have relatively positive results. But just because the factory looks the same or better than your factory back home; and just because they have MBA’s working in the glass and steel office building doesn’t mean that you can email an PO and forget about it until it shows up on your warehouse doorstep. You still need to do QC. I have some foreign associates that do electronics work for some big box stores and they have told me they have the same issues and problems we do—logos are not adhered correctly, products are dirty, upside-down or otherwise missed packaged, deadlines are missed, raw materials are late or sub standard, parts are sub’d out without letting you know about it, etc. This isn’t $100K worth of stitch bags we’re talking about either. We’re talking about scores of container loads of fridges and microwave ovens, hair dryers, TV’s and DVD players. If you’re not going to be here to do QC, at the very least you need to confirm that what you ordered is what you’re getting and that what you’re getting is actually in the containers being shipped to you.**Limited International**There are some factories that claim to have a completely international clientele. I don’t want to call them liars, but the world is a pretty big place and while producing for Africa and the EU are both technically considered “international” I would submit that they are hardly comparable. Even producing for SEA and the Middle East are not comparable in many instances to what’s expected in the US, the EU and Japan. I mentioned above that we worked with two SOE’s. The second one was a basket case. We worked with them only because our client didn’t want to pay for new molds and was only looking to modify a product that the SOE currently made, en mass. They had one of the best websites I’ve ever see. They also had huge (empty) buildings in multiple locations. I never saw the thousands of people they claimed to employee. They worked on a cash only basis and our QC was the only QC—we’d accept or reject product and they acted like they couldn’t care less. They had one computer, no one that could speak English and a number of old Red Flag and VW brand sedans. And they had one guy whose business card said “Sales Manager” but who seemed to run everything from Accounts Payable and QC to Sales. We did one order and one re-order with them in a period of about 6 months. The best part of the entire experience was that they were relatively close to a section of the Great Wall. I got some great pics. The lesson here is that whatever factory you finally choose, you are responsible for the factory that you work with—you have a choice and you need to do the necessary DD, before you pay any money, to ensure that you completely understand what you are getting involved with. If you don’t find out until after you’ve already paid a deposit that your factory sucks—IT’S YOUR FAULT, NOT THEIRS!!So how do you pick a “good one?” First, I suggest that you find through recommendations (not just a website) at least 3-5 factories that could potentially manufacture your specific product. Talk with them (on line) and get as much information as you can from them from anyone that knows them. Then spend a few hundred dollars and get some real research done on who they are and what their history is. After you’ve cut the number down to 3 or 4 factories, visit the three that you think would be the best options. If possible, get samples from each of them. Compare prices, production times, sample quality, excuses for problems and your experience visiting the three. When you’re confident, place the order with one but let them know that if the first order doesn’t go well you’ve already got two other options ready to go on line. Finally, remember that sometimes the “best factory” is not the best to work with. If you can get what you want from the second best factory and they are easier to communicate with, by all means work with them instead. In my experience, the biggest killers of potentially good deals in China are insufficient QC and DD—and neither of these problems are the factory’s responsibility. Make an informed decision about with whom you are working and then participate often in the production process. Good luck. ### Would you like a gas shortage with your inflation? URL: https://www.silkroadintl.net/would-you-like-a-gas-shortage-with-your-inflation/ Last updated: 2026-07-18T14:48:39.000Z [Amazing](%28http://www.iht.com/articles/ap/2008/03/24/business/AS-FIN-China-Fuel-Shortages.php%29)!Only in China can having an almost complete monopoly on a protected domestic market be a bad thing. The two largest suppliers, Sinopec and PetroChina are now being required by the government to supply more fuel to meet rising domestic demand. Sounds like a good thing right? Think again. The price of fuel in China is fixed to ensure domestic stability. But the price is fixed at a point that the two big companies can’t compete with the quickly rising international prices of crude. Since China is, via these two companies, a net importer of oil, crude is being bought on the international market for a price that is higher than the fixed domestic price in China—so these two companies are losing money on their state sponsored monopoly! So who get’s hurt? Well, the rule in business is that the costs get passed along to the consumers. Currently the shortages are being passed onto the retail filling stations and private citizens are the ones being squeezed at the pumps. In addition, the lines of container trucks waiting outside of filling stations all over the country has been well documented. Each summer for the last few years, as demand goes up, privately owned factories get hit too. And, when it get’s really bad (usually May through September) regional electricity providers implement rolling blackouts. We’ve worked with factories that have had up to three days a week with no power—that means that projects that were bid out at 20 days for product times will actually take more than 30. As inflation in China continues to rise and (if) the price of oil continues to rise too, expect to see less and less imported oil in China. Sinopec and PetroChina aren’t stupid. They want to make money—and importing oil for a higher price than you can sell it at home makes no financial sense. There are already reports that they are selling what limited domestic supplies they have on the international market since the price there is so much better (further exacerbating the domestic shortages). Expect to see higher prices at the Chinese pumps. Expect to have another summer of shortages, rolling blackouts and higher prices for container trucking—if you’re producing inland, your cost advantage just shrunk. I’m not sure what’s worse for an harmonious society, high gasoline price or power shortages. ### The best comment ever (not) made about China URL: https://www.silkroadintl.net/the-best-comment-ever-not-made-about-china/ Last updated: 2026-07-18T14:48:39.000Z I apologize in advance for not being able to source this comment. It was aired on a TV show about media and education to a Wharton School audience. I got into the show after it started and I don't know who made this comment. But it was great and can be applied specifically to China. > "It is very easy to believe in what you think even though you may actually be out of touch with reality." So it got me thinking. How do I get in touch with the reality of my Chinese manufacturing situation? I don’t know if I’m “right” or if I’m out in left field while the world goes by, but I did come up with a couple of ideas that I use to at least confirm what I think is really what’s happening around me. First, seeing is believing. If you don’t see everything (check it off a list) it may not have happened. This is important for almost all parts of all products (molds, assembly, packaging, printing) but most important if you are making products that have a functioning component or a specific standard that must be met. Second, QC, QC and more QC. You should be testing and monitoring and reporting on every step of the process. I’ve heard the guys from BV say that products should be tested (not just QC’d) anywhere from six to nine times in the production cycle to be safe and sure. I don’t test that many times personally, but we certainly QC more than a few times per project. Third, “their” reality. You need to know that there may be contradictory forces working against your projects success. Whether it's politics, money, face or any number of other issues it behooves you (I always want to say that phrase) to find out what’s “really” going on. Sometimes you’ll be pleasantly surprised. Other times, you’ll be glad you found problems sooner than later. Fourth, have someone do QC on your QC. This is usually me, for our company. It’s not a lack of trust, I really have great QC guys, but it is a double check that standards are being followed all the time. Fifth, some parts of the project you just have to do yourself. I do all our printing. Nothing ruins months of work on a project like poor package printing—it’s relatively cheap and just not worth having something that isn’t even part of the product ruin a job. This concept of checking up on the relationship of your beliefs and your reality works in other areas too. Here are a couple of other things related to working in China. Learn from North Korea, or at least the UN’s position with NK: Trust but Verify. You have to trust other people. It’ll kill you to doubt and worry about everyone. It’s just not worth it. You have to, at some point, trust both the people around you and organizations you are working with. So confirm everything before you spend money. Then confirm everything after you spend money. But let them do their job. Be upfront and make sure they know that your job is specifically to check up on their job performance. Now a few less practical thoughts on the subject of “reality” in China. See? I told you it really got me thinking. In Asia, fate and cycles are much more important than you or I probably will ever really understand. If you grew up in the west you were educated/indoctrinated in the theology of self-determination; e.g. you have the ability to choose your own future. And even if “the gods” have predetermined your future you at least can affect it to a (large) degree. For many people here, this just isn’t the “reality.”This isn’t an East vs. West, or a right or wrong proposition. It’s just that what you believe my not be the actionable reality for your Chinese counter parts. This certainly affects the wiliness of employees to innovate, take initiative and think outside the box. Finally, I think that it’s really hard to be Chinese—your environment both physically and socially is changing quickly, not to mention you have to manage the rules about face, fate, guanxi, and all within the massive and rapid changes of the last thirty years and in increasingly westernized business context to boot. Think about this Chinese “reality”:• Just about everyone over 50 in China never had more than some primary education. But today, you can’t work at McDonalds without a college degree.• 20 years ago they still weren’t using cash in most of the economy—they were still using coupons from their work units.• If your primary education is from the Chinese system and your MBA is from the West you have two completely different concepts of how the world works competing within your head.• As a factory, probably most of your supply chain is working in a solely cash system while most of your customers are certainly working in a credit and terms system.• If you save face by hiding and personally solving problems but your foreign client wants to know-all and see-all when push comes to shove what do you sacrifice? Your own personal face or your professional relationship?• Are time and experiences linier or cyclical?• If your boss is foreign and rewards individuality but your manager is Chinese and punishes anyone out of step with the system, who do you work for? I’d love some reality checks—anyone else have any thoughts on the subject? ### The ever-present past, the moon and The (Chinese) Man URL: https://www.silkroadintl.net/the-ever-present-past-the-moon-and-the-chinese-man/ Last updated: 2026-07-18T14:48:40.000Z With the release of yet another “epic Chinese period piece” in theaters this month I have to ask: Have you ever noticed that everything great about China is, well, old? I’m not talking about the factories or the economy; I’m talking about the popular culture. Ask the Chinese themselves about China’s greatness and you’ll most likely get something like I get from people I ask: “we should be one of the great countries of the world like we were.” Or “The greatest thing about China are its history of 6000 years.” I have never had a single Chinese person answer me something that wasn’t political or historical in answer to this question in the 12 years that I’ve been here and been asking. Now, that’s not all bad. I’m here in China because I think that China’s history is very interesting. The Chinese past is fascinating to visit on vacation, but it’s, well, past. I’m here for the now and the next. When I’m on vacation I do want to see the past and I regularly visit places like The Great Wall, The Terra Cotta Warriors, temples, museums, etc. But my children and I don’t live in China’s past other than these brief visits. But in this view we seem to be a minority. For example, my in-laws (Chinese) watch Chinese soap operas every day—all set in dynasties centuries past. Chinese movies in theaters today are mostly about, yes you guessed it, the past. Indeed it seems that a “modern” Chinese movie is set in turn of the century Shanghai. Turn of the 19th century, that is. In recent years China has built more million-plus-people cities from scratch than any other country in the world. They’ve had growth that boggles the mind and economic theories for 30 years. They’ve put a man into space, orbited the moon and are now racing—and yes, have a good chance of beating—the US back to the moon. That’s incredible! Their future is so bright, if not for the pollution, you’d have to wear shades! Where is the independent social culture that mirrors these great modern Chinese achievements? I’m saying this as a Chinese History buff too—I was a Chinese History major in College and I studied Chinese (and Thai) anthropology in grad school. I married a Chinese. I speak Chinese. I read 20-30 books a year on China. I have lived in China for 9 of the last 12 years. But just I don’t get the obsession with the past. Can history really be that popular to 1.3 billion other people? What about the present? The future? I grew up in the 70’s and 80’s in the US. The US had just won the space race by going to the moon in ’69; the resultant cultural phenomenon was literally an overnight explosion of everything space in 60’s. And that look-to-the-future space culture has lasted for more than the next 40 years in the West. I grew up watching Buck Rodgers, Star Trek, Battlestar Galactica, Pigs in Space, Star Wars, Alien, The Terminator and Inter-planet Janet. Don't get me wrong, I also love America’s history so I don’t see anything wrong with Chinese patriotism and love of the past. George, Tom, Ben, Alex, Teddy, Lincoln, Philadelphia, Boston, Washington DC. I love it. We were, and I think, still are, great! I’ve read 8 books on US history in the last two years. I bought Ken Burns’ documentaries (plural). “My” US history is special to me, because it’s a part of who I am and I really want to know more and I want my kids to know both their roots—both Chinese and American. So before you think I’m just another foreigner basing China and you glibly respond, “other countries do it too,” think about this: when was the last time you saw a top-ten movie about the American Revolution? When was the last time a Prime Time or even Day Time TV show was made about James Town? Columbus? Philadelphia? 1776? (Since I wrote this John Adams has come out on HBO to great reviews—and it’s a surprise exception, to the rule, is it not?) When was the last time you watched anything about US history because of its entertainment value? Outside of Shakespeare and Emily Bronte what plays/movies have you watched about Victorian England? Even Disney’s current Shaolin Showdown cartoon is based in the future has tons of technology mixed in with martial arts and classical style Chinese artistry. It’s certainly not old people reliving old stories in old dress. Now maybe the American economy is dying a quick death this year. Indeed, optimism in the future of the US is down to record lows. But Hollywood isn’t pumping out a list of Civil War and American Revolution movies this summer to raise our collective spirits. Nor is the US govt funding special programs to remind us that “we once were great.”Which brings me to The Man, Chinese version. Can you honestly tell me that the Chinese kids of today, who, by the way, watch all the US movies on knock-off DVD, really would rather watch cartoons about the Tang dynasty, 18th century Shaolin monks, and heroic CCP soldiers? Really? Do you honestly believe that Chinese professionals, business people, teenagers and MWM—“Mainlanders With Money,” as Diligence Calls them calls them—really want to watch controlled and edited versions of the past glories/tragedies while other waking hours are spent checking stocks online, working for a house, a Benz, a Rolex, an iPod, etc.?Outside of Ang Lee (Taiwan), Jet Lee, Zhang Zhiyi, Chao Yangfat (Hong Kong) and Jacky Chan (Hong Kong) how many Chinese are competitive in the international film industry? Not many, so many of the Chinese films are in part State sponsored (or at least State allowed). The recent banning of Tang Wei would support this. Further, The Chinese Man limits the number of US films that are show in Chinese theaters to less than 10 a year to reduce competition. When you control exposure and competition you have a captive audience and can show anything you want—including the same historical novels over and over again. Starting way back in 1995 I remember the Chinese press bemoaning the fact that China didn’t have it’s own domestic cartoons. Yes, this was a national identity crisis for many university students reading the People’s Daily. So The Man stepped into the manufactured crisis and promoted local artists. Not all bad, certainly. But the limit of foreign films and the promotions of local films and cartoons isn’t the best way to promote diversity or quality—but maybe that’s not the point, eh? But the manipulation of thousands of years of history for a current, short-term political goal is a big deal. All of the Chinese history you see today is carefully edited and presented in a context that is not “dangerous” to The Man, current version. Now certainly America and other countries manipulate history to some degree but free press, independent filmmakers and colleges and universities push back and indeed, more “history” comes from private sources than government sources in the West for sure. Maybe the goal is an actual experiment on the admonition that those who don’t remember the past are forced to relive it. Could it be that The Man here is hoping that this time his dynasty will not end in disaster? Certainly. But what price is The Man paying in lost creativity and entrepreneurialism? I can’t believe that the promotion of Chinese history at the expense of the future isn’t going to be a problem, in the future. I can’t believe that education that is based on memorizing how “great we used to be” isn’t somehow limiting future generations creative ability. Like the child who’s always told he’s smarter than everyone else, he soon becomes scared of failure and trying new things. Idolize the past at the expense of the future. I really just want my kids to see the Chinese version of the Muppets’ Pigs in Space—come on, that’s not too much to ask, is it? ### One More Note on (Chinese) Politics URL: https://www.silkroadintl.net/one-more-note-on-chinese-politics/ Last updated: 2026-07-18T14:48:40.000Z Last political stump, I promise. I've avoided the incredibly huge white elephant in the room over this last week simply because I want to stay on line. But I need to say something. These two posts are concise but thought provoking; compare this about [Ta!wan](http://www.cibmagazine.com.cn/theyuanalsorises/index.php/2008/03/21/passionate-about-politics/?ref=silkroadintl.net) to this about [T!bet](http://www.danwei.org/blogs/lian%5Fyue%5Fon%5Ftibet%5Fand%5Finformat.php?ref=silkroadintl.net).I do most of my project management with clients via the internet and so I try to stay away from overtly political issues. But there are "non-business" issues that affect business and affect the individuals involved in business. By the way, if you think that the issues last weekend in T!bet, the elections this weekend in Ta!wan, the Olympics in August and the US presidential elections in November will not affect your business in China, you are mistaken. These are important issues that affect who you can work with, the balance of trade and import/export policies, how much information you'll have access to, the prices for materials and labor, the accessibility of markets and products, taxes, visas and most importantly the lives of real people. ### Just a typical white guy URL: https://www.silkroadintl.net/just-a-typical-white-guy/ Last updated: 2026-07-18T14:48:40.000Z I try not to be purely political on this blog, but who will be the next president of the US will affect my business over here. Not to mention that [these comments](http://www.usnews.com/blogs/news-desk/2008/03/21/obama-typical-white-person-comment-delights-clinton-aides.html?ref=silkroadintl.net) are stupid and offensive. This single comment will live on in political infamy much longer than anyone will remember any other thing he's said. For a "brilliant orator" this was a misstep of historic proportions. Now, I'll admit, I am "a typical white person" whose "reactions that have been breed" because of "experiences" in my lifetime. And according to him, I guess that who I was "breed" to be is disqualifying me from being anything but a racist--despite the fact that I've got a MA in Cultural Anthro, a Chinese wife and Chinese children and have lived in multiple countries for more than a decade. My experiences include own my shock and dismay at my own grandma who made overtly racist comments to me (many years ago). But I'm not throwing her under the bus to promote my own multicultural enlightenment--my imperfect "breeding" taught me at least that much. This type of comment, ironically meant to resolve other concerns about racism, is not "hopeful" nor "unifying" (or smart or even politically helpful). It's certainly not kind to poor old granny and will almost assuredly alienate much of the other 60% of America that are "typcial white \[people\]" and that vote in the US in November. Sorry for the interruption. We now return to our regularly scheduled blogs on China. ### Is it really “Chinese Culture” or is it just bad planning? URL: https://www.silkroadintl.net/is-it-really-chinese-culture-or-is-it-just-bad-planning/ Last updated: 2026-07-18T14:48:39.000Z I think that it’s a crutch, or at least an excuse. The constant negotiations over already-signed contracts is getting really old. Especially when I can’t go back and renegotiate contracts with clients from the West. If I can plan out costs and times, mock up packaging and labor needs, make safe bets on currency and inflation changes 30 days out, why can’t Chinese factories do the same? Now, I’m an anthropologist so in my training I’ve read that Chinese love to sign a contract to start a relationship and then the “real” negotiations begin afterward. But I’m also a businessman and so I’ve also read/experienced that Chinese companies rarely, if ever, do DD or forecasting on future costs of projects. I’ve heard more than once that most factories here have no idea what it actually costs them to make any give product.(On a related note, there is a great post on [China Vortex](http://www.chinavortex.com/?ref=silkroadintl.net) about why Chinese don't like lawyers.)So, is it culture or just an accepted lack of planning? Many Chinese tell me that they can’t forecast out the prices of raw materials more than 30 days out—ok, but 30 days out is all I’m asking for; that’s what I give my clients. I mean, if you commit to a price and sign a contract shouldn’t that price for a one-time order or raw materials be good for an order at anytime within that 30-day window? Isn’t buying raw materials the first step once the deposit is paid? Can’t you give me a price that is both competitive and safe for you over a one-month period? I’ve also been told a thousand times “labor is more expensive than we thought.” So…what did you think and why? If I don’t change the order details from the bid details where is the change in thinking coming from? If you are consistently under bidding (or under annalysing your costs should you change what you’re doing? If nothing less it’ll save you an awkward discussion about changed prices later. As I understand things you can “buy” labor for a price per action or a price per person/hour. Either one of these methods of pricing lends it self to testing and forecasting, does it not? If you know exactly how something is going to be packaged you can both time the total labor per piece as well as count the actions and bill accordingly, right? I mean, can’t a factory just have one “guinea pig” employee whose job it is to test/time the labor necessary for all new projects? If you’re not doing this what’s the point of a bid in the first place? It’s really not just to placate the Westerner is it? I’m begging here. Tell me that some really thought and calculations went into the bid. Please. Now figuring out Inflation, I admit, takes you a bit by surprise the first month of a jump and also requires a bit of research. But come on—we’re talking about 6 figure USD amounts here. I’m sure you can take the time to look of the last 6 months of CPI numbers and make an educated projection for the life of the production process, right? Finally, over the last two years the RMB has risen from 8.25 to 6.9 to the Dollar. That’s big, but the rise has been pretty much expected. Sure, changes are random and driven more by politics than the market. But the changes have rarely been bigger than 0.1 a month. So can’t you assume that rates now (6.9/1USD) will be 0.1 different in the next 30 days? Sure it’s not rocket science, but it’s safe, it’s probably pretty accurate and it’s more understandable than “I know we gave you a bid in Dollars but now you have to pay in RMB. Oh, yea, and it’ll cost more too.”There are cultural differences in the understandings for sure, I won’t totally discount that. For example, in the West, when I bid on something, barring an act of God, I’m committed to that price. Chinese, on the other hand, will bid on something but will not lose money. So if the price changes as the projects progresses and pricing variables change the price (contract) to the client will change accordingly—it’s just smart, financially. Chinese companies have no western moral qualms about “updating” your price and, I’ve found, are honestly bugged that westerners, get so bent out of shape when the Chinese are just trying to preserve their originally agreed upon margin/percentage. “You don’t really expect me to do this for little or no profit just because we have a document, do you? Why would I do that?!”So what do you about all this “culture?”Here’s what we do.1\. We educate our factories on these ideas presented above. We mock up packaging with them, we commit to spec’s before the order. We confirm that prices are in RMB and we take into account inflation and the changing RMB too.2\. We walk through contacts and details with managers, QC people and engineers BEFORE the contracts are signed. This is huge. The guys on the line are the ones that have the most valuable input as to where there will be both cost increases and saving. These guys know what’s really difficult and where they will personally spend extra time and have issues.3\. We get all our bids in RMB. Despite my wounded national pride, we do everything in RMB now; we have no choice. Unless you have enough qtty to buy futures and guarantee the exchange rates, you’re stuck working in daily rate RMB or losing out on both the exchange and ever-changing rates. Side-note: we hearing here that the RMB will be at 6.5 before August. True? Who knows?! But it’s probably a safe bet that it will be close to that (or higher).4\. When possible (not very often) we try to negotiate fixed mark up percentages that are agreeable to everyone involved in the deal. This assumes that you have a very accurate assessment of the market price for raw materials and that you have a very clear idea of the cost structure of you supplier. Not to mention a great working relationship with your supplier. ### China vs. Thailand, Part II URL: https://www.silkroadintl.net/china-vs-thailand-part-ii/ Last updated: 2026-07-18T14:48:40.000Z Don't know which is more ironic, the fact that the movie "Anna and the King" was filmed in Malaysia and banned in Thailand or the fact that the Film "[Shanghai](http://www.reuters.com/article/lifestyleMolt/idUST27055320080319?sp=true&ref=silkroadintl.net)" is being filmed in Thailand and banned in China. ### Large Chinese companies in the US/Global Market place. URL: https://www.silkroadintl.net/large-chinese-companies-in-the-usglobal-market-place/ Last updated: 2026-07-18T14:48:40.000Z Since I knocked the international Chinese presence last week, I thought that I should run this article, you know, to be fair and balanced. This AP [article](http://ap.google.com/article/ALeqM5ixIB6AMVTe0E-mJ--Okp-rkT49igD8VEL75O0?ref=silkroadintl.net) presents some numbers and a few names; but probably no one you've ever heard of except Lenovo. The numbers are impressive because of their growth, but Chinese investment overseas is still VERY small compared with US investment in China. But still, the growth is impressive. Will China in the 21st century become the Japan of the 80's? We'll see. There are enough domestic issues at home that I don't think the two are comparable. And the fact that China is seen as a thre@t by many in the US makes comparisons to Japan even more dissimilar. But people are talking. Some other points of interest.1\. The US/Euro market is just as “inscrutable” for Chinese as China is for foreigners. But Chinese are on balance doing a better job of getting into US grad schools and learning the local rules/language than Westerners are doing in China. I’ve said it before and I’ll say it again—if your kids aren’t learning Chinese, they should be. Why can't the US get this right? We don't learn languages, we don't use the metric system, we only travel to Paris. Really, the US as world leader is much more of an enigma than China.2\. Management skills and mature market analysis and research skills are lacking in Chinese companies both in China and around the world. Multinational Chinese firms are learning what they have to do to compete and the standard is still "Western Business Practices" no matter how many new players enter the market. " Will the lower margins of the Chinese Co's affect the marketplace? Of course, but business practices are being set in MBA schools in the West.3\. Politics are still a major part of Chinese business, even private ones. From the still passively accepted ideals of socialism to the direct investment and encouragement of the Chinese govt in Chinese companies and investments abroad, Chinese Nationalism is alive and well—and that is a big part of the “Chineseness” of Chinese companies.4\. Chinese companies that are successful abroad are companies that are adaptive to the environments they are moving too—gee, no one could have predicted that one! My favorite part of the article is the vision I had of the conversation that went on in the Chinese boardroom when they were discussing a Splendid China style theme park (that no one in the US goes to) in Southern Florida. > CEO: “Here'a a great idea! Americans will love a park with miniaturized versions of Chinese sites just like we have back home!”Yes man #1 “Certainly! Every Chinese at home and abroad and on both sides of the Chinese Straight loves the parks in China. And the Americans don’t have a single park like this! How'd they miss this!”Junior MBA: “What about Disneyland and Epcot Center here now?”CEO: “We have Disneyland in China and the mini-China parks all over the country do great business too. This is money in the bank.”Junior MBA: “But Chinese have passport restrictions. Can’t Americans just buy tickets to the real China for about the same amount as a week long trip to Florida?”Yes man #1: “Americans already love our culture. Now they will love China even more, we have such a grand and glorious culture and they don’t even know much about it. This park will strengthen cooperation and friendship between our countries. Not to mention make us a ton of money!” > Apologies if my sarcasm is offensive. But the China theme-park in Florida is a confirmed failure. ### Um…your price just went up. URL: https://www.silkroadintl.net/um-your-price-just-went-up/ Last updated: 2026-07-18T14:48:40.000Z Numbers are from [here](http://news.xinhuanet.com/english/2008-03/17/content%5F7808866.htm?ref=silkroadintl.net).1\. [Diesel shortages](http://www.iht.com/articles/ap/2008/03/17/business/AS-FIN-China-Fuel-Crunch.php?ref=silkroadintl.net) in Southern China means that a) there isn’t enough to go around (duh) but also, b) the black market price for gas is taking off. Read: your transportation costs just went up.2\. Coal, oil and electricity prices went up 14% from least year and 0.6% from last month.3\. Compared with last year: farm produce up more than 13%; Edible oil up 44%; meat products up 58%; raw grain up 9.5%, veggies up 26.8%.4\. China’s CPI is at a 12 year high of 8.7%This means that the RMB will strengthen again (and again, and again) and so if you’re paying for things in Dollars (or Euro) the cost of exchange will go up too. And, as we mentioned before, with the new rate cuts in the US, cheap money from the US will continue to fuel the FDI flood into China and keep inflation running hot and high!Good times. ### What's it like to be Nike? URL: https://www.silkroadintl.net/whats-it-like-to-be-nike/ Last updated: 2026-07-18T14:48:39.000Z In the midst of factory angst, have you ever thought to yourself “Man, if I was as big as Nike or Wal-Mart I’d never have these problems—they’re just raking in the money.”? I used to. And, I hate to burst you bubble, but the problems don’t go away. Apparently they just get bigger and more public. I was talking with a friend from Wal-Mart last year and he confirmed, to my dismay, that they deal with the exact same issues that I deal with in China. It’s just that their qtty’s are millions of times bigger than mine. When I got over the shock of realizing that my issues with manufacturing weren’t going away with increased qtty’s, I was actually comforted a bit. Really, I thought, “hey, I’m doing things the right (or at least established) way.” My partner at that time was thoroughly depressed, though. He was thinking that at some point we would be getting out of the problems that we were having. Nike’s recent corporate report focusing on China confirms this to me again. Being big doesn’t make your problems go away. You can read some of the commentary on the [report here](http://ap.google.com/article/ALeqM5iNZ8hC7Ht8jP8QIFm7J3rI7QHRCAD8VCRC700?ref=silkroadintl.net).In reading this I found three really relative things for small business from the report of problems with global giant Nike.1\. “Nike spokesman Alan Marks said the problems highlighted in the report are "consistent with the problems we face globally. "” Once again, doing business in China requires that you learn a different language, not move to a different planet. China is not inscrutable. Most of the problems that foreigners have here are two fold. One, they don’t learn Chinese or even Chinglish. Even if you do speak Chinese, the translations of Chinese into English often do not make sense and even more often do not mean the same things to the (Chinese) speaker and the (English) listener. This language barrier is HUGE and often means that people miss cultural issues, have massive factual/technical misunderstandings and basically can/do miss most of what’s going on around them. And since Chinese is a high context language (English is low) I think that this is the source of most problems when discussing project details as well. The second issue is that people physically are not here. They assume that because the emails going back and forth that show both parties are in agreement (big mistake, see problem #1) means the product will be exactly what they expect. Here’s the reality of China: It’s not inscrutable, you just have to be here and confirm everything yourself.2\. The report also states that "corporate responsibility is a relatively new, rapidly evolving business practice in China. Adoption and understanding vary widely. " Amen. This is one of the biggest deceptions created by the huge and very modern east coast cities. People come into Hong Kong, Shenzhen, Shanghai, Beijing, Tianjin and are comfortable—they recognize the office towers, the Starbucks, the subway. They stay in 5 star hotels and get chauffeured around in foreign brand autos. They talk with managers/owners with foreign degrees or at least assistants with foreign degrees and they assume that because business in China looks like business in the West they’ll be OK. But the adoption of business concepts and theories are years if not decades behind. Sure there are some world-class factories in every industry but they are the exception rather than the rule. And, when the rest of the Chinese industrial environment is working on a different plane even the top level players can have serious problems—e.g. the report from Nike.3\. The report indicated that “Problems include: inadequate management, excessive overtime and workers using false documents to get jobs.” Now, I don’t’ know how you deal with the last one here, and for SME’s you probably wont’ ever have too. And excessive overtime is another one that is hard, if not impossible to monitor if you are not living in the factory and counting hours in the HR department yourself. But the first one, inadequate management, should never be an issue for SME’s—meaning for every project you can and should be putting some of your own people into factories to report, count, QC, monitor and manage schedules, people and time. A couple thousand dollars a month to guarantee that the project is done correctly is well worth the cost of delays or mistakes. You can, and we do, almost always negotiate into contracts that we get some living quarters for full-time, on-site QC and part time project manager visits. You won’t be able to supplant the existing management in the factory, but you will be able to get intimately involved with the needs and people involved in your projects. The factory may not be managed well, but you can make sure that your project is—the key? Be there yourself. ### Face vs a good deal; Chinese and American Perspectives URL: https://www.silkroadintl.net/face-vs-a-good-deal-chinese-and-american-perspectives/ Last updated: 2026-07-18T14:48:42.000Z Another good article at [Knowledge@Wharton](http://knowledge.wharton.upenn.edu/article.cfm;jsessionid=a830481865b0536a2b6b?articleid=1906&ref=silkroadintl.net).Very simply, American’s don’t care about face as long as the price is “fair.” Americans also tend to think that preferential treatment is almost always unfair (unless they’re the one getting the deal). Chinese consumers, on the other hand, expect to get better deals if they have a personal connection with the seller and they must have face with friends (i.e. a relatively lower price than other people they know) regardless of the actual price paid. From the article: > “According to Bolton, these findings suggest that Americans may be less accepting of dynamic pricing at this point because "fair is fair" as they see it. "In China, there may be more room to maneuver" in setting different pricing levels, she said, because consumers tend to view pricing fairness in terms of how they fared in comparison to "in-group members," or friends versus strangers.” > The article focuses on retail sales, but the implications for other levels of business are clear. If you’re an American buyer in China—you have to know you’re not going to be getting the “best” price and you need to be OK with that. A price that works for you is going to have to be good enough. Also know that you can bargain and haggle over everything. And I really do mean everything. It also means that your Chinese supplier will perceive value in your repeat buying. It sounds a bit stereotypical to say that American’s value “fairness” almost as much as a good bargain and the Chinese don’t care as much about the price as long as they have good relationship behind the purchase, but that seems to be the findings here. ### The Cruel Hoax of an Improved Lifestyle URL: https://www.silkroadintl.net/the-cruel-hoax-of-an-improved-lifestyle/ Last updated: 2026-07-18T14:48:41.000Z This is a copy of a chat by a couple of friends and myself about globalization, on a different blog site. As it pertains to both the rise of China and a common (mis)perception of China, I'm going to copy the whole thing here. Enjoy.**The Cruel Hoax of an Improved Lifestyle, by Ben Hawken.**The long-foreseen, but under-reported, shortages associated with globalization have arrived en [masse](http://www.nytimes.com/2008/03/09/business/worldbusiness/09crop.html?...&ref=silkroadintl.net).According to an article in the NYT, a surge in demand has led to grain shortages around the world, despite farms operating at peak output. Many factors are contributing to the rise, but the biggest is runaway demand. In recent years, the world's developing countries have been growing about 7 percent a year, an unusually rapid rate by historical standards. The high growth rate means hundreds of millions of people are, for the first time, getting access to the basics of life, including a better diet. This problem is the result of a long series of successes. Programs which have sought to modernize the cultures of third-world countries, and give them access to first-world living standards and customs, have given these densely populated countries a desire for a quality of life and consumption habits equal to those in the West. Nigeria grows little wheat, but its people have developed a taste for bread, in part because of marketing by American exporters. Between 1995 and 2005, per capita wheat consumption in Nigeria more than tripled, to 44 pounds a year. Bread has been displacing traditional foods like eba, dumplings made from cassava root. Thus, the success of globalization efforts have provided a demand that is unsustainable. Or, as Daniel W. Basse of the [Ag Resource Company](http://www.agresource.com/?ref=silkroadintl.net) (a agriculture consulting firm in Chicago) puts it: "Everyone wants to eat like an American on this globe, but if they do, we're going to need another two or three globes to grow it all. "Many anthropologists and geographers, the eminent Jared Diamond among them, have pointed out the inherent dangers of this trend--the fact that the earth cannot, under any circumstances, sustain the consumption demands of all 6.5billion people living a first-world lifestyle. Diamond, in his landmark book [Collapse](http://www.amazon.com/Collapse-Societies-Choose-Fail-Succeed/dp/06700...?ref=silkroadintl.net), and most recently in an [NYTop-ed](http://www.nytimes.com/2008/01/02/opinion/02diamond.html?ref=silkroadintl.net), discusses this problem directly. Several decades ago, many people considered rising population to be the main challenge facing humanity. Now we realize that it matters only insofar as people consume and produce. \[...\] What really matters is total world consumption, the sum of all local consumptions, which is the product of local population times the local per capita consumption rate. This problem does not exist merely in figures and projected calculations--there are very real examples of this currently at work. Among the developing countries that are seeking to increase per capita consumption rates at home, China stands out. It has the world's fastest growing economy, and there are 1.3 billion Chinese, four times the United States population. The world is already running out of resources, and it will do so even sooner if China achieves American-level consumption rates. Already, China is competing with us for oil and metals on world markets. Per capita consumption rates in China are still about 11 times below ours, but let's suppose they rise to our level. Let's also make things easy by imagining that nothing else happens to increase world consumption — that is, no other country increases its consumption, all national populations (including China's) remain unchanged and immigration ceases. China's catching up alone would roughly double world consumption rates. Oil consumption would increase by 106 percent, for instance, and world metal consumption by 94 percent. If India as well as China were to catch up, world consumption rates would triple. If the whole developing world were suddenly to catch up, world rates would increase eleven fold. It would be as if the world population ballooned to 72 billion people (retaining present consumption rates). Some optimists claim that we could support a world with nine billion people. But I haven't met anyone crazy enough to claim that we could support 72 billion. Yet we often promise developing countries that if they will only adopt good policies — for example, institute honest government and a free-market economy — they, too, will be able to enjoy a first-world lifestyle. This promise is impossible, a cruel hoax: we are having difficulty supporting a first-world lifestyle even now for only one billion people. We Americans may think of China's growing consumption as a problem. But the Chinese are only reaching for the consumption rate we already have. To tell them not to try would be futile. Even this anticipated problem of China's drain on world resources is preceded by the aforementioned grain shortages. The successful development programs in Nigeria, for example, have resulted in the emergence of a middle class. According to the NYT, median income has doubled, and most of that increase has been spent on food. After generations spent in poverty, the Nigerian middle class is in no mood to return the foods or practices that remind them of poverty. They are dedicated to their "taste for bread. ""I must eat bread and tea in the morning. Otherwise, I can't be happy," Mr. Sule said as he sat on a bench at a roadside cafe a few weeks ago. For a breakfast that includes a small loaf, he pays about $1 a day, twice what the traditional eba would have cost him. This response should not outrage us nearly as much as it might at first. Mr. Sule still hasn't insisted on driving an SUV, refused to take public transit or turned a blind eye to the dangers of clear cutting and unsustainable natural resources. There are solutions, and Diamond spends the second half of his op-ed outlining them, but they are not things that will be eagerly done by a majority of first-worlders, and it is cringe-inducing (and saddening) to consider the tragedy that will have to occur before these solutions are heeded.**First Reply from Prof. Vincent James Strickler** I call bovine stool. I heard a talk given by an agricultural expert about 10 years ago in which he said if then current ag tech was applied to areas then in cultivation, there would be enough food to feed 30 billion people. He saw no reason why, if and when we did reach 30 billion, there wouldn't be the technology available to feed 150 billion. In the Q & A session after, he was asked, if we are capable of feeding so many, why do so many go hungry? Politics getting in the way of economics he said. I think he is right. As these developing countries demand more wheat, the price will go up, there will be an incentive then to produce more, and farmers will. Maybe some of those US farms that are now getting paid by the govt to NOT raise wheat will decide they can make more money actually doing so and shipping it to Nigeria (or selling their little family farm to some big corporation that will raise the wheat and ship it toNigeria). We just need to get bleeding heart social policies ("Save the family farmer, sob! ") and protectionism out of the way. Unsustainable? More Malthusian nonsense. The sky is falling, the sky is falling! Whenever I hear this kind of stuff, I reminded of Michael Crichton's (please excuse the colorful language) "horseshit" analogy:"Let's think back to people in 1900 in, say, New York. If they worried about people in 2000, what would they worry about? Probably: Where would people get enough horses? And what would they do about all the horseshit? Horse pollution was bad in 1900, think how much worse it would be a century later, with so many more people riding horses? "But of course, within a few years, nobody rode horses except for sport. And in 2000, France was getting 80% its power from an energy source that was unknown in 1900\. Germany, Switzerland, Belgium and Japan were getting more than 30% from this source, unknown in 1900\. Remember, people in 1900 didn't know what an atom was. They didn't know its structure. They also didn't know what a radio was, or an airport, or a movie, or a television, or a computer, or a cell phone, or a jet, an antibiotic, a rocket, a satellite, an MRI, ICU, IUD, IBM, IRA, ERA, EEG, EPA, IRS, DOD, PCP, HTML, internet, interferon, instant replay, remote sensing, remote control, speed dialing, gene therapy, gene splicing, genes, spot welding, heat-seeking, bipolar, Prozac, leotards, lap dancing, email, tape recorder, CDs, airbags, plastic explosive, plastic, robots, cars, liposuction, transduction, super conduction, dish antennas, step aerobics, smoothies, twelve-step, ultrasound, nylon, rayon, Teflon, fiber optics, carpal tunnel, laser surgery, laparoscopy, corneal transplant, kidney transplant, AIDS… None of this would have meant anything to a person in the year 1900\. They wouldn't know what you are talking about. "Now. You tell me you can predict the world of 2100\. Tell me it's even worth thinking about. Our models just carry the present into the future. They're bound to be wrong. Everybody who gives a moment's thought knows it. "You want hear my prediction for the future? Two things. Birth rates around the globe -- including in these developing countries will continue to crash. At the same time, sustainable, profitable nuclear fusion (or something even more exotic) will become workable in the next 20 years. With these two developments, all worries about energy consumption, pollution, resource sustainability, etc. will become as dumb as worries about horse crap in the street. Yes, there will still be new worries to replace the old, I'm sure. But the old worries won't be valid anymore.**Second Reply from me, David Dayton** Way too much hype and assumptions about the rise of China. The doomsday scenario assumes that China and India will soon reach US consumption levels for all or most of their collective 2.5 billion people. Not going to happen. Ever. First, China will not get to the point of having all 1.5 billion people consuming at first world rates in 50 years, let alone 15 or 25\. Inflation for the last 6 months and the strengthening RMB over the last year are already proving this case. Even with growth and FDI China doesn't have the physical capacity (schools, roads, stores,etc.) to even provide the opportunity for all the 1.5 billion of them to consume like Americans. You still have 900 million people here that still are living on $1 a day--you telling me that they are going to move up to $100 a day in the next two decades? This assumption is pure hyperbole. Second, it took China 50 years to raise about 200 million people to the levels they are consuming at now--and even those 200 mill are not at levels that are equal to US levels yet. That growth also coincided with two very important events . First, is that China's growth was literally from 0, or starving, to the point it is today. And most, if not all of this growth came after 1980 when the West was booming like nothing the world had ever seen, small recessions prior to this year notwithstanding. Second, the recent recession is a correction for that growth, mostly in the US where we financed our growth on credit (and the Chinese, by the way, are the creditors) and could last for 5 or more years. The Chinese economy is deceptive precisely because of these factors. It is overwhelmingly reliant on exports in a world with a crashing Dollar and China has a huge cash (inflation) liquidity problem that is just beginning to be recognized and is destroying it's ability to control inflation. China will NOT achieve 1.5 billion people consuming at the US levels. Sure we can't tell China to stop consuming, but we won't have too. Further China is both continuing their one child policy for the next twenty years, at least, and must also deal with MASSIVE and I mean really really MASSIVE environmental problems that some assume will suck 6-8% of the growth from the economy when they are finally tackled. Not to mention the fact that they are going to have an aging population in 20 years and no social net. By the time they get richthey'll already be old and consumption patters will not be the same--if they live long enough to even get old. India has even more issues than China, massive poverty, smaller % of usable land per capita, much poorer infrastructure, a democratic government that can't get much necessary change through (yea, there are advantages to totalitarianism). India will not get their billion people consuming at the US levels in the next 50 years either. Any end of the world story, including Diamond's, that assumes that China will continue 10% growth for then next 50 years, or assumes that because 200 million people now get $25 a day all 1.5 billion will soon have $100 a day is just not going to pan out. ### Welcome to The Worker’s Paradise. URL: https://www.silkroadintl.net/welcome-to-the-workers-paradise/ Last updated: 2026-07-18T14:48:40.000Z Just about everyone I know asks me, at some point or another, "So, what's China really like? I mean, I see the news, but what's it really like to live there?" Everyone seems to be caught up in this idea that there is a "real China" that they're not getting on the news. NEWS FLASH: there are hundreds of millions of different "Chinas" the most common (in terms of shear numbers) is the Chinese dirt farmer. Second most common is the factory laborer. Most foreigners really don't want either of these versions of China unless they are in an air conditioned car with a telephoto lens."My China" is much different than these two versions, being a foreigner here, it's probably completely different than most Chinese people. But there are some things that affect everyone--foreign or local.1\. Interest rates dropping in the US means that foreign investment is going to keep rolling into China and keep the hot economy going strong! Since the US is trying to jump start their economy Dollars are practically free (for people with already good credit) and that means that companies are going to be spending more in China—where everything is made.2\. Interest rates are rising in China and this means the people who own homes/factories or are producing goods are paying more for the same things. The continually rising Yuan (almost 10% in the last 15 months) is drawing in even more cash in an economy that already has too much. And, it’s going to go up again—the rumor is a rise to 6.5 (from the current 7.14) to the Dollar before the Olympics.3\. Rising inflation in China means that the price of everything, from my favorite Y10 noodles (now Y12) to labor, is jumping up fast—7-9% a month for the last 4 months. And, because of #’s 1 and 2 above inflation will continue.4\. Just because I own my own apartment in China (only for the next 75 years) doesn’t mean that I get to choose what happens outside of it. The local government just announced—to the dismay of hundreds of landlords in our complex—that it is going to put a subway line in the street in front of our complex, a very large and ugly exhaust fan where our community fish pond now sits and build a new 30 story government office building between my house and the golf course—right in the very spot, they said when we bought the house for the view, they were going to keep as a park.5\. Attempted hijackings mean that planes have unscheduled stopovers but eventually continue on to their scheduled destinations with not much more than a delay and a brief comment about nasty Muslim separatists.6\. Instead of getting better access to news as the Olympics draw nearer more and more online outlets are being blocked or censored. Losing Fox News and BCC feeds is one thing, but blocking some ESPN and Ask a Ninja pod casts?! Come on. Enough is enough. Think I'm being petty? Not really. China is now, according to [Image Thief](http://www.imagethief.com/blogs/china?ref=silkroadintl.net), the worlds #1 internet user with over 220 million people using regularly. And, some of them are paying up to 10x US rates for bandwidth services that, as I can attest, really, well, um...suck. Not to mention a severe lack of quality content!7\. We’re in a mad scramble to not deliver late on multitudinous projects this year since more than 2 million workers went home for Chinese New Year and never came back. Some of that is due to more factories offering jobs in the provinces. Some of it’s due to the winter storms that forced workers into taking a late holiday. And some of it’s just the new economics of China—the east coast cities are just getting too expensive for low-end laborers to live in. Don't believe me? Here's a snapshot of "my" China: in the three blocks surrounding my apartment there are 4 completed and 2 under-construction Starbucks, 3 KFC's, 2 Pappa John's, 3 McDonald's and a Subway Sandwich shop. And I don't even live in the "foreigner areas" of town!Yep, workers of the world unite, and pass the cream and sugar. ### Comments From Foreign Business-Tourists. URL: https://www.silkroadintl.net/comments-from-foreign-business-tourists/ Last updated: 2026-07-18T14:48:41.000Z I just spent the last week with a couple of clients in Thailand, China and Hong Kong. It was their first trip to Asia—there were here to help organize some production lines and visit some industry specific shows. All in all it was a great trip. While they were here I was reminded that the view of fist-timers is much much different than that of those of us that have been here a while. So, here is a list of comments from this group of foreign business-tourists in China1\. More shocking than all the people is the air quality. The athletes are going to scream when they see/smell the Beijing air. I used to think that the pollution masks were silly, but now I think that the people wearing them are the only smart ones in China.2\. It’s an amazing country, but where’s the heart? What do the Chinese people love and believe in?3\. When compared with Thailand, Hong Kong and even Cambodia the customer service attitude in China still leaves a lot to be desired.4\. The Beijing airport security was VERY lax considering there was an attempted hi-jacking over the weekend.5\. Do they really believe all this crap (CCTV news)?! There is this whole world out there that these people just don’t know that they are missing. Sad.6\. I’m sick of the Olympics already—and I’ve only been here one week!7\. The hacking was grosser than the smoking.8\. The fluidity of the “system” of traffic and people was amazing. No honking, no rude gestures. It just flowed. And all the stuff they put on those bikes! Wow.9\. When you come over here you can have either a “Chinese” experience or a completely Western experience. They are completely different versions of the same country. And we also were able to confirm a couple of my previously unpublished but nonetheless true rules about Asia:When in Asia, you must:1\. Walk through the women’s lingerie department to find what ever it is you are shopping for.2\. Climb hundreds or even thousands of stone steps to see any cultural/historical relic or site.3\. Either pay out the nose or quickly learn that everything is negotiable.4\. Believe that money is more important than anything, except face. Don’t fall for the big hullabaloo made over guanxi (relationships), money is what really moves business here.5\. Never ask for permission as the answer will always be either “no” or more money. ### Taksin’s Back! URL: https://www.silkroadintl.net/taksins-back/ Last updated: 2026-07-18T14:48:41.000Z Taksin’s finally back in BKK this AM. See [here](http://www.bangkokpost.com/?ref=silkroadintl.net) or [here](http://www.nationmultimedia.com/latest/?ref=silkroadintl.net)“So what do foreigners think of Taksin?” is the question I being asked by a number of Thai’s everyday this week. Well, I have to admit that if you’re not really interested in Thailand (or Man U) than you probably don’t even know who he is (Former deposed PM of Thailand). My opinion is that he’s well educated, well connected, successful in business, and very rich. I turned the tables and asked the same question to the Thai’s. The answer—every time was, “There is going to be corruption no matter who is in office. At least the economy was good when Taksin was in office.” Interesting and slightly depressing take on both business in Thailand and the darker side of the easy-going let-it-be attitude Thailand is famous for. There is really an odd reality in Thailand today: The country is divided about Taksin but still, even people who hate him loved the strong economy that prevailed when Taksin was in power. So what happens next? I’ll bank on the following: some extended court cases mostly focusing on Taksin’s wife’s assets; some more Man U games in Thailand and Asia; a lot of bluster by both the new People’s party and the military junta; he won’t go to jail but he’ll lose, on paper millions of dollars; and finally, Thailand will look petty, shallow and the economy will continue to languish. Bummer. ### Thailand vs. China URL: https://www.silkroadintl.net/thailand-vs-china/ Last updated: 2026-07-18T14:48:41.000Z “Every thing in Thailand is slow except for the internet.” “Everything in China is fast except for internet.” Ironic, no? This comes from a conversation that I had with a friend of mine who also does business in both countries. I’m in Thailand for the week to help a client set up a small assembly facility. As I’m thinking about the differences in the production capabilities in different countries, specifically China and Vietnam, I realize that Thailand has lot to offer too.1\. Were here in Thailand for this client because of the tax and export duty savings over China in their specific product line. The cost differences are substantial and the legal requirements for export are not nearly as burdensome here.2\. Thailand’s infrastructure is at least as good as China’s East Coast’s—ports, airports, toll-ways. Nothing new, I know, but this is one of the major drawbacks of working far inland in China or even close to large cities in Vietnam or Cambodia. The big plus in Thailand is that there are no inter-provincial tariffs or restrictions on the flow of goods like there is in China.3\. Even with the recent wage increases labor is still more expensive in Thailand than in China. I’m seeing cost differences of about $50 to $75 a month between factory workers in China vs. Thailand.4\. The environment is much more “international” in Bangkok than it is in Shenzhen—more so than even Hong Kong, I’d say. Sure there isn’t as much English on signs but the exposure to “the west” is certainly as much or more—To me, Bangkok seems to be becoming more western and Hong Kong more Chinese. There are certainly more foreigners (yes, even in the non touristy sections of town).5\. The advertising is much more sophisticated in Thailand than China where it’s still a relatively immature industry. I was consciously amazed at the higher quality of both radio and out-door media advertising.6\. Nationalism is alive and well in both countries but Thailand’s flavor is much less strident. China seems to be a bit more angry, with something to prove, while Thailand is much more comfortable with it’s unique place in the world.7\. As I work with people in the jewelry industry here I’m constantly being told the same thing when I tell people I live in China, “You know, labor is more expensive here, but you get better quality work too.” Almost to a person, this was the response I heard—more than 10 times in just one day.8\. Thailand has a very well developed export base for automobiles, machinery and electronics, according to the [Bangkok Post](http://www.bangkokpost.com/?ref=silkroadintl.net) today. While China does have some of this too, pick-up trucks and hard-drives are especially well developed sub industries in Thailand.9\. Staffing in China is difficult in both retaining top-level local employees as well as low-end factory labor. Thailand has similar tight market in top-level employees. Service levels are much higher in Thailand as is education in general. Professional standards seem, to me, to be higher in Thailand as well.10\. The traffic in both Thailand and China is horrible—but each has it’s own perils. In China you are literally taking your life in your hands when you get into a car—the roads are some of the most deadly in the world. It’s scary, and for good reason. Thailand is completely different—you’re never going fast enough to be in a dangerous situation! The traffic, in Bangkok, is so bad at almost all times of each and every day that estimates are it lowers annual GDP by multiple points!11\. Banking (I can’t believe I’m going to say this); hands down China has better banks—in terms of service and accessibility. In China if you need a bank, you can get one open from 8AM to 5PM 7 days a week. Thailand is 9AM to 3:30PM five days a week and off every holiday known to man. ### Customer Service in China? URL: https://www.silkroadintl.net/customer-service-in-china/ Last updated: 2026-07-18T14:48:41.000Z Interesting insight into the prep leading up to the Beijing Olympics on this [Reuters site](http://blogs.reuters.com/china/?ref=silkroadintl.net). It’s mostly, from what I gather, written by professional reports who are not typically located in Beijing. It’s a nice (fluffy) look at some of the things that are happening in the run up. There are some good photos and some light stories and every now and then a bit of real insight. For example, in comparing the service cultures Hong Kong with Beijing the reporter said this:“But I still stand by the gist of it, which is that Beijing simply does not “get it” when it comes to attitudes towards service, and to building tourist facilties \[sp\] like airports which are world class.”So what else is new? Just because Beijing is hosting the Olympics doesn’t mean that Chinese culture is going to change, nor are business practices going to be updated overnight. Beijing certainly has invested billions in the Olympic venues and in training people. But service is an attitude that is not just “trained” but it’s felt/believed and needs time and experience to germinate. Two related experiences that explain not just the attitude in Beijing but in most of China. And this isn’t just the old hackneyed “Under Communism they didn’t give damn, and they still don’t.” I believe there is more to it than that. First anyone that has ever been here has heard (in English or Mandarin) the phrase “There are too many people in China.” The one-child policy, the Mao offer to give way 10’s of thousands of women, and thousands of years of over crowding in limited agriculturally prime areas—they all combined to produce an attitude amongst many Chinese that there are just too many of them. (Have you ever heard a foreigner say that?! Of course not. It is a uniquely Chinese attitude.)The result of this history is that, in my opinion, Chinese are very unconcerned about anyone that is not in their personal network. Despite the Chinese penchant for all terms emotional, there is a real lack of honest human empathy (renqing) compassion for the masses (“ants,” as the Chinese say). How do you serve throngs of unknown others if this is the attitude you’ve been taught/experienced for your entire life?! Answer is: You don’t, at least not very well. Second, as a foreigner, my life in China is very different from the “masses.” I’ll be the first one to admit that, for the most part, I am treated better (because I’m noticeably different) by strangers in China than other unknown Chinese would be. Of course, the pessimist in me says that this is because service providers probably assumed that I have more money to spend than the other unknown masses. But that’s just the point. Those who are perceived to be worth more, in whatever way, are give the better service and the rest of the masses are ignored. And there are reasons for the difference in attitude too. As the article points out, Hong Kong is decades ahead of China in its exposure to both the service economy and other (western) standards for customer service. One of those other issues is that China, when they started their capitalist experience, really started out at rock bottom. I honestly believe that many Chinese believe that it’s so much better than the 1960’s and 1970’s that even if there are still problems people should just shut-up and be glad for the fact that things are so much better than before. And they really are better, but, of course, that’s no excuse to stop now. As on old boss of mine used to say, “better than a stick in the eye” is not a great customer service slogan. Too many factory managers (and govt officials) mistakenly believe that good enough is just that, good enough. Things won’t get better until this attitude is overcome. Many people blame 40 years of communism for the bad service attitude, and it certainly had an impact. But look how fast capitalism came back when given the right opportunity. I think that there is more to the (lack of a) service attitude than just some structural issues that are being quickly and consciously removed. Another part of the equation is something that we foreigners and foreign companies are actually causing ourselves—high demand (for less than average service) squelches the need to improve the service quality. Foreign companies are pouring record numbers of FDI into China year on year and with this much money coming in, you get the attitude from many that “Hey, we must be doing a pretty good job—just look at all the money rolling in.” I have had many factories look at projects of mine and say: “Your standards are too high, we don’t need your business.” There is no incentive to change if the current system is helping people rake in cash hand over fist—in fact it makes the problem worse. Finally, a side-note to service and the big East-coast cities. If you don’t know already, these showcase cities are not “China.” Ok, they are one of the many China’s that do exist here, but they are not most people’s China. They are A-typical in terms of education, exposure to the west, housing costs, salary levels, developed infrastructure and just about everything else. I have client after client come to Shenzhen and marvel at how “developed it is. And they’re right, it’s amazing. But Shenzhen is not where 90% of their products are made and it’s not like 80% of the rest of the country. In terms of service Hong Kong is not China. Shenzhen is better than Shanghai, Shanghai is better than Beijing and these cities are years ahead of most of the rest of the country. Business people come to Hong Kong and Shanghai and Shenzhen and see fantastic airports, stay in great hotels, have drivers pick them up and drop them off, have factories cater to their every whim and get great service through out a 5 day trip here and think, “Damn, This is just like at home—maybe better!” But it’s a show—and maybe that’s good enough for the twice a year businessman or even the Olympics. But it’s not a service attitude that you can find for an extended period of time or across a large percentage of China. Is it getting better? Absolutely. Gone are the days of a store clerk standing next to the product you want to buy and telling you “meiyou,” we don’t have it, because he doesn’t want to work right now. Are there industries and companies that are world class or working to be world class? Sure, but great service is still a pleasant surprise and nowhere near an expectation. Need to improve customer service in China? Start with the basics, understand where you’re service people are coming from. While their experiences and even standards of good customer service may be low, even in the interior of China people can tell you about a good customer service experience they’ve had—capitalize and build on that. Set top-down goals and standards that are realistic and measurable. Have teams (bottom-up) create own their own steps to accomplish and monitor the corporate goals. Teams and individuals need to hold each other responsible rather than being forced to have a good attitude from above. Having a goal or standard of “less bad” service is actually not a goal or a standard. LCD is not acceptable and just gets you more of what currently exists. Whether it’s though teams creating their own goals or some other system you have to have frontline buy-in. If there is not buy-in at the point of interaction, then what’s the point? Corporate incentives need to target group achievement of their own goals and, AND “small” individual actions that make personal connections and a personal difference. Understand that it’ll take time. Lots of time. Finally all of your efforts and plans will be for not unless you, the people at the top, are giving the service to those working for you that you expect them to give to customers. ### Baseball Players took Steroids. So what? URL: https://www.silkroadintl.net/baseball-players-took-steroids-so-what/ Last updated: 2026-07-18T14:48:40.000Z Great article about Baseball and business ethics at the site [Knowledge@Warton](http://knowledge.wharton.upenn.edu/article.cfm?articleid=1902&ref=silkroadintl.net) . The point there being that gaffes, mistakes or even all out lies are not damaging to a companies value until those (un)ethical events strike directly at the core of their consumers’ mission/vision/values. I would add: until those issues cost consumers money. So what does baseball’s current steroid problem have to do with China? Maybe nothing directly (unless we find out later that the roids came from here), but the parallels are there for sure. Baseball is scoring record high attendance numbers despite the steroids scandals of the last few years. Similarly, no matter what the perception of human rights, disease control, freedom of information, or even illegal work-place activities, FDI is at record highs in China right now. Like baseball fans who aren’t personally affected/affronted by the steroids issues and so still going to games in record numbers, foreign companies will continue to work in China until their bottom line is seriously and directly impacted. One particularly applicable example from the article tells a story about a company in New York that could just as easily be told about any factory in China. From the article: > “The Soho, New York-based company Yellow Rat Bastard is another example, says Schweitzer. The trendy clothier faced an employment suit from the state in which it was accused of violations such as unpaid overtime, below-minimum-wage salaries and improper employee firing. In early January this year, the company settled the suit by agreeing to pay $1.4 million in fines and back wages. But because their closes still look cool, they probably won’t take a hit from customers, says Schweitzer.” > Exactly. Because things are still cheap, quality is continually rising and no one is really getting “busted,” business as usual will continue in China. (If you missed it, the implication here is that the situations in most factories in most third world countries are pretty bad.)Where does this lead? To an entire society that is “unethical” in both practice and perception. Speaking about Moscow the article states: > “Economies where kick-backs and bribes are the norm or considered part of “relationship-building,” represent s similar sort of ethical dysfunction. Schweitzer relates how a businessman in Moscow told him recently: “‘I spend as much of bribes as I do on taxes. I have to. Otherwise, I can’t compete.’ Once that behavior is the norm, it’s very hard to break out: It’s a corrosive atmosphere.” > Amen. This is the same environment that exists in China and, as I mentioned before, shows that China is not as unique as many think. But more important than that is the reality that, like in baseball, the desire to compete, both from inside China from foreign companies investing here, will drive people to do anything they can get away with to get an edge. And while this desire to get ahead is not any different than the US or anywhere else, the frequency at which it is pushed to unethical levels and the degree to which it is (not) controlled is much greater here in China. So what is the answer to China’s (perceived, real or ignored) problems? It’s certainly not a boycott of China (or the Olympics) as some have called for. And a call for higher standard is meaningless without enforcement. The answer is, the same thing that is required for any project any where: Investment into the process, regular testing, on-site confirmation and consistent detailed reporting. This means holding individuals and companies responsible to clear and consistent guidelines. ### Reminder: if you didn't confirm it, it didn't happen. URL: https://www.silkroadintl.net/reminder-if-you-didnt-confirm-it-it-didnt-happen/ Last updated: 2026-07-18T14:48:41.000Z [Paperwork is not enough.](http://www.bloomberg.com/apps/news?pid=20601080&sid=azFQiOAkFqsk&refer=asia&ref=silkroadintl.net) Most of the time lack of on-site inspection just costs you money, which is bad enough. But some times [it cost lives](http://ap.google.com/article/ALeqM5jqm4C9oxV7LhuwKEsld3Wi6D-08QD8UT0JBO0?ref=silkroadintl.net). It doesn't matter how big you are, you need to have someone on the ground to confirm that things are indeed being completed as required. ### The Chinese working Environment, part 347. URL: https://www.silkroadintl.net/the-chinese-working-environment-part-347/ Last updated: 2026-07-18T14:48:41.000Z The following are a collect of stories that I've either see, experienced directly or been told by the first had participants in the last three weeks. The point to the stories is this: if you’re not a huge MNC (and sometimes even if you are) doing business in China is very different from the books that you read about doing business in China or the classes on international business that you took in grad school. Business is business, yes, but understanding where you are doing business is important too. This is what business is really like—on the ground here. New factory? What new factory? We’ve been working with the same “product” factory for about 5 years. They have a large capacity and great service and overall our relationship with them has been an exceptionally good experience. So you can imagine my concern when our main contact, one of the owners, told me that he was starting a second company. Now, in China guanxi rules Chinese relationships so the old factory ownership didn’t dissolve; the new factory, though a direct competitor, still actually shares much of the same clientele and some of the same ownership. But they are not “partners” or “sister” factories. Odd, to say the least. Anyway we are comfortable with their relationship and I’m still getting the product that I need. All the rules that aren’t fit to print. A couple of other items about this restructuring that make it interesting. First, there are a number of “unwritten” rules that affect the new factory. Recycling is not optional. Not just recycling but which company you can use—the local officials are “requiring” new factories to use a recycler that was chosen by them. While there are many legitimate other options and no one recycler is contracted legally with the local government the local officials are still forcing factories to work with one service provider. Further the “sponsored” recycler pays much lower rates per kilo than the other recyclers. So…factories are hiding their total recycling amounts and giving only a small percentage to the “sponsored” recycler. The rest is sold at market rates to other providers in the middle of the night. Getting caught doing this is not just expensive but can result in officials finding “problems” with your registration or taxes or whatever and shutting you down. Another “requirement is a local manager. All factories must hire a single person that the local officials provide as a manager and pay them a dictated monthly salary. Most factories just pay an annual “salary” to this person and then don’t ever have them come to the factory. Paying money is one thing, but having a “patsy” in house is more trouble than it’s worth (i.e. they could spoil the midnight recycling). Undocumented fees and “insurance” are also “suggested” by the local officials. Of course, like the mafia, you ignore the suggestions at your own peril. So, may factories just cough it up. Some refuse and are hassled out of business and many with lawyers quietly see their cases lost or dismissed. Or so says our PVC factory owner. Some factories are asked to sign and stamp blank pages of corporate letterhead and just give them to the local officials—I was told a similar story in 2004 by another factory in another part of Guangdong province as well. They sign documents and then don’t ask questions. Under employment + snow + new labor law = extra long vacations. The new labor law is a disaster. Coming home from Chinese New Year employees believe that they have the ability leave early or come back late and have little if any repercussions from their employers. The job market is tight in Guangdong—there are more jobs than employees and the perceived power that the new labor law gave employees have combined to create a perfect storm—pardon the New Year pun. Just about every one left for home early because they had to catch a train/bus/plane and then are coming back late because they couldn’t catch a train/bus/plane back on time. Their not scared that they are late coming back; the attitude being “What are you going to do? Fire me?”The ultimate end game. The pitch goes something like this: “If you don’t pay the balance in cash immediately (11PM Saturday before Chinese New Year) we won’t release the goods; contracted terms be damned.” If you need product shipped to meet deadlines there is very little that you can do expect pay up. An associate of ours was given just this choice last week. After confirming the final product (and rejecting some for quality problems) the factory dropped this little gem on her as she was walking out the door heading for CNY. Being Chinese herself she worked though all the typical issues she could think of but by midnight was left with no other choice—and that’s precisely why the factory made the demand. She scrambled for the next hour with multiple ATM cards, many of them personal to get the cash and get the loaded-truck out to the port. What are Chinese lawyers good for? Have you heard the one about the three lawyers, three real-estate agents and two clients trying to close a home purchase deal in China? They meet once for the “legal” contracts (which were completed with a much lower than market value amount) and then met again for the “personal” contracts with the real market values. This is what lawyers are used for in China. I wish that this was just a joke—I can confirm, that it’s not. If you didn’t see it, it didn’t happen. Even after more than a decade working in Asia, last month I forgot that verification is the most important part of production. We made some simple changes to a product that we’d not yet started production on. The changes were cosmetic but required a bit of attention at start up to make sure that they were done correctly. We got caught up in the CNY rush and didn’t check on the changes and, sure enough, they didn’t happen. The factory confirmed that they were done but when we went to do QC we not only found them not completed but no one, outside of the guy on the phone, even knew anything about them. It wasn’t a big deal and didn’t sink the project but the lessen was re-taught clearly—if you don’t see it happen it didn’t happen. “We didn’t read the contract.”Yup, they really said that. And not once but twice. When a factory was going to miss a delivery deadline just before CNY we sat down with them and re-read through the contract they signed and chopped. When we pointed out that if they missed the deadline they were going to be either paying for airfreight or taking a huge cut in the final payment. We went round and round with them trying everything to get us to change our position, but we had them sign the contract for a reason and didn’t waiver. It wasn’t easy. It wasn’t fun. But we had the legal documentation that saved our bacon when they claimed ignorance. This exact same comment was made when we were working out the production problems with another factory. After a really bad day of pre-production QC we (again) pointed out all the spec’s of the project and found that most of the problems were the result of ignorance—the production manager had not discussed the details with the floor engineers. In trying to get us to let them off the hook they said straight out “we didn’t read the contract.” My response? “We read through it with Mr. X (the manager) before you started. Did he give it to you? Did you review it with him?” Of course no was the answer to both questions and they started over. Other common variations of this are “You’re really going to be that strict?” Or “But nobody can really do that. We just thought you wanted us to try.” Or “But none of our other clients do that.” And, my personal favorite, “The Japanese don’t even ask for that.”The daily black market. There are limits on the amount of foreign money that some types of Chinese and foreign businesses can exchange each year. Even banks in China have limits. So we get calls all the time from people that want us to help them change dollars into RMB. We don’t do it, period. But what are businesses to do if they can’t exchange the money they need to do business? They go to the black market. And the black market is HUGE in Shenzhen. Every AM in Louhu you can see people exchanging duffel bags of money. (Just imaging how many bank notes you’d need if you had to do business in cash and the biggest bill you had to use was a $20!!) Yea, the exchange rates are lower that what you’d get a bank but there are a ton of businesses that just don’t have any other choice. A side note to the “bags of money” comment above: can you think of anything stupider than the Bank of China giving people bags printed with the bank logo to take home their cash? I can’t either. I mean, nothing says “target” like a person walking out of the bank with a full Bank of China plastic bag on their arm. ### Inside Chinese Business--BOOK REVIEW URL: https://www.silkroadintl.net/inside-chinese-business-book-review/ Last updated: 2026-07-18T14:48:41.000Z Every now and again the real truth comes out. Once when I was in grad school (at the now infamous NIU) writing my thesis on Thai/Chinese Corporate Culture (Professional Networks and Relationship in a Bangkok Law Firm; Southeast Asian Cultural Anthropology) my thesis advisor broke her academic façade and turned to me and said, “It’s all just B.S. isn’t it? I mean, it’s all just bribery, no matter what we call it, right?” She then went back into her academic mode and continued talking about “gift giving” and we never talked about “bribery” again. Now, without betraying my Anthropological roots, I have to say this: the truth is that business in China is just like business anywhere else. Yes there are some things about the system that make it different from anywhere else too, but those traits are not, I don’t think, non-existent in other business cultures. This admission comes after years of fruitless searching for the “secrets” of Chinese business. Maybe I’m jaded, but I just don’t see anything that is uniquely Chinese in my daily business transactions. Sure, there are specific issues with face/pride, hierarchy, regionalism, language, underdeveloped infrastructure and over involved governments and IPR violations but how are those things unique to China? The answer is, they’re not. Personal relationship networks and face are easily as or more important in the Middle East as they are in East Asia. The legal and political infrastructure in Central and South America is similarly underdeveloped and overlycorruptinvolved as it is in China. Regionalism and language issues are huge barriers in South and Southeast Asia too. As I mentioned last month, recent research bears this fact out too. If you’re good at business in other places you’ll most likely be good at it in China too. Compensating for risk, finding and relying on good people, investing in your people, extensive research and accurate market knowledge, on-the-ground experience and presence, good products/services, honesty and great timing are keys to success no matter where you work. In the last few years I have read probably 50 books on doing business in China—looking for the “key” or the “secret” or the “whatever” it is that makes business in China seem so different to foreigners. I haven’t found it. There are a ton of books about big companies coming to China and either failing or succeeding. There are likewise a ton of books about life in China written by such and such expat either in this century or the last. There are a thousand books on Chinese history and culture. Most of these have value in preparing you to work here. But there isn’t some golden key to unlocking the inscrutable Chinese. Now having said that I totally agree that Chinese culture is unique. Chinese history is unique. But the lessons learned from history and culture and the resulting business practices today are not some cryptic Chinese code based on Confucianism, Guanxi and bastardized Chinese Communism. The goal of commerce is to make money and the purpose of all organizations is to standardize the process in a changing and competitive external environment. In this sense the Chinese are no different than anyone else. Which brings me to my latest book review: Inside Chinese Business; A Guide for Managers Worldwide; by Ming-Jer Chen. This is a great book—a great introduction into Chinese Culture. The goal of the book is to introduce Chinese management practices to the foreign audience, and it does that quite well. What I like most is that he is not sharing “secrets” to Chinese business but rather reflecting some culture patterns that affect the business environment. Mr. Chen’s takes business practices and couches them in terms of Chinese history and culture. He does a great job of contextualizing business from the Chinese perspective. The idealistic Chinese business is presented with some real multi-cultural educational, business and life experience. He knows what he’s talking about when he describes Chinese culture in the business setting. He doesn’t convince me that business in China is unique but he does effectively remind me that there are cultural forces in play that any successful businessperson should be aware of. Chen’s book starts with a look at the most important roles and responsibilities; after the introduction, the first three chapters are about Family, Guanxi and Social Roles. I agree with Chen that these are probably the Chinese cultural traits that influence business the most and are probably the most uniquely “Chinese” concepts that are presented in the book. Business is family and family is business. Chinese would rather work with family or at least people from the same region than with strangers. And while this preference may still be true its practicality is quickly disappearing. But, nevertheless, blood is thicker than water and family will always come first in China. Chen cites many examples of businesses, large and small, that are “families” none the less and maintain their genetic and/or emotional familial roots. Certainly there are (hundreds of millions of) Chinese that just “go to work” every day, but this is the ideal and the preference if the choice is available. One Chinese friend once said to me: “Insider-trading is just smart!” To me this is the essence of Guanxi. You maintain and use and pay back relationships precisely because there is a value, potential or immediate, to the relationship. That value can be both lost and accessed. They are almost tangible properties that must be cared for and cultivated. Social roles are defined by Confucian philosophy. Confucianism focuses on hierarchy and relationships and I would say that Confucianism in China is as easily as influential over the last 2500 years as Jesus Christ has been in the West over the last 2000\. Don’t underestimate the power of defined roles. Don’t get all philosophical about them either—just know that Chinese companies are vertical and decision-making is limited. Other influential “Chinese” concepts: > • Time is not linear and experiences are not accumulative.• Business and individual do not prioritize individual tasks but work simultaneously on many.• Chinese do not like transparency in business.• Distraction and misdirection are acceptable and effective ways of (avoiding) dealing problems.• Chinese, especially on the Mainland, are “accustomed to rapid and unpredictable political and economic change.”• Westerners value efficient while Chinese value effective communications (information vs. relationship management).• Westerners need to hire trusted interpreters rather than educated translators.• Knowing with whom you are working is of utmost importance.• Without face-to-face communications the Chinese language (high context) is very limited in it’s ability to convey details.• Chinese do not like to say no.• Negotiations are never ending regardless of if there is a signed contract.• Nationalism is alive and very close to the surface. > Other concepts from the book that I completely disagree are “Chinese” or are really even part of business in China today. > • Chinese salespeople want long-term relationship instead of quick profits.• Harmony in the extended community over market dominance.• Businesses will take loses to maintain long-term relationships with (foreign) customers/clients.• Chinese investors like property and not mass-market goods because it allows them to keep a low profile.• For Chinese the ultimate goal is win-win.• “The best defense in ambiguous situations is strong guanxi with your business partners: Networks act to protect their members, and no one loses in the long run.”• The goal of Chinese business is relationship-building (not making money). > Now a couple of issues with the book. One is the generalization of what is a Chinese Business. Throughout the book the terms “Chinese-Style” and “Chinese-Owned” are used interchangeably when referring to the nebulous “Chinese business.” The problem I have with this lack of clarity is that Chen assumes that Lenovo, Haier, Alibaba and the small printer with 10 employees (his example) are all both Chinese Owned and being run “Chinese-Style” at the same time. I highly doubt it. There is no way that the organizations structure of Lenovo, which is the purchased PC arm of very American IBM is organized, run and understood the same way that the family run and owned print shop in China is run. Neither the concepts of organization nor the motivations (family vs. investors) are the same. But the reader is continually asked to believe that the Chinese models are at work in each and every example. Another issue is his willingness to; as many Chinese do, downplay the fact that the “Chinese” cultural aspects of business in China do indeed facilitate and may even promote dishonesty and illegal practices and relationships—illegal and dishonest according to Chinese Law, not my Western morality. Face, Guanxi and Family-style business practices, all priorities in Chinese culture, can and often do conflict with the tax, IPR, finance and other business laws of China, not to mention other countries. But Chen, if he comments at all, mentions these illegalities in passing as minor aberrations in an other wise moral system. I have to admit, I don’t know a single Chinese company that does not have multiple sets of financial records—for taxes, for shareholders, for internal accounting, etc. Technically this is illegal in China (and every other developed country). This whitewashing of common on-the-ground activities is probably not an intentional cover up ( I’m sure I do for my American Culture too) and is in many books written by Chinese about China. Finally, specifically when talking about multinational business much of what is called “Chinese” is no different than Western management theory with new names. I have to disagree that huge multinational Chinese companies (of which there are very very very few) are as uniquely Chinese as Chen claims. For example: > Winston Chen offers a comprehensive illustration of how balance and holism can be applied to practical corporate affairs. An overseas Chinese living in the United States, Chen is the owner of Solectron, rated by Business Week s the number three among global IT enterprises, with a market value of $24 billion in the year 2000 and $9.4 billion in sales in 1999\. Chen attributes his success to his application of Sun Tzu’s philosophies of balance to the management of his own company. For Chen, tao (the right way) means emphasizing employee relationships and common objectives. T’ien (heaven or harmony) is equated with timely adaptation to the changing environment. Chen interprets di (surrounding) as strategic positioning, and jiang (leaders or leadership) and seeking the best possible managers. Finally, fa (law or method) points to the importance of implementing well-defined policies and managerial systems. Chen’s translation emphasizes the interrelationships of all parts of the business and the need for a dynamic balance among these parts. (p.87) > While I admire Chen’s desire to define his business as “Chinese” I don’t think that any of these concepts or their application are uniquely Chinese. Maybe Sun Tzu’s Art of War was written earlier than Machiavelli’s The Prince so the Chinese can take credit there, but a business that focuses on human capital, flexibility, skilled (instead of family) managers, strategic positioning and well defined systems sounds incredibly American and quite the antithesis of the family guanxi hierarchy that was described in the first half of the book. Indeed, current business literature about China would suggest that most if not all of these concepts are completely foreign to the current Mainland Chinese business environment. The book is great a great insight into Chinese culture and how it influences business. Chen provides detailed analysis that is both clear and useable. I don't agree with all the examples and dislike the willingness to whitewash some of the negative results of Chinese cultural influences on business. But it's very much worth the time and money. ### In Defense of Trading Companies—the honest ones, at least. URL: https://www.silkroadintl.net/in-defense-of-trading-companies-the-honest-ones-at-least/ Last updated: 2026-07-18T14:48:41.000Z I have to admit, I’m trading company. And I'm tired of hearing everyone bad mouth trading companies and then quickly hush up when I enter the room. Sure there are bad apples in the barrel but that is a characteristic that is certainly not unique to trading companies (Enron, Anderson, Mattel’s factories being three examples of companies, consultants and factories with the same issues). So why are trading companies always singled out? I don’t know what your personal experience with trading companies has been but it if the company was doing it’s job it should have been a good experience. Trading companies can and should save you time, money and stress. So, in (my) defense, here are some of the advantages of working with a trading company vs. going to the foreign factory directly.1\. We work for you—you (and only you) pay us. We are your rep. We don’t get paid from the factories; Ever. If your trading company takes money from a factory they are not a trading company they are a sales office.2\. We take tons of your liability. If the product is bad we are on the hook to both you and the factory. It is in our best interest to get you the quality you want in the timeframes you’ve contracted for. Typically we are paid directly by you and then pay the factory—decreasing your liability (since you are not contracted to the factory for the product).3\. We are on the ground and in the factories multiple times each week over the entire course of production. If you aren’t here yourself you absolutely MUST have someone here for you. We are not day-wage hirelings that will just visit the factory to check the job off their list as many 3PQC are. Nor do we receive any incentive from the factory to lower quality standards. So, who better than someone who has a vested interest in seeing you succeed?!4\. We have management experience with a better understanding of logistics within Asia. Our job is supply-chain management in Asia. This is where we spend a significant amount of time on every product—finding, negotiating with, inspecting, coordinating and shipping from multiple factories in multiple provinces in China and countries in Asia.5\. We do multiple products and so have resources outside of any individual factory. There is no such thing as an all in one factory for any product—the materials, the labor, the packaging all must come from multiple sources. For example, a bag factory may be great at stitching and finishing. But they will not be great at packaging or printing and certainly don’t make their own hardware or even materials at the same time or in the same location. As a trade company we do products that span multiple industries and know with whom to talk to get better prices and/or more options and/or faster turn around times and/or better quality.6\. We have better communications than factory reps. This is better for you talking to us and for us talking with the factory. We have full time native English speakers who also speak Chinese—you don’t want to talk to someone that is guessing at your meaning. Typically the only time you’ll get factory employees with very good English is at trade shows. And when the show is over they’re gone.7\. We have a better understanding of international standards—having experience with multiple foreign clients in multiple countries for multiple years. We know what you expect and know the difference between what is standard in China and what is standard internationally. We may not be experts in your specific industry, but you are and we work for you. What we do know is how to apply standards to product, how to test, how to do QC, how to communicate in China and how to manage projects. We won’t waste your time with rounds of sub standard samples—nor will you get a “golden” sample that can never be duplicated.8\. We are independent and are not attached to any single factory in any way. The advantages of this position are obvious—there is no conflict of interest when it comes to product standards.9\. We can leverage production quantities for multiple clients into cheaper prices for everyone.10\. We are focused on getting you the best product possible—that’s how we get paid and how we stay in business. A factory is focused on getting a product done for the absolute cheapest price possible.11\. We are totally transparent. We’ll take you to each and every factory and production site that you want to see. You’ll never wonder if something is being subbed out—because if it is, we’ll tell you and we’ll take to the actual production site. We don't want "face" and don't make any profit by showing a nice building but then giving you substandard product from a sub-contractor.12\. You already have a job of your own (that you probably work too hard and too long at already), why do you want to do ours? We provide a service not unlike your tax accountant—a difficult job for which many probably think, “If I could just do it myself I’d save tons more money.” Truth is, we often offer a lower price and certainly offer more services than people doing “the China thing” themselves. Do what you do best and we’ll do the same.13\. Finally, you know who we are, where our company registration is, what our relationships to the factories are, where the money goes and where our loyalties lie. There is no guessing, “is this guy really a part of this factory or is he a Hong Kong relative?” There is not need to worry if we are going to run away—we are registered in the US, in Thailand, in Hong Kong and in China—we are conspicuously available and have nothing to hide. Unlike a factory sales rep, who can take the money and run, your deposit is not more money than we’ll ever see and it’s not more important than your long term relationship with us. The truth is, it’s much easier for an individual factory sales rep to take off with your money or sell your product to someone else than it would be for a legitimate trading company with multiple clients. A trading company works for you, represents you when you can't be here yourself. It is in our best interest to get you exactly what you expect when you expect it—that’s the only way we get paid! We are Your Branch Office in Asia. ### The Holidays, Chinese Style URL: https://www.silkroadintl.net/the-holidays-chinese-style/ Last updated: 2026-07-18T14:48:41.000Z Some times Chinese New Year/Spring Festival is hard to understand. I had one client ask me “Why did they schedule CNY right at the same time as the trade show?” Real question. But scheduling the lunar calendar aside, CNY can be pretty difficult to deal with if you’re trying to manufacture on a deadline. What doesn’t matter is whose house on what day you’re supposed to go to and what gifts you’re supposed to bring for which relative. What does matter is that you’re still trying to meet production deadlines in February and your labor force is all going home for an untold number of days/weeks. CNY more than just a single holiday—it’s the equivalent of “The Holidays” in the West—Thanksgiving, Christmas, Hanukah, Festivus and New Years all rolled in a 7-14 day period and then multiplied by 1.5 billion. Which for manufacturing adds up to a month of disruption. Here are some of the reasons why it’s such aconfusingwonderful holiday experience:1\. Most of the 1.5 billion Chinese are low wage laborers. They aren’t emotionally connected to their job and have no incentive to stick around (think about when you had a part time job at the supermarket/fast food chain in high school). There are more jobs than workers and this means that people leave early and come back late. Why wouldn’t they? They can have their pick of jobs when they get back.2\. The logistics in China can been good, especially when compared to India or SEA, but they are still not good enough to handle the largest mass migration in the history of the world—EVERY YEAR! Train tickets and buss tickets are sold out the day they go on sale. Ditto for international and domestic airplane tickets nowadays. There just aren’t enough vehicles, plane and simple—so people leave early and stay late because they don’t have any other choice.3\. Everyone, and I mean everyone, is on vacation at the same time and everyone, and again I mean everyone, is “going home.” These means that a few hundred million people are going west the first week of CNY and the same few hundred million are coming back east at the end of the holiday. You may think that I’m exaggerating here. But let me give you some context. Shopping on “black Friday” (Friday after T-Day) in the US is the worst/busiest day of the year, right? My wife, who is Chinese, willing goes to Wal-Mart and other malls on this day in the US—with nary a second though. Why? Because “there are more people than this shopping at Wal-Mart every day in China. What’s the problem?!” See, unless you have “experienced” China for yourself, you just won’t understand. Second, the affects of mass migration. Have you seen “I am Legacy” with Will Smith? Well the streets of Shenzhen look just like those NY streets (sans lions) for about a week. No one is from here and so for CNY no one stays here. Really! If you’ve never seen 500 million people all travel at the same time, you’ve really never lived (ok, so it’s more like a near-death experience).4\. Until this year, the government scheduled everyone’s official vacation at the same three times each year (this year it’s now just two “Golden Weeks” and a couple of long weekends). This means that anyone that can takes as much time as they can get at those three times. It also means that everyone with any vacation flexibility at all does the same thing at the same time! I can’t over state this enough—really, honestly, everyone leaves all at the same time!5\. Dates are relative. Unlike the fixed dates of most Western holidays, the days of actual CNY are based on the lunar calendar so they move each year. But more confusing that this is the fact that businesses and factories will typically not just schedule arbitrary dates months in advance but will break when orders from big clients are also ending. Many times a factory with pending orders will, as late as a few weeks before actual CNY, not yet have decided what days it will be closed. This means that no one factory will have the same vacation as any other factory. Sure most people will get, this year, the 7th through the 10th off, but before or after that—it’s all a crapshoot. We have factories starting their holiday on the 27th of this month. Others on the 5th of Feb.6\. While the type of gift isn’t really important here, what you get may surprise you. Most gifts given on this holiday are of two kinds—money in red envelopes and gifts from one’s hometown (working on a photo). This maybe the 21st century but a factory gift of a smoked duck or leg of cured ham (unpackaged) is still commonplace in big-city Shenzhen. Tasty too!7\. Fourth of July, smorth of July. Here we get fireworks displays just about every night starting a couple of weeks before the actual CNY date and lasting well past the “holiday.” Also, every new business wants to open up at the beginning of the year—it’s an auspicious time. So there are HUGE strings of firecrackers going off every day along the streets for weeks on end. And if you haven’t seen the fireworks display in Hong Kong you haven’t seen fireworks! (OK, I know the Hong Kong show is on Jan 1, but still, it’s a great show.)If you’re manufacturing in China this year all this means that anytime from the end of January to the end of February you could have any one or all of your suppliers off line for weeks at a time. For example. We do a stitched product that could be finished before CNY but the fabric factory is taking an early vacation (to accommodate a larger client) and so we can’t get fabric delivery until just after CNY. But the stitching factory and the packaging factory are taking, for the same reasons, late vacations. Effectively killing the project for 30 days for a 4-day holiday. Happy CNY and enjoy the fireworks! ### The Price of Rice in China URL: https://www.silkroadintl.net/the-price-of-rice-in-china/ Last updated: 2026-07-18T14:48:41.000Z Back in November ([link](https://www.silkroadintl.net/things-that-make-china-prices-rise/)) I listed out 12 things that are making the price of goods/services in China rise. This week, the folks from [Sourcejuice](http://www.sourcejuice.com/?ref=silkroadintl.net) via [China Success Stories](http://www.chinasuccessstories.com/?ref=silkroadintl.net) (two good sites for people trying to source from China) listed out 4 price-increase issues in more detail with updates for 2008\. Check it out [here](http://www.chinasuccessstories.com/2008/01/21/sourcing-from-china/?ref=silkroadintl.net).My original list included these 12 items:RMB AppreciationInflation in ChinaRaw Material Price IncreasesIncreased Labor CostsGrowth in the Chinese EconomyMaturing Industries and Industrial ZonesPressure to Slow the Chinese EconomyLow Price CompetitionIncrease QC and Testing ExpensesPoor Sourcing DecisionsGreen GDPThe Poor US EconomyThe Sourcejuice list includes these 4:Reduced VATRMB AppreciationRaw Material Price IncreasesIncreased Labor CostsAn additional couple of factors for the coming year are:1) The Chinese government is actively trying to slow down their economy and the US is trying to speed up theirs. This means that money will be more available in the US (Yesterday’s huge rate cut being example 1-A) than it is in China. Thus making China relatively even more expensive. And 2) The inconvertibility of the RMB and it’s appreciation make it a target for foreign investment, thus raising it’s value further; as noted [here](http://www.chinaeconomicreview.com/finance/2008/01/18/why-the-renminbi-appreciates-abroad-but-not-at-home/?ref=silkroadintl.net).Among other things in this article, the increased price of exports is singled out as a policy measure (the decreased VAT above being a good example) that must happen again/more/further than it already has. > “To solve the problems of declining purchase power, and to burst the domestic asset bubble, according to experts, the Central Government should, first of all, adopt measures to streamline asset prices, elevate people’s income levels, and increase export prices. At the same time, it should strengthen its supervision of the influx of speculated funds overseas.” > Can you say “Good Morning Vietnam?” (SRI will be blogging from Vietnam later this year as part of a couple already-planned investment and sourcing trips.) ### China—not so inscrutable after all URL: https://www.silkroadintl.net/china-not-so-inscrutable-after-all/ Last updated: 2026-07-18T14:48:41.000Z Very interesting piece on [Pysorg.com](http://www.physorg.com/news119876787.html?ref=silkroadintl.net) about the effectiveness of international management practices in China. From the article: > Dr Gamble said: “All the evidence suggests that, whilst it may be necessary to adapt to some extent to local conditions, time-tested management practices actually translate well across cultures.” > Basically the article says that while there must be some adjustments made for the institutional and demographic realities of China, business is business even in China. Who knew!? So all those MBA classes *will* actually pay off in China. This is really interesting to me as I have been looking for the book on how Chinese do business and have either come up with introductions to general Chinese culture or western business theories retold in terms of general Chinese cultural maxims. I don’t believe, anymore, that there is a “Chinese way” to do business. But there are characteristics about the Chinese business culture that are unique in their combination and influence. This should also be interesting to anyone else doing business here for a couple of reasons. First, if you are successful in your business at home you have a great chance of duplicating that success here in China. Skills and success can be translated and duplicated. Second, there is not some “secret” to cracking the Chinese market. No magic bullet, no golden connection that will give you the country on a silver platter. If anything China just requires more of the same: more due diligence, more QC, more management on the ground, more training, more time invested into starting up, more patience, more “buy-in,” more cautions and legal protections. So if you’ve got business “success” down pat in your home country, what are some of the things that (I think) you need to “adapt” to here in China. > 1\. Labor/people are more often the answer to problems than a tech or money solution.2\. Language is key—Learning Mandarin is a great advantage.3\. Regionalism—From differences in language and trust to manufacturing/industry to intra-province transport tariffs, China is more like a group of loosely federated states.4\. Scarcity mentality—there is not enough for everyone, there never has been and there are too many people. Throw in political turmoil and you’ve got the scarcity mentality that most business owners grew up in.5\. Change and irrationality—Local, Provincial and National government policies can be created, changed and/or (un)enforced for completely political motivations.6\. Nationalism—it’s very real and very active.7\. The personal nature of business and the converse lack of trust between strangers doing business.8\. The incredible numbers that are China.9\. Business is not M-F, 8-6\. Its all day all night until the sun goes out. > This, of course, is just a quick list of the things that I think are “culturally” important when doing business in China. The good thing is, all of these “cultural” traits are not only very understandable but manageable as well.**BONUS—Business, politics and PC’s.**Not sure that this article will pass the censors, so I’m just recommending it and not commenting. Glen Smith of PC Magazine has a [fantastic article](http://www.pcmag.com/article2/0,2704,2250646,00.asp?ref=silkroadintl.net) on the interconnected nature of business and politics across the Taiwan Straight. ### Starting your own business in China--some additional comments. URL: https://www.silkroadintl.net/starting-your-own-business-in-china-some-additional-comments/ Last updated: 2026-07-18T14:48:41.000Z If you are looking to register your own business in China, I would suggest that you read this on the China Success Stories website. It’s a great list of must do’s. I would add a couple of other items to the list that if you’re not prepared for will get you hung up. Here’s the article from [China Success Stories](http://www.chinasuccessstories.com/2008/01/09/starting-business-china/?ref=silkroadintl.net).Now for the additions.1\. You must have all the correct documentation for the business name, foreign capital (if any), and members/owners/reps/legal person in China done and approved buy the Chinese Embassy in your home country BEFORE you can start this process. This time consuming and almost completely mail-only process can be both frustrating (hard to talk with people in the embassy) and time consuming (yes, I said time consuming twice--and I meant it both times). It also can cost up to $100 per document to have the embassy certify.2\. An additional few days could be spent getting your health certification for foreign employees. This requires an eye test in one government office, a complete physical exam in a (scary) government clinic and at least two visits to your local police department for residence verification.3\. Just because you have been told by one office that you need to get X document from whatever other department does not mean that that next department will have it, or that they will give it to you or that they won’t want some other form from some other department first. This is not just me being crotchety either. In our SZ business registration we traveled back and forth between government offices trying to figure out who really could do what was next on our “list” of required documents. Many times we were told by one clerk that we must have this and then left only to hear something similar from a different clerk in a different department. Try to find a senior official in each place. They will know what really can and can’t be done and even if they don't take care of your paperwork, you can throw their name out to the window clerks to get things done right.4\. One advantage of hiring someone to do this process for you (see below) is that they will know what papers can be filed first, at the same time and which offices really do process stuff in a single day.5\. Legally, you have to hire employees from the State. But if you have “employees” that you already know/work with/want to hire you can work with an accounting firm on your employee taxes and they can “work out” the conflict of this law. Even according to the lawyers that I've talked with, this is a little bit of a gray area. But the contracts for employees and taxes are with the state and they are the ones allowing this end-round process via accounting companies.6\. Once your business is registered, you’ll of course have to find a place to do business and, unlike the US, you can’t have a home business unless your building is specifically registered as “multipurpose” facility. Check out your building’s code/zoning before you start the registration process. You could have your license rejected if you provide an address that is not approved for business.7\. You DO not have to pay anything “extra” to officials in offices nor do you need guanxi to get this process done. But I’ll make one warning and one suggestion about what "really" happens on the ground. First the suggestion.a. Pay $1000USD and have someone else do all the paper work for you. It will save you tons of frustration. You can be involved as much as you want (follow them to each office for each document) if you don’t trust them. But there are a lot of good accounting/law firms that will help you register, annually update registrations, pay employee and other taxes and take a huge load off your mind for a very reasonable price.b. Even though you don’t pay fees in the government offices, you most likely will have someone come out to your office. There are a number of government departments that need to come to your office after/while the registration is completed (fire safety, employee verification, zoning confirmation, or foreign employee registration—all of which were needed in Shenzhen). You’ll have to choose whether you are willing to pay these people or not. I’ve found that if you don’t they just won’t show up. And, a little bird told me that just one of these guys can cost you more than all the legal fees and hiring an accountant put together--and that's if you haggle with him for 2 months and cut the "fee" in half!!Good luck. ### Crisis Averted! We're safe-GUARANTEED! URL: https://www.silkroadintl.net/crisis-averted-were-safe-guaranteed/ Last updated: 2026-07-18T14:48:41.000Z Rejoice! [Crisis averted](http://news.yahoo.com/s/nm/20080114/wl%5Fnm/china%5Fsafety%5Ffood%5Fdc%5F5?ref=silkroadintl.net). Once again the Nanny State has saved us all from ourselves and the evil capitalist pigs. Thank all that’s holy; we’re safe! I am relieved to report that the Chinese government confirms that there are no more substandard toys or food in China. None. The campaign was a “complete success.” To quote one official in the article: “"The overall quality of Chinese-made toys will be further improved and safety will be fully guaranteed," he said.”This quality guarantee is great news. Not only do I not have to hire any more QC guys but I can now pass this guarantee on to my clients—won’t they be relieved. My wife will be thrilled too, that she doesn’t have to go to Hong Kong to buy baby formula any more—our kids are completely safe. Whew. Of course this may put a few lawyers and 3PQC companies out of business. I wonder how this guarantee compares to the State guarantee of absolutely no illegal CD’s or DVD’s in China that I first saw in 1995\. Hmmmm….OK, maybe we’ll keep going to Hong Kong for formula. ### China Fear Mongers URL: https://www.silkroadintl.net/china-fear-mongers/ Last updated: 2026-07-18T14:48:41.000Z Like I said yesterday in my post about the stories promoting fear, I don’t like this kind of “reporting.” And today’s Guardian article, [Made in China, Recalled in Britain](http://www.guardian.co.uk/business/2008/jan/14/retail.manufacturing?ref=silkroadintl.net), is a prime example why. Now remember, I get more business when the media back home bashes China like this—fear promotes the need for my services in China. So my agenda is clear—just tell the truth about working in China, I try too. But of course that’s more or less impossible for the majority of “journalist” back home the majority of whom have never been to China or may have been here on a 10 day whirlwind trip to a few factories, the Great Wall and a couple of East Coast cities. So the article in the Guardian claims that there was a 22% increase in consumer product recalls in GB this last year. Then they quote unions saying that it’s because of imports. Of course, the other opinion (local product recalls) wasn’t printed nor did the “journalist” who wrote the piece look up all of the recalled products to see where they came from—didn’t even look them up! The “journalist” didn’t bother running any statistical analysis either—could the total number of imported products be more than 22% higher than the previous years thus having recalls as a percentage of imports going down. Nope none of this was done. Now, I don’t know about the % of recalls in GB. And frankly I don’t care. And two of the three people who read my blog don’t care either (I know because I called my parents to ask). But if you have a “journalist” making claims and speaking as a “expert” then they should be required to back it up—hell, just do a little research before you go to press. Is that too much to ask? What’s the point of the article? Well, since unions are quoted, you can guess that it’s about keeping low-wage labor-intensive jobs at home (toy and toothpaste manufacturing specifically). Great idea. And since no research was done to either support or prove otherwise you know that the general public will read just what the unions and "journalist" want them to read: “22% increase in recalls from China.” ### Buying "legally" from China is your responsibility URL: https://www.silkroadintl.net/buying-from-china-its-your-responsibility-to-be-legal/ Last updated: 2026-07-18T14:48:42.000Z I don't like articles that are written to scare, as is this one. But it does tell a couple of good stories that (hold your breath) have an actual helpful point to them. Here's the [link](http://ap.google.com/article/ALeqM5hfotQHg3Oz3nNylbo2Y7AUQnH2gAD8U3P45O0?ref=silkroadintl.net) to the William Foreman, AP article. The article backs up a couple of points (I made as recently as this week's post on Returning Product) obviously worth repeating. First, if you reject or return finished product you will see it again. The guy in this story saw his product 6 months later at the next industry trade show. Second, you'd better personally check out every factory that you use. If you don't you are to blame when problems arise. Avoiding the "small" factories and only working with "big" factories is not enough. You'd better verify EVERY production site you plan on using. Finally, my point not the article's, the importance placed on IPR and Western standards of safety are not yet completely understood, even by large factories, over here. Profit is. That's not a slam on China, it's just really how it is. Even when specific controls are built into contracts if you're not confirming that they are completed they there is a good chance they were not. ### Returning Products to a Factory in China. URL: https://www.silkroadintl.net/returning-products-to-a-factory-in-china/ Last updated: 2026-07-18T14:48:42.000Z I have a friend that has his own business and has been exporting goods from China/Taiwan on his own for a few years now. He has recently had quality issues and it has finally gotten to the point that he can’t take sub standard product any more. He wants to return a full 40’ container of product to the factory now. So he called me up for some advice—what should he be watching out for? Here’s what I told him.1\. This will kill any good will you may have developed with your supplier. You will need to find a new supplier. My belief is that Chinese style “cooperation” means that you allow for a few mistakes/problems and still accept the product for the purchase price. Now you are calling their bluff and asking them to actually put up cash (redoing the order is cash out of their pocket).2\. You may not get the product back into the country—especially if it’s defective or already opened because of import restrictions. There are limits to what China (and all countries) will allow into their country. Rejected product and or second hand items are often not allowed into China. You need to confirm with a freight forwarder before you start negotiations with your supplier that this is really an option.3\. You must decided who will pay and where the cash will come from before you take any unilateral action ("I'm just going to send it right back to them, dammit! "). Phone calls and verbal commitments from your factory rep are ABSOLUTELY not enough. You need to get a written, stamped document from a factory manager/owner that says exactly what you agree to.4\. There is really no such thing as "credit"—the cash for the redo has to come from somewhere. Be careful. If your factory says that they’ll “credit your account” you’d better know how much actual cash and what that will buy next time. If you think that you’ll get another order for free (especially if you can’t send it back) you’re probably wrong.5\. You will see the returned product again, somewhere. If the product is usable and if you can send it back into China and if you are getting a second order for free I can guarantee you that the factory will sell the stuff to cover their costs. They don’t care about your reputation in the industry—they are concerned about their bottom line, first and foremost. Be prepared for customer service calls from Karachi.6\. What will it really cost you in terms of time, shipping costs lost clients due to the production flaw, etc? You need to balance the nature of the problem with the fact that giving the product back will destroy your factory relationship and your product will still find it’s way into the market and you’ll have to pay costs (return shipping at least) that you don’t have now. So what’s the solution? DON’T EVER SHIP BEFORE YOU (YOU PERSONALLY OR SOMEONE OTHER THAN THE FACTORY) APPROVE IT. It doesn’t matter how “good” your relationship with the factory is. It doesn’t matter if you’ve shipped the same thing a dozen times before. It doesn’t matter how big your order is or how many other future orders rely on this shipment. If you’ve got product in your home country (and you’ve already paid for it) it’s too late to be finding find problems. ### The New Trend in China—Official Non-Enforcement. URL: https://www.silkroadintl.net/the-new-trend-in-china-official-non-enforcement/ Last updated: 2026-07-18T14:48:42.000Z It’s happening; the fangs of state sponsored nationalism are starting to come out. In small, but significant bites, the Chinese Government is showing how powerful indirect control can be. What am I talking about? People power—specifically private citizens policing the actions of other private citizens. In China, it’s the new black. Example number one, the new Employee/labor law. What’s the scariest thing about it? Not that it’s complex or that it’s more rules to follow or even that the degree of direct government enforcement is still unknown. The worst part is that now businesses are scared of their own employees and taking drastic measures to limit the risks they could face. I’ll bet almost every factory I’ve talked with in the last couple of months has told me of recent or impending layoffs to avoid the law—this, despite the fact that here in Southern China labor is at a premium right now. Example number two, the new online video rules. Once again, the limitations and degree of government enforcement are both unknown and not the big deal. The kicker is that foreign and domestic sites operating in China are being asked/forced to police themselves. Chinese sites are already demanding that users report other users posting objectionable content. Example number three, the domestic ISP’s own self-censoring. This well document phenomenon is starting to hit home. For example, I had to change servers because some of my website’s pages were blocked by Top Way (cable internet) but not by ADSL in the same city, Shenzhen! It forces me to either use a proxy in the office (very slow in China which is already slow; VPN’s are even slower) or head out of the office to Starbucks or over the wall to Hong Kong just to get access to my own website—and we’re a legal Chinese entity with no political motivations! Example number four (OK, this is more of a joke than a threat) the new ads on CCTV for the Olympics are asking Chinese to think about others (share a seat, talk quietly on the phone, don’t spit or litter) in order to change the international image of ‘cultural backwardness” before the world comes to the birth place of all wisdom, culture and history, Beijing. But this isn’t the end of the story. In Beijing and Shanghai laws have been passed against activity such as profaning and cursing and arguing in public (yea, I can’t believe that I have issues with these laws either). Who gets to make the call on what is and is not profane? At what point is an argument illegal? Reports out of the capital are also mentioning the groups of “volunteers” that are enforcing the new manners campaigns along the streets. But it’s all politics, right? It really doesn’t matter to business, does it? Only if opportunity doesn’t affect economics. China and the US being the greatest cases in point ever—the US economy built on entrepreneurs and opportunity and the Chinese economy dead to the world until Deng, on his famous Southern Tour, pronounced “To get rich is Glorious” and let people actually work for themselves. Given the opportunity, Chinese are fantastic business people (just ask them) as their 10% plus for 10 years+ growth would attest. Limited opportunity means limited entrepreneurialism, limited growth, limited exposure to new ideas/technology and limited on creativity. But there are specific issues of concern here too. Simple resource like various Google searches, the Apple Store, Blogger.com and of course the oft-mentioned Wikipedia are all either blocked, or limited. My business relies heavily on the internet for communications—including VoIP and large FTP file (video and other) transfers. I’ve already seen the declining quality of Skype within China (it was once reported to be banned in Shenzhen). A new limit on video transfers, which we use to spec out detailed packaging procedures, could be difficult to work around, to say the least. Further, at what point will confrontations with factories become illegal? What happens if what I’m manufacturing/reading/watching/discussing via webcam or in video is determined to be “offensive” to anyone that may just happen to pass by? Nationalism is the tool. The roots of this new MO are in the State’s obsession with harmony. For 2008 this means that the Olympics are so important that everything (other than Taiwan) will be subordinated for the rest of the year. It means that the available tech is getting too advanced and so prevalent that the government needs help in keeping surveillance. It means the possible realization of the fear that a combination of social factors (inflation, Western spiritual pollution, widening rich/poor gap) may case unrest. It also means that without a rabid case of nationalism to make it palpable to the domestic audience control to this degree would be impossible. Let’s hope that economics are not the victim, as they have been in the past. Didn’t China see this type of nationalistic self-policing 40 years ago? Yikes. ### 新年快乐 URL: https://www.silkroadintl.net/xin-nian-kuai-le/ Last updated: 2026-07-18T14:48:42.000Z SRI’s 2007 Year-End BlogFirst, Happy New Year! I guess that I should have called this the SRI 2008 New Year Blog, but I started it on the 31st and then went out to celebrate and didn't get back to it until now. Anyway, whatever it's called, I hope that 2008 in China is notable for the Olympics and not for pollution, a crash in the stock market, fakes or more recalls. Second, welcome to our new blog. Enjoy; and say thanks to Dan at [CLB](http://chinalawblog.com/?ref=silkroadintl.net) if you like it. There are some changes to come, but it's good to start the new year with the new page and a new post--all at the same time. Now, for the new or uninitiated. The goal of the SRI blog is to share experiences, success and frustrations of a small, independently owned US business working with small to medium sized factories in China and SEA. There are a lot of blogs and books on how big business works here--but not much for the SME. Enter SRI.What makes me think that I can share anything of value? Well, I've been living and working in Thailand, Taiwan, Hong Kong and China for almost all of the past 18 years. I've cut my teeth in Chinese SME's and managed projects ranging from a couple thousand to a couple hundred thousand USD in multiple countries and in multiple languages. More importantly we’ve had great response from readers, other bloggers and some other major outlets. 6 original articles from SRI were published both online and in print form by two different international organizations. More than 20 of this last year’s blogs were also featured on other blogs. I was able to read and review more than 30 books on China as well.2008 will be more of the same—more book reviews. More published papers (some already requested and others in the works). More thoughts, insights and experiences from working with SME’s in China. Next year will also have more updates from Southeast Asia as we do more projects in and invest more time and money into Thailand, Vietnam and maybe a couple other places too. I’ll keep you posted. I appreciate your patronage and hope to keep you interested and informed during the next year. I hope that you enjoy the blog and look forward to your feedback. Thanks,DD ### Working with Small to Medium Sized Factories in China URL: https://www.silkroadintl.net/working-with-small-to-medium-sized-factories-in-china/ Last updated: 2026-07-18T14:48:42.000Z I spent the week at factory in Jiangsu province. The owner, now retired, used to be a teacher before he opened his own factory some 25 years ago. One of the final motivations to move from education to business was that, in the early 80’s he as making the equivalent of approximately USD$8 a month (yes, eight dollars a month) working as a teacher—I was making almost that much an hour at a part time job in high school in the 80’s! He switched to business and never looked back. His factory now employs not only his immediate family, his second son runs the business now, but hundreds of local workers as well. They are expanding to a custom building complex that will house twice as many employees and triple production floor capacity. They have 5 to 10 production lines, less than 10 major products, a few hundred employees (less than 500), good local connections for logistics and supplies. They are honest, sincere and friend first, business partners second. But working with them isn’t always easy. This is the “reality” of their situation (and many that are similarly sized/experienced).1\. They are good a few things that they do regularly. This factory, or example, has two products that they do over and over and have 20 years of international experience with. They are simple products that can be altered minimally with no change to the quality of the product. The product is sold both to the domestic and international market so they have a consistent and growing market for the same thing every month. In the last 5 years they’ve added another line of (simple) products for one of their two main clients that are doing very well.2\. They are growing quickly as both the domestic and international markets expand. The boom of the Chinese economy has stretched into the smaller, mid level cities and these factories are growing as the economy looks for more resources and advantages for both the local markets and the competitive export market. Most of their growth is coming from two to three sources—two large clients, one domestic and one international trading company in Shanghai, that reorder the same things each month and have started to try them out on a couple of new items as well. The other source of new clients is tradeshows—that’s how I found them in 2003\. The tradeshow clients are typically smaller inconsistent orders and in total make up less than 30% of their business.3\. They most likely have a couple of large clients that they do the same product for over and over again—this keeps them in business and gives them some tradeshow cred. These two big clients are on all their literature and all over their tradeshow booth. This is at least 70% of their business and if either of these two clients leave, for any reason, they are going to be in big trouble.4\. They probably don’t have very good or standardized QC processes. Indeed, because they have typically been servicing either the domestic market or only a couple of international clients with the same product/service they may not have any QC department at all. They have grown up with their two largest clients and know exactly what they want and expect. Each employee has the process down to memory and they have done the same thing every day—without QC. This is good if you are buying the same thing from them, but changes mean a new process and there is no established order for checking new products/processes. This is our biggest issue with them—fortunately we have our own QC and can leave a man in the factory for the length of the production cycle.5\. They are growing so quickly that, while intentions are good, they are falling short in quality because of the in ability of the “family business” model to keep up with the new international level business they are attracting. They are going after bigger fish, and with the names they throw out and length of time they have been in business they appear bigger and more capable than they really are. This is NOT an attempt on their part to be dishonest. They are very very good people with whom we’ve had great experience, but do not know what they don’t know. Since they produce for X international brand they assume that everyone is the same and they’ve got that mastered—so what else is there?!6\. The international standards/testing requirements are not even on their radar. We test all of our products with third party testing companies and introduced this process to them. They don’t understand the standards they have to meet, but don’t realize that annual testing, re-testing for minor changes and/or testing for new products (even with similar/same components) is still necessary. So how do you work successfully with a factory like this? There are a number of things that help. First, you realize that working with them has specific advantages not the least of which is probably price. We can make products with these folks for 1/3 of the price it would cost to do the same item in Guangdong Province. That’s huge and it makes up for the extra travel and QC expenses that we incur. Second, it’s a partnership, a process not just a quick one-off. We have invested significant time in transferring out QC experience to them and they respond by giving us service that we couldn’t get anywhere else. Third, there is significantly more time involved in the development of new items/products and we know this going in. Because we plan extra time, we have the ability to work throw what would, at a larger factory, be non-issues. Fourth, component parts must be controlled more than you’d expect. While this factory has the connections to get the suppliers/support they need for raw materials they don’t necessarily have the standards that we expect. We do a lot of QC on incoming materials and go out and do other things on our own too (printing, for example we do on our own and ship into them). The time and effort that we expend in working with them is exhausting and sometimes very frustrating. But the quality product we get for the low price we pay is the point of the relationship. We have great dinners together too. ### Shanghai'd! URL: https://www.silkroadintl.net/shanghaid/ Last updated: 2026-07-18T14:48:43.000Z I always learn new things on business trips, and this trip to Shanghai has been no different. First, after a day at a tradeshow I love to break the bank and fork over the big money and have a $10 two-hour foot massage. But this time I got more than the foot massage, I got an education. The 24-year-old girl that massaged my feet was a recent college graduate. She had a degree in Computer Science and had very very good English—good enough that for the entire two hours we could talk about everything: politics, economics, Shanghai pop culture and why she was rubbing feet instead of working elsewhere. Why? She explained that she can get 3x the money every month doing massages (even with no “special” services for customers) than she could working for a computer company, doing retail sales or even selling real-estate; all of which she’s done in the two years since graduation. The glut of (sometimes unqualified) college graduates and the uncontrolled migration into Shanghai have, predictably, made a buyers market for college graduates here. The going monthly rate in Shanghai is somewhere around $250 for someone with a college degree, decent English and some specialized skills (accounting, computers, etc.)This should be a warning for America! How long do you think that 1-2 million college grads each year are going to be satisfied rubbing feet? Even with good money my bet is not for long. Due to this glut, there is a huge opportunity for entrepreneurialism in China’s immediate future. This has been one of the biggest critiques of China “they just aren’t creative or independent thinkers.” And I agree. But as an American I also believe that necessity is the mother of invention. There just aren’t going to be millions and millions of satisfied college educated graduates every year, year on year. Is not going to happen. You’re been warned. Second, the Shanghai Global Sources Show that I was just speaking at had a very different demographic than the Hong Kong Shows I spoke at in Oct. The majority of buyers here were Chinese. Many overseas Chinese to be sure, but I’ll bet 20 to 1 Chinese to foreign buyers. I don’t know the show stats, but I’ll guess that the Hong Kong show is more like 3 or 4 to 1\. Significant, I think, in that it says the domestic market is growing out of the Shanghai area while the international market is still being feed mostly out of the South. The export stats would bear with out—the Shanghai/Ningbo area move about 28.8 million (TEU) containers while the Guangzhou/Shenzhen/Hong Kong area moves about 48.3 million (TEU) containers annually (numbers from [Schenker Int'l](http://www.schenker.com/index%5Fen/index.html?ref=silkroadintl.net)). Singapore, Hong Kong, Shanghai, Shenzhen, Pusan and Kaoxiong (Taiwan) are the top 6 ports in the world, in terns of TEU exported per year. Do you speak Chinese yet? Maybe you should learn. Third, you think that it’s risky to do business in China? Maybe so. But how much riskier are you making it yourself? If you are coming here on your own, that’s fine. But that shouldn’t mean that you just jump in with your eyes closed. Do some DD (yes, either Due Diligence or David Dayton, I hear I’m great!) and check up on the factories that you’re working with. Yes there are problems here, but there are problems everywhere. So just because the system is dangerous you don’t stop doing DD altogether. You should be taking MORE precautions, not less. For example, if a hospital in (any region of the world) was known to be unsanitary, but you were sick and had to go there anyway, would you just say “what the hell, I’ll take my chances” or would you take your own syringes? Is there even a question as to what you’d do? Of course not. So why, would you consider not taking precautions when coming to China?!?!Fourth, A few thoughts about Shanghai. There is very little bling in Shanghai. It is a much more sophisticated city than Shenzhen. The average car on the street can’t compete with Shenzhen’s Bentleys, Audis, BMW’s, and Porsches and maybe the size of the city (twice the size of SZ) just water’s the money down. But I think the MWM, (as [Diligence China](http://www.diligencechina.com/blog/?ref=silkroadintl.net) calls them) are much more flashy with their cash in SZ than in SH. It’s more of a subdued wealth here; it’s not “new money.”I found the city to be much more "international" than Shenzhen. There were more Western BBQ restaurants in Shanghai than all foreign restaurants in the Shenzhen together. Many more foreigners in all parts of the city than I typically see in Shenzhen; much more like Hong Kong (except for at the trade show). But the subway was a mess. Packed to overflowing from 4pm till closing. No electronic location signs. you know, the little red LED's that tell you where you are. So if you can't hear the PA system, which no one can from 4pm till close, you'd better have a clear view out the window to know where you are. And it closes at 11PM--what's up with that?!Finally, Had a great dinner with Steve Dickinson of [CLB](http://www.chinalawblog.com/?ref=silkroadintl.net) fame two days ago. He first came to China in 1974—nine-teen-seventy-four!! That’s almost longer than I’ve been alive! Steve has serious history, serious war stories and amazing experience and endless knowledge. He quoted Chinese poetry, Chinese law and dropped the names of judges, foreign companies and threw out more than one Chinese book that I ‘should read” in our time together. Our business-over-drinks meeting turned into a 7-hour (4pm till 11pm) rip-roaring ride through the history of Modern China and the inner workings of business and law in China. I asked him when he’s writing “the book” on China. He responded “which one?” Just amazing. If you’ve not talked with the CLB guys, you need to. They know China. Thanks, Steve! Oh, yea, the Shanghai weather and pollution are really really awful! ### It's not all their fault. Really. URL: https://www.silkroadintl.net/its-not-all-their-fault-really/ Last updated: 2026-07-18T14:48:43.000Z I drive my own car here. Some people think I’m nuts. I find it quite convenient, if not a bit stressful. If you don’t drive yourself, you may be oblivious to the traffic around. But chances are you probably sit in back and complain about the traffic and the “drivers” on the road. If you do drive you probably complain about the traffic and the other “drivers” on the road. But take comfort, it’s not just your bad attitude. The roads in China really are the most dangerous in the world (ask WHO). So be careful and keep complaining, if it makes you feel better. If you are still complaining, and I’ll admit I am, here are some observations that will at least make you think before you flip off the next guy that cuts you off. The most important thing I've learned while driving here is that the biggest car in the collision always wins everytime. No, just kidding. What I’ve learned is that it’s not really all their fault. Really, they can’t help it. The Chinese are not bad drivers; it’s the system that sucks. Don’t believe me? Let me give you a few examples. First, remember when you got your first driver’s license? After a semester long course in 10th grade and 10-15 hours of mandatory driving in a car you got it. So for starters, your education was formally much longer than these folks here. They buy a book, take a test and that may be it. They may drive in a car, with a hired coach, but only for just as long as the coach thinks they need it. If they act competent in 2 hours or 10, that’s all the training they get. And just because they have some time in the car that doesn’t mean they received quality training. For example, my wife, while practicing driving, was told in no uncertain terms: “There is no such thing as a blind spot! Don’t ever look further back than your mirrors. Looking over your shoulder is illegal.” That pretty much explains 80% of the accidents you see here, doesn’t it?! But who’s fault is that?!Second, you rode home in a car from the hospital the day you were born. And probably rode in a car, on average, every day of your life from birth on. There are probably no American’s under the age of 80 that can say they remember the first time they drove, let alone rode in, their first car. Most, if not all, Chinese people can tell you when the first car in their village showed up. When the first time they rode in a private car (not a taxi) was. And certainly when the first time they drove was. They’re all newbies when it comes to cars. And not just new to driving—new to cars!!You probably cleaned dad’s car as a kid. You my have had older brothers or friends or neighbors that were car nuts. You knew your way in and around cars before you were 10\. But, here? You’ve seen him, that guy with the shocked look on his face as you slam on your brakes and blast your horn to avoid hitting him I the middle of the intersection. Or, how about the college graduate who can’t figure out how to get out of the back of a van (true story)? Or the lady driving her own car who has no clue what any gears other than R and D are for or that her car has wipers (another true story)! There is no car culture here. Being from the West, you know to look both ways before you cross the street; you know how to open a car door; you know that the bigger the car the more time it takes to stop; you know cars can’t see people in dark clothes running across the 5 lane freeway in the middle of the night; you know that there are sidewalks for a very good reason. You know that you can defrost your windshield without opening your window in the middle of winter. You know that your car uses both oil and gas and that they are not the same thing and you probably know how to change or pump both too. Because of that knowledge you are unique over here. Third, In the US the most expensive insurance class of drivers are teenagers. Why? Lack of experience and tons of social pressure. Ditto China. No one in China has been driving for more than 10 years. (And if they’ve been driving that long they’ve been driving in the army.) Most people on the road have had their license for only the last 2-5 years. And, they have enormous social pressures (face) to keep up now that they have a car. That makes them all relative teenagers behind the wheel. Inexperience and testosterone are a bad combination no matter what the culture you’re in. Although I was driving tractors on my father’s farm before, I’ve been driving with a license since I was 16\. That means that I’ve been driving for more than 20 years. In 5 years in Shenzhen, and I ask every taxi I get in, I have never meet anyone who has been driving longer than me and only a couple of people that have been driving for 10 plus years. Fourth, while the surface of the roads themselves are pretty nice, the organization is really really bad. The guy backing up on the freeway to get back to his exit? Not his fault. Signs are posted at or even after exits, not before. The guy drifting into your lane without looking? Not his fault. Roads often change from 4 lanes to 3 with no notice and for no reason. The guy making a U-turn from the right lane. Ok, that’s his fault. But you get the picture. It’s really not all their fault that driving here is such a nightmare. Fifth, you know how many people drink and you know they’re all driving now too, right? Drunk driving is really no big deal, socially, here. Even in college in the US, frat parties usually have a designated driver. Bai-jiu business meetings and all night karaoke parties here do not. How rude to have someone miss all the fun! You probably remember campaigns by MADD, or wrecked cars outside of high school gates before graduation to remind students not to drink and drive—none of that is done here because no teenagers drive! You don’t get any of the (drinking &) driving cultural lessons until you are much older, if at all, here in China. Sixth, I think that the “unless I get caught it’s not wrong” mentality really affects driving quality, among other things. Add to that the concept of “don’t offend anyone as they may be a resource in the future” and you have millions of drivers who don’t follow the rules and don’t call out anyone else—i.e. there is no community policing of driving laws in China. You screw up on the freeway in America and everyone for 4 lanes will honk and yell obscene things at you. Heck, some people will even follow you home just to yell at you. Here? Everyone does it, so why get angry? What’s the point, they may not even know what they did wrong. Seventh, police enforcement is specific and sporadic. Let me explain. Police and cameras enforce specific laws at specific times in specific places. Just for example, let’s say that on Monday police in Shenzhen are going to stop all white private cars and check for registration papers. Or on Tuesday they are going to stop all mid-sized trucks and check emissions. Camera’s only check for speed red light violations and they are in fixed spots, so drivers know they only have to obey the laws in those few areas with (working) policemen and cameras. If you know that the chances are slim to none that you’ll get caught anywhere else then breaking the rules is never even a question. You just do whatever you want. Why wouldn’t you? Other factors: Complete-coverage insurance at very low rates means that trucks and buses hit people and honestly don’t care. Fines for breaking laws, if you do actually get busted, are so low it’s ridiculous. In Shenzhen, with the highest income levels in the country, its only RMB500 for running a red light and RMB200 for speeding in the city. Compare that with $279 for the lowest traffic violation fee in CA.One side note, if you do get a ticket you can’t pay it by mail or credit card. In fact you can’t even find out what it costs by mail or by phone or even on line (but you can look on line to see if you have a ticket—and you can check on anyone else too, if you know their license plate number! Talk about voyeuristic fun!). You have to return to the city where you were given the ticket and get it physically printed out at the “Traffic Control Department” and then pay it in cash at another department! Really. Of course since this is suck a ridiculous system a quasi-legal service economy has grow up to fill the gap. You can hire an “agent” to go and print out and pay the tickets for you. They charge you per ticket depending on how far away you are from the ticket location. They claim to service every city in the country. Who says the Chinese aren’t creative!?See, not such a crazy idea after all, is it? Drivers here are uniquely equipped to drive in this very Chinese system. And, like most things in China, us few participating foreigners aren’t going to change the system no matter how many fingers fly and no matter how many times we lay on the horn. Complain if you want, but it’s not changing—not with 1 million new cars on the road each week! Beep Beep. Have fun! ### Christmas gifts and a few holiday updates URL: https://www.silkroadintl.net/christmas-gifts-and-a-few-holiday-updates/ Last updated: 2026-07-18T14:48:43.000Z Merry Christmas! SRI has a couple of gifts for all of our loyal readers! First, SRI makes a fantastic calendar every year from photos that we’ve taken in China and Southeast Asia over the past year of our personal and business travels. If you’d like a copy, you can request one by email and we’ll mail it out to you. It’s free if you’ve got an address in China but international shipping is on your own dime if you’re not in China, says Scrooge. I’ll be in Shanghai passing out free calendars at the Global Sources Expo on the 13th (New Buyers Seminar) and standing on a street corner passing them out in exchange for dinner on the 14th! Email me with your address at david at silkroadintl dot net if you want one. Second, we’ve taken the photos from the past three years of calendars and built a screen saver. It’s about 7MB and free to download from our home page or the column on the left (“Free SRI Photo Screen Saver”—yea, that link). Click here for an [instant download](https://www.silkroadintl.net/b.php). It works great with Windows, but we’ve had some problems with Mac. I too have a Mac, so I understand the frustration. But, hey! It’s free, so whatcha gonna do?! When it gets fixed I’ll let the Mac users know. Now for a couple of business related issues. David will be speaking at the New Buyers Seminar at the Global Sources trade show in Shanghai this Thursday. The event is in the Shanghai Pudong New International Exhibition Center and starts at 1pm. Due to (positive) peer pressure from Dan at China Law Blog, we are updating the blog this month--yes, consider it another Christmas present to you from us. Look for the changes in the next couple of weeks! Merry Christmas to all and to all a good night! Ho Ho Ho. DD ### Random thoughts from 5 non-stop days in 7 factories in three provinces in China URL: https://www.silkroadintl.net/random-thoughts-from-5-non-stop-days-in-7-factories-in-three-provinces-in-china/ Last updated: 2026-07-18T14:48:43.000Z 1\. Factory owner and millionaire, 35 years old, tells me that the road out in front of his factory he built with his own hands when he was in high-school. The local govt required all households to provide unpaid labor for specific lengths of the new road. His father was a teacher and away at school and his mother was over 40 and the only one home. So he had to miss much of one year of high school to fill the State-mandated labor quota. These are the type of people that you’re dealing with in China—you need to know that they can wait you out. They are not intimidated by your pressure. They know they can dump your product in the local markets if you back out. You need to understand that you’re probably not nearly as important to these many factories as you think you are.2\. My friend Peter Zapf in Singapore alerted me to this amazing phenomenon in China and since I was traveling this week I made sure I took notice. Yup, he’s right—except for Beijing, all airports built in China in the last 15 years are exactly the same. Some just have more gates than others. One large room divided by check-in and security counters, (cold) metal and glass, blue, silver/grey and white are the only acceptable colors, rounded-girders or stretched “mountain-tops” roof design. The same crappy shops with over-priced luggage and the choice of Haggendas, noodles, Dove chocolate, Pepsi, local dried fruits/meats and knock-off electronics. 90% of the travelers are Chinese men in dark suits, 8 % are foreign men in jeans and polo shirts, the other 2% are young women, almost no kids. All airport customer service employees are women, departures on the top floor, arrivals on the bottom.3\. Unless specifically contracted otherwise “good enough” is the going rate for production standards in China. Doesn’t matter what your making. If good enough isn’t, you’d better make sure you spec out exactly what is acceptable.4\. Everywhere I go Chinese people are thrilled that that Hillary Clinton may be the next President of the US. Kind of tells you something about the foreign policies of Bill Clinton, that he is so popular here but not known for his great international legacy in the US. Of course China donated (illegally) tons of money to Bill Clinton, so that may explain some of the local admiration. Also, many Chinese openly admit they don’t want a black man to be the US President, are sacred of John McCain (understandable), have never heard of a Mormon and think that Guliani is going to continue war with other countries. Any other choices?5\. Factory Sales Manager: “Why is your government still trying to make us change the value of our RMB?” Me: “Actually, it’s the Europeans this month. Our economy crashed—we like your cheap stuff now.”6\. Why do people hate road construction in China? You’d think they’d be happy with all their new cars and all. But, again, they know what we don’t. Repaving the roads means that someone in the government signed and is paying out on a contract. Ditto for roadside trees, sidewalks, parks, and just about any “non-essential” public works project. The process for awarding and fulfilling contracts is less than transparent in China, and the locals know it.7\. Speaking of construction, every single construction project in the entire country of China is expected to be finished by August 8th. Now, I’m no construction foreman, but even small manufacturing projects go over time. Heck, most things run over. So how is every huge public works project going to be done all at the same time next year? Answer: They’re not. No way. I’m going on record right now saying that there are going to be issues with the logistics around the country next summer before, during and after the Olympics with all the accompanying tourists. Just in one city in Jiangsu, by Taihu Lake, this last week I saw the cannel being dredged, new bridges and roads just being started, massive public and government buildings starting to rise and new power and utility lines going in—all to be finished “in time for the Olympics.”8\. Fantastic article by David Brooks in the [New York Times](http://www.nytimes.com/2007/12/04/opinion/04brooks.html?%5Fr=2&ref=opinion&oref=slogin&oref=slogin). This is certainly what it’s like for, 1% of China. But before you think that everything is social clubs and meritocracy, remember the factory owner I mentioned above and realize his ilk represent 10 to 20 times the total number of people this article talks about. And, at best, these two groups of people are out numbered 4 to 1 by the rest of the Chinese population. Whenever someone asks me “what is China like?” I always respond: “Which China?”9\. Last, if you can read this, you've got better access than I do. For some reason, Top Way blocks my access to this blog and I have to update from other ISP's. So much for prosperity mentality. ### Scott Gets China URL: https://www.silkroadintl.net/scott-gets-china/ Last updated: 2026-07-18T14:48:43.000Z Had lunch with my friend Scott this week. He is the VP of a large (and famous) tech company from the US. He speaks Chinese, lives in China and likes a good bowl of noodles as much as the next guy. We got to talking business and I learned a few things from Scott. First, Scott gets it. He knows how to both manage relationships and projects in Asia. Case in point. Scott is working with a large Chinese supplier on an AV product for the US market. He understands that customer service in China is based on a philosophy of immediacy: “what have you done for me lately. And lately means: today! He negotiated prices for the 2008 buying year and within two weeks the supplier sent out notices of new (higher) pricing for the first 2008 orders. Scott, of course, said no. The supplier is still shipping. The point being—just because you have a signed contract for 10’s of millions of dollars doesn’t mean that negotiations are over. Second, Scott laughs a lot. He doesn’t get mad, doesn’t get even, doesn’t cheat, lie, steal or even swear. He’s the guy that everyone wants to work with. This is the way to do business in China, or anywhere for that matter. You are going to get screwed in China, because foreigner are coming from a much more developed business environment into a much newer, less structured/experienced environment in China where short term profits still often trump long term relationships. But Scott takes it all in stride—the deal isn’t dead with the attempt to raise prices after contracts are signed. Third, Scott doesn’t let today spoil tomorrow. Scott’s company currently employees more admin-level quality control managers in the US than in China even though they do almost all of their product here in Asia. Scott isn’t waging an internal war. He understands that corporate cultures from the West don’t change overnight even though production has long since moved to China. Factory locations change (change to new continents even!) much faster than attitudes do. But is he angry that he’s up nights to coordinate international what should be local issues? Nope. Is he complaining that “people just don’t get it?!” Nope. He’s fighting maintaining his poise and position and waits as the tide eventually changes and the winds eventually blow in his direction. I learned a lot from my lunch with Scott. He has vision that extends beyond current political trends and current project setbacks. He makes decisions based on values and his strategies are designed to achieve success—lasting personal and professional success in China and in life. It’s working already. Thanks, Scott. ### A China free Christmas? Really? Give me a break. URL: https://www.silkroadintl.net/a-china-free-christmas-really-give-me-a-break/ Last updated: 2026-07-18T14:48:43.000Z On CNN TV this AM (but nothing on their website) I saw a show about going “China-Free for Christmas. The “news” (gag, choke, cough, chortle) had Barbie telling Ken that she’s “contracted lead poisoning” and is rather embarrassed about it. I kid you not—CNN the “world leader” is using talking dolls to push BS politically motivated agendas. Wait, maybe that’s not surprising. Now what CNN and others are NOT saying is that more than 99% of all imports from China to the US are safe—not very exciting news, eh? They also don’t say that the percentage of rejected products FROM the US to China is higher!!! Yup, the US has a worse record than China! Don't hear many Chinese planning a American-Free Chinese New Year. Now I’ve got 5 boys between the ages of 12 and 1 so I’m certainly going shopping this Christmas. But making it China free? Um…not a chance. I know better and I don't have the time to hunt down or the money to spend on US toys/products even if I didn't. These are great excuses, I know, but the real kicker is this: if my kids and I didn't want US products last week/month/Christmas why do we want them now?!But just in case you are well educated (i.e. you don't watch CNN) and missed Ken and Barbie this morning here a few more choice lies promoting the China-Free concept. First a [site](http://www.usnews.com/blogs/flowchart/2007/11/21/how-to-find-safe-toys--even-from-china.html?ref=silkroadintl.net) that’s supposed to help, if you really want to try to go China-free. But, like the CNN crap it’s completely impractical and basically dishonest. (More on this later.) As is this [article](http://www.newsday.com/business/ny-bztoy1122,0,7823801.story?ref=silkroadintl.net) with no stats about how many people are actually avoiding China vs. just “thinking twice” about it. As with most things, people talk morals and spend money completely differently but this article would lead you to believe that so many people are going China-Free they couldn't even interview one without stepping on the toes of another. Politicians have Christmas too! This [claim](http://afp.google.com/article/ALeqM5gdEFQukGbxvc5nqIlWsfk2Z6SDpg?ref=silkroadintl.net) to be able to stop unsafe products from Clinton denies the fact that the problem is the inability of US companies to do adequate QC on their own products and the federal government has even less control within China. Or this site listing toys from Thailand and Indonesia as an alternative—as if production standards in Thailand (read: outsourced to Cambodia) are so much better! (That was sarcasm; the standards are NOT better.) Or how about [this](http://www.universalhub.com/node/9988?ref=silkroadintl.net) article that says all China made stuff is “cheap plastic crap.” Can you say iPod, Sony, Nike, Nokia, Dell? Yup, all made in China and exported to the US.This [blog](http://www.goodyblog.com/playing%5Fhouse/2007/08/update-mattel-r.html?ref=silkroadintl.net) cries “9 million toys recalled by Mattel,” but all but one type of toy listed was recalled for DESIGN problems, not lead or manufacturing problems. How is that a China issue?! Sound like stupid Americans to me. Now to clear the air, I’ll admit my job is China. I live there, I work there, and I buy stuff and manufacture stuff there. But before you say “see you have a vested interest in making China look good” think about this: the recent product recalls are the best press I could have ever dreamed of for my business! The more recalls there are the more business I get. The safer China is the more business I lose. So financially it would be smart for me to shut up and agree with CNN. But the “news” is so completely stupid that I just can’t. Now, since CNN isn’t putting their crap online, we’ll use US News and World Report's article on the same topic as a substitute. Rick Newman’s suggestions, in USN&WR, for going China-free couldn’t be more stupid if he was trying to do parody. Remember, Rick is trying to sell magazines—his Christmas depends on it--so you know he's got a vested interest in stoking the flames. For example:Rick says: “avoid toys with magnets and small parts.” What does this have to do with China? Don’t the designs for these “small parts” come from US companies with US designers that are also producing “small parts” in the US? Mattel already admitted as much, saying that this was a US problem, not a China problem. Maybe avoiding small parts is safe for unsupervised toddlers but won’t help you go China free. Rick says: “avoid painted toys unless they are made in the US or EU.” This is to keep kids away from lead poisoning, I guess. First, 85% of all US sold toys are made in China so this is going to be hard to do. But what Rick doesn’t tell you is that toys that are made in many countries all over the world can be listed as “made in the US” or “made in UE” if they meet assembly percentages. So, this is just smoke and mirrors. Buy lead covered parts from China, ship to Mexico--no china labels! Further, is the scare lead poisoning or China rising? If you’re really worried about lead (and not just news scares) you’ll have to avoid all the items that contain lead not just the ones that have lead paint from China. Rick Says: “Don’t buy metal Jewelry” because of the possible lead in the materials and the dangerous parts. None? How about safe, US made stuff? So painted things from the US are ok but metal things aren’t? Does metal jewelry break more often than plastic? How is this one of the major fears of toy shoppers? Once again, Rick is either just using China in the headline to sales papers or doesn’t think that you as a parent have enough sense to keep knives and scissors away from 2 year olds. Rick says: “buy brand-name toys” because the big companies have a better chance of finding and fixing mistakes in China than do smaller brands. OK, this is just pure unadulterated ignorance. Rick has obviously never been to China or a factory. Here are a couple pieces of fact from my experience in factories on the ground.1\. All manufactures in China outsource to at least some degree. Some outsource the whole item, some just raw materials (like paint).2\. None of large toy manufactures or box stores, NO ONE is going all the way up the supply line on each and every piece of each and every $2 Thomas Train and testing it all themselves. NO ONE! Not in China, not in India, not in Mexico. NO ONE. Some of the EU stores have said they want to (tacking carbon foot printing) and it's going to cost MILLIONS of dollars and take years to implement. One of these big companies told me directly, when we were having a product/factory qualified for their production in 2005, "just pick the biggest and cleanest factory and don't list the sub-suppliers. " Yea, there's some brand-name safety for you! Another one of the big boys has such a corrupt QC department that QC employees are able to "retire" after only a few years of work. I've been told numbers of how much a factory pays said company's QC to accept product--QC guys are paid thousands of US dollars to approve product every time something ships. Another big company, I've been told, demands payment to approve the shipping of even acceptable product.3\. Big companies don’t always have the best processes, just the lowest prices and biggest orders--and those are the keys to business in China. I have seen the reports for materials that are tested for name brand goods but then the actual materials that are put into products with these big companies names on them are completely different. I can promise you that the brand name means much less than you think. Rick says: “test for lead yourself.” Um…don’t I have to buy the toys first to do this?! How is that sticking it to China? Sounds like you’d have me buy product, test it, reject it and then buy it again just with a “made in the USA” sticker on it. So... China gets its money. The toy company gets double. And me, the consumer, is out twice. How about—don’t let your kids eat Thomas the train?! The lead levels in the paint of the rejected Mattel toys was less than what was in the paint in the schools and homes when I was a kid--and, guess what? I'm still alive! Rick says: “check for recalls.” Ok, good idea—but how about, since we want safe goods specifically from China, check and see if the problem is US design or China manufacturing. Buying lead free items from the US that will choke your children is, kind-of a step back, I'm thinking. As American we like cheap stuff. Don't deny it. Look at the personal credit crisis, the mortgage collapse and the success of Wal Mart ("Low Price Leader"). The bottom line is this: until the price of goods from China is as expensive as the same goods manufactured in the US the “China-Free Christmas” will continue to be a TV-news only issue. Don’t believe me? Just look and see how many of your electronics, kitchen and household decoration items, furniture, clothes, shoes, bags and car parts are made in China. Are you willing to forego the lowest prices, sale items and name-brand items that you and your kids want this year just to be politically correct? Unless it’s financially painless, this boycott will be dead before it starts. If you really want to make a difference there are a couple of things you really can do. First, boycott items and stores, not brands and countries. The US companies are the ones with their name on the products. They are the ones testing and doing QC and QA. They are the ones demanding lower and lower prices. They are the ones making the most money (significantly higher % than the Chinese factories). They are also usually the ones with PR departments in the US and (oft corrupt) QC departments in China—convenient. Second, make sure that if you decide not to buy a specific good from China (or any where for any reason) you write to the company and tell them why. If you don't write they won't know. Third, if you are involved in overseas production then you must be responsible for anything and everything that has your name on it!!! You, only you can prevent....(insert product recall reason here). This is a political issue and when there are kids and safety involved you know the media is going to run it into the dirt. Follow the money if you want to know who’s really at fault and where the news is coming from. But hey, all this China-is-evil press is great for my business! 圣诞快乐 (Merry Christmas)! ### Things that make China Prices Rise URL: https://www.silkroadintl.net/things-that-make-china-prices-rise/ Last updated: 2026-07-18T14:48:43.000Z Just a few days ago I had a client ask me about some (factory direct) prices, saying: “I thought China was supposed to be a great deal?!” Well sure, it can be. But not everything every time is going to be blow-your-socks-off cheap and fast. It often depends on a number of different factors, some you can and some you cannot control. For example if you’ve got small quantities and lots of SKU’s, as does this client, there really isn’t going to be a great bargain anywhere. One of the keys to “China pricing” is millions of the same widgets, not hundreds of different widgets. Another key is having a real reason to be here—are you here just because everyone else is? Can you do smaller runs just as cheaply at home without the hassle of overseas production? Unless there is clear bottom line (or other) reasons to be here, you don't have to be here. A third key is to do your research UP FRONT. Don't make the transition to China and then see if it is cost effective to have done so. Finding and qualifying the best supplier possible will save you TONS of money, problems and headaches later. Now there are obviously thousands of other issues that affect the prices of individual products too. These are both product specific and very general issues that cross over multiple industries. I can’t speak here to product specifics, but I do know that what happens with these general issues affects my bottom line and that of my clients’. So here’s a list of general things that are making the price in China go up now.1\. The US government. Because politicians and unions lobby Congress to pressure China to raise their RMB the prices in China will rise as the RMB strengthens. In the past 2.5 years prices for Chinese goods have gone up more than 10% do to this fact alone (8.3 to 7.4). Sure, there are a few thousand manufacturing jobs in the US that will benefit from this, but there are 300 million consumers in the US that will not. But the consumers don’t have a lobby in DC like the manufacturers do. In addition to the consumers there are also thousands of American SME’s that will be caught in the squeeze—they are too big to keep manufacturing in the US (or their industry is too price competitive) but with a rising RMB they can’t get the competitive pricing they need in China either—hence my client’s question in the opener.2\. Inflation in China. The CPI in China is up more than 6% in the last year. That means that indirectly prices for labor and the costs to house/feed workers has gone up. This is in part due to the incredible bubble in the Chinese housing and stock markets, and in part due to the annual 10% growth rates that the government can’t, despite their best efforts, reign in.3\. Prices of raw materials/commodities. The war in Iraq, growth in China and other global issues are raising the price of commodities all over the globe. China is no exception. When your products are heavy into commodities with little value-added you’re competing with the rest of the global markets—and sometimes US tech is going to be cheaper than Chinese labor as it’s more developed than that that in China. To compete with this Chinese factories are gearing up—buying new equipment to compete with the more developed industrialized countries (and raising your prices to pay for the equipment).4\. The new China moon probe. Ok, the probe itself isn’t raising prices in China, but the shift to technology over lower end manufactured goods means that (educated) labor is more expensive than it was just 5 years ago. Why are Western China, Cambodia and Vietnam exciting? Because the cost of labor (for one thing) is cheaper than in Eastern China. China isn’t pricing it’s self out of the cheap labor market yet, but there is a conscious effort to do just that—they don’t want to be the “low cost leader” when it comes to low-end manufacturing.5\. Domestic Chinese Growth. Labor prices in general are rising in China as the population becomes more urbanized. The numbers today show that about 44% of the Chinese population is urban compared with only 35% 15 years ago—and that number is expected to continue to rise over the next decade. The demand for production for the domestic market means that more (not-for-export) factories are competing for more and more of the labor pool previously dominated by export-only factories. It also means that cities are growing bigger and bigger and the cost of living is going up for laborers that live in urban areas.6\. Mature industries and industrial zones. Competition between regional industrial centers (Yangtze River vs. Pearl River) for a limited labor force means that laborers have a choice of where they want to work. Within industries skilled laborers, and even unskilled to a lesser degree, have a choice of factories in similar industries and even within the same industrial parks. Factory-offered incentives to laborers, most especially skilled labor, are rising quickly in this limited labor market. Yes, you read that right; there is a limit to the Chinese population and the available pool of labor. Western educated Chinese have their pick of jobs and change employers regularly. Factories are complaining regularly that they just “can’t find workers” or “workers refuse to work over time” and “if you yell at a worker they’ll walk out and go get a job across the street.” Just about makes you pine for the good old days, don’t it?!7\. The Chinese government. The government is scared that too much growth is bad and that the growth rates are currently (Q3 = 11.5%) too high. So they are regularly raising interest rates (again this last week) making it harder to get cash to do business in China. On a related note, why is the Chinese economy so strong while the West (and the US in particular) seems to be having issues (housing, banking, stocks, etc.)? Part of the answer is the fact that the RMB is not fully convertible—meaning it’s not free to exchange on the open market. This insulates the Chinese economy from the ups and downs of the world markets. Another part of the answer is that the Chinese economy is an export economy so it lags the downturns in the West. A third part is the large domestic market that is growing as well as the construction that is necessary just to keep up with annual internal migration.8\. Wal-Mart. Yup, the low price leader changes prices here by demanding low low prices. So low in fact, that factories are forced make their margins on other clients. If you’re making bags in the same factory as Wal-Mart, for example, you’ll certainly not get the Wal-Mart factory price and you’ll probably get a higher price since the factory won’t be making any money on the Wal-Mart deal (that is also pushing back your production times). So why do factory’s work with Wal-Mart if they don’t make much money? Factories I work with have given me the following answers. First, they want the name and status that comes from the association with Wal-mart. That status is not just face, but money—the Wal-Mart name in China is a by word for quality production and international standards. Buyers and traders often use the Wal-Mart certification as a standard to measure the capabilities of factories. Second, they know that Wal-Mart doesn’t just do one-off’s and so they can keep people employed and have a consistent source of income. Third, they expect that one product order will lead to others. Once your foot’s in the door…9\. Quality Control and Testing. The scares of the past summer are now going to translate into “additional costs” for anyone producing here. Of course you can ask the factory to pay for product tests themselves, but ultimately the costs will find their way back to you. In the toy industry prices are going up because out of 2700 some odd toy factories in Guangdong the government just closed down 700-plus. That’s 25% of the manufacturing base gone, overnight! The related question is now, with the rise in testing/inspection standards and enforcement will there really be an appreciable rise in standards too? Date-rape drug beads recall this week would be strike one.10\. Alibaba. Ok, not just Alibaba but all sourcing sites that take payment for rankings and don’t audit their vendors. I think that Alibaba, because there are so many unverifiable vendors on the site, makes the cost of doing business in China higher. I know, I know. With the billion-dollar IPO last week I’m being sacrilegious, but I still think that it’s true. Most of our new clients are companies who used Alibaba (and other sites) and just couldn’t get real product to match anything they saw on-line. They spend time and money working with online suppliers only to find that they’ve wasted months to produce something that just won’t cut it. Sure they had a “learning experience” but at what cost?!11\. Green GDP. While this has been scuttled a number of times in China in the last 5 years, it’s getting more and more attention as the conditions in China are getting worse and worse. It goes without saying that production without any environmental controls in China is going to be cheaper (in the short run) than production anywhere else that has environmental controls. Further, as the many EU distributors start tracking the carbon footprint of their products expect prices to rise accordingly (read: astronomically).12\. Paying the Piper—Yup, the days of Americans living on debt are coming to a swift (and painful) end. We’ve had a late night out and now it’s time to go to work in the early AM—and it’s going to be a long day. The Dollar is weakening, the economy is sluggish, we’ve got way to much consumer and collective debt, the housing market hasn’t hit bottom yet and growth is slowing while inflation is rising—the American economy isn’t the hottest date at the ball any more and, consequently, we’re going to paying more for just about everything. Now all of this doesn't mean that China isn't an opportunity any more. But it does mean that what happens in Topeka or Bagdad has influence on prices in your Dongguang factory. So again, do the homework before hand. Know what your approximate prices are going to BEFORE you place orders or ask for bids and then you'll never be saying "Hey, I thought this was going to be a great deal?! What happened? "Good luck! ### Legal Myth Busters in China. URL: https://www.silkroadintl.net/legal-myth-busters-in-china/ Last updated: 2026-07-18T14:48:42.000Z Dan Harris, on the always-excellent [China Law Blog](http://www.chinalawblog.com/?ref=silkroadintl.net), has listed out listed 6 common myths that he hears regularly from foreigners coming to work in China. I then wrote to him with a list of myths that I encounter time and time again from my clients—and he commented on each of “my” myths. The complete legal myths post is [here](http://www.chinalawblog.com/2007/11/i%5Fheart%5Fchinas%5Flegal%5Fsystem.html?ref=silkroadintl.net).His response to me is below—I’ve separated the questions and responses so they are a bit easier to follow.\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_David Dayton,Heard them all many times and all have at least a grain of truth to them. Here goes:1\. Courts are not independent. Whether you win or lose in court could be up to the people that the court is connected to. Many govt. officials are involved in "private industry. " It may not matter if all your legal ducks are in a row if the other side has better guanxi. True or not? True, but the farther away one gets from the local officials (i.e., appeals), the less likely this is to be true.2\. The legal system is getting better all the time but enforcement is still so poor that it may not matter. Even if you win, so what? Maybe you can stop one offense, but if there is money in it another will pop up (or may already have). True or not? True, but part of this is that Chinese courts are just learning about things like fraudulent transfers and piercing the corporate veil. I have had many discussions on these issues with Chinese lawyers (because this is an issue in which I have a lot of experience and interest) and they tell me that we lawyers need to keep working on the judges on this and things will continue improving. I believe this. I argued and lost (through my Korean lawyers) the piercing the corporate veil doctrine in Korea so many times that I actually think it was my arguments that finally led Korea to institute a piercing the corporate veil law. China already has one, but it is going to take a while before it becomes truly effective.3\. IPR protection/enforcement is really the domain of politics rather than courts. Case in point: The Olympics. The fact that they can enforce IP on issues that are of ($) value to the State shows that IPR is still a political rather than legal issue, at least some of the time. Economic development of China is still a more important issue than international IPR. True or not? Mostly False. You are combining two things here. I agree that enforcement of IPR outside the courts is mostly political, but if you bring your own civil suit to enforce IPR in China, your chances are not half bad.4\. Because China is process rather than precedent based system if someone else files paperwork for your trademark/patent/etc. you are basically out of luck. China is not the only country that works like this, I know, but as "the world's factory" and the largest source of black market goods it's a huge issue here. True or not? Half true, half false. This is a huge, huge issue and it is usually the very first issue I raise with every new client. It is mostly a huge issue for North Americans (which is where most of our client base comes from) because things are the exact opposite here. There is absolutely nothing wrong with China's IP laws as they are (I am told) very similar to many EU countries. They are very different from US laws and so US companies tend to get burned. The US, for instance, says the first to use a trademark gets it while China (and most other countries) say the first to file for it gets it. I do not think one system is necessarily better than the other, but in the first to file system you should as hell better know about it or you run massive risks. We get calls all the time from US companies complaining about how someone in China stole "their" trademark and we have to tell them it was not theirs to begin with. Of course, had they hired a lawyer with China experience and simply paid the minimal fee upfront to register the trademark, they would not be having any problem. So it is nothing we lawyers cannot easily remedy. What’s the take away from all of this is this? DO ALL YOUR LEGAL WORK IN CHINA NOW!!!!!The question is not “does the legal system work or not?” The question should be “have I done all the legal work I can to protect myself yet?”I’m constantly amazed that US companies are willing to just say “China is an IPR hole so I’m just not going to do anything.” OK, they don’t actually say that, but that is what their actions say. You wouldn’t do that anywhere else so why is OK in the one place where you need protection more than anywhere else?!Just do it! ### SRI's Qualifying Suppliers Presentation from the Global Sources HK Shows URL: https://www.silkroadintl.net/sris-qualifying-suppliers-presentation-from-the-global-sources-hk-shows/ Last updated: 2026-07-18T14:48:42.000Z As promised, here is the outline of the presentation that I gave in HK. The focus was first-time buyers and some of the things they should be watching out for in starting work in China. An updated version of this presentation will be give in Shanghai at the Global Sources Show, December 13th. Evaluating Potential Suppliers in China• Qualitative Techniques for choosing the best factory for your needs. What to know about China BEFORE you start talking• “Westerners come to China with too much trust.” Chinese people don’t even trust Chinese from other provinces.• The legal system is probably not what you are used to. While it’s getting better it is not independent and is not precedent based (it’s a file first system).• Potential suppliers will probably never say no. If they say maybe, that means no.• There will be problems. Don’t go in blind-you will have problems so chose your suppliers carefully.• You do NOT need special relationships or backdoor connections to work in China any more. Don’t go here. Do it right, do it legally or don’t do it.• Factories are limited in the number of people that can/will make decisions. If you aren’t talking with the decision maker you’re wasting your time. There is no substitute for being here yourself• You cannot judge a factory by their website or show booth• You must visit the supplier yourself, probably more than a few times.• Plan on multiple trips for better quality and better/faster problem solving (i.e. better personal relationships).• You cannot manage a project from 5000 miles away by phone, fax and email; especially when English is the second or even third language.• If you’re working with trading company and they tell you can’t go see the factory, get a new trading company immediately. If they are not completely transparent you don’t want to work with them. Realistic Expectations• Tradeshows are just that-SHOWS. So verify everything yourself.• Don’t expect to finish everything in a 10 day visit. Your factory visits better take more time than your trip to the Great Wall or the Canton Fair.• You can have any two of the following:– High quality– Short production times– Low costQuestions to ask at a trade show:• Ownership?• Export History/license?• Client Recommendations?• Actual Capacity?• Age/condition/make/ model of Equipment?• Average Order Qtty?• Average Production Time?• Sales Department Questions:– Fluent in English?– Dedicated rep?– How long with company/turnover?– Can you talk with managers/engineers directly?– Who makes decisions on price/materials/quality?– 3rd party QC?Factory Visits• Plan on spending as much time on the floor as you can--more than a day, if possible.• Make sure you see production and QC in action.• Talk with the factory’s other clients--why are they there and what is their experience?• Bring you own translator and probably lawyer too (if it’s a big project/order).• Visit as many potential sites as possible.• Talk directly with designers, managers, QC and engineers not just sales people. Questions to Ask Yourself and the Supplier• Can you honestly communicate with them?• Do you feel comfortable working together?• Are you going to have issues justifying the factory conditions to your investors?• What are the production line bottlenecks that will most affect you? Is the allocation of labor what you need?• How much of their production do they outsource? You cannot ask this question too many times or to too many people.• Do they have multiple sites? Which one did they show you? Where will they (really) produce your items?• How many other large clients? What’s their order schedule?• When is their high season?• What does the price include/not include? Know your INCO terms!• What is done with non-conforming products? If you don’t both specify and verify what is to be done you’ll most likely see your rejected products again.• How does the factory control molds, design and other IP?• Utilities and back up?• Is the QC department independent from production goals?• Do they have various MNC (Wal-Mart, Disney, etc.) and industry certifications?• How do they verify incoming product quality/origin? Can you have original documents and copies of standards?• R&D and/or mold design/manufacturing done on site or outsourced? If not on site how do they control quality?• Safety procedures defined and followed?• Do they pay at least local minimum wage?• How much machine/process training is provided for each person/assignment?• Is there project and shift specific training? Final Points• Complete more Due Diligence than you normally would in your home country.• Be involved in the process more than you would with an order in your home country.• Record ALL conversations, commitments, changes, options, problems, EVERYTHING. You will be the only one that records things, so make it a habit to send copies of conversations to your supplier and have them confirm them.• Take ALL legal precautions you can at home and in China.• There is always another story/more to the story; so keep asking questions.• Spend the necessary time to do all due diligence BEFORE you pay for any product or sign any contracts. ### Global Sources Final Wrap Up URL: https://www.silkroadintl.net/global-sources-final-wrap-up/ Last updated: 2026-07-18T14:48:43.000Z I pray that the internet Gods won't block this--for some reason I've not been able to post for the entire last 10 days--couldn't have anything to do with a large gathering in North, could it?!Anyway, here is attempt number 239 to post a simple tradeshow report. A couple of final notes from the GS Tradeshow in Hong Kong before I post the SRI presentation. First, Global Sources is starting a new website with information for people going to China. There are a number of articles written by yours truly and many other great resources. Check it out [here](http://silkroadintl.net/blog/wp-admin/www.Importfromchina.globalsources.com?ref=silkroadintl.net).Second, Allen Mathews is the only guy I’ve every meet that is honestly glad for the multiple degrees of Chinese bureaucracy. Why? Because of the information that they provide on Chinese companies for people that are doing due diligence on their potential Chinese partners. For more on the services that he offers check out Verify’s [website](http://www.verifyscreening.com/?ref=silkroadintl.net).Allen also said that US companies coming to China need to be wary that they are not involved with PEP’s in China—Politically Exposed People. Why? If these people in sensitive positions get into political or legal trouble it could be a PR nightmare for a foreign company that is even indirectly involved with an associated business entity. Third, Michael Lavergne of Bureau Veritas ([website](http://silkroadintl.net/blog/wp-admin/www.cps.bureauveritas.com?ref=silkroadintl.net)) listed out the steps of an integrated supply chain and where you should be testing your products. The steps for audits, tests, or inspections include:An initial Technical Factory Audit and a Social Compliance Audit;Product Testing in Development. System Line Review. In-Line Inspection of ProductProduction Testing of Finished Product or Parts. Pre-shipping Testing of full or a Percentage of Total Order. Distribution Center Testing (Too late for solving any problems). Last, Mike Bellamy of Passagemaker ([website](http://silkroadintl.net/blog/wp-admin/www.psschina.com?ref=silkroadintl.net)) has a “black box” operation—the ability to coordinate various suppliers and control product quality and protect IP. The concept is that if you don’t any have your own presence in China you can use Passagemaker to both assemble and coordinate production with the confidence that your IP will be protected an you’ll get the product quality you demand. Good stuff! I’ll post the entire “Qualitative Techniques for Finding the Best Factory” presentation later this week. ### NBA in Macao URL: https://www.silkroadintl.net/nba-in-macao/ Last updated: 2026-07-18T14:48:42.000Z I went to Macao for the NBA’ China Games 2007 last night. The game featured the Orlando Magic and the China All-Star Team from the CBA. Most of the Chinese team were the same guys that play for the Chinese National Team, minus Yao and Yi. They also added 3 foreign players from the CBA (China Basketball Association). Basically, China was completely outclassed. Not surprisingly, since they don’t do very well against the US even when they have Yao and Yi. But there were some bright spots for them despite being behind by more than 20 points for most of the game. First, I don’t know why Wang Zhi Zhi isn’t playing in the NBA. He was certainly better than the three (Outlaw, Foyle and Gortat) back up centers that the Magic played. He outplayed Howard in the first quarter and was the leading scorer for the Chinese. He is a smart player with skills at least as good as most of the back up centers in the NBA now. Second, after getting burned three times in a row buy the faster Chinese guards the Magic’s Arroyo took the game into his own hands and completely schooled the younger, smaller Chinese guards. By the way, Arroyo and Wang were easily the best players on the floor. How is this a bright spot for the Chinese team? Well, they need to believe that they have good guards that are fast and can shoot—but just don’t yet have the attitude to compete for the full game. The guards themselves need to believe this—they obviously were scared or embarrassed or both after Arroyo took over. But that’s something they can learn with more international experience. Also, Arroyo has torched just about everyone, including Team USA, in the past. The fact that the Chinese guards got into his head at all means that he wasn’t ready for how good they could play. Backhanded to be sure, but a complement nonetheless. Finally, the Chinese can shoot better than and are faster than the Magic. So why didn’t they run and gun?! Why did they continually try to post up their three big foreigners against the obviously better Orlando big men? This was absolutely the coach’s fault. When the Chinese were running and shooting outside they lead. When they slowed down and decided that they could play NBA style power ball they went from up 9 to down 10 in about 5 minutes. Shooting guard Sun shot and dunked over the Magic 2 guards just about every time the ball didn’t get dropped down low. Now a word about the fans and venue. It’s very odd for me, as an American to go to a game and have the crowd cheer for both teams as well as the time-out acts. The fans loved the experience more than the game as many of them had no clue what was going on on the floor. To be sure there were a lot of Chinese NBA junkies there but it appeared to me that most of the people there were just folks with money rather than a basketball Jones. But the Venetian was awful!. The security was a joke, the crowd control non-existent, the food bad and the line horrendously long. If you got there early you were required to check your camera and bag. I couldn’t do it. There was no security at the camera check desk, just an open desk in the main hall that was soon packed waist deep in expensive cameras—I’m sure that many were stolen—no way they couldn’t have been; I personally reached over and took my own bag after I had second thoughts about checking it. If you got there late you had to wait in huge lines. The security were so overwhelmed by game time that bags, cameras and people without tickets were all getting into the arena. There were at least 5 people in my little section that had cameras with telephoto lenses and scores of others around the arena. People were posing for photos with mascots and the only security I encountered was a guy telling us that we could have cups but not bottles of pop in the arena even though they were both for sale at the top of the stairs! The game was fun despite the venue and the score. I got some great pics too! ### Update from the GS Show in HK, Oct 14th. URL: https://www.silkroadintl.net/update-from-the-gs-show-in-hk-oct-14th/ Last updated: 2026-07-18T14:48:43.000Z More quality information from people that know how to do business in China. Here are some tips from the experts. First, from Global Sources, Bernie Holmbraker presented the 5 R’s:1\. Re-learn. Realize up-front that working in China is different from buying domestically. You need to go in without any preconceptions.2\. Research/resources. Because you need to re-learn China, take advantage of the online and professional resource available to you. Ask: What can you do to learn more about what you are doing (both importing and production of your own product & the Chinese processes). New resources can be found at: www.importfromchina.globalsources.com.3\. Relationships (guanxi). Business is more personal here than in the west. Trust is first, business is second.4\. Requirements—yours and theirs. Be more than specific than you would be on a PO in the West; get everything in writing, confirm it before you pay for it.5\. When in Rome… Be polite, culturally appropriate and do as much as you can to make the process as comfortable and effective as possible for all involved. Second, Allen Matheson from Verify, said that because China is seen as risky, too many businesses don’t do any DD—they assume that there is risk so they just jump into China and forgo any DD because “hey, it’s risky anyway.” There is much that can be done in China; sometimes even more than what’s available elsewhere. At the very least a simple credit reports should be doing on all potential suppliers. Third, Michael Lavergne from Bureau Veritas, listed out some steps that you can take to ensure you are getting what you expect and that you are doing it the right way (legally). You should ask: Am I confident? Are my products safe? Am I doing what is right? Also, he agreed that choosing your supplier is probably the most important decision you will make. Choosing a good supplier is half the battle for getting good product. And, since your name is on the product and you’re paying the money, it is the buyers’ (your) responsibility to verify and confirm the claims made by potential vendors/suppliers. Remember, A VENDOR IS ONLY AS GOOD AS THE INFORMATION YOU GIVE THEM. So, standardize information formats, keep it as simple as possible, document everything, and provide as many appropriate samples as possible. Testing and inspections are essential so you need to know: What is required by law? What are your customer’s requirements? Are you testing for additional high-level risk issues? Finally, who is paying for it? When you test use only recognized testing labs, standardized procedures and document everything. Good stuff. Good luck. ### Global Sources Show Updates--SME's Sourcing Techniques URL: https://www.silkroadintl.net/global-sources-show-updates-smes-sourcing-techniques/ Last updated: 2026-07-18T14:48:43.000Z Quite a bit of really good information at the Global Sources Show today. The show was, as usual, packed and surprisingly the presentations had hundreds of people attend as well. Surprising only because (I was told) there were lingerie and swimsuit models downstairs in the exhibition hall (it’s a lingerie, swimsuit and electronics show). Outside of missing the “show” downstairs to listen to some suits speak, the only downside to the presentations was that we started late and Q&A time was limited. The presentations were generally geared toward SME’s coming to China for the first time. In addition to myself, Mike Bellamy was the other buyer on the panel. Both of us have had about 10 years of experience in China and fielded the most questions from the audience. Allen Matheson, Sabastian Tschackert and Michael Hetzel represented professional DD, shipping and 3PQ services respectively. The most repeated take away from all these speakers was that it is incumbent upon you, as the importer, to verify all the materials, claims, quality and processes that will ultimately bare your company’s name. You must either hire someone to do it for you or plan on doing all verification yourself. If you don’t do this you can plan on having either quality issues, financial issues or both—probably both. Another big issue was the structuring of deals and contracts. All contracts need to be both legal and extremely detailed. If you expect to realize any specific result you had better contract for it specifically. If it’s not on paper, and signed/registered/notarized it doesn’t really exist. Allen spoke to the impressive availability of business and legal information in China today. He says that there may in fact be more information about potential suppliers available in China than in Western countries. For example last year’s P/L filings, corporate and individual credit reports, company registration information, due diligence reports, litigation history, and PEP listings are all available from government and private agencies in China at relatively low cost. He also mentioned that too few Western companies do enough DD on their China supply chain. Each of the presenters commented on the fact that you’d better be legal with all your contracts, agreements and processes. Mike Bellamy mentioned that legal contracts made in China are more effective in China than contracts made outside of China—makes sense, and I agree, if you are dealing with a 100% domestically owned company. My experience with JV’s has been that if the factory you are working with has a foreign office, you can get better legal resolution outside of China. Either way, you need to have your legal bases covered. Michael Hetzel emphasized that you’ve better be managing and doing QC on your entire supply chain—not just the one “dimension” or single factory that most buyers think about when coming to China. He says, and I couldn’t agree more, you’d better be doing QA on the entire process from start to finish. More presentations to come—Sunday the 14th and then at the House wares and Crafts shows later this month. ### Qualifying Buyers-SRI presentation at the China Sourcing Fair URL: https://www.silkroadintl.net/qualifying-buyers-sri-presentation-at-the-china-sourcing-fair/ Last updated: 2026-07-18T14:48:42.000Z Just another shameless plug for SRI's presentation at the Global Sources China Sourcing Fair to be held at the Asia World-Expo in Hong Kong this week. The presentation is part of Conference Program for buyers being held at the Fair. David (me) is speaking at 12:30 on the 12th and 14th. Both presentations will be in Room 201C.In addition to my presentation there will be other speakers and a panel of experts to answer questions about buying in China. Included on the panel are:Mike Bellamy, China Operations Director, PassageMaker Sourcing Solutions. David Dayton, Chief Executive Officer, Silk Road International (SRI). Michael L. Hetzel, Vice President/Americas, Pro QC International. Bernie Holmbraker, Export Communications Consultant, Global Sources. Allan Matheson, General Manager, Verify Ltd. Sebastian Tschackert, General Manager, Shenker International (Hong Kong) Ltd. ### Even Stocks are Tainted in China. URL: https://www.silkroadintl.net/even-stocks-are-tainted-in-china/ Last updated: 2026-07-18T14:48:43.000Z By now we should all be convinced that anyone doing business in China better be very involved with their suppliers. But the latest news suggests that some people still haven’t learned that lesson yet. Tainted BSA badges aside, the juicier story is now stock in worthless companies. The stock for the tech firm China Expert Technology is now, it seems completely worthless. The US investors that bought up to a 20% stake in the company and saw the value rise to $7 are now sitting on worthless paper. What happened? It looks like they just didn’t do the due diligence necessary and/or didn’t have anyone on the ground to confirm that what the company was claiming was real—after the initial dog and pony show, things fell apart. Once the first visit was over the veneer of “US accounting” practices, a home office in Hong Kong and announcements of big provincial level contracts convinced foreign investors that this was a safe bet. Of course, only insiders know the full story, but you can bet that none of the foreign investors stayed in China confirming orders even though they bought 20%. More specifics are available [here](http://www.iht.com/articles/2007/10/05/business/05norris.php?ref=silkroadintl.net).What’s the take away? You’d better either be on the ground yourself or have someone who you trust be on the ground to represent you. You, as the buyer/distributor in the West will ultimately take the biggest hit in both PR and $$ for a shipment of below standard product. What’s avoiding that hit worth to you? So whom can you trust? You need to hire a company or employee who is rewarded for accuracy and quality rather than fast turn around and cheap prices. It’s still true—you get what you pay for. Whether its stock, toys, tires, or BSA badges. What does one trip to China do for you? Nothing. Absolutely nothing. If you are the buyer or an investor don’t forget that a tradeshow is just a show and Shanghai and Shenzhen are showcase cities—designed specifically to impress foreigners and attract FDI. That’s whey they were built and they do a damn good job in fulfilling their purpose. Further, a one-week “fact finding” tour of a facility will get you more dinners and photos than facts. The Chinese have been “entertaining” foreign gests for centuries and they know exactly what they are doing—especially if you’ve got cash to spend. A 10-day trip to China will do nothing but overwhelm you. So don’t get all excited that China “is totally different than I thought it would be. I can’t believe it!” as we hear so many people say. Keep your wits about you, keep your camera and your wallet in your pocket, ask every question to more than one person and compare answers, come to China more than once and don’t invest anything until your harshest critic has been answered. ### China Shakes the World, The Rise of a Hungry Nation; James Kynge. —BOOK REVIEW URL: https://www.silkroadintl.net/china-shakes-the-world-the-rise-of-a-hungry-nation-james-kynge-book-review/ Last updated: 2026-07-18T14:48:43.000Z When I read a book I look for three things, entertainment value, new information and applicability to my current situation (whatever that may be). I first read China Shakes the World maybe 6 months ago, and honestly, I left it on the plane when I was done—it was very entertaining to read but it didn’t do much for me beyond fill my flight time. Basically, I didn’t see myself pulling it off the shelf in the future and citing it or recommending it to others. But since then it won the Business Book of the Year (Financial Time) and it got some good reviews by people that I respect so I figured that maybe I had given it a bad shake or missed some hidden nuggets of practical information. So I bought it and read it again. My second reaction isn’t much different from my first. I loved the stories and the travel log-like experiences. Indeed, the best parts of the book are Mr. Kynge’s writing style and the personal experiences he relates. The personal stories of individual Chinese involved in the worldwide changes are indeed fascinating too. Tales of illegal Chinese textile workers in Italy becoming factory owners in China are great, personalized versions of stories we’ve all heard. Equally interesting are the stories about oil barons, auto magnets, lawyers, politicians and activists. The human side of the “China experience” is a successful pattern for humanizing the numbers—and there are a lot of numbers here—that has been followed by many an author trying to make sense of China for the lay reader. I like to read books about China by authors who can speak Chinese, Kynge speaks Chinese and that gives him insight into China that writers who do not are not able to grasp. Further, he’s been here a long time—and while that may not mean much in other parts of the world, in China it means that he’s witnessed history. Earth shaking history. Kynge also collates a mess of stats into the kind of reports that make people’s head’s spin. And judging by the title of the book that was his purpose. The growth in China is astounding, amazing and truly unique in the history of the world. But with all that praise I’m still left, after I read the book (again), wondering what to do with the stories and the numbers? Most troubling is the fact that the banking and legal data is at least three years old. Which in China Years is more like 10. China is now shaking the world and will continue to do so, but this book will not. It should be read for all the individual stories, personal insights and Kynge’s extensive experience—it’s a very entertaining read. But it’s not all that new and it won’t help you do business in China. ### Product Recalls in Perspective--well, someone's perspective URL: https://www.silkroadintl.net/product-recalls-in-perspective-well-someones-perspective/ Last updated: 2026-07-18T14:48:43.000Z In response to the recall issues and a discussion about them, my friend Darrin Wilkey helped my put everything into perspective. Darrin wrote:Sure China has widespread human rights issues, corruption at every level of every hierarchical organization, and a minor problem of tainting all manner of consumer products with things that “scientists” and “experts” and other government yesmen say are bad for us. But let’s just take a minute to think about all the great stuff that never gets brought up by the media because it’s not deemed “headline worthy” and “doesn’t incite panic”. For instance, fortune cookies. You never see articles about how frequently we are encouraged and guided in every aspect of our daily lives, from buying lottery tickets to finding love, by that insightful little piece of parchment. Instead, the focus is on the number of ink poisoning cases…is it really China’s fault that idiot Americans eat the whole cookie, fortune and all, by the bucketsful? No. Also, walls. I’m sure you’ve noticed the influence the Great Wall Of China has had on society. I see walls everywhere I go. I mean, I can’t go 10 feet without finding a wall of some sort – now that’s a lasting influence. It’s even reached the corporate vernacular with phrases like “Chinese Firewalls”. Seriously, can you imagine any other culture that would add FIRE to walls? Brilliant. In conclusion. The next time you throw out a tube of toothpaste, or a Dora the Explorer Doll, or even a can of wet cat food just because it has Made In China on it and shows up on some government list of terrible stuff that killed so-and-so, I just want you to consider one thing. Chinese Firedrills. Wow. FIRE to drill. Now maybe you won’t be so cavalier about throwing up perfectly good cardboard dumplings...the Chinese obviously know something we don't. Darrin ### Two apologies are better than one URL: https://www.silkroadintl.net/two-apologies-are-better-than-one/ Last updated: 2026-07-18T14:48:44.000Z With the double mea culpa by Mattel this week, there were two very interesting comments made regarding the reality in China. A great report on the two speeches can be found [here](http://www.chicagotribune.com/services/newspaper/printedition/saturday/chi-sat%5Fmattel0922sep22,0,6366313.story?page=2&coll=chi%5Ftab01%5Flayout&ref=silkroadintl.net).First, a word about the involvement and reach of the Chinese government in the activities of individual factories and buyers. From the Chicago Trib article liked above: "You're dependent on the good will of the government," Shenkar said. "They can do a lot to make your life difficult. "This doesn't mean that China is the police state that so many in the West mistakenly think it to be. Indeed, much of the time China is more similar to the American wild west where the law is made by those on site (and with the guns). But the government does have a long reach and can still deliver a punch when it’s in it’s own best interest. There is NOTICEABLY more involvement by government regulators this month than there has been in the past--and that is a direct result of both the problems and the government doing something about it. Second, as I've stated before, the responsibility is on the foreign company, not the Chinese or American government or even the Chinese supplier to confirm quality standards. Again from the article: “Many observers, however, agree with the Chinese government that Mattel deserves most of the blame for the mess it has created in China. Few experts would let Chinese officials off the hook for failing to regulate their industries effectively, but many say that for a large, multinational corporation like Mattel, the Chinese manufacturing environment presents a case of buyer beware.”Regardless of who is at fault, and there is blame enough to go around, my experience over that last month with Chinese factories is positive—they are scared they will lose money and they are indeed seeing more government inspections. My experience with US clients is the same--they are requesting testing documentation like never before. We can only hope that this fear leads to increased responsibility from all parties and that the hightened standards continue. ### SRI's David Dayton Speaking at China Sourcing Fair in Hong Kong in Oct URL: https://www.silkroadintl.net/sris-david-dayton-speaking-at-china-sourcing-fair-in-hong-kong-in-oct/ Last updated: 2026-07-18T14:48:44.000Z I'll be speaking at the China Sourcing Fair seminar about buying in China, specifically on evaluating suppliers in China, in October. The forum is the Honk Kong Asia World Expo (near the Airport) on the following dates:Friday, October 12, 2007, 12:30-3:00PMSunday, October 14, 2007, 12:30-3:00PMSaturday, October 20, 2007, 12:30-3:00PMMonday, October 22, 2007, 12:30-3:00PMThe format is a short presentation followed by Q&A on each of the 4 different days. There are other speakers as well, covering topics such as: Opening/Getting Started (in Importing), Due diligence, Quality control, Shipping/logistics and Paying suppliers. Here' a link to the show: [China Sourcing Fair](http://tradeshow.globalsources.com/TRADESHOW/TRADESHOW.HTM?ref=silkroadintl.net)I'll post the presentation here after the event. ### Thoughts on avoiding Quality Fade URL: https://www.silkroadintl.net/thoughts-on-avoiding-quality-fade/ Last updated: 2026-07-18T14:48:44.000Z Every manufacture or buyer will, at some point, have to deal with quality fade of some type. But there are two types of quality fade. And while each result in the same end result, bad quality products, one is significantly more nefarious than the other. The first type, as detailed by Paul Midler in Forbs Magazine in July (link [here](http://www.forbes.com/entrepreneurs/2007/07/26/china-manufacturing-quality-ent-manage-cx%5Fkw%5F0726whartonchina.html?ref=silkroadintl.net)), is purposeful and willfully dishonest. This type of quality fade is consciously and deceptively crafted to give the suppler more profit at the buyer’s expense. And the costs to the buyer can be huge, just ask Mattel. It’s too simple, and rather racist, to just say: “You can’t trust the Chinese.” There are more structural problems at work here. Besides historical insecurity, especially recently, I think that the basic problem here is both that China has yet to develop a culture of trust and the resulting legal system to support it but that, as James McGregor says, Westerners come to China with way to much trust. Because of the structural problems and history of political instability the Chinese don’t trust other unknown Chinese—so why do we? Why do you think that Guanxi is such a big deal?!Now, I’m not saying that all Chinese are dishonest and the West is the bastion of moral goodness. But in a culture of shame (it’s only wrong when you get caught) like China’s the relative morality is different that what most of us would expect. If you don’t consciously allow for the fact that you will most likely be taken advantage of in the name of business. Further more, many newbies in China are often overwhelmed by China’s sheer size and the initial hospitality of our hosts. We are enamored by the opportunity, the masses of people, the incredible rate of development and growth, the huge factories and the cheap labor prices. And in our China dream we, more often than we’d like to admit, forget our good senses at the door and trust complete strangers from a country and culture we often no nothing about. Many China hands will scoff at the simplicity of this comment, but I stand by it. How many engineers or QA or Production Managers from the West have after rounds and rounds of just-barely sub standard products and under duress from the home office to meet a deadline have approved something that was previously unacceptable? I’ve seen this more often than not with projects that we’ve been asked to fix; and that’s when there’s a Western manager involved. The China apologists typically chime in about now and say something smart like: “they probably learned how to do quality fade techniques in the West.” Or “all countries have this problem. Why pick on China?” I’ll grant both points—yes, they may have learned it elsewhere and yes, it happens every else. But identifying the source of the concept and defending China’s practices doesn’t solve the problem. The problem is China is the World’s Factory and so quality fade as an endemic problem across a massive production base is global, immediate and potentially mortal concern. One of the common solutions of this type of quality fade is to hire third party inspectors. More often than not will solve the problem. But there are times when testing will only help you achieve lowest acceptable standard—hardly a standard you want to advertise. Other solutions range from partially investing in or completely owning/building your own production facility to simply buying product from a vender that is then responsible for the quality of the product. The bottom line is, at some point, you have to have a degree of trust with your supplier. You can test all you want. You can personally watch the entire production run. But you can’t watch the production of all the rare materials nor can you monitor each individual line worker’s performance. You must eventually test a sample percentage, trust and work out responsibility agreements with suppliers in the chance that there are future problems. While it’s nice to see the current rash of articles on this issue I’ve not read any that list out what to do once you’ve found out that your product quality is fading. And brings us to the second type of quality fade. This second type is much easier to (emotionally) deal with than the first. You don’t have to confront someone on the ethics of doing business. But it requires that you schedule regular updates and are equally as diligent in what, when and how you test.1\. Establish standards and live by them at all times and in all discussions. If you can’t/won’t or don’t follow your contract you cannot expect you supplier to.2\. Record every change on each production run and why you agreed to any changes. It’s not enough to just record that a change has taken place, you must record why and what the solutions, options, costs and times were. You will be able to not only use these again in future discussions, but you will be able to determine what changes affect product quality and why—and what can be done (or undone) for the future orders.3\. Annually renew the sample standard. Everything fades or loses quality over time (even the standard for the kilogram is shrinking!) and you must update what your standards are too keep pace with this incremental fade.4\. Annually renew your measurement tools (if necessary). If you are using a digital caliper, Pantone books, or other scales or tools, get them checked or replaced annually to make sure that you are indeed accurately testing. Pantones are notoriously prone to fading and can cost you an entire order of otherwise acceptable product if you’ve approved the “wrong” colors. On a related note, if you plan on using you own Pantone books again, don’t ever let a factory use them.5\. Seal, bag, laminate, vacuum pack—do whatever it takes to preserve your sample’s quality. If you’ve ever sent a sample to a Chinese factory and then asked for it back or asked to use it for QC you know what condition it’ll be returned—unrecognizable. Ink, oil, grease, cuts, tears, missing parts, etc. Once you send a sample to a factory, do expect to ever use or even recognize it again. So, send the factory a sample and then seal away another one for you to use for QC later.6\. Keep and additional standard sample in a separate location from production—tell your supplier that the “off-site” samples is the final standard if there are any questions. If the standard is in your possession you will never have to have ask the question: “Are you sure this is the sample we gave you?”7\. Check molds, frames and all product equipment for degradation and replace if necessary. Along with testing equipment, you need to check you hardware on a regular basis—and it should be before you have a new production deadline because at that point it’s too late. Molds wear down and even break as they are moved in and out of machinery. Confirm before starting and after completing each order that your molds et al are in good condition.8\. If you’re moving to a new factory—do the entire start up process over again. Don’t assume that because you’ve been through the process and this new factory is “better” than the last one that you don’t have do all the same tedious start-up procedures again. YOU DO.9\. If you are outsourcing part of the product—require QC before the parts are shipped to the assembly location. Even if the sub-contractor is miles or even countries away, take the time to research a local QA firm to help you. The few hundred dollars it will cost you (most likely less than shipping) will save you thousands of dollars and weeks of time if you can catch problems before you ship. Even simple things like bags for packaging can delay you a week or more. It’s just better to be safe than sorry.10\. Develop and follow a detailed QC checklist. Like you contract, go over this list with your supplier and their (and your) QC personnel before you start the project. When you and the QC department all understand the standards that you’ll be using for QC there will be no surprises down the road (other than your supplier saying: “You’re serious, you really are going to be that strict with quality?!”). Having the list is not nearly as important, though, as is sticking to it no matter what. Like you contract, if you deviate, they will too. Never never accept “chabuduo” (almost) as good enough. Good enough for you will be stretch into a huge disparity with multiple QC with multiple agendas checking your product. Don’t change you standards, no matter the temptation. If you do, they will and then you’ll have no leg to stand on if you call them on it.11\. Use your own personnel and (not or) a reputable third party to constantly do random QA. Not a fail safe, but usually very effective. Of course you’ve got to train and communicate your standards to them just like you would if you were communicating with the factory directly. Third parties get paid by the hour/project and so have incentive to do the job as quickly as possible—know this is their bias up front and take the necessary precautions (book full days and require a time report along with product reports). There are obviously product specific details for everything under the sun. This is just a general list of procedural items. ### Foreign First Impressions URL: https://www.silkroadintl.net/foreign-first-impressions/ Last updated: 2026-07-18T14:48:44.000Z I just spent two weeks with four 60 year-old American professionals who have never been to Asia before. This group travels to Europe at least two-three times a year, they own their own companies, speak more than just English and are affluent by American standards. Their impressions of China and other Asian countries reminded me that I’ve been here for a long time and as a result I’m jaded to the realities of living here as compared to the US.Their opinions follow:First, crossing the boarder into/out of China is time consuming, complicated and obnoxious. Outside of some of the food, this was the biggest complaint. Shenzhen to Hong Kong was especially difficult. Customs officers were “cold, unfriendly refused to explain problems/requirements.” They were baffled at all the forms and that China couldn’t replicate the Euro-style system for HK/Macao/China boarder crossings. Second, you’ll never win a gift giving “war” with a Chinese person. A corollary is that you’ll never win a who’s-paying-for-dinner arguement with a Chinese woman either. No matter how many gifts that were given or how many times they tried to pay, the Chinese always won. Of course the Chinese were the hosts and felt required by culture to pay. But the Americans really did want to and tried to, to no avail, pay for things. Third, face vs. politeness. They found very interesting the fact that while in public the Chinese spit, pick their (own) noses, pee on the streets, have no idea about lines, “drive like they’re the only ones on the road” and talk loudly and yet they are, at the same time, incredibly gracious and hospitable to guests. The contrast was commented on almost daily. Further, while every conversation “sounds like they’re fighting” there was never any road rage. Each “fight” ended in smiles and myriad traffic violations were never even noticed. We drove all over the country (4 cities) in cabs, private cars, mini buses, mini cabs and trains. I can’t believe with the crash course (excuse the pun) in Chinese driving we didn’t lose one of these folks to a heart attack. Third, WOW! The pace of development is absolutely mind boggling. Where are all the investment dollars coming from? Are the investors in all the buildings seeing any ROI? What’s the difference between the Chinese system now and the other Asian countries before the crash in ’97? Hmmm…good questions. So we talked with some accountants/consultants in HK that help foreign clients manage investments in China. The short of it was: Most of the money is coming from Taiwan, HK and then other foreign countries. And, no, profits are yet to be seen in most physical investments. In general people are still waiting for ROI from China. While investments in WOFE’s are a great new opportunity (as of this year) most joint ventures are not yet seeing profits—this was according to the two top-ranked accounting firms that we spoke with in HK.Fourth, how does a city like Shenzhen with more than 10 million people and the highest per-capita income in China not even make it onto most maps of the world?! How many Cities in China have over 10 million people? At least 5—Chongqing—23 mill, Shanghai—17 mill, Beijing—15 mill, Shenzhen—12 mill, Guangzhou—14 mill. Those five cities have the equivalent of about 25% of the US population but only about 6% of China’s. For comparison, the US has three cities over 10 million (NY—21 mill, LA—18 mill, and Chicago—10 mill). China has 42 cities with populations over 2 million while the US has only 25 in about the same size country. I just don’t think that you can physically print 50+ city names on the standard world map of China—and Shenzhen is only 30 years old, so many people have never even heard of it. Also, Chongqing (Chungking) as an administrative region (like Beijing and Shanghai) is only 2 years old. ### The personal price of doing business in China. URL: https://www.silkroadintl.net/the-personal-price-of-doing-business-in-china/ Last updated: 2026-07-18T14:48:44.000Z I originally wrote this blog as a list of warning for those who are maybe a bit over excited about coming to work in China. I didn’t mean it as a bash, but just a list of things that are real. After I finished, I thought that it might be a tad derogatory, so I ingested a large amount of chocolate and wrote a second, more Pollyannaish version (and yes, you’ll be glad to know that “Pollyannaish” is an actual work that does indeed spell-check; the word “blog” does not, though. Go figure.). Instead of running two blogs, I’ve just pieced them together. This is not a rant or a complaint. It’s a real part of doing business in China and I list out the details for those who are expecting a move to China full time (more than a month) to be just like their previous quick trip to China for a factory visit. Nor is this all roses. It’s a real part of doing business in China and I list out the details for those who are dreading that a move to China full-time (more than a month) will be just like any other “business move” since all they’ve seen is China from quick factory visits. Many will counter with “but when I come to China I get stuck in terrible traffic, I have to go out every night and I live in a hotel.” And I’m sure you do. But that’s not going to happen if you move here. Life of the ground for an expat can been down right plush if you work for the right company. And an equal number of people will say, “When I come to China I have chauffeured cars from the factory, expensive meals and nice hotels.” And I’m sure you do. But that’s not going to happen every time and if you move here it will very quickly stop. This is life on the ground for most expats not employed by huge MNC’s.1\. Time—International hours. One of the most exhausting things about working in China is the fact that the rest of your life is still often going on 12 or more hours “off-schedule” on the other side of the globe. This means that you’ll put in a full day of work at a factory here and then go home to a full day’s worth of emails, calls and meetings; meeting with the home office are at 11PM or 5 AM, calls home to family are at odd evening hours too. This can quickly become more than an emotional drain, it can hurt your physical health too. Balancing the demands of both time zones requires saying “no” and sticking to a schedule. Regular exercise helps as does “losing” your cell phone for an hour or so of private time each day.1a. Time—International hours. What company isn’t already on this schedule? If you’re used to dealing with China from the US, you’ve now got a better schedule. Besides your life isn’t going on 12 hours off-track anymore; since your family is here with you in China. An added bonus is that when you wake up you’ve got a full day to answer the emails that came in over night. You can start you days early with conference calls in your bunny slippers and bathrobe too. Early to be early to rise…you know what happens! And leaving your cell phone on your desk for a catered lunch with your spouse means some quality personal time is easy to find.2\. Domestic travel—Extensive and exhausting. I’m typically on the road 3-4 days a week. For me “on the road” means that I’m flying, driving or on a train to a factory in one of any of the 7 provinces and 4 countries in which we manufacture goods. Outside of down town in the major east coast cities, most travel in China, even if you have a driver, is over rough roads and to out of the way places. I’ve used 19 different airports in China and, except for the old Shanghai airport, I’m convinced there isn’t another airport in the country that’s less than an hour’s drive from down town—and no factory is actually “in Shanghai” or “in Shenzhen” or whatever other city is on the business card either. Traffic is dangerous and rush hour is as bad here as anywhere else. A “quick” factory visit for me will require at least two hours of driving one way—it’s rare that I can ever visit more than a single factory per day—even if they are in the same city. This makes long hours in the car/plane/train and regular stays in hotels an almost daily part of business in China. Things are certainly getting better and there are even a couple airports in China that are close to what you’d expect from a city of 10 million plus. A couple of specific tips—Shanghai (old and new) are notoriously bad for delaying flights. The commercial air-space between Shanghai and Taiwan is used by the military who do not file flight plans. Second tier cities (Yiwu, Wuxi, Guiyang, Shijiazhuang, Lanchang, etc.) often have little more than an airstrip and a baggage claim—don’t expect to find “services” at the airport.2a. Domestic Travel—Convenient and comfortable. If you’re on the road 3-4 days a week like I am, China can be a dream. Many of the planes are new (Dragon has a great fleet) and the service is SO MUCH BETTER than in the US. The HK airport is the best in the world and Japan, Korea, Taiwan, Vietnam and Thailand are all less then 3 hours away. Domestic airports in China are improving daily too. Pudong, Shenzhen, Beijing, Taipei, Gaoxiong are world class and with a driver or cheap taxis you never have to find a place to park. My personal on-time flight experience has to be over 70% for the last 5 years. One of the best things about living in China is the time that I have to read in the car. On trips to factories I have time to read, write, catch up on finances and even meet with clients over the phone—since I don’t have to drive myself like I would in the States.3\. Pollution—If the recent food scares in the US didn’t make you cautious you need to realize that there are almost NO quality standards for domestic food sales. Outbreaks of disease (like the current blue-ear pig disease) are covered up. Most health scares reach China through Hong Kong media reports of the latest banned Chinese import. Add to that that 16 of the 20 most polluted cities in the world are in China. Most cities in China don’t have water, air or soil that meet anyone’s minimum standards. I’ve read that living in Chinese cities is the equivalent of smoking 2 packs a day of cigarettes. Believe it.3a. Pollution. Ummm…. Did I mention the Olympics are coming to Beijing in 2008?4\. Low Standard Medical Care—if the pollution wasn’t enough to kill you the medical services will. People with money either go to Hong Kong or Bangkok for medical services. Quality medical services are limited to large cities, are massively over-crowded, dirty, and are plagued with fake medicines and under-educated and over-worked doctors. I’m convinced that its more dangerous to go to a Chinese hospital than waiting until you can get out of China for medical help.4a. Medical Care—When was the last time you were able to see an emergency room MD in the middle of the night for less than $25?! For basic care major cities in China have good care for excellent prices. Of course, you don’t want to have major surgery here, but you can say that for just about any posting outside of Europe or North America. There are Western standard clinics in most major cities and many of the expat communities have clinics with western trained MD’s on staff (and Western prices to make you feel more at home too).5\. Confrontational communications. The Thai’s have a saying about the Chinese: “Chinese people talk like Thai people fight.” If you’re not used to loud and consistent confrontation China will be a slap in the face—literally. Everything is louder and anything can be an argument. Chinese people just shrug it off, “that’s how we do it,” I’m often told. Parking, shopping, QC, ordering food in a restaurant, actually resolving concerns—just about everything can be confrontational. As I got into a Taxi last night at the airport the driver and another driver almost got into a fistfight over the fare.5a. Gracious Hosts. There are few places where people take such pride in an opportunity to welcome you into their homes. They are gracious, generous and honestly willing to share with you all that they have. I’ve been to homes where people will give up their bed and sleep on the floor so that I’m comfortable. Other times I’ve eaten meals that cost more than the monthly salary of the host family.6\. Loud, dirty, poor facilities. Unless you are the CEO of a Fortune Global 1000 company, you’ll probably spend much of your time in China in factories and facilities that are less than the standard you are used to back home—but that’s why we’re all here—the low prices. Factories are often not just dirty and loud but downright unsafe. Factory work is tiring even if you have a nice hotel.6a. Huge, state-of-the-art facilities. There are factories here that are larger than football stadiums—that make bags or t-shirts. There are single-campus factories with more than 50,000 employees. The capacity here is out of this world—literally more space and people than anywhere else on the planet. It’s probably the only place in the world where you can have 400,000 backpacks made in less than 4 weeks—all at the same facility. Not all factories are world class, but combined the number of good and great factories with the sheer number of available workers and total number of facilities and you can see why China is the “world’s factory.”7\. Language—barrier and additional study time. There are three ways to deal with the Chinese language. You can hire a full time translator to accompany you; you can just say, “screw it” and force everyone else to learn English to accommodate you; you can learn Chinese yourself. Each has it’s own advantages and disadvantages. Miscommunications cost time and money—but so does learning Chinese. No matter which one you chose you will have times of frustration and it will take you longer to communicate than back home.7a. Language—a look into a new world. Learning a language is an exciting experience. And even if you don’t turn out to be fluent you’ll make a lot of life long friends trying. But moving to China and learning Chinese gives you (and your children) the opportunity to be on the cutting edge of communications as we start the “Chinese Century.” There isn’t another language on the planet with as much opportunity as Chinese—and moving here puts you right in the middle of it all. But if language is not your cup of tea, there multiple quality options for translation.8\. Personal relationships—lack of associates/family time during week and divorce. Because the hours are long and the culture and conditions are so different from the West family issues can be a major emotional distraction in China. Studies have been done about the higher than average rate of expat divorces and moving teenagers (ok, doing anything with teenagers) can be a nightmare. But I find the lack of daily association with others that know a joke from a Seinfeld episode or remember an obscure song from the 70’s or can talk about NCAA football or can just relate to me from a shared cultural understanding to be one of the things that I miss the most. If you don’t live in an expat community the associations with other expats will be a cherished return to the familiar.8a. Personal relationships. The ability to spend time with your family, if they come with you, can be significant if you have the right opportunities—namely a driver and a maid. These two people can give you as much as 2-3 hours a day more time to spend on personal/family relationships. In addition to more time, there is sizable expat community in the large cities in China.9\. Chinese business hours—evenings and weekends. In addition to the fact that your home office is probably just getting to work when you want to go to sleep each night the Chinese seem to have endless amounts of time to entertain on nights and weekends—not to mention the fact that factories run 24/7\. Late, long dinners and business meetings/trips scheduled any time of the day or night (except during the three “Golden Weeks”) are the norm. Most companies have a huge entertainment budget for client’s nights out (dinner, drinking, karaoke). While all this late night carousing may seem fun at first (or may seem like a waste of time) it will quickly get old and just as quickly become an invasion on your “personal time.” But to some degree, this is how business is often done here.9a. Chinese Business hours. The ability to have huge shifts of workers online 24/7 is a major advantage over production in other countries. Chances are you can meet with managers or decision makers at just about any time of the day or night. You can also expect nights out at factory expense and good food and drink on a regular basis.10\. Petty crime and theft. Getting better? Yesterday the Beijing police said: "Crime cases such as murder, rape, arson and explosions which have seriously threatened people's sense of security have dropped greatly. " So glad I don’t have worry about explosions anymore; that’s a relief. But there is still a reason that Chinese all have bars on their windows, guards at all gates and doors and don’t like to go out into the nights alone. Plan on getting pick-pocketed or mugged. Don’t leave anything valuable out in view. Only park your car in a guarded lot. When we bought a car they told us to never leave anything valuable in the car or people will break the window and steal it—even just a phone. License plate theft is a big deal recently too—not sure how to hide those.10a. Um…. I mentioned the Olympics already, right? How about “explosions” have dropped greatly. Good news, eh?!11\. Poverty, prostitution and corruption. No matter how honest you are, these three things will find you in China. First, you can avoid the sex but a knock on the door or a phone call into your hotel room to offer a massage is common—often calls come multiple times as late as 1AM. The karaoke and nights out come with “companionship.” Shenzhen is said to have the most sex workers in Asia outside of Bangkok. Second, get out of the office, get off the Bund and get out of the exclusive expat villas and you’ll see the “other” China—800 million subsistence farmers and another few hundred million $80 a month factory line workers. You will be hit up for money in your car, at the entrances to subways, on walkways to shopping malls. Stories about kidnapping and maiming children to work as beggars are not unusual. Even the biggest and most cautions companies (Apple, last year) find out that their factory’s that force overtime, don’t pay minimum wage and fire people for getting injured. Despite the decades of 8% growth, China is still a developing country. Third, maybe you don’t have to have back-door personal access to officials to get the rights to do things any more but corruption is still a huge problem in China. Paying off officials to stamp documents that are required for opening an office in China goes without saying (you have no choice). Factories that start production before any licensing or registration is complete are the rule, not the exception. Kickbacks from factories to employees or third parties are openly offered and are expected in return. Buying or paying off 3rd party QC and strong-arm QC departments that force payments to approve goods are rampant.11a. Over the past decade the disagreeable aspects of living in China have been sanitized, if not eliminated, to a large degree. 5 star hotels, a higher standard of living for approximately have the country’s population and “modern” cities and amenities that rival any other world city. Beggars, prostitutes and corrupt officials are regularly rounded up and shipped off to less visible parts of the country. And while have indeed been a number of quality scares with Chinese products recently, the majority of products are, according to the govt, safe and do indeed meet international standards. Again, this is the reality of doing business in China. Maybe these things are not unique to China, but China’s what I know and where I work. These aren’t just a list of personal bad experiences either—I feel like I’m not just average but probably pretty lucky. In the last 5 years: I’ve only been pick-pocketed twice, I’ve have had three phones and a bike stolen, I’ve only had to pay one official just to do his job, I’ve only gotten debilitating food poising once, I’ve flown more than 250 domestic flights and had probably 75% on-time flights (20% on-time out of Shanghai), I’ve only had to fire 4 of 25 employees (all QC) for taking money from factories, I’ve only gone to a Chinese hospital once (kidney stones). And I live in “Chinese” areas of Shenzehn; I don’t live in an expat community and I don’t have a driver. I also argue with factories daily and I work 70+ hours a week. But I do choose to live here. I live here for a reason: there are opportunities here that I don’t have in other places—I choose to live here. But that doesn’t mean that it’s the best quality of life. You’ve been warned. ### "China is Killing China" URL: https://www.silkroadintl.net/china-is-killing-china/ Last updated: 2026-07-18T14:48:44.000Z With all the recent news about the Mattel problems and the resulting suicide I found it interesting what the Chinese were saying about the issue. First, the view of the boss that killed himself is very very positive. Apparently he borrowed a ton of money and paid all of his employees prior to ending his life. The Chinese I’ve talked to say that it really wasn’t his fault; he was lied to by a friend about the chemicals in the paint that he bought. When I replied that he should have done QC on the incoming product the response is often: “yea, but this was a friend.” As if friendship makes procedures unnecessary. And yet almost to a T everyone’s conclusions all seem to be the same—“you can’t trust anyone.” This is important for anyone doing business here—because so much of business is done through friends there is a huge amount of trust between friends and a serious lack of QC. I was told it would be an insult to do QC on goods from a friend. What does that mean for you, the out-sourcer in China? It means that you’d better be hiring 3rd party QC/testing or your just asking for trouble. Second, my wife, who is Chinese, said of all the recent bad press about Chinese products: “China is killing China!” She has this week used this poor image of goods made in China as a tool when talking with factories about quality issues. This is the reality of the educated opinion in China—but will this opinion and the loss of face or poor international image ever change the way things are done here? My contention is no—at least not until the FDI starts showing up with tighter strings attached. Emotional decisions are, as we all know, prone to become less and less effective over time. The fact that people are riled up today doesn’t mean that production in China is going to change next month. It probably won’t. Immediate money issues are much more impactual on daily decisions than is an elusive “image of China” abroad. Third, what I’m really please about though, if there is a silver lining to a bad situation, is that every factory that I’ve visited in the last two weeks has brought this up to me—from Jiangsu to Ningbo to Shenzhen to Taiwan. They are all talking about it. It certainly has people worried. And that, I think, is a first step in seeing some positive result come of this. Finally I’m amazed (maybe I shouldn’t be) at the complete disconnect between what’s happening on the ground and the response from Beijing. The govt, almost in unison, has responded by attaching foreign governments for protectionism, blaming toy companies for causing an unnecessary scare, retaliated by “you do it to” product bans and basically done everything but take responsibility for the lack of enforcement in China. Certainly there are problems is other countries. Sure there are foreign firms working in China that are culpable. But the scares are real too. And enforcement in China is notoriously bad and nothing is being done to fix that at the level where it matters most—the production floor. It seams to me that regular Zhou-on-the-street understands that China is killing China, not foreigners in these cases. ### This isn’t your father’s Monolithic Authoritarian China. URL: https://www.silkroadintl.net/this-isnt-your-fathers-monolithic-authoritarian-china/ Last updated: 2026-07-18T14:48:44.000Z The popular image in the West is often “the Chinese government” as a single, wealthy, corrupt and motivating force driving 1.5 billion people to world domination. This monolithic image continues to wrongly be the scapegoat for many of the world problems—from environmental pollution to mercantilist energy purchases to an artificially inflated currency. Much of this imagery is a hold over from a China of three decades ago. Some of it stems from the simplistic understandings of China that most in the West get from education that does not focus much, if any, time on Asia. And some of the misunderstanding come from the fact that much news that comes from China is written by people who either copy the People’s daily articles (assuming that they are legitimate news) or who are just in China for a week to “get a story.” The results are the poor understanding and masses of misinformation that currently constitute a very contrived opinion of “the Chinese government.”Those of us on the ground in China often see a much different China—a fractured chain of command, various and competing power centers, local power brokers and the central government as not much more than the lead story on the nightly news. Regardless of the industry, talk with people working in China and you’ll here the stories of local power and regional authority contradicting if not openly defying the central government. Drive through China anywhere off of the East Coast and you’ll think you’re in a completely different world—8% growth, IP violations and BMW’s haven’t made it to most of the country yet. But at the same time that many in the Western media and governments are discussing the issues they miss the bigger picture: misappropriated education funds, the current food and other product scares, local land grabs, individually corrupt local officials and a complete lack of enforcement of most central government policies are just the highlights on the long list of “this is not a centrally controlled state.” An article in today’s Asia edition of The Wall Street Journal specifically notes that there are sectors of the government/economy/legal system where there are “no legal framework to govern \[local officials\]” thus giving them tremendous amounts of power over local activities (13 Aug, 07; p.9). Despite the obvious evidence that China is not as centrally controlled as the Western powers and media would lead us to believe there continues to be article after article bashing a singular authoritarian “Chinese Government.” I’m not defending the Chinese government but I am frustrated by an image that both hurts political relationships and damages business opportunities. For example, the continued pressure by the US Congress on the Chinese government to revalue the Yuan (RMB) mostly hurts individual Chinese employees, US companies and US consumers. Basically it’s meant that politicians can court labor unions in the US and then never disclose that fact that their anglings have made the price of everything produced in China go up about 9% over the last three years. In addition, much of the trade deficit itself is a big media and political scare tactic—60% of that huge trade deficit (at least 60% of the annual exports from China) is from subsidiaries of foreign companies. The trade deficit has, in large measure, been created by US (and other foreign) companies moving production to China and shipping cheap goods back to the US not by the Chinese mercantilist government. US tax structure even supports these shifts to overseas production. But even as I write this, Beijing is doing it’s best to prove me wrong and give the West more fodder for their China bashing. But oddly enough, I support most of it! Outside of the increased controls over the media and dissidents recent policy from Beijing is excitingly pro-environment and pro-business. New controls by the central government over land appropriations, pollution, energy policy, and a desire to slower down the economy before it overheats all show that Beijing does want more actually control to do what’s in the best long-term interests of China. What does this mean for SME’s? It means that you’ll get to ride the coat-tails of the big business and their lobbyists in the US when it comes to free trade policy making (good). But you’ll also get take a hit to your profits as the US continues to pressure Beijing revalue it’s currency (bad). In the coming years you’ll see much more environmental control by Beijing resulting in a better working/living environment in China (good) and more standardization in business and legal practices across China (better). There are still serious questions as to China’s commitment to other freedoms (I have to watch my working here so I don’t get block) but efficient (yes, you read that correctly) and clean growth are indeed central government policies—let’s see if they are enforced. ### IP reality in China URL: https://www.silkroadintl.net/ip-reality-in-china/ Last updated: 2026-07-18T14:48:45.000Z I’ve had two questions come to me this week about tech in China—both about IP protection, really. First was a question in response to the news that Microsoft is lowering its prices (drastically) for Vista in China to compete with pirated copies. The new price of real software is about $65 USD; that’s about 65% less than what it was before. But even at that discount price its still about $60 more than what you can buy a knock off copy for here in Shenzhen—of course, I only know this because I’ve seen posted prices in shops; I wouldn’t buy one since I use Mac. But the question was—why is it so cheap there and can you buy me a copy (or 10) and mail them to me in the US?No, I can’t buy you a copy. Sorry. But I’ve got a better answer for why it’s so cheap. Without asking MS themselves, there are a couple of theories on fighting piracy. The first is to compete with piracy head on—push for enforcement and cut prices to make real products attractive enough that morally minded citizenry would buy the real thing (if its cheap enough). The second is the theory that piracy actually helps build brand recognition and MS will make a show of fighting it but can deal with loses in the short term for the development of market familiarity and the potential of the long term. I think that the first theory is doomed to failure in China as the ideas of Western morality are not common here. Chinese are not guilted into doing the right thing. They do it out of choice, force or shame. But not guilt. I think that the second is equally prone to failure, as MS can’t foresee what the future of legitimate software will be in China. Nor can it see the future competition. To bank billions of dollars on the hope that people will simply buy what they are familiar with instead of any other (currently unknown) option is pretty weak knowing how fast things in China change. Sounds too much like the old British pipe dream “if each Chinese would only add an inch to his shirt tails…”I think that the reality of China is much less sexy and much less strategic. The fact is that there is very little enforcement of IP laws in China. Indeed, I believe that there is a certain national promotion to catch up with the West at any cost. And until this reality changes, MS and others are left with little choice but to minimize loses as best they can. There may be a degree of brand development and certainly a lot of PR about enforcement, but the bottom line is profit—if you’re selling relatively few real copies of Vista now, more copies sold at less $ per piece is better than nothing. The second question I was sent this week was more practical: what can I do to protect my IP in China? This has been covered before by me (here) and by others (here). But in brief there are a couple of concrete steps to take and concepts to understand. First, if it’s worth protecting its probably worth stealing (obviously). Without much actual enforcement in China you can pretty much bet that you’ll get some “leakage” (as I heard it called here). So even before you come to China you need to asses the cost of doing business here—which will, most likely, include IP theft. If you can’t handle this, stay home (and if your product sells well someone will buy it, reverse engineer it and you’ll have “leakage” anyway—just latter than sooner). And remember, IP theft is not unique to the Chinese, although they may have found a way to mass-produce it. Second, if you decide that coming to China is worth the risk (and it obviously often is) than you need to file for all legal protections available to you in your home country BEFORE you come to China. Think this is a no brainer? You’d be surprised. Third, now that you’re legally protected in the international arena you should find a good law firm in China (I recommend Harris and Moore) and do the same thing here—file for all legal protections available to you in China. Now if there is not much enforcement in China, what’s the point? The point is that while there is not much enforcement you can take your case to court and you do have a chance of winning and the situation in China is getting (incrementally) better all the time. Fourth, there are physical steps that can be taken to protect your IP.•Build good relationships with your factories. If your relationship is worth more than stealing your IP you’re probably pretty safe—I personally think that this is your best defense.•Divide up the sensitive parts of the IP so that no one single factory has access to then entire product.•Have your own personnel on the ground looking after your interests here—this needs to be someone that can speak and read Chinese and maybe Cantonese if you’re in Guangdong.•Remove all molds and samples when projects or parts of projects are completed.•Sign contracts and then live by them and expect your factories to do the same. If you are lax on your contract enforcement they will be more than happy to be lax too. You can’t pull your contract out at the last minute before you ship and try to beat them over the head with it if you’ve been accepting and making changes for the previous few months. ### Personal Responsibility in China Exporting URL: https://www.silkroadintl.net/personal-responsibility-in-china-exporting/ Last updated: 2026-07-18T14:48:44.000Z Great article in the [NYT](http://www.nytimes.com/2007/07/29/world/asia/29safety.html?%5Fr=1&pagewanted=all&ref=silkroadintl.net) about the current state of Chinese exports and regulations. It’s not much in the way of application but it does detail the current state of affairs here and what to expect. So now that we know what’s going on—heads are literally rolling in China over the violations of Chinese FDA regulations and other export laws—what is going to be the on-the-ground affect of these actions? Or more specifically, that’s the news, but what does it mean for you, the small to medium sized US based importer? The NYT is correct is saying the issues in China are a problem of enforcement not regulation. China often tells the US and the UN that the laws in China are more comprehensive and aggressive than in the US or the UE—and it’s often true. The problem is, as the NYT points out, is that enforcement of these strict laws is so lax that there might as well not be any laws in the first place. China is just too big, with to many suppliers and too many opportunities for small time bureaucrats to be paid off to enforce properly. So it’s a no win situation, right? Wrong. It just means that you have to do the enforcement yourself. The best way to make sure that you get what is legal and exactly what you ordered is to be there—in the factory—and involved in all the processes that affect the quality of your product. This does not mean that you have to move to China or set up your own factory. Quite the contrary. The (lack of) success of JV’s in China is well known. It’s rarely the win-win that it’s touted to be. And setting up your own factory is typically a jump that is just too big for many SME’s to bite off. But it does require that you do a couple of things. First send someone over here to make the decisions that you know you want to be involved in. Maybe this is the raw materials check/purchasing. Maybe it’s the mold confirmations or maybe it’s the sample testing. Whatever your product needs are, make sure that you or someone you trust is involved. It’s way over due that Westerns take responsibility for the quality of the products that they are importing. Second, you can’t be here all the time and you shouldn’t have to. But you need to confirm that everything is done according to the decisions that you made while you were here. Get someone here to be your eyes and ears during the rest of production. There are usually a couple of key points that you may want to be personally involved. The rest of the time you can hire a 3rd party to monitor production for you. You’d think that it should go without saying, but don’t take the recommendation of the factory for your 3rd party inspector. Next, if you’re getting raw material or chemical or other test documents from you supplier in China it is YOUR responsibility to confirm that they are legitimate. If you are concerned enough to request the documentation then should be wise enough to get some independent testing done. There are numerous testing companies that meet international standards and can provide testing for you across multiple mediums and for various Western governments. Remember, if you rely on your supplier to test their own materials you are asking for trouble. What if you are receiving test documents from your trusted Chinese supplier that you’ve used for a few years already. You’ve never had any problems in the past and the documents look legit and you think things really are on the up and up. You have two choices-lit it ride or double check. It’s your call, but why take the chance? Even if it’s a trusted an long term supplier, the recent problems with Chinese exports give you a good face-saving excuse to have a third party check things out for you. Even with trusted suppliers you should be calling for random 3rd party inspections anyway. They’re just an internet search away. One other thing that will help you out is the new regulations that started in July for exporting. The new laws, which limit some of the tax breaks and going forward place some stricter limits on export certificates, should separate more clearly factories of origin and trading companies. This means that the Chinese government is trying to more carefully regulate who is actually shipping things out of China—theoretically making it easier to track down (ir)responsible parties. Whether you’re using a broker or going direct you should be able to request all of your shipping documents to confirm, for your own piece of mind and US customs where things are actually coming from. Basically there is no substitute for personal responsibility. You need to confirm what you are getting and where it’s coming from independently from your suppliers. This won’t take much more work as there are companies (like SRI) set up to do exactly that for you now and will cost significantly less than the bad press that a mistake could cause. ### REVIEW—The Great Wall—China against the world 1000BC-2000AD. URL: https://www.silkroadintl.net/review-the-great-wall-china-against-the-world-1000bc-2000ad/ Last updated: 2026-07-18T14:48:44.000Z Once in a while a book that is originally about one topic illuminates greatly another. One book (that I can't blog about in China but contained a number of internal government documents about the happenings in a large square in Beijing in the late 80's) was one such book—highlighting the Chinese leadership and psychology behind the decisions of that summer almost two decades ago. This year another book has done much the same thing—while “The Great Wall” is about the history of the wall, its value is in the light it sheds on the development of the Chinese international perspective. The Chinese Govt., in the last 15 years, has obsessively used the call for a peaceful and harmonious society to limit opposition and galvanize support any and all state sponsored social positions. What’s so interesting about “The Great Wall” is the historical context into which this “new” desire for social harmony can be now placed. Indeed neither the desire for social harmony nor the enforced superiority of the Chinese “official” position is new to China. And more than just a list of dates, Julia Lovel’s analysis of Chinese international decision making over the last three millennia contextualizes beautifully the current regime’s thinking. Further illuminating is the historical details of what can easily be called a national superiority complex. I have for years been personally detailing what I see as a national inferiority complex—and I think they are one and the same. Chinese, in general, feel like and have been taught that they are historically, socially and educational superior to at least all others in Asia if not the world—hence the superiority complex. But very few of them can rationalize the current economic, military or political superiority of the immature (less than 300 years old) United States and it’s perceived humiliation of China-hence the inferiority complex. Lovel addresses these insecurities in the context of the national obsession with building and now showing-off the wall. Tackling 3000 years of wall building is no small task, but Lovel does it with such an easy flow that you forget about the dreariness of the lands and lives through which the wall passes. The book is fantastically descriptive of major historical events related to The Wall without ever becoming a boring list of names and places. Certainly not a quick read but definitely worth the investment if you want to understand the historical drivers of China’s international perceptions of itself. ### Reputation Crisis part II URL: https://www.silkroadintl.net/reputation-crisis-part-ii/ Last updated: 2026-07-18T14:48:44.000Z The [NYT](http://www.nytimes.com/2007/07/08/weekinreview/08kahn.html?ex=1184817600&en=9f14a8511078fee4&ei=5070&emc=eta1&ref=silkroadintl.net) reported that China is increasing enforcement on exports in response to the recent round of tainted products and rejections of China manufactured goods. This is good ### To have a crisis of reputation--you need a good reputation first URL: https://www.silkroadintl.net/to-have-a-crisis-of-reputation-you-need-a-good-reputation-first/ Last updated: 2026-07-18T14:48:45.000Z For those of us that follow the daily news about China we may think that China is the center of the world ### China: Fragile Superpower—Book Review URL: https://www.silkroadintl.net/china-fragile-superpower-book-review/ Last updated: 2026-07-18T14:48:45.000Z This is one of my new favorite books on China. Fantastic insight from someone who has been here for more than 30 years, Susan Shirk knows not only about China’s history and current political and economic situation but she knows the leaders, personally. Her insights into their fears, their decision making, their expectations and their historical chains are the most insightful and up-to-date that I’ve read on china—and I’ve read more than 30 books on China in the past couple of years. If you want to know where the leaders of China are headed and why they’re taking China in that direction, Shirk can tell you. This isn’t just a book about politics and the personalities in office, it’s a book about how the people and the system affect the business decisions of the Chinese economy. The book is filled with first hand accounts of the major events in China over the last few decades. Personal story after personal experience gives the events in China’s recent growth both personal insight and current applicability. Shirk was the former Deputy Assistant Secretary of State responsible for US relations with China and is currently a Professor at UC-San Diego. As the name implies, this book is certainly written with a cautious if not hesitant tone. But I find that in the current atmosphere of exploding stock markets and real estate bubbles, caution is good. I think that most investors in China and many SME’s that come here for business assume that money is money and business is business and China is open for business just like the West. This is not the case. Informed decision are always best—this book is the opportunity to inform yourself as to the nature of the worlds largest state controlled command economy. ### The New Chinese Empire and what it means for The United States—Book Review. URL: https://www.silkroadintl.net/the-new-chinese-empire-and-what-it-means-for-the-united-states-book-review/ Last updated: 2026-07-18T14:48:45.000Z Other than the title, which I think is misleading, I really like this book. Ross Terrill has been a “friend of China” for 40 years and his experience shows in this in depth narration of Chinese history and it’ modern implications. He tells a story of continuing Chinese empires in the modern Chinese Communist party. But if there is anything specific meaning for the US, you’ll have to find through inference and personal deduction. That shouldn’t take anything away from this great book, though. It’s just mislabeled. The New Chinese Empire is a review of thousands of years of Chinese imperial thinking. It’s a look into the minds of leaders who, for centuries, have been concerned with “stability” and “harmony.” Ross describes how the Chinese see themselves, international relations, domestic politics and the historical march toward the (glorious) future in terms of both domestic (in)stability and China’s turbulent international history. Due to his knowledge of Chinese history Terrill is able to clearly detail how current Chinese political decisions are based on past historical trends and events. For example, the fact that Communism (Leninism in particular) is heavily based on the historical dialectic feeds even more the historical determinism of the Chinese leaders. Many bloggers and writers have recently been asking the questions like: is China’s ascension to world super power status as benign as the Beijing regime likes to claim? Terrill has a definitive answer—No, it’s not. Terrill documents that historically the Chinese have asserted regional dominance in Asia and their current overt goals now are the same. They specifically want to be the “dominate influence in Asia” and their new policies for going abroad (specifically to Africa and the Middle East) are designed in a similar vein. China, as a government, as a people, as a historical dialectic, all aspire to be the Asia’s and eventually the World’s dominant power. This book is a great read if you want to understand some more about Chinese politics, history and psychology. To that end there is much use in a business setting too. But like the specific meanings for the US that the title claims, what you get out of the book will be more deductive and personal than overtly detailed. ### Made in China—Book Review URL: https://www.silkroadintl.net/made-in-china-book-review/ Last updated: 2026-07-18T14:48:44.000Z Like most other authors in the past 5 years, Donald N. Sull is pretty high on China and its coming ascendancy to world super-power status. Sull’s Made in China details many of the same company profiles (Lenovo, Sina, Haier, Wahaha, Galanz) that others use to talk about the rise of China. Sull's difference is that he holds up the Chinese companies as success stories "despite" their humble Chinese origins and then compares them with the failures of larger foreign companies is a similar environment. A pessimist could read this book as a litany of of foreign companies' inability to really “get it right” in China. But I'm not a pessimist--I like what this book has to offer. I think that Sull has filled his praise for Chinese entrepreneurs with a ton of practical advice—and that’s what makes this book so valuable. Rather than just rehash mind boggling stats Sull includes a detailed and useful review of successes and missteps by both domestic and international companies in China. This book makes stories and stats from China USABLE!Some of the concepts that work for anyone coming to China include:1\. Fog of the Future: understand, truly understand that China is unpredictable and is constantly changing. What is true today probably will not be tomorrow. This means a complete mindset change. You have to be constantly looking out into the uncertain future and at the same time taking active advantage of today’s opportunities. Change is the only constant here. Learn to embrace it or it will crush you.2\. SAPE Cycle: Sense, Anticipate, Prioritize and Execute. Basically do it and do it now. If you don’t do it now, the fast pace of change in China will make you outdated before you even get started. Be capable of successfully managing internal and external change.3\. Manage Relationships Dynamically: Ironic here that the same book that holds Wahaha and Danone up as a success story also warns readers to be wary and cautious about relationships. This is not just “don’t do JV’s in China” but a how to grow and use relationships effectively in China. Despite what many people will tell you, personal relationships still do play an important part in doing business in China. I don’t mean that you still need to use guanxi to get in through the back door. Today, it’s about professional relationships that can also be intensely personal in nature and can be used to facilitate opportunities that appear in the ‘fog.”Read up on the recent crumbling relationships between Danone and Wahaha at the same time you read this book—a timely confirmation that change and relationships are what you need to pay attention to in China. ### The elections are coming, the elections are coming! URL: https://www.silkroadintl.net/the-elections-are-coming-the-elections-are-coming/ Last updated: 2026-07-18T14:48:44.000Z Good balanced article from Bloomberg [today](http://www.bloomberg.com/apps/news?pid=20601087&sid=aTcO6SsOUpZY&refer=home&ref=silkroadintl.net) on the cost of pegging or floating the Chinese Yuan. The article discusses the pros and cons for both sides of the Pacific, something that you rarely see in the US press. The essence of the article is this (from the article):\`\`After years of talk and bluster, protectionism no longer seems like an empty threat,'' says Stephen Roach, chief global economist at Morgan Stanley in New York. \`\`Trade sanctions against China are now all but inevitable.''If you produce goods in China, that should scare you. If you shop at Wal-Mart in the US that should scare you too. First artificial valuations of the Yuan do help keep Chinese goods cheap and force manufacturing to move to China away from more expensive places like the US. But trade sanctions on Chinese goods in the US would do the same thing for the US—they would create a temporary and artificial wage protection for specific industries in the US. This, in the short term view of Democrats trying to win the ’08 elections, is great political strategy. But long term for the US economy, China-US relations, and the specifically affected and temporarily and artificially assisted industries, it will mean a hard crash later on. Second, if you are just the average Joe-Shopper and don’t “do business with China” or are not involved in manufacturing in the US the bottom line is that the protectionist laws in the US will mean that you’ll be paying more at Wal-Mart so that someone else can keep their $22/hr union Job building whatever. If you do work in manufacturing, you’re cost of living will go up as the laws protect your job. But wages in China (right now about $0.50/hr.) are not going up as fast as these laws will go away. China knows that the US is all about 4 year political cycles. China is much more long term in their thinking than the US—they’ll weather the storm to maintain domestic social stability. Further, the hew and cry in the US that outsourcing is taking jobs is just not statistically true. The Economist, April 7th 2007, citing an IMF report shows that labors are indeed getting a smaller share of the pie ($) but it also shows that the pie as a whole is getting much bigger at the same time. Bottom line, trade is growing faster than outsourcing and the US is the best positioned economy in the world to relocate laborers that do indeed get outsourced. The US is also the largest exporting economy in the world. It’s not as bad as election year politicians would like you too believe. The point is: you should be much more scared of shortsighted politicians than of Chinese outsourcing. The scariest specter on the horizon, to me, is a politically unstable China. A 40% jump in the value of the Yuan would throw hundreds of millions of people out of work. The migrant-worker population of China is already estimated to be MORE THAN THE ENTIRE POPULATION OF THE US! The unemployment from State-owned companies closing down in China is also already MORE THAN THE SIZE OF THE ENTIRE WORKING AGED POPULATION IN THE US! Hundreds of millions of more Chinese out of work would be a catastrophe of historical proportions. In addition to that, the export markets of all those US jobs that were just saved with protectionist legislation would dry up as China as an export market would disappear. What you should be ironically grateful for though is a strong Chinese government. Why? Because there is no way on God’s green earth that they will either give into foreign pressures or actively create an environment where the ’08 Olympics could be become a world stage for hundreds of millions of dissatisfied peasants and unemployed workers. For evidence the Bloomberg article says:\`…says Straszheim, who specializes in China's economy. \`\`They are going to take their chances and move as slowly as they possibly can.'' China's textile industry says it loses 8.2 billion Yuan ($1.1 billion) of annual profit for each percentage point rise in the currency. Now, I’m a free trader, but I’m also a Realist who likes relative peace and stability. Certainly the Yuan needs to be revalued. But calls for 10%, 15% or even 40% changes in a single year are ridiculous. They just aren’t going to happen either. Expect 4% or maybe a little more if the protectionist legislation is very strident—but not 10%. Expect this to be a huge election year topic and expect to see tons of bills and hear tons of speeches that sound good to protectionist US ears, but really mean nothing long term. ### China Inc.--Book Review URL: https://www.silkroadintl.net/china-inc-book-review/ Last updated: 2026-07-18T14:48:45.000Z The last two years of unfettered growth and hundreds of other books on the same subject seem to have supported Ted Fishman’s early optimism that this is indeed the Chinese Century. China Inc., one of the first in the China-will-soon-dominate-the-world genre, has all the great news and wonderful statistic that China supports and critics alike love to quote. The fast growth, the lack of IP protection, the leaps in education and income, the rise in prostitution and crime. This book interesting but not very deep. Lots of personal stories support the statistics but there is little in terms of actually doing business in China. This book tells you what you already know—that China has a ton of people, some serious social issues, and will change the face of the global economy for good or for will simply because it’s so big. Much better more balanced books include: One Billion customers, Made in China, and The New Chinese Empire. But there are some valuable take-ways. First, the Chinese know about the internet and are using it. If you (somehow) still believe that China is far away, Fishman says you’d better do a quick search on eBay and see how many sellers are working directly from China. Second, for good or for ill, China is taking the world stage and it would be wise for everyone to learn some Chinese or at least encourage your kids to do so. Third, no matter what your future is you’d better be better than competent at what you do. Competition is coming and it’s coming fast and in larger numbers than the world has ever seen. Keep learning and stay ahead in whatever industry you’re in. If you do read China Inc.—and it is an exciting, well written book—you should also check out The Coming Collapse of China just so that you have a balance to Fishman’s unabashed optimism. ### Welcome to China--where 11% growth is bad news!? URL: https://www.silkroadintl.net/welcome-to-china-where-11-growth-is-bad-news/ Last updated: 2026-07-18T14:48:45.000Z In terms of sheer numbers of new articles it was a banner day for China today. And the news highlighted the completely different animal that China is. It’s like nothing the world has ever seen before. Even growth is bad and old words mean new things in China. In case the news that the CCP is talking about expanding democratic rights gets you overly giddy. Remember, democracy in the West is not the same as democracy in China. Specifically, structures that appear similar are actually used quite differently. “Democracy” in China is meant as a way for the CCP to benevolently understand the needs of the people and then implement what they see as the best solution--not government by/for/of the people. While definitions may be different, politics are the same—the maintenance of personal power is every politician’s goal (OK, I’m a bit jaded here, but you understand). The rise of the economy and businesses in terms of both domestic political influence and international media attention means that even if they don’t want to the CCP has to give more attention to the Chinese with money to maintain control. In 1994 I was told by a foreign professor working with CCP leaders on political projects that the silent opinion of most Chinese leaders was that socialism was indeed dead and that keeping the CCP in power during the long arduous shift to a new system was the real goal. The problem is how do you “control” democracy? The attempts in ’89 were obviously a failure. So now what? There are few real answers and now the general Chinese population has caught wind of the big secret. For many years in China the buy-off-the-populace-with-economic-growth-so-they-won't-worry-about-democracy has worked. For a billion people going from absolutely nothing to middle class was a huge step and it has totally changed the world’s economic landscape. But many people with money and subsequently more global experience and education in China are now looking for something more. Small steps toward more participatory government will continue to buy time, as long as no missteps are made. Adding businessmen, professionals and intellectuals to the CCP was huge. Small, local elections are too. Broader participation in the relatively new stock markets and actual property ownership by the end of this year will certainly pacify many for the next few years. But if the economy overheats or if there is a political crisis of any type the trappings and slogans will do little to pacify an increasingly media savvy Chinese population. And indeed a crisis may be where things are headed. I’m not a doom sayer and I think that the CCP is itself pretty clever. But the unexpected rise of the 1Q economic figures (Govt. predicted 8%, released numbers were over 11% and you know that the govt. held back on even those numbers) is going to be putting a lot more international pressure on China to revalue it currency—something the govt has been unwilling do more quickly out of fears of both negative social and financial reactions. Add into these numbers the fact that loan growth in China is doubling despite the fact that Beijing has raised interest rates 3 times in the past year. In an already horribly insolvent system even the new spat of foreign banking JV’s and their FDI isn’t going to solve the problems of increasing numbers of NPL’s. Because of the Chinese governments artificial security blanket around the economy China didn’t really feel the effects of the Asian banking collapse in 1998\. But it could have a crisis of its own in the making. This financial “bad” news was accompanied by reactive falls in oil, gold and stocks across the globe and coincided with a condemnation by Canada over the jailing of a Canadian Uighur in China and the lawsuit against Yahoo in the US by a Chinese couple. In these interesting circumstances the government is limiting every type of political dissent and both domestic and international media outlets in hopes that a strong hand before the ‘08 Beijing Olympics will mean relative peace, or at least quite, for another 18 months. Things are so tenuous that Premier Wen in his visit to Japan not only didn’t mention Abe’s visits to Japan’s controversial WWII shrine he even went so far as to praise Japan for it’s historical apologies to China for WWII and their subsequent FDI and aid! Politics indeed make strange bed fellows. ### Link to some Danone-Wahaha analysis URL: https://www.silkroadintl.net/link-to-some-danone-wahaha-analysis/ Last updated: 2026-07-18T14:48:44.000Z [China Law Blog](http://www.chinalawblog.com/chinalawblog/2007/04/steve%5Fdickinson.html?ref=silkroadintl.net) has some great links and analysis on the Wahaha Danone story that's unraveling. It's worth a read for anyone considering partnering with a local factory. ### Waves of enforcement…or the squeaky wheel gets the grease. URL: https://www.silkroadintl.net/waves-of-enforcement-or-the-squeaky-wheel-gets-the-grease/ Last updated: 2026-07-18T14:48:44.000Z IP owners of the world unit! The end of piracy in China as we know it is at hand. The numbers of article in the news yesterday about Beijing’s new efforts to confront (Olympic only) piracy was more than on just about any other topic outside of Hu Jintao’s latest trip to Japan. Which means that the government is really going to take this seriously…this week. I hope you didn’t have your hopes up. Of course I’m pessimistic. I live here. I’ve seen it all before. Specifically, there are three reasons why I think that IP enforcement is not going to change much in China after this week.1\. It is in the government’s personal and direct financial interest to protect Olympic IP. They are the sponsors of the games and they directly benefit from the sale of legitimate products. Not to mention the face they lose when their “own” officially licensed products are knocked off. This means that while protection of Olympic IP will be stellar (as will the games in general—regardless of your politics, if you don’t think that the CCP will make damn sure that this is the best Olympics ever you’re nuts!) protection for the rest of us will be business as usual.2\. This week just happened to coincide with a new round of US complaints to the WTO about “rampant” copyright violations. Within the same week of the US complaints China just happened to have 42 million pieces of illegal media?! If they can get that much in a week they have the best police force in the world and are just sandbagging the other 51 weeks of the year (likely sandbagging), or they stockpile over time just for events like this (VERY likely) or piracy is so out of control over here that 42 million pieces is just a drop in the bucket and it really only does take a week to collect that much (also VERY likely). Point being, once this round of bad international press is over so to will the enforcement.3\. All assumptions aside, the press said that 25% of the destroyed media came from Guangdong Province (where I live). If so, how is it possible that I’ve still got 4 illegal shops operating within a block from my house and twice that many on the block around my office building?! I’ll believe that copy right protection will improve when they can close down the stores selling nothing but knock offs. But that’s how things go in China. Enforcement du jur is the MO here. If you get caught doing anything illegal, I’m convinced it’s just dumb (bad) luck. Take street cops, for example. The traffic police don’t chase pick pockets or clear away illegal street vendors. They just watch traffic—and then they only watch for specified violations each day. Think I’m making this up? I once chased down two guys hacking the lock off my bike. The traffic cop on the corner box couldn’t/wouldn’t even call the police station. Anyone else that’s ever driven here knows that “random” police stops means white vans on Mondays, black sedans on Tuesdays, right turns against the light on Wednesdays, etc. Boarder security is another great example. All of the Shenzhen boarders have luggage scanners. For fun stand by one and listen to the boarder agents talk about who they’ll stop next, watch them take fruit (and then watch other’s in back eat it), watch how many people DON’T put their luggage through the scanner (I almost never do—I walk fast and pretend to not speak Chinese; they almost never stop me). There is nothing “secure” about it. The only people that ALWAYS have to scan their baggage are Middle Eastern looking folk. This is not meant to a call to illegal arms. Rather, I’m just pointing out the fact that while sale of Olympic paraphernalia will be outstandingly legal for the next 18 months there most likely will be little if any change in any other IP protection in China; except for the random weeks of enforcement due to external circumstances. Waves in….waves out….in…out… ### Mr. China—Book Review URL: https://www.silkroadintl.net/mr-china-book-review/ Last updated: 2026-07-18T14:48:45.000Z MAY 19th 2009 UPDATE--Jack Perkowski's book, Managing the Dragon is [reviewed here](https://www.silkroadintl.net/managing-the-dragon-by-jack-perkowski-book-review/). The stories in Mr. China were collected while Tim worked for Jack. These books tell many of the same stories from two different perspectives.------------------------------No one single person should be allowed to have this much fun in China. Ok, I suppose it’s alright for Tim Clissold considering the years of his life that he undoubtedly sacrificed to Baijiu, factory pollution, stress and deadly bus rides to distant factories. Absolutely enjoyable and a bit scary at the same time. Mr. China is the book that tells the stories that many have of us have lived being in China over the last 20 years. Clissold is the man who did what everyone just talks about—he put all the stories down in print—and what a job he did! Quite an uncensored look at what “business” has been like in China for the last two decades, and an equally exposing look at both backward Chinese practices and ignorant Western boardrooms. Mr. China provides great insight into both the Chinese business environment and the mentality of many of those doing business in China. In addition to the fantastic shake-your-head-unbelievable stories the value of the book is the fact that many factories, Chinese businessmen and Westerners are still doing business like this today. This is not a history of what-china-was-like-in-the-past as much as it is a look into the deep dark insides of what China can still be like today. I highly recommend that anyone working or planning on working in China read this book as a cautionary tale of what could happen to your best intentions (and investment dollars) if you come to China with more optimistic than realistic expectations. ### So you want to move to China… URL: https://www.silkroadintl.net/so-you-want-to-move-to-china/ Last updated: 2026-07-18T14:48:45.000Z Just spent a week in the US—a family wedding, chocolate Easter eggs galore and some visits with clients. While I was there I was asked by just about everyone that finds out I’m in China if they should move their business into China for sales, production or both. To be honest, I don’t have a clue if you should move here or not—that’s really not a decision that should be made over appetizers at a wedding reception. But if you must have it quick and dirty, here you go. This isn’t your typical advice column about China though—nothing about guanxi, Chinese language or strange food. I’m going to give you the basics of what I’ve culled from 15 years over here in schools, factories and government offices. First, you’ll get out of China exactly what you expect to get. If you hate China, complain about the dirt, the problems and the lack of QC, etc., etc., that’s what you’ll see everyday and that’s what you’ll take home. This doesn’t mean you have to be Pollyanna and only see the sun that shines through the outhouse window—some things here really, really stink. But it does mean that if you expect to be disappointed or plan to fight for everything you’ll do just that. Do you homework and know what you’re getting into before you come over. Second, practical experience will do you more good than any degree, guide or guanxi. In coming to China this means know your industry and stand firm on your established standards and experiences. And then, when you’re here spend enough time to understand how your industry works over here. If this means that you fly over four or five or ten times before you close any deal, so be it. Get into factories more than once and more than for the guided tour. If you are going to invest hundreds of thousands of dollars suck it up first and invest in a hotel for a month or three and actually live and work here for a spell. Get to know, not just visit with, the principles involved in your future. And become an expert on what’s going on in your potential partner’s production floor. I’ve seen more than one person come over and make a poor deal worth hundreds of thousands of dollars because he was rushing to catch a flight worth $1500. Third, invest in your supplier and supply chain. If you expect better quality products you’d better start at the source of the products and spend the time (and money) that it takes to teach multiple levels of the supply chain what you expect, why you expect it and what it will mean to them to meet those standards. If you’re here for the long haul, invest in what it takes to create the supply chain that will justify your investment and provide you the ROI that is expected. Just because your finishing/packaging factory is world class doesn’t mean that their materials supplier is. Fourth, be willing to learn from the factories and people here. This doesn’t mean that you need to sacrifice any of your standards. But it does mean that due to technology, logistics, politics and even weather you may have to alter your standard production processes. And heaven forbid that you should actually learn something from China! Fifth, if you expect your suppliers to follow their contracts and respect your IP then you’d better do the same. If you bust your supplier’s butt over IP violations and then have the factory driver take you to the local knock-off golf or DVD shop, what message are you giving to the factory?! Yea, what you do personally does influence how you are seen by your Chinese supplier. Make sure all your legal issues are taken care of in China (and back home) so that the law is always on your side, just in case. Get the right visa, file copy right and trademark applications both at home and in China, if you are going to get an office here in China, do it right. Sixth, when visiting provinces far inland don’t eat seafood. Oh yea, and never eat anything that is still moving either. (Sorry, I couldn’t resist.) ### Will the Boat Sink the Water--Book Review URL: https://www.silkroadintl.net/will-the-boat-sink-the-water-book-review/ Last updated: 2026-07-18T14:48:45.000Z With all the daily optimism about China and the China market, it’s necessary to regularly and consciously take a step back and look at China from a different perspective. “Will the Boat Sink the Water,” is just that perspective. If you’re reading this blog, you’ve got a computer and a degree of education and distance that means you will most likely never personally see this China. Sure you may travel through it, but you will never experience the China of the 900 million peasants that have been literally passed by as the other 40% of China rushes head long into the 21st century. Based on the 3 years of research by a Chinese husband and wife team, this book illuminates the troubles and personal impacts what the last thirty years of Reform and Opening up have had on most Chinese people. Stories of horrible corruption, extortion, abuse and ultimately, stories of a loss of hope for the future for many peasants that can’t reach the wealth that they see in the east coast cities. This is the story of many of the workers that we, Western Businesspeople, see when we place orders, inspect factories, check production and ship products. This is the story of the families behind the rows of uniformed, 20-something, factory faces. ### Do as I say, not as I do URL: https://www.silkroadintl.net/do-as-i-say-not-as-i-do/ Last updated: 2026-07-18T14:48:46.000Z I am not a China apologist. I know first hand how uneven the playing field is here for foreign companies in many industries. I agree with many critics on issues from barriers to market entry to individual freedoms. I think that the artificial valuation of the RMB not only hurts foreign economies but it also hurts the Chinese economy. The inflation of the RMB against foreign currency hurts individual Chinese factories and entire industries by allowing them to complete at an artificial advantage. That advantage will eventually be taken away, sometimes rather abruptly as WTO violations are taken to court. But the calls by the US for a Change in Chinese State policy to “preserve” American (manufacturing) jobs or to level the playing fields because it’s unfair to American’s is hypocrisy of the worst kind. Name one country on the planet whose domestic policies are not geared specifically to support (at the cost of other countries) their own domestic market?! Similarly, US and Chinese (and all other) foreign policies are designed to promote individual domestic interests abroad. Make no mistakes, China makes the same stupid calls for the US to ‘recognize Chinese national interests’ when considering trade policies. But that’s the dance of politics—howls of mistreatment appease the masses at home and do little to affect the real negotiations happening elsewhere, in closed government offices. The recent change in US policy concerning the status of China in some markets (paper) is a great example of these stupid “whose side are you really on” kind of foreign policy. Newly classified, China is no longer a developing economy and therefore subject to the full weight of the anti-dumping and other restraints of their WTO membership. I had a business associate call me and talk about the impact that the tariffs with have on this industry—up to 12% duty levies on imported Chinese paper. That not only makes them “competitive” with the US domestic market, it effectively blows them out of the water. On the surface, the purpose here, it seems, is not to balance trade but indeed to protect a few industries that otherwise can’t compete. But wait! What about all the other US companies in related industries that are importing from China and will now take a 12% hit?! Surely the lager market of associated goods outweighs protection of one industry (indeed on the complaints of one lobbying group from Ohio). And when this new classification starts being applied to other industries? Yup, the consumer is the one who’s going to get hurt. I suggest that the WTO start regulating stupidity—both the Chinese and US governments are dumping toxic amounts. ### Great Firewall of China URL: https://www.silkroadintl.net/great-firewall-of-china/ Last updated: 2026-07-18T14:48:45.000Z Yup, the Great Firewall really does stop just about everything. I posted yesterday about a couple of books that are not available in China and visits to our website dropped by almost 90%!!So, now it's back the sanitary and safe. ### How fast is China changing? URL: https://www.silkroadintl.net/how-fast-is-china-changing/ Last updated: 2026-07-18T14:48:46.000Z Check out this report about a land owner in [Chongqing](http://www.iht.com/articles/2007/03/26/news/house.php?ref=silkroadintl.net). She is already quoting the newly past property laws (past just over a week ago) in her defense of her home. Can you believe that this ever even got this far in China? I can’t—I’d love to know the full story behind her ability to outlast development (in a SEZ no less). People usually are “disappeared” long before it ever gets to this point. What does this mean for you, the foreign businessman in China? It means that yesterday is already gone and what you used to do no longer matters today. Keep up with your industry at home and the news in China, use well connected and knowledgeable partners in China and play by the rules at all time—because when they change if your ducks are not lined up and quacking in unison you’ll get caught with your pants down then you’re going to be in big trouble. ### Negotiations, Strategies and Experiences, Part II. URL: https://www.silkroadintl.net/negotiations-strategies-and-experiences-part-ii/ Last updated: 2026-07-18T14:48:46.000Z More “learning experiences” today as we negotiate with factories. So that means there’s more to share on working with factories.1\. Way too much trust from West to East. This comes back to me almost daily. I assume that everyone starts off on equal ground and that I can take anyone at their word until they prove me otherwise. In the West there certainly are crooks and cheats, but there is also a well functioning and easily accessible legal system to back you up if trust is violated. Business is based on a foundation of trust first, and a lawyer to back you up, if necessary.2\. No trust at all from East to anywhere. There is no historical or even recent precedent for trusting strangers in China. In negotiations here you are considered both a potential source for (big) profits and a stranger. That means factories start from the position of: we don’t know you and don’t trust you until you prove to me otherwise. This isn’t morally vacant as many critics like to complain; rather it’s necessary for survival in a system that does NOT have an effective legal system. If you have no (or are unfamiliar with options for) official/legal recourse your only options are to take care of yourself first. It’s not only smart, it’s absolutely mandatory for success. That’s the system here and you’re not going to change it.3\. Leverage is the key to any negotiations no matter where you are. If you have no chips to play you are out of the game. You’ve got to keep something from the factory to make sure that you have some control when (not if) problems arise. For large orders an LC is a great option. But for orders smaller than $100k LC’s are not typically used. So be sure that you have a contract that gives you clear options, outs and specifies penalties in detail.4\. Face is totally misunderstood, often to the Westerner’s demise. I’m constantly amazed at how Westerners are willing to be totally rude to Chinese—is it the language barrier that makes it OK? The dirty streets and bad toilets that make someone assume they are better than the locals? I’m not sure what it is, but it’s wrong. You need to give respect to them, if for no other reason than so they have no reason to screw you. As a Westerner you probably won’t appreciate (or even recognize) when face is given to you. You’ve probably thought more than once “I just wish they’d tell me directly when there is a problem.” (I think this daily.) I don’t think that Westerners will ever understand the all complexities of face. They key is be polite to others. Yes, just like mom taught you. Yes, even if they screw up. You wouldn’t stomp out of a supplier’s office, call him names and scream obscenities at factory workers in the US so don’t do it here either. One thing you can understand is that if you threaten or embarrass a Chinese factory owner you’ll not move negotiations forward. You can argue and even get angry. Everyone does at some point. But if you embarrass someone you’ll also never now the depth of the consequences. So be polite or script the arguments so there is always options/way out and so that fights are not personal. The goal is to fix your problem and allow them to maintain their dignity.5\. History is very important. Personal relationship history between you and your supplier will be the deciding factor if you hit a roadblock. The longer you’ve been working with someone the more “credit” you have with them—especially if you’ve always paid on time and never tried anything cheeky. Honestly is the best policy and your good standing in the past will go a long way to resolving current concerns.6\. The “higher ground’ means nothing in China. You will not successfully appeal to anyone’s (Western style) moral virtue or get product by trying to pull on heart strings or detail your current emergency. This is business, same as back home—money talks. You’re not going to get a supplier to “help you out just to be nice” in the West so don’t think that you can get it here either.7\. Verification is the key to success. This means everything, not just finished product!! This includes raw materials, money transfers, and specific production processes. If you can’t personally certify that it happened, it probably didn’t—it’s better to be safe than sorry, so check everything. The corollary to this is that you will need to allow a degree of transparency into your procedures too.8\. Scarcity vs. abundance—you need to have a totally different frame of mind to understand China. Historically Chinese have never had enough—not enough money, freedom, food, health care, good chocolate cake, legal recourse, etc. But in the West we all grew up with too much of all of these things. These different situations change dramatically how our different cultures think. You have to understand that your supplier may have built his factory from nothing in the last 30 years. Your supplier can probably tell you what it feels like to be hungry—really, honestly hungry. Your supplier probably has parents or other relatives that have died or been seriously injured because of “political problems.” This is not the land of plenty (except for plenty of people). This is probably the angle that your supplier will negotiate from when there are problems.9\. There is always another problem. Find your suppliers real problem and you will resolve many of your own issues. No Ancient Chinese Secret here—this is Covey’s 5th habit—Seek first to understand then to be understood. If you are willing to take the time to discover the real issues you will save time (and emotional energy) in the long run. ### Oracle Bones--Book Review URL: https://www.silkroadintl.net/oracle-bones-book-review/ Last updated: 2026-07-18T14:48:46.000Z As I said before in my review of Peter Hessler’s other book, River Town, “Peter gets China.” He understands not only the language but the people. This book is his second portal into the world of his (Chinese) life and Chinese friends. Filled with personal stories and personal events that are really not detailed in any other books on China, Oracle Bones is an engaging ethnographic odyssey into personal lives and real stories. As with River Town, this is not a business book. You won’t learn anything new about politics, business, law, or the working environments in China. But you will gain a greater appreciation for where most, if not all, of your Chinese employees are coming from. While I like the personal perspective of Peter as a real person with real friends in China, I think that, overall, Oracle Bones is not as good as River Town. Some of the stories are extended for far too long and many are not concluded; this left me with the expectation of another book in a few years or simply wondering why he (and I) committed so much time to an unfinished manuscript. Granted, many of the lives he writes about are not yet over, but some of the unfinished stories made me doubt that there was ever a point to them beyond filling up a second book. Don’t get me wrong. The insights into the personal conflict of adjusting to a rapidly and constantly changing China are certainly intriguing. The book is written well, if not too long. And the subjects almost become your own personal friends as you read. But when it’s all said and done, there really isn’t much substance that you can take away other than, “well, I’m finished. That was a nice distraction. Now what?”If you’re a Sinophile, you’ll want read it. But if you’re just coming over on business, skip it. ### China: The Balance Sheet--Book Review URL: https://www.silkroadintl.net/china-the-balance-sheet-book-review/ Last updated: 2026-07-18T14:48:46.000Z If you’ve ever wondered where someone got their numbers about China then this book is for you. It’s just what it claims to be—a stat sheet of both good and bad that is Modern China. The book is divided into broad topics such as Domestic Economy, Chin in the World Economy, Foreign and Security Policy, and Domestic Transformation. The detail and bibliography are some of the most researched that I’ve see in my readings on China—a great resource for making broad political decisions or updating your research with current numbers. As with all numbers, there is an agenda. The point of all these statistics is to improve US-Chinese relations based on more information and consequently more dialogs. The book was written for The Institute for International Economics, a part of The Center for Strategic ad International Studies. Their self proclaimed agenda/priority is: “China, globalization and the backlash against it, outsourcing, reform of the international financial architecture, and new trade negotiations at the multilateral, regional, and bilateral levels.” They also bill themselves as “the most influential think tank on the planet.”One of the major conclusions is that “the interests of the United States and it’s global partners would be best service by policies that seek to engage rather than isolate the country, in order to moderate the potential devastating economic and security outcomes” of the continued rise of China. While this sounds nice, not everyone agrees. For a newly released view on why to not engage China you could read James Mann’s “The China Fantasy,” or the older but very good “The Coming Collapse of China” by Gordon Chang(review coming soon). All in all a quick but detailed read, a great library resource, and definitely worth the time and money. ### Maybe blocking Wikipedia is not so bad after all… URL: https://www.silkroadintl.net/maybe-blocking-wikipedia-is-not-so-bad-after-all/ Last updated: 2026-07-18T14:48:46.000Z Chinese universities are teaching, encouraging and even sponsoring plagiarism at all levels. From “open” schools to top level universities students are literally being asked to “just copy it off the internet.” I have personal experience with two Chinese universities and a March 19th article from Reuters in Beijing about a sacked professor shows that my personal experience is not unique—in fact it’s the national standard. There are a number of reasons for this ranging from graft to laziness to political pressure to perform. I’ve seen and heard, first hand, professors tell students that are working on papers, (even thesis and dissertations) to “find something that’s already done. \[I\] don’t want to have to correct all your English mistakes.” And “It’s too much work to write it all by yourself. You don’t have time to do it.”From the Reuters Article: “Universities have become an officialdom… The over-intervention and manipulation of academia by power definitely fetters its growth,” Zhang was quoted as saying. “How is China’s academia doing now? Does anybody overseas read paper written by Chinese scholars? Plagiarism and theft are rampant… Obedient kids are being taught to be minions.”Interestingly, when Chinese students write their own text (in Chinese) and then use online translators (like Google) teachers typically can spot the poor translations and I've heard teachers tell students to find source materials to copy in English instead. If China’s best and brightest are being taught to plagiarize how much better is the rest of Chinese society going to be at protecting international IP?!You're IP protection is in your own hands. You've been warned. ### Socialism with Chinese Characteristics, Part II URL: https://www.silkroadintl.net/socialism-with-chinese-characteristics-part-ii/ Last updated: 2026-07-18T14:48:46.000Z I’ve become personally aware of a few of new (to me) types of behavior that are clearly (capitalist) Socialist with Chinese Characteristics in nature here in the SEZ known as (The Wild West) Shenzhen. The first one I call License Plate Verification, and it works like this. You buy a car and park it somewhere, anywhere that does not have a guard (or has a guard on the take). You come back to your car after shopping or whatever only to find the plates missing and a business card with a phone number on your windshield. You call the number and are told that if you want your plates back it will cost you X amount of RMB. Going rates are 2000-3000RMB for a relatively new Japanese model car, and up to three times that much for a nice German brand; or so I’ve been told. During the phone call a convenient pick-up point and time is then immediately arranged. In case you want to call the police you are calmly reassured that all your windows will be broken and tires will all be slashed if you don’t pay up and don’t come alone. Such proactive attention to detail! I don’t doubt you can find this service in any city in China nowadays. The second type of (capitalism) Socialism with Chinese characteristics can be called The Arboretum Effect. Tree lined roads, parks, flowers next to the sidewalks everything is perty and green, right? Right—green as in the color of money. What you don’t see when the trees cover your drive by tour of any given city in China is the fact that tress, sidewalks, roads, curbs, parks are regularly “improved” or resurfaced or redone. And each “improvement” requires contracts. And in China each government contract requires multiple stamps of approval. And each stamping official requires some personal benefit before his precious chop can be used. Yup, good old fashioned graft is what’s planting trees and resurfacing already decent roads. My wife, Chinese, literally spits out the words “another government project” each time we drive by road repairs. Government contracts are what keep people in power—more contracts means more money surging through the system. This is such a problem that even the CCP has addressed this in official pronouncements. A third type has been historically called The Protection Racket and it works the same here in Socialist Paradise as it does and has everywhere else in the world. You open a small shop and pay the local “guardians” to keep it open and undamaged and consumer friendly. Since I’m obviously foreign (can’t get much paler than me) but speak Chinese I get to listen to a lot of conversations that people wouldn’t normally have in front of others—because they assume I don’t understand. So I was buying peanuts and Coke (better than factory fair) at a neighborhood shop and a couple 20 something guys come in and just take a bunch of food. They say keep watching the shop and they’ll be back tomorrow. The cashier scribbles down what they took in a note book in a drawer and looks at me laughs nervously and takes my money. Another common version of this is the beat cops that allow street vendors to set up shop along the busy sidewalks between office buildings (selling food, DVDs, bags, magazines, etc.). The cops basically set them selves a table at a free buffet. They take what they want since the roadside stands are technically illegal and the owners don’t have anyone to complain to. The common good, that’s what China’s all about, right? And in the interest of common good, I bring you…Number four, and this is something that I actually (voluntarily) support: a website that allows you to instantly confirm the ID of any Chinese for whom you have an ID number. The web address is: www.nciic.com.cn. Type in the ID number and instantly you know if the number is real, who it belongs too and you can even see the photo on the license. (You have to be able to read Chinese and it costs 40RMB per search to use this service.) This type of ID check would never fly in the US, but hey, when in Rome, right? Enjoy! Call me if you want your plates back. ### Yea, but what's China really like? URL: https://www.silkroadintl.net/yea-but-whats-china-really-like/ Last updated: 2026-07-18T14:48:45.000Z I get variations of this question almost every day from clients, potential clients, friends, family, and even some strangers on planes and in airports. Usually the questions are something like: “When we come over to see the factory can I also see the real China?” “Can I see how real Chinese people live?” It’s like there is the China in the West (economic power, growing political power, HR issues, kungfu, chopsticks) and then there “another” China, the “real” one over here. I’m not sure what people expect and so I always just tell people they can see whatever they want--because that's what they're going to see anyway, right? Without getting too academic the answers to everyone’s question is all the same. “Yes, you can see the “real” China. Yes, I’ll show you how real Chinese live.” There is certainly more than one China and you will see which ever one you believe to be the “real” one. But the real question should be: What do you want the “real” China to be?” And that answer is NOT so simple. The China Daily, official English newspaper in China, recently asked people what they thought China would look line in 2050\. My question, again, is “Which China?”In the true anthropological sense there are probably 5 billion different versions of the “real” China—one for every single individual perception on the planet. No way to deny or analyze each one. But there are a couple of generalities that can be made. They are all somebody’s reality—usually millions of somebodies. You can come on a package tour and get a postcard version. You can come teach English in a village for a year or more and have a very different version of China. You can live on the East Coast or in a factory in a SEZ or just come to trade shows on an annual basis—each will give you a “different” China. Usually all radically different. So here are a few. TOURIST CHINA. This is what most foreigners, including business folk here for a few weeks a year, will see. This China includes: Xi’an, Yunnan, The Bund (Shanghai), Hong Kong, The Great Wall, Tiananmen, some business offices any maybe a factory or two, etc. Most of these people will go back home with the opinion that “China’s not nearly as bad as I see in the news.” Additional opinions will include: “Yea, some of it was dirty but, wow! I couldn’t believe Shanghai/the Great Wall/that adorable little village/etc.”This is the China that China wants you to see. It’s very real and for millions of Chinese and for millions tourist every year it is their reality too. In 2008 you will be able to add the Olympics to the list of real. Tourist China is actively promoted by the Chinese government not to just win the hearts (and dollars) of tourists but to promote their benevolent paternity of minority groups—Window’s on the World, CCP Minority Delegates dressed in ethnic costumes on the front rows of the annual congress sessions, lax college entrance and on-campus behavior rules also support this version. China knows that few foreigners know much about China beyond Kungpao Chicken and the Great Wall and they actively exploit this ignorance. (By the way, you can’t see the Great Wall from space. Whatever “space” means.)A sub-version of Tourist China is the “I-hate-China” China that too many Westerners “see” after coming here and forgetting that this is still a third world (and very foreign) country. This includes run ins with bureaucracy, filthy toilets, traffic from hell, shoddy products, more face than Western morality, etc. This is usually a rest stop that people visit while traveling to “another” China. I’ve been here and it’s not a pretty site. Yet sometimes I still go back, usually just for a day or two. Anyway, that’s another blog for another day. EAST COAST CITIES CHINA. The second most common international version of “China” is the one that most business people see and less than 100 million Chinese people actually live (about 15% of the Chinese population). This is where the expats live, where all the MNC’s have the offices, where growth is in the double digits for almost three decades, where the “new money” Chinese live, where overseas Chinese come home to, where investment (both domestic and foreign) is the highest, where foreign fast food franchises, films, Euro-fashions and automobiles are just as common as bicycles and chopsticks. Shanghai, Shenzhen, Hong Kong, Beijing and to a lesser extent Tianjin, Qingdao, Nanjing, Ningbo, Xianmen and Guangzhou. Business people see the money in Shanghai. They see the factories and the nice restaurants run by the Hong Kongese and Taiwanese in Shenzhen. They see an immaculate factory complete with dinners and Karaoke, a trade show either in Shanghai or Guangzhou, a lot of 5 star hotels, Starbucks, chauffeurs, etc. The expat families and rich Chinese (less than ½% of Chinese) live in gated villa communities, shop in the import stores and have their children go to international schools. Chinese in these cities are, on balance, more educated and make more money than similar individuals in other areas. There are lines of Chinese at Pizza Huts across the country every Saturday and Sunday. A subset of East Coast City China is the millions of migrant labors, maids, taxi drivers and others that are part of the Special Economic Zones but certainly don’t have special incomes. There are an estimated 300 million (equal to the population of the US) migrant works that move from one construction project to the next. In essence they become poor tourists of the wealth and economic growth in their own country. FACTORY CHINA. Once the dream of many rural Chinese, the factory life is much less glamorous today than it was even 5 years ago. This China is typically much younger than any other version of China—most factory workers are 16 to 30 years old. Most factory workers are migrants from other rural areas of China. Most don’t speak the local dialect and most will move from factory to factory at a pretty steady clip of one or two factories a year. Hours are long, overtime often mandatory, conditions typically poorly regulated. Some factories are great, many are not though. Over crowed dorms, low levels of job security and a constant line of new applicants outside the front gates. Yet despite the drawbacks of factory life it is often a much better (financial) option than rural China. Even in poorer factories, wages are higher and work easier than farm labor. Most factory workers send money to relatives back home. This is the China for roughly 300 million Chinese. Chinese from East Coast Cities China rarely get involved in Factory China any closer than driving past factories on the freeway. Many have relatives who live/work in factories though. Foreigners see this China on each business trip, as they’ll tell you "I've seen what it's really like. " But many see only offices, factory floors, private cars, high class restaurants and the outside of dormitories; and all this for only a few hours per trip. RURAL CHINA. This is the China that most expats see driving by on the freeway or stop to take pictures of on their trip through Guilin/Yunnan/Sichuan. This is the China of Pearl Buck and the romanticized ideal of many foreigners--the "real China. " This is the China that most every Chinese is related to—-parents, aunts and uncles, grandparents, in-laws, classmates and friends. There are 800 million Chinese still living on less than $400 a year. This is, if we were going by sheer numbers, the “realest” version of China. Regardless of where they live now, most Chinese people 20 years old or older came from this China. There are other versions of China as well. Political China (more than 10 million bureaucrats in China) Dissident China, Minority China (close to 10 million ethnic minorities in China), ABC China (American Born Chinese), Official Statistical China, Insecure China, The Republic of China and Taiwan-as-part-of-China China (over 22 million people in Taiwan). Interestingly, I’ve never ever been asked by a Chinese person “What’s America really like?” The questions from the Chinese are all from an assumption that they already know what it’s really like (capitalist warmongering hell) but just want to confirm. Common questions are: “I’ve read the many people are killed by guns in America, is this true?” or “I’ve heard that the American government only works for companies with lots of money, is this true?” or “I watched such and such movie and want to know if this really happens in America?” Why does America think they are the world’s policeman? Will the US support Taiwan in a war? Etc., etc., etc… I guess I need to ask which America they are talking about. ### Chinese Business Etiquette--Book Review URL: https://www.silkroadintl.net/chinese-business-etiquette-book-review/ Last updated: 2026-07-18T14:48:46.000Z If there you are only going to buy two books to read on the flight over to China they should be McGregor’s “One Billion Customers” and Seligman’s “Chinese Business Etiquette. Of the 30+ books on China that I’ve read in the past two years these are easily the best two. Simply put, Scott D. Seligman gets it. He not only understands China but he presents that understanding in a business context that is easy to understand and apply. This book is more than “don’t stand your chop sticks up” it explains the nitty gritty of getting what you want within a system that is, despite surface appearances, very foreign. Many books on culture attempt to explain what you may (or may not) see as “Chinese Culture.” But Seligman instead details what exactly are some of the differences are between China and the West, what they really mean when doing business and how you can adapt to your situation. This is specific, hands on information. It’s like having a personal assistant to help you navigate the Chinese business environment. This book covers all the stuff that you usually have to learn on your own in the painful first weeks of an overseas assignment: face, connections, business meeting etiquette, how to dress, where to sit, keeping in touch and manners for communications, just enough history to give you context not too much to bore you, personal relationships, gifts and how to really get things done. This book is easy to read, small and succinct enough to carry with you on each trip to China and will always be of value to those who honestly want to know “how to do business in China.” ### Socialism with Chinese Characteristics URL: https://www.silkroadintl.net/socialism-with-chinese-characteristics/ Last updated: 2026-07-18T14:48:46.000Z My wife and I went to the National Museum of the First Communist Party Congress of China in Shanghai yesterday. On balance, quite a good museum. It was well put together and well lit with a lot of different period items. Bio’s of each of the participants in the first CCCP, clothing, contracts, weapons, stamps and books from the years about 1911 to 1920\. Only 3 RMB per person to get in--foreigners pay the same price as Chinese too. But the three things that stuck with me are: First, my wife thought Mao Zedong was quite handsome when he was young (at least the wax manikin was). Not sure why I’m still thinking about this one...hmmmm…Second, according to the diagrams, the destruction of China in the 1900’s was 100% caused by foreign countries and foreign ideas—no mention at all about the hundreds of years of corruption of the Qing dynasty. Nothing new here, right? As a resident of China I’d all heard this a thousand times before. But something about physically seeing it both in print and with all the accompanying artifacts made it a little more personal than some factory manager telling it to me over dinner and too many beers. Third, the entire neighborhood was purchased and restored by a Hong Kong developer a number of years ago. So the CCCP museum is right next to a Starbucks, next to a British pub, next to a French Cabaret, next to a Thai Restaurant. Across the street was a 4 story glass and steel mall with an international cinema and scores of Euro name-brand fashions. We bought a pack of "Shanghai-100 Years" playing cards in the museum gift shop and then shopped at Shanghai Tang (originally a Hong Kongese company that’s since been purchased by a US group), bought some French make up and had a drink at Starbucks while we waited for the rain to stop. The irony was so thick you could cut it with an original Small Dagger Society knife. ### Contracts are just a starting point... URL: https://www.silkroadintl.net/contracts-are-just-a-starting-point/ Last updated: 2026-07-18T14:48:46.000Z No matter how long I’m here, this will always be one of the things that I just can’t stand. Maybe I’m just too American. Maybe it’s just that I hate negotiating the same thing over and over again, but I just hate this part of doing business in China. Latest example is the landlord of one of our offices—she has decided that “everything in the office is hers since she rented the office to us at “such a low price.” Yea right. Never mind the fact that we have a contract that clearly states that the office was rented “empty” and that all “decorations and furnishings” are the tenant’s (my) responsibility. She wants to start negotiations from the point of “it’s all mine” and “I won’t give you your deposit back” unless we give her all the furnishings. I’m at a loss for words. It’s flat out extortion but it’s also business as usual in China. So what to do? Well, we hired a lawyer--[Dan](http://silkroadintl.net/blog/wp-admin/www.chinalawblog.com?ref=silkroadintl.net), I wish you guys were in Shenzhen. Then we completely stopped talking with her. Now she’s scared and giving us concessions like they were candy. But I’m just amazed that she’s even got the guts to try to pull off something like this. She treats us, as do many factories, like we don’t know about contracts, legal proceedings and have no recourse buy to work with her on her terms—classic Chinese power play. Most threats are a show. The show is half the battle—if you can win the stage show you’ve got a great chance of getting what you want, or at least more than what you originally contracted for. If you are ever in a situation where you are scared that you could lose what you’ve already contracted for, remember you have a contract (and it better be in English or you’re probably already dead) and China’s fledgling legal system does give you some rights and you can pursue those to their legal ends. It not too expensive to hire legal representation in China and if you have some representation chances are you will turn the tables on whomever is pressuring you—they’ll claim to have hired a lawyer, but probably have not. In China most negotiations are never written down so it’s up to you to record everything. And I mean everything! \*Side Note—Text messages can be used in court but faxes can’t.\* Notes from meetings should be detailed, translated and sent to all parties—if you’re the instigator of these records then you’ve got the upper hand because you know that your Chinese antagonist will most likely not do it. Phone calls to your secretary, to the factory or whomever else, people that phone to tell you that they’ll be late or are changing something in the contract; these are the killer—you’ve got to keep track of all these changes. In addition to conversations, record that you've agreed to post-contract as well as what they've offered that you didn't agree to. More often than not what they end up pushing in the end will turn out to be something they asked for but didn’t get in the beginning. Make sure that you are following the law to the letter. Don’t cheat, lie or sneak you way into the country. Don’t double cross your Chinese partners and don’t play them for fools. If you expect the law to be on your side you had better be on the right side of the law yourself. It is the best feeling in the world to go into a negotiations session knowing that you have been completely honest and have the records to support your position. I’m sure its tons easier for your lawyer too. NEVER NEVER NEVER change you contract—it’s like opening Pandora’s Box and once it’s open you’ll never get it closed again. Lastly, wait out those putting pressure on you. Usually demands or changes are made when some party thinks they are in a position of power or thinks that you don't have time to accommodate changes. If you are in a rush, you may be in trouble. If you are not in rush you can call their bluff. ### Chindia: How China and India are Revolutionizing Global Business. URL: https://www.silkroadintl.net/chindia-how-china-and-india-are-revolutionizing-global-business/ Last updated: 2026-07-18T14:48:46.000Z This book was a great magazine—literally. This is a collection of all the articles from Business Week Magazine about Chindia from the past two years. They’ve collected the articles, added some filler to link them all together and called it a new book. The info in the articles is interesting and the stories of individuals is just as riveting now as it was when it was first printed as semi-factual human interest stories in Business Week. But, it’s not new. It’s not in-depth coverage of any one particular aspect of Chindia and it’s frustratingly simplistic in it’s analysis and has no bibliography. If you’ve been on the moon for the last three years, this will be a great review of popular US sentiment regarding Chindia. But I’m sure that it’s not of much value to anyone that is already in Chindia or doing research on how to best come over. I do like the term “Chindia” though. It’s like everyone at Business Week doesn’t really know enough or care enough to distinguish between the two for the US masses. They both have a ton of people. They’re really big land masses. They’re “stealing” jobs from good honest US citizens. They’re all “foreigners.” Yup, same same. Convenient. But of course there are differences and issues that those in the US ought to be aware of. I think that some current (2007) analysis added to the last few years of hyperbole would be nice. For example, the “large sucking south to the East is not as loud as many, including Business Week are making it out to be. Some of the latest scuttlebutt in IT in the US is that India is running low on people that can actually do what all the hype claims. China, while more prepared infrastructurally, is not only running low on people power but quality issues are hurting their rep as well. While a large number of companies are certainly moving both projects and operations to Chindia, almost as many are readjusting how much and what they send. Poor quality product, difficult communications and missed deadlines are clearly showing Chindia to be a cheaper, but not necessarily better option for everyone. Buy this book if you want to get really excited about Chindia or if you’re a magazine aficionado and just happened to miss the least three years of Business Week. Otherwise, skip it. ### China CEO, Voice of Experience--BOOK REVIEW URL: https://www.silkroadintl.net/china-ceo-voice-of-experience-book-review/ Last updated: 2026-07-18T14:48:46.000Z China CEO—BOOK REVIEWThis book is for anyone that is going to a new post in China and has never been here before. It is quite broad in its coverage of issues but maybe a bit shallow in its analysis. I like the idea behind this book—talk with people in the know (CEO’s in China) and take into account the culture, the government and the logistical difficulties that are China But it also makes a couple of assumptions which I do not think are absolutely true. First (misleading) assumption is that running a business in China is different from anywhere else in the world. China certainly has some different cultural issues that you have to get used to, but at the end of the day if you are good at what you do and you’ve hired good people and have a good process/product there is going to be only minor changes to the corporate organization from any other country. For example a summary of the Chapter “Managing Chinese Employees summarizes the following points as keys to success: Right Compensation, Smart Recruiting, Train to Retain, Promotional Opportunities, Loss of Face, and Building Employee Relationships. How are any of these (including Loss of Face) different from the US, Brazil or Europe? There not. Some of nuances are indeed different but I continually found myself asking “how is this different than the US.” Sure they throw the word “Guanxi” around likes it’s the secret of life on the planet. But outside of mentioning the significantly different personal relationships, I found little that was detailed enough to be of real value. Second, anyone coming to China is going to be working in a high level position in a Global Fortune 500 Company in Shanghai. I don’t know the numbers here, but I would have to guess that the bulk of foreigners in China are NOT working for huge multinationals. While a good percentage are, I’d be willing to bet less than 20% of foreigners in China work for Global Fortune 500 company—that means that the target audience for this book very very small (and the applicability to others equally discriminatory). So why aren’t the mid-sized companies and the educators and others included—why only high level CEO’s? Can the lessons from the CEO’s be extrapolated to apply to others? Sure, to some degree, but so can the lessons learned from the movie Hoosiers. This is a book that is supposed to be specifically about China and how to work here and how it’s different from anywhere else. Despite what I see as pretty shallow look into the specifics that actually do make China different China CEO is quite a good introduction to working in China. It has on-the-ground foreign businesspeople talking about what their actual experiences in various situations have been—this is great and varied experience that can really be helpful—I just wish we got the full stories behind all the one line quotes. I would love to have seen see a book series written on each of the ten chapters—that amount of depth would really allow for personal adaptation and application of the high-level general advice from the current volume. Hopefully more details/information are forth coming. I agreed with most of the book, but didn’t find anything that was as practical or applicable as I had hoped as a mid-sized business owner. I would suggest that you read this book and Mr. China at the same time to really understand what a non-Chinese speaking CEO of a large company and what a mid-sized, on the ground manager have in common in China—outside of chopsticks, not much. ### China Hands--BOOK REVIEW URL: https://www.silkroadintl.net/china-hands-book-review/ Last updated: 2026-07-18T14:48:46.000Z James Lilly’s book, China Hands, is a Foreigner-in-China Adventure Story to rival the spy stories of James Bond (and these stories are true!). While there are a number of exciting stories this book isn’t just a list of adventurous jaunts, it has the real life feelings of a family living, for generations, abroad in China. And this generational storyline gives the reader insights into life in China from early in the last century, through the wars, the political turmoil, the pre-Socialism with Chinese Characteristics days and even life on both sides of the Taiwan straight. It also is written by a family man and includes the perspectives of both a businessman/government official and the accompanying family. The specifics about life in Taiwan vs. China and the details about family, rather than just professional life in China are what make this book unique. Not many people in the world can claim the experiences that James Lilly has had—from meetings with the Presidents of both the Republic of and the People’s Republic of China to being a CIA officer in China before it was open and then a diplomat after normalizing of relations. And as much as this is a story about the life of “spy” in China this is the story of American and Chinese relations for almost all of the last 100 years. As a history of China, it’s written from an on-the-ground perspective—the real life of individual families and the surreal life of international politics at the same time. In addition to the meetings with Deng, Reagan, and others are the dinner parties at the Lilly home, the personal issues of a foreign family living in a Chinese fishbowl, school, constant surveillance and the effects of international political decision on real life people. This is a quick read, a captivating spy-novel with a personal touch. Only real problem is that it’s still only available in hard-cover—kind of a pain to lug around China. ### River Town; Book Review URL: https://www.silkroadintl.net/river-town-book-review/ Last updated: 2026-07-18T14:48:46.000Z I first came to China in 1995 and spent a year in Chongqing (then in Sichuan Province) teaching English. It was probably the most interesting and difficult year in my life. I taught at a little college of about 3000 students. I’ve since been in China (and Taiwan) for most all of the last 12 years and have managed to keep in touch with only 3 students from 900 that were in my classes that year. I also read this book while traveling through Zhejiang and Jiangsu province visiting factories this past week. With that background you can see that I was a sucker for Peter Hessler’s book “River Town.” Set in a small college just down the river from Chongqing in 1997, Peter describes exactly what I had felt, seen and recorded in my journal and on film while I was in Chongqing. The sights, the struggles, the successes, the friends, the misunderstandings, the smells, the food, the politics, the weather—he nailed it. I laughed, I cried, I remembered. I loved it. Perter Hessler not only knows about China, he knows how to write. Now this isn’t a book about China today or a book about how great China will become in the future. It’s about living in a glass box—that’s what China was for foreigners as recently as 10 years ago. If you are doing business in the coastal cities this book will bear little resemblance to the China that you know today. But if you want to know what it was like “back in the day” this is the book for you. This is a very romantic look at 1997 China and my experience of talking with people about China is that they typically can’t relate to the past while looking at the current development. I think that most people who read this book will probably think one of two things: either that China is still like this (people that have never been here) or that he’s off his rocker (people that only visit Shenzhen and Shanghai in the last few years). In that light, my only issue with Peter’s book is that he doesn’t balance what he experienced then with what he knows now—but maybe that wasn’t his point. Read this book if you want to know what it was really like to experience China before it was used to the West. Great job, Peter. Thanks. ### Some differences between China and Taiwan URL: https://www.silkroadintl.net/some-differences-between-china-and-taiwan/ Last updated: 2026-07-18T14:48:46.000Z There were a couple of obvious differences from China that I noticed while in Taiwan this past week. Nothing major, but different enough that I consciously recognized that even though everything was in Mandarin I was not in Kansas any more, Toto. First, I was sad to realize that Taiwan wasn’t as nice as I remembered it from when I lived here almost a decade ago. Taipei and Taichung look pretty much like any other Asian cities that were in their heyday 15 years ago. I lived in Taiwan 7 years ago and it’s still pretty much the same—not like China where every 6 months and you’ve got a completely new city! The coolest new thing in Taiwan was the high speed train that now zips from Taipei to Kaoxiong. What once was a 6 hour drive is now an hour and 40 minute train ride. Taichung is now a suburb of Taipei-only an hour away by train. This train was fantastic. Second, the lack of over abundant labor is readily apparent almost everywhere you go—in China receptionists can be beauty contestants; problems are solved by adding more man hours to the equation; and garbage is collect by an army of little ladies with their own carts and brooms. In Taiwan, the staff seem to be competent in their jobs first—better English, service with a smile and noticeably more experience. Production issue solutions are calculated decisions and typically require an adjustment to the technology rather than an additional night-shift. And the garbage trucks...if you’re not been to Taiwan, you don’t know what you’re missing. I’ll give you a hint: Mozart. Third, most people I worked with in Taiwan are pretty much resigned to the overwhelming sucking sound to the West that is China. Seven years ago, there was still fight in the Taiwanese. I was struck by the resignation in almost everyone I talked with this time. A decade of lost jobs and capital has really taken its toll on the spirit of the Taiwanese. The recent local political missteps seem to have also depressed a large % of the Taiwanese. Fourth, I didn’t have an argument in 3 days. Not one. No one argued about QC standards or price. While a French friend railed on Bush, no one criticized US foreign policy—it probably helped that we just concluded a huge new missile deal. And on the streets, you won’t believe this, but people actually waited in lines-yes, they exist in Asia-be still my beating heart. Fifth, International standards were indeed the default standard. Quality of products, levels of QC, knowledge of foreign expectations seemed to be much more clearly understood in Taiwan. I didn’t have to explain why our QC standards were so high—the factory managers understood and clearly explained their QC and production processes. Not a single factory had an ISO 9001 banner hanging up. Except for the smell of the 1,000 year old eggs in the 7-11's it was a breath of fresh air. The attitudes of the people in general were different—polite, service oriented, honest. Maybe my trip was too short. Maybe I’m jaded by China. Maybe the Taiwan prices will bring me crashing back to earth. But all in all, I have to say it was nice to be back in Taiwan. ### Yea, yea, yea. It's the Chinese Century.... URL: https://www.silkroadintl.net/yea-yea-yea-its-the-chinese-century/ Last updated: 2026-07-18T14:48:47.000Z That’s it! I’ve had it. I’m so tired of reading books about how the US will soon become a second rate country (if it’s not already) and how this is the new Chinese Century. Give it a rest! We’ve heard you all—over and over again. Skulls are sufficiently bludgeoned already. We believe, we believe—isn’t that what we’re supposed to say in this new PC world? The latest addition to this hullabaloo was Bill Gates’ Editorial in the WP last week. Now, you can’t fault anyone that donates billions to charity, and I agree with his premise—the US must invest in education and take an active interest in political support to market systems that will improve the US economy/competitiveness in the future. I just want people to start talking about solutions rather keep reminding me that the sky is falling. So to this end, I must disagree with his closing comments. He, like most authors who write about the new Chinese century fault the US government for not taking appropriate and timely action to stop the decline of the US educational system. He states that the problem is “political will.” Last time I checked it was still a government by, for and of the people. Blaming politicians is simplistic and self serving—it also gives individuals an excuse, a way out, a scapegoat. Sure the government has serious issues. Certainly there are major “gaffes” in the creation of US foreign policy. But the reality is most Americans either don’t know or don’t care enough to even notice what the government does outside of Iraq—and how many even know the difference between The Republic of China and The People’s Republic of China?! This isn’t the fault of the educational system. Any political agenda with enough grass roots support (i.e. individuals doing something) get’s put into public school curriculums. Further, anyone that went to college or has a job knows that the economic reality of China and its increasing impact on the US economy and even individual jobs. The real problem is apathy. As Americans, we are fat and comfortable. The welfare state and trade deficit are skyrocketing. College graduation levels for American citizens are declining and when compared with just about anywhere else in the world the number of Americans who speak a second or third language is pathetic. Unfortunately, the editorial in the WP does a serious disservice to Bill Gates’ charitable actions and fuels the fires of “it’s the government’s fault” and “it’s the government’s responsibility to fix it.”The solution is not government, it’s individuals—people and companies that both know enough and care enough to do something that embraces rather than runs from the future (of Chindia). The best international relations are created by people and though open engagement between businesses and governments. Think this is simplistic? Then ask yourself: Why won’t China and the US go to war? In part because there are anally billion$ and billion$ of reasons to not—it’s simply not financially worth it. Historically wars do not happen between two countries that are completely financially dependent on each other. MFN status for China was pushed though by big business over all the political objections to Human Rights and whatnot. So if it’s an individual problem, what do individuals do? First, they take care of themselves and stop blaming others. If this is really the Chinese Century do you or your children speak Mandarin? You don’t’ need to go to China to do this either; there are so many online materials and schools that offer resources now that only the laziest person couldn’t get started on their own. Second, how about other professional skills? Computers, science, math, advanced technical skills? If you don’t do anything to improve your future, why should anyone else. Are you enrolled in continuing education? My father was an MD and despite being recognized as one of the top in his profession and delivering more than 15,000 babies in his career, he was annually taking classes on new procedures up until the time he retired. If continuing Ed isn't in your career plan, it needs to be added ASAP.Third, whatever you do get ready to deal with a new reality. From the end of WWII until the mid 80’s you could get a job with a single company, get your gold watch and retire with maybe one same-industry job change in a career. Then we realized that companies were not going to provide lifetime employment and that individuals would most likely change not only jobs but industries multiple times in the course of a career. Now, we are competing with highly motivated, highly skilled people via the internet and global travel who speak English (as well as two or three other languages), have US degrees or their equivalent and will work more hours for much much less money. If college isn’t your thing, technical school or entrepreneurialism better be. Just about the only thing that can’t be done digitally are medical and physical services (food services, janitorial work, washing dishes, trash removal, etc.). It’s a small small world after all! You’re probably saying—“yea, so what are you doing about it?!” I agree, it’s easy to be a critic, sure. But I’m not just talking out of my hat. The company I was working for out of grad school was sold and I was unemployed. I started out on my own working in Asia with no Chinese and a family to support. Since then my children studied Chinese and/or Thai. I personally learned Chinese after I graduated from college because I realized that China was the future—so I know you can do it on your own too. I live in China and run my own (registered) company here. And while I’m not Bill Gates I support charitable organizations in the US and China and believe that helping foreign companies and foreign businesspeople work out production issues in Asia is part of my contribution to the world. Kudos to Bill Gate’s for using his wife’s forum to make a statement and using his billions to help those who really need it. Now if he would direct his passion and pen (keyboard) at creating opportunities for those still stumbling in the darkness of protectionism rather than blaming politicians we may see some change for the future. ### 9 out of 10 ain't bad URL: https://www.silkroadintl.net/9-out-of-10-aint-bad/ Last updated: 2026-07-18T14:48:48.000Z I visited Taipei 101, the tallest building in the world, this last weekend on a business trip to Taiwan. Not only is it the tallest building, it has the tallest roof, the highest occupied floor and the fastest elevators--they went 60km an hour straight up. My ears popped at about the 75th floor. Wow. Tall buildings are cool, for sure. You can argue about the meaning of having the "biggest one" if you want. I just liked the view from the top...And Bigtom Ice Cream on top floor lobby was pretty good too! No, I didn't make the name up. Anyway the coolest thing was this list of the top ten tallest buildings in the world. And guess what? I've been to 9 of them.1\. Taipei 101, Taiwan.2\. Petronas Towers, Malaysia (been to KL, but not the towers).3\. Sears Tower, Chicago.4\. Jin Mao Building, Hong Kong.5\. Two Int'l Finance Center, Hong Kong.6\. CITIC Plaza, Guangzhou.7\. Shun Hing Square, Shenzhen.8\. Empire State Building, New York.9\. Central Plaza, Hong Kong.10\. Bank of China, Hong Kong. If you agree that Taiwan is part of China, then 13 of the world's top 20 tallest buildings are in China. The remaining 7 are: Chicago (3) and then one each in New York, Malaysia, Dubai and North Korea--that's right, North Korea. Either this means that all the world's money and business has migrated to Asia and/or in Europe size really doesn't matter. Maybe not earth shatteringly important, but I thought it was pretty cool to know that I've got photos of myself at each one of the 9. ### The Rape of Nanking--BOOK REVIEW URL: https://www.silkroadintl.net/the-rape-of-nanking-book-review/ Last updated: 2026-07-18T14:48:47.000Z As if the death of up to 400,000 Chinese in 6 weeks was not enough to turn your stomach the details of the grisly murders of women and children and the horrors of thousands of rapes certainly will. Like a watching train wreak, I couldn’t stop reading even though I was constantly suppressing the gag reflex. To say Iris Chang’s “The Rape of Nanking” is an enjoyable read is just wrong; but it is a great book. A must read if you want to understand a conscious part of the current Chinese psyche. Well written and researched, The Rape of Nanking details the Japanese invasion of the ancient Chinese capital of Nanjing from three distinct perspectives—the Japanese preparation, the Chinese victims and the foreign observers. These three perspectives are then further divided into the war crimes committed and the global “cover up” in the aftermath of WWII.Even after reading all of the gory details of the attack, probably the most revolting part of the book is the depth and breadth of the Japanese denial and the complicity of the world’s powers. Unlike the Germans who admitted, paid for and now teach about the holocaust to make sure it’s not forgotten, the Japanese have never even officially admitted that anything happened in Nanking. The rise of communism in the 40’s and 50’s made support of a stable Japan more important than the punishment of war-crimes against the Chinese. Since then it’s been conveniently forgotten by all but the Chinese. While hate is never excusable, reading this book will certainly help you understand much of the current feelings of the Chinese toward the Japanese. ### Negotiations, Strategies and Experiences URL: https://www.silkroadintl.net/negotiations-strategies-and-experiences/ Last updated: 2026-07-18T14:48:47.000Z I had an interesting experience (interesting, as in: I learned a lot and didn’t get screwed) today with a factory that is working with us on a couple of projects. Basically the owners and the manager came to talk with me about the fact that we are “too strict” on our quality standards and the high number of rejected products is costing the factory more than what they originally budgeted for. Of course there were lots of issues that they, as owners and not project managers, didn’t know about like their late delivery, dirty product, incorrect product, etc. Once we got rid of the self-serving manager and listed out all the details we were able to have a relative straightforward discussion. Of course there are still many little twists, turns and subtleties that are sometimes hard to pick up (in Cantonese/Mandarin). After it was over I made a list of things that I was able to take away from the experience.1\. If you don’t know that your negotiations, factory visits and dinners are planned and scripted then you don’t know what you’re doing in China. Roles are defined, what can and can’t be offered is clear before negotiations start and who you will meet and what you will see is typically controlled to a large degree (as it is in the US and anywhere else—think about it). Learn to play the game and play your role—just like in the West, you have a job description and a specific responsibility. The difference is that that in China you are expected to know and play your part in the CHINESE script whether you speak Chinese or know their culture or not. The obvious problem is that Western and Chinese scripts are radically different. As one China hand put it, this is their sandbox and if you want to play in it, you’d better know the rules.2\. Talk with the people that have the authority to do something about the problem. Just like anywhere else, the higher up the food chain you can climb the easier the resolution will be. If the owner of the factory will attend than you know you have both a serious issue and the opportunity to get the real story and a real answer.3\. There is often both a cover story and the real story. The only way to get to the real story is to ask tons of questions and take copious notes. The stories will come out in the end. As important as finding the real issues are, this is often where Westerners most often fall short—we take too many things at face value. McGregor, in his One Billion Customers, states clearly that foreigners come to China with way too much trust—we transfer our legal system and cultural baggage to China because the suites, office buildings and computers put us at ease that all is the same. The latest news about the absolutely NON-independent judiciary should leave you with no doubt that things are different here.4\. Don’t openly push the inconsistencies too hard—i.e. don’t cut off your (or some one else’s) nose to spite your face. There are stories and white lies (and big black ugly lies sometimes too) you’ll find and when you put the puzzle pieces together. Once you figure out the real situation you’ll have the upper hand—remember, if you can name the game you no longer have to play it. The trick it is to find out what’s really going one and then deal with it in way that allows the most people the most face as possible. If your goal is to get someone fired or make someone so angry that they spit on your burger before they serve it too you, you certainly can do this. But the really goal ought to be getting production done on spec and as close to on-time as possible—keep this in mind even if you feel that you have been totally wronged.5\. White face, dark face. This is a very common and very conscious strategy employed by many negotiators, both Chinese and foreign. A.k.a. good cop, bad cop, in this scenario one guy will be the instigator and a partner will be calming voice of reason. This both raises the stakes and gives the instigator the ability to be the peacemaker at the same time. Threaten to cancel or not deliver with one hand and offer a (advantageous to you) solution with the other. Typically Chinese like to have the boss be the white face (good cop) and the manager be the black face (bad cop). I usually see foreigners doing the opposite. But since face is more “expensive” for the boss than the manager it most often works this way in Chinese culture.6\. The sacrificial lamb. Like the black face, white face, this strategy allows the instigator to cut someone loose or give in on a specific issue without losing the war. This is another fairly common strategy in China where labor is (over) abundant and replacing people is easy. For example, it’s often much easier to fire a QC manager and blame the issues on him than to accept the face losing issues that could be the real concerns. The use of this strategy is not just convenient for the instigator but often a sign that the factory is willing to make some significant concessions, if they don’t publicly lose face or privately lose money. Often times a manager will be both the black face and the sacrificial lamb—he gets angry forces issues and then will be sent off or just leave the negotiations thus allowing cooler heads to continue. I even fired myself once to make a point over a ½ million dollar project (I told them that their mistakes had cost us so much that my boss fired me). I’ve never worked with that factory again since then.7\. The closing offer. Once everyone is friends again and all the issues are worked out there will invariably be a last issue that’s just thrown in at the very end. Often literally on the way out the door—“Oh, by the way, this material is going to cost more on the next order. We’ll eat it this time, but the price is now this much more.” My theory is that this happens because meetings between Chinese usually end with dinner or Karaoke so there is still time to work out issues. But foreigners usually have work meetings during the day and then go home. Whatever the reason, it’s almost comical to me—it’s something they have to bring up, but don’t want to so they wait until there is no possible way to procrastinate it any longer and then, just off the cuff, throw it out.8\. The way out. When ever I’ve been asked to pay more, I always come back with “I can’t ask my client to pay more after the order has been placed. Where do you expect this extra money is going to come from?” The truth, of course, that the supplier won’t say is: “you’ll just have to lose some of your margin because of our mistakes.” But what they usually do, after some hemming and hawing is to offer me a way out—just not in so many words. It typically goes like this: The supplier will offer an improvement to the product that will cost very little but could be added to existing production and then used to cover the costs of the price increase so the end client doesn’t realize that they’re paying for both the (unnecessary, but perhaps useful) alteration and the other cost increase. I personally don’t ever add costs that cannot be specifically account for—it’s not worth the potential fall out with a longtime client. The offer actually is helpful because you can always procrastinate making a decision (if necessary) by saying you’ll talk with the client about the “improvement.” In addition, these options, if you remember them, can give you leverage for future negotiations as well as inside pricing information directly from a factory that’s trying to cut a deal.9\. A show of anger vs. a loss of face. For me this one of the hardest things to understand—at what point is a Chinese conversation (argument) too personal and offensive? As a foreigner, I see/hear Chinese people shopping and yelling like a beating is immediately forthcoming. But two minutes later the transaction is done and both parties walk away as if nothing happened. Just so you know that it’ not just foreigners that think this, Thai’s say about the Chinese “Chinese talk like Thais fight.” It’s quite amazing if you’ve never experienced it before. If you have then you know that it’s not totally inscrutable. There are a couple of general rules that will keep you within the lines of acceptability. First, don’t make it personal—don’t be rude, condescending or insulting. This is a give in any culture and especially true in face conscious China. Second, try not to throw any one specific person under the bus. The factory boss may disrespect his own manager, but you can’t. Likewise, you can chew out your own QC manager, but they can’t. Detail issues that are specific to one person without pointing fingers at him directly. Third, try to resolve specific concerns with general solutions. I know that sound’s crazy, but if, for example, you can both agree that your QC is the final say in the production process you then don’t need to bust their chops over all the minutia that got the product rejected in the first place.10\. Know the numbers better than your counter parts. This is straight from Sunzi’s art of war and the Chinese know it well and will beat you with it every time—unless you’re prepared. Know the costs, the production times, the delivery schedules, who’s in charge of what, where the break downs occurred and what are the specific options to fix things. If you know the numbers you can’t be taken advantage of—no mystical Chinese wisdom in that. It’s just good business sense. Now the catch is balancing this overwhelming knowledge of minutia with the ability to play “non-specific” games. You can always counter price with price and times with times—abstract details about processes and products aren’t as offensive as or don’t cost as much face or good will as personal accusations.11\. Chinese don’t know the concept of win/win. True, this may be sweeping generality, but everything I’ve experienced and read agrees. Why? Two reasons. First, most of the upper level people you’re dealing with in China are products of China tumultuous past. Second, the lack of an effective legal culture means that change is the only constant. Under these circumstances wining is still a zero sum game. If you can win the money game and they can win the face game without losing money, that’s probably about as close as you can get to win/win. The guys as Sinocidal said it best: As far as most Chinese are concerned “Win Win is a panda bear in Sichuan Province.”12\. No one, not anyone ever makes product for a loss. Don’t ever believe this line. Regardless of the negotiations, every factory I’ve ever talked in China, Vietnam, Thailand or India with has brought this excuse up at one time or another. In my book, it’s the dumbest line ever. No one agrees to make product for a loss and usually the price increase are so minuscule that there is no way that the factory’s margin is that small. The answer to this excuse is simple, call the bluff. “Ok, let’s call this deal off and I’ll move on to another supplier.” In 10 plus years in Asia I’ve only ever had one factory take me up on this offer—they were so busy they didn’t want my business. In China is common to find factories that think that they have their Western counter parts by the nether regions. Sometimes it’s true, but usually only if you’ve not been careful or on-site. In most situations if you’re committed to a project financially, unless you’ve been seriously lied too, so is your supplier. At that point no one really wants out—and if you’ve planned ahead, you can counter the temptation to raise the prices in your initial PO’s. Additionally, in today’s China if push does come to shove, there is always someone else how can make your product. If you’ve got the time and patience to find someone else, they are certainly out there. Now there are times that I’ve later agreed to pay more to just get what I initially contracted for—and felt good about it. Sometimes factories make honest mistakes and miscalculations. The RMB strengthens, oil prices rise, etc. There are legitimate reasons for price increases just make sure it’s not just a rouse to get you to pay more.13\. Time is on their side. Sometimes called the “iron ass” strategy, this is definitely something that China has learned that the West has not. The longer they wait, the more desperate we typically become. We are an instant gratification society. The classic Chinese tactic is to have meaningless meeting after meaningless meeting to overwhelm you with nothing. The solution? First, arrange a meeting with someone that is important and has other business to do—e.g. a factory owner or high level manager, like you, has little time to waste doing nothing. Second, a couple of days is not a long time—learn to wait. Third, if you need to, sit them out. They can’t put you off forever and they will be increasingly uncomfortable the longer you hold them to their promises of “the boss will be here soon.” This strategy then extends to meetings as well—they may be long, but keep on your points and get what you came for. I’ve see many foreigners leave China with less than they wanted on a project worth hundreds of thousands of dollars because they had a two thousand dollar flight to catch to get back home. Organization, details, politeness, a strong will and a healthy does of patience will help your negotiations in China. Good luck! DD ### REVIEW--Myths about doing Business in China; Chee and West URL: https://www.silkroadintl.net/review-myths-about-doing-business-in-china-chee-and-west/ Last updated: 2026-07-18T14:48:48.000Z I was quite excited to find a book about doing business in China written by a Chinese for foreigners. But I was soon disappointed. Mr. Chee’s explanation of “Westerners” doing business in China is an apt description of his own book—- culturally arrogant and simplistic. This book was a total waste of money unless the unstated goal of Mr. Chee was to use this book to convince “Westerners” (whoever they are) that “the Chinese” (again, whoever they are) are all culturally duplicitous and base all their stereotypical opinions on undocumented personal experiences. On the other hand, if this is an example of Mr. Chee’s stated goal of teaching Westerners “what to really expect in China’ then there is some value—it’s taught me that Chinese “academia” is not quite to the level of the West yet. No matter what the goal, it wasn’t worth the $35 or the time it took to read it. While I admit that I shared some of the same cultural experiences, the author’s lack of research, sweeping generalizations of both “Chinese” and “Westerners,” double standards for analysis and constant willingness to defend questionable Chinese cultural practices with “I’ve seen this in the West too” invalidates any truths that might be found. The most blatant example of double standards is Chee’s discussion on honesty. On page 55 he claims that Chinese tell “white lies” to preserve harmony and that this is not only acceptable, but seen as honorable to all Chinese (all 1.3 billion of them?). Yet, just 50 pages later he bemoans the fact that Westerners see the Chinese as dishonest. Later in Chapter 9 he justifies the wholesale theft of IP with the excuse “it happens in other countries too,” specifically, and I’m not making this up, in the “Chinese countries” of Taiwan and Hong Kong. Lack of real research is equally troubling. For a 150 page “academic” or “professional” work the bibliography is woefully small; only 29 sources total—20 of which are from the same Western experts that he chastises for being “arrogant and ignorant.” Basically that’s one dubious and self-discredited reference for every 3 pages. Sweeping generalizations and stereotypes of Westerners and Chinese with no documentation is also glaringly pompous. Examples include:• Women coming to China “need not fear…" "You will be treated with respect and find that China is a safe country to travel in (p.47);” No stats or attempts to measure respect or quantify safety.• “Chinese families are more extended than Western ones (p.);” First, how is this even possible?! Second, with no stats, how do we even know? Third, personally I have 84 first cousins, 16 aunts and uncles and can document at least four different households with 4 generations living together in America.• “All Chinese people are justifiably proud of their long history…” (p.71); Sounds suspiciously like the Chinese government’s famous “All Chinese on both sides of the Taiwan straight…”• “Americans, I am sad to say, are often the worst offenders here.” (p.75); Stat? Studies? Examples? Anything more than one biased, limited opinion?• “The Chinese perception of this was… (p.76); As if there is only one perception for all 1.3 billion people—a common assumption made my Mr. Chee and the Chinese Govt.• Mr. Chee claims that any Chinese giving background information rather than answering a question directly is always doing so from innate Chinese altruism and a desire “to ensure that all points of view are taken into account. " (p.87); Again, how is this even possible that “all Chinese” are this aware of the source of their opinions and social environment let alone this generous, this educated or this unconcerned about the time it takes to explain all this history?! I have a simpler answer "all Chinese have trouble saying "no. "• “The Chinese are certainly among the toughest negotiators in the world. (p.94); Maybe so, but how about some proof?• “There are, or course, occasions when Chinese can be aggressive and rude. This is uncommon…” (p.101); How could he possible know the frequency of aggressive or rude behavior? How would he measure it? Any support studies? Who decides if the Chinese are rude or aggressive? The Chinese themselves? The foreigners? How about the new laws in Shanghai this month (Feb 2007) that attempt to crack down on the frequency of cursing and uncooth language to curb aggressive behavior and stop fights before they start?• “The Chinese may not look sophisticated or slick when compared to their Armani-suited Western counterparts. But let me assure you they know your company and Western practices much better than you know China and its ways of doing things.” (p.98); I don’t know about the rest of “you” (all 3+ billion non-Chinese) but personally, I’ve never met Mr. Chee. And I work in an industry that is relatively new to China and in which most if not all of my factory associations are first time participants. Not only that, but I’ve been in Asia for 11 years—not much by “Chinese” standards I know, but I’ve done a bit of study, more than my factory sales reps, I dare say. Further, the only “Armani Suited” people I’ve ever worked with are the Chinese trying to put on Western aires—unfortunately with white socks, labels still on the sleeves and more cigarettes than money in their pockets. Finally he extrapolates his own experiences to all the other 1.3 billion Chinese with no other research or qualifications. For example he uses his own personal observations of the decreasing number of times he had been offered an illegal DVD in Shanghai as proof that piracy is decreasing—could it be that marketing has just gotten better, enforcement more lax and/or that previously underground street vendors now have their own stores and don’t need to street contact any more? My personal experience with street CD/DVD vendors in Shenzen is that there are hundreds of times more today than in when I was in Shenzhen in 1995. His extrapolations reach the ridiculous when he concludes his 3 page justification of Chinese IP theft with these three comments (page 106):• “There is a genuine sense that IP is really no big deal.” How/when did he take a “general” survey of 1.3 billion people?! I doubt that Haier, Lenovo, and other Chinese multinationals would agree. Maybe an alternative explanation could be that the education and government enforcement is so poor in China that people don’t know what a big deal it really is.• “A large proportion of Chinese behavior (IP theft) can be described as driven by expediency, by the need to get by in an often harsh world.” The obvious extension being that the country with the most poverty is allowed the most IP violations. Yet China leads the world in piracy, not Bangladesh, Lao or even North Korea.• “And, of course, faking goods happens in the West too.” I don’t recall “you do it too” ever being an acceptable professional, academic or legal justification for anything—in China or in the West. The book is not academic, professional, well researched or well written. While Mr. Chee’s experience is certainly extensive his analysis and supporting research is not. His cultural understanding may actually be spot on, but how much of this book is “real” verses exaggerated? How much is written out of defense against the foreign “China bashers?” How much is derived from a noticeable sense of wounded national pride? How much is just off the cuff stories strung together to meet a publishing date? There are simply too many stereotypes and generalizations and not enough research to recommend this book to anyone. There is a reason why the best anthropology is done by outsiders looking in and not people looking at themselves. ### REVIEW--3 Billion New Capitalists; Prestowitz URL: https://www.silkroadintl.net/review-3-billion-new-capitalists-prestowitz/ Last updated: 2026-07-18T14:48:48.000Z Better than Freidman’s “The World is Flat” because it has more research and less left-leaning political solutions. Clyde Prestowitz’s “3 Billion New Capitalists” is a more complex read and of more value since it looks at both the causes of America’s decline/Asia’s rise and the numbers behind the trends. While Freidman regales us with anecdotes, Prestowitz tries to overwhelm with statistics. The two general themes make up the case for the potential fall of the US from world dominance and the rise of Asia, and to a lesser extent the EU and Brazil in it’s place. While Prestowitz groups these issues together, I think that there are really two different issues:One is the fall of America and the Dollar from the top spot in the world economic-political hierarchy and the rise of Asia, and the Euro, in it’s place. The decline in the quality of American education, the lack of government support/encouragement for both economically strategic industries and maths and sciences gets most of the blame. Conversely, the willingness of other countries to see specific types of education and industries as keys to national security has made the “free trade” playing field anything but level. The second issue is the environmental degradation that is changing the balance of economic powers—global warming, water pollution, over use of natural gas, oil and other natural minerals and metals. While this is certainly tied to the industrial revolution and the consumer culture of capitalism (e.g. the US) it seems to me to be a second, but parallel issue rather than part of a larger international financial shift to the East. Further, while the consumption doctrine must be laid at the feet of the US, there is no evidence that a Communists Russia or China would have been any more environmentally friendly. Indeed, I would argue that the great workers’ paradises have been and are more of an environmental disaster than the US.Despite the organization, I agree with the doom for the US scenario. Education outside of University level is atrocious and I don’t want my kids in anything resembling public schools in the US. Also, long term planning in the US also seems to equate to a two term president rather than a view of decades that is more common in Asia. Finally, the rate of personal savings (oxymoron?) in the US and the national debt must be brought under control immediately. Regardless of the rise or fall of the rest of the world, these three issues must be resolved or the US as we know it will end for ever. I have three specific problems with the conclusions. Prestowitz spends 250 pages convincing us that the world as we, American’s, know it is coming to a speeding and disastrous end. Yet he glosses over the one statistic that makes the American Dream still viable. In his chapter on Indian growth he lauds the fact that India has something that neither China, Brazil, Russia nor the EU have—a young population and a relatively high birth rate. This is one of the saving graces for the slower-than-the-Chinese-on-the-world-scene Indians. Yet this same demographic, when identified for the US has little or no potential value at all and warrants only a mention in passing. Indeed, by 2025 only India and the US will have median population ages under 50! The US at 40 and India at 37\. If this is a long term saving grace for India, why not for the US as well? Problem number two is the complete hopelessness of his solutions. He offers a number of things that should happen to reverse the trends, not just for the US but for the rest of the world as well—but almost every one has the caveat: “this probably won’t happen, but it should.” Well, how about realistic solutions? If there is no way that the US or other countries has the political appetite to change, proposing such solutions is of little or no value. Finally, my question to Mr. Prestowitz and all the other US doomsayers (not that I disagree with their conclusions) is: so what if we’re not number 1 anymore?! I’m not sure that China, India, Brazil and EU with more power, more money and more education relative to the US is a bad thing. Sure we probably couldn’t invade Iraq unilaterally again, but if the Dollar is too strong, and the US needs more export markets, and competition for markets is really a good thing (like we’ve been preaching for the last 50 years), why is the rise of these other powers wholly bad? I live in China now—a stronger, more educated China with more money and more responsibility to the world community would not just be a good thing, it would be fantastic! Certainly the US needs to save more and get out of personal and collective debt. We must, as global citizens, address the environmental problems that do not recognize political boundaries. US education needs to improve. But 3 billion new capitalists are going to play a role in shaping the decisions and actions of more than just the US government in the next 25-50 years. Great book, weak ending. ### Take Me Seriously, Please. Part II URL: https://www.silkroadintl.net/take-me-seriously-please-part-ii/ Last updated: 2026-07-18T14:48:47.000Z Good grief. You’d think that if your history was 2000 year’s old, you were the fastest growing economy every in the history of the world and you were coming into your own as a world power you’d not be threatened by a cup of coffee and a green logo. Well, think again. China has once again has displayed it’s national insecurities with the admission that it’s considering a request to remove a Starbucks from the Forbidden City. Apparently, the fact that Starbucks is inside the walls of the Forbidden City (akin to say, a Panda Express in the Smithsonian) is an “an insult to Chinese civilization.” I thought China was still “working to build a civilized society.”Now, to be fair, not everyone in China agrees that a Starbucks in the Forbidden City is an insult. Indeed, Starbucks is so popular that they’ve had to file numerous trademark lawsuits in China—apparently no Chinese are offended by the color of money. But enough are offended at this cultural outrage that the proposed removal is being considered. Aren’t there bigger issues than a coffee shop that are threatening the cultural purity of the Chinese? Are some Chinese really so threatened by a latte that it has to be eliminated from the presence? If Chinese culture is so great, won’t “all Chinese people on both sides of the straight” overcome this insult by just naturally boycotting the café out of sheer national pride? My theory is that the café is doing well—probably very well. And some official is bugged that tourists aren’t drinking the particular brand of tea from his hometown or cousin’s tea plantation. Other theories claim that it's really a bit more offensive than us American Capitalist Pigs may think. More akin to a McDonald's in the Louver. Either way, China needs to step beyond it's past and into the future--insults, real or imagined, to dead emperors should be taken with a grain of salt. Or coffee, as the case may be. ### Heavenly Land? Hardly! URL: https://www.silkroadintl.net/heavenly-land-hardly/ Last updated: 2026-07-18T14:48:47.000Z The new Suwarnabhumi Airport in Bangkok is so bad that… (insert your favorite punch line here). The name means heavenly land. But it's anything but heavenly! What strikes me as I read and talk about the new BKK airport with others is not that there are problems it’s that they are so openly discussed. Even in Thailand, which has one of the freest presses in the region the criticism has been more than the usual outburst against poor quality construction. This time, there are politics at stake—the lingering image of former PM Taksin and his alleged corruption and cronyism. Most commentaries on the quality of the airport includes at least one comment to the effect of “this just shows how corrupt Taksin was.”Indeed most papers and blogs are saying that the airports failures are directly related to Taksin’s willingness to enrich crony’s and himself at the country’s expense—everything from design flaws, to runway cracks to broken pipes to a lack of toilets are apparently his fault. Not that they will ever be proven, but certainly there are corrupt deals that were made to gain airport contracts—I defy you to name one projects in Asia that isn’t done that way. But while the Baht stops with Taksin, or did, it also passed through the hands of thousands of others along the way. Thailand needs to move beyond the blame game and solve the problems. I’m not saying let Taksin off the hook, but do something constructive (literally) with the airport problems. Regardless of who ultimately is/was responsible for the problems at Suwarnabhumi, the issues need to be solved and repaired quickly. The rash of bad international press is directly effecting the economy and tourism—when combined with the coup that replaced Taksin and the continual ethnic unrest in the South, Thailand is losing it’s tourist paradise luster. ### Take me Seriously, Please! URL: https://www.silkroadintl.net/take-me-seriously-please/ Last updated: 2026-07-18T14:48:48.000Z The Chinese Government’s latest attempt at being seen as a world power shows just how far they’ve come and how big a gap of a gap there still is in their understanding of international political norms. The ability to shoot a satellite out of orbit puts China in a unique group. Only Russia and the US have also successfully demonstrated this ability. The technical advances that China has shown in the last few years are world class—a man in space, their own fighter plane and now their rocket technology. Heady stuff for a country that didn’t have any functioning universities 30 years ago. Critics of China’s latest foray into the space race will say that China is deliberately being belligerent and will only encourage other developing countries to increase their offensive space technology also. Not to mention that the US is very threatened since many of our military sat’s are in orbits similar to the weather sat that China shot down. But more than the development of technology, I see the communications gap, or the unwillingness to play as a member of a global community as more threatening. China refused to comment on the rocket test for two whole weeks. Not even acknowledging direct questions. When they did verify what the rest of the world could already confirm they refused to accept any degree of responsibility for what effect their actions may have on other countries in the world. China is not ignorant of the global environment in which they participate. Indeed they regularly, and bellicosely, whine that they are not accorded the respect they deserve as the worlds largest population, 4th largest economy and third largest country. But it seems that the leaders in Beijing are of the impress, or at least the attitude, what they do in the name of “domestic development” or “national defense” are not only off limits to any outside commentary but actually occur in a vacume. China just doesn’t think that they need to play by the rules. ### China Book Reviews URL: https://www.silkroadintl.net/china-book-reviews/ Last updated: 2026-07-18T14:48:47.000Z As I live and work in China I have an unusual amount of travel time—which means that I have a lot of time to read. In fact, I’ve polished off about 35 books in the last couple of years, most about China, as I’ve traveled to from factories. So, I’m going to make some general book recommendations and then review, each month, a couple of books dealing with China. I’ll start here with the recommended reading list and add reviews each week or so as I finish new books and review older ones. All of the books in the following list, and another 20 or so books that I’ll finish this year will be reviewed in by the end of the year. Recommended China Reading:• 1421—Gavin Menzies; A foreign addition to the new “China-did-it-first” literature, this is an pseudo-academic look at China’s claim to mapping out the world long before the West.• Art of War, The—Sun Tzu, translated by Ralph D. Sawyer; The classic book of Chinese strategy for war and business.• China CEO—Juan Antonio Fernandez and Laurie Underwood. Very general information that tries not to stereotype or offend and so fails to deliver the punch or detail necessary that could make it really useful. Chapters are more experiencial than practical/applicable and reads more like a textbook for a “international business class.” Does offer “todo” lists in each chapter, but their vagueness is frustrating.• China Hands: Nine Decades of Adventure, Espionage, and Diplomacy in Asia—James R. Lilley; A really cool personal history of a foreign famly’s life and work in China over almost the entire 20th century. Lots of famous names, dates and people. An easy read.• China Inc.—Ted C. Fishman; quick review and preview of the largest and fastest growing economy in the history of the world. Hope on board, the bandwagon isn’t full yet.• China Shakes the World—James Kynge. Not a book about the business implications of the new Chinese economy (which I thought it would be—my mistake), but rather an interesting collection of narratives and business experiences in China over the last 25 years. Disappointing because of my expectations, but interesting nevertheless.• Chinese Business Etiquette—Scott D. Seligman; The best book I’ve ever read on what it’s like to “live” in the Chinese business environment! He knows the Chinese. MUST READ!• Chinese Cinderella—Adeline Yen Mah; An emotional personal history of life as a women in “modern” China. Another depressing look at the history of women in China.• Chinese Family and Kinship—Huge D.R. Baker; Academic look at Chinese family relationships and the networks they create. More academic than practical, I first read this in college—and only have read it again since I’ve married into a Chinese family.• Coming Collapse of China, The—Gordon Chang; Every reason you’ve ever heard why to never work with China—a perceptive but long winded balance to the ever present optimism about China. If you can get past the obvious paranoia/grudge there is a lot of wisdom in the cautions presented.• Flow of Gifts, The—Yunxiang Yan; Reciprocity and social networks in a Chinese Village. More of an academic look than an easy read. But the practical and real-world application of guanxi is both interesting and useful for learning more about Chinese relationships.• Gifts Favors and Banquets—Mayfair Mei-hui Yang; This book is the standard on Chinese relationships. An academic look at the influence of thousands of years of history on business relationships in China.• Harvard Business Review on Doing Business in China, The—Various authors. Unfortunately, the content does not live up to it’s name sake. This book is simplistic, outdated, and focuses exclusively on marketing to the domestic Chinese market.• Joy Luck Club, The—Amy Tan; two generations of Chinese women in three families deal with modernity, relationships and their own history. Great book, great movie too.• Kitchen God’s wife, The—Amy Tan. Not nearly as good as The Joy Luck Club. If you’re not a woman having a midlife crisis or addicted to everything Chinese you can skip this.• Life and Death in Shanghai—Nian Chen; a personal look at the politics and life in Communist China’s cosmopolitan center. Gets better reviews than I think it deserves, but it so commonly read that you can blow though it quickly and know what everyone is talking about.• One Billion Customers—James McGregor; “Lessons from the front lines of doing business in China.” Probably the most honest and accurate book on doing business in China. Another MUST READ.• One Couple, Two Cultures—Dan Roberts; Nice book to validate the fact that all marriages have communications issues. Not much on research or contextual analysis. Unless your in a mixed-racial relationship don’t bother. And even then, think twice.• Myths About Doing Business in China—Harold Chee and Chris West; I was excited to read a book by a Chinese for foreign businesspeople. Unfortunately it’s of little or no value as a guide to China. It serves as more a soapbox for Mr. Chee’s anti-Western Racism and stereo-types. Skip this book.• Seach for Modern China, The—Jonathan Spence; the best history of modern China available. A MUST READ.• The New Chinese Empire, And What it Means for the United States—Ross Terrill; Winner of the LA Times Book Prize, it clearly and with great detail explains where China is headed and how to become a part of that future. Very good, if not overly optimistic.• The Rape of Nanjing—Iris Chan. This book will make you vomit—it’s that good. It will make clear why the Chinese hate the Japanese still. A must read for anyone trying to understand the current Chinese psyche.• Three Billion New Capitalists—Clyde Prestowitz. Very similar to “The World is Flat” but without all of the leftist political prescriptions. It does paint the same very bleak picture for the future of the US though.• Tiananmen Papers, The—Zhang Liang, et al; Insider details about the Chinese government’s decisions leading up to the 1989 Tiananmen massacre. A very interesting look into the mindset of Chinese leadership—I liked the psychology much more than the history.• Wild Swans—Jung Chang; a very emotional and personal history of three generations of Chinese women in China during the first 30 years of the “new China.” Another book that everyone who comes to China reads—this one is worth it though.• Will the Boat Sink the Water?—Chen Guidi and Wu Chuntao. A FANTASTIC look at the reality of the Chinese country side and the peasants’ problems with agriculture, government, poverty, taxes and opportunity. Originally written in Chinese and since translated, it was banned in China. Totally corroborates any and all corruption stories you’ve ever heard. ### Blog Backlog URL: https://www.silkroadintl.net/blog-backlog/ Last updated: 2026-07-18T14:48:47.000Z Because of the earthquake and the disruption it caused to the internet, I've got a backlog of blogs that are written, but not posted. So get ready for the deluge--a couple weeks worth of blogs and book reviews. Enjoy! DD ### Protecting your IP in China, Part II URL: https://www.silkroadintl.net/protecting-your-ip-in-china-part-ii/ Last updated: 2026-07-18T14:48:47.000Z Had a couple of great conversations with a camera factory and the Chinese customs yesterday. We are ordering some disposable cameras and got a “Kodak” sample from one of the factories that we talked with. We immediately called them to see about ordering the “Kodak” camera since the price was basically the same as the no-name cameras that we were finding elsewhere. They told us that we certainly could get “Kodak” embossed on the camera body but that it wasn’t really Kodak—it’s a fake. In fact, they said that they will be glad to ship it any where we wanted but we may have some issues if we try to import it into the US. But anywhere else, including Europe, would not be a problem. Now this factory is not some back-ally secret that we just happened upon. It’s listed on all the major international sourcing websites and participates in international tradeshows too. Naturally, we were incredulous. And since there were some other questions about the importing some items to the US we called the Chinese customs here in Shenzhen. Yup, exporting “Kodak” cameras that were not made by Kodak was not a problem—meaning there is no check as product leaves China. But, we were told, the US customs will call the listed Kodak factory of origin to verify the shipment before it is allowed into the US.If you believe all the great news coming out of China consider this your wake up call. You need to temper all the hype you’re hearing about how quickly China is catching up to the West’s legal and IP standards. Sure China joined the WTO. Sure the legal system is developing quickly. Sure China is miles ahead of where they were even 5 years ago. But China is still the number one producer of black market goods in the world. Your IP is your own responsibility. Register your brands and trade marks in the US and in China. Get your legal ducks in a row so that when you (not if you) have a problem you can immediately resolve it. ### Yes means No and No means Yes. URL: https://www.silkroadintl.net/yes-means-no-and-no-means-yes/ Last updated: 2026-07-18T14:48:48.000Z You’ve head it before, Chinese (Asians in general) don’t like to say “no.” It’s a face issue for them to not be able to give you what you want or for them to not be able to do something that you think they should be able to do. You can claim that Asians are not unique in this; that Westerns won’t say “no” to avoid uncomfortable social situations or close sales deals, but that’s another blog for another site. In Asia, it’s more than just uncomfortable social situations or sales. And for Westerners doing business it means money, time and confidence. There is probably nothing more exciting while on a factory-qualifying trip than to have the factory tell you “yes, we can do that. No problem.” This is exactly what you have come to China for—to find and qualify a factory. But hearing exactly what you want to hear is often dangerous—especially if you are heading back home soon and leaving production or mold tooling in the hands of someone that you’ve just met. One thing that we found is that being told “no” is actually a great indicator of factory capabilities and character. Two of our “best” factories tell us “no” on a regular basis. Why is that good? Because it means that we can trust them to only take projects that they are confident they can actually do. For them to tell us “no, we can’t do that” means that they are comfortable with our relationship, they are knowledgeable about their own capabilities and they are willing to admit limitations and provide real service rather than just be a “yes-man.” That is invaluable anywhere but especially in eager-to-please-you China! The good kind of “no” is more than just the typical “We don’t want to customize this for your because that means we have to work harder than usual.” That kind of “no” is certainly bad. So how do you tell the difference? Usually it’s process vs. pieces. You want a “no” when process can’t be duplicated due to a lack of expertise or insufficient technology. If your original (Western) supplier can manufacture you widget in 6 weeks and your Chinese supplier, with the same machinery is telling you they can do it in 3 weeks—you know that you would rather have a “no” now because you’re going to get crap later. By pieces we mean individual products, for example molded items, that a factory could make or outsource but tells you they don’t want to. That’s the bad kind of no. If you know your product and the manufacturing process you’ll be able to discern between the two. Bottom line: if your factory is telling you they can do it for ½ the price in ½ the time—that’s a “yes” that really means “no.” Likewise, if they understand your product and are still telling you “no” they can’t do it—you know that they are honest or at least not reckless and you should keep in touch for future projects. ### Back in the USA URL: https://www.silkroadintl.net/back-in-the-usa/ Last updated: 2026-07-18T14:48:47.000Z Flying from HK to LAX is just like going to the moon. American in general, and LAX in particular is like visiting a miniature UN, a fat farm, and a shock-therapy treatment center all in just a few hours. First person off the plane that I talk to is the customs agent. He asks me about living in China, how long I’m back in the US for; all the typical questions. He wonders why I’m home for the holidays without my wife (she’s already here). He then lets me go with “You can come back and live here forever, you know.” I’m sure my parents paid him to say that. But things go downhill from there. In the next 3 hours, all while still in LAX, my luggage gets lost, found, lost and then found again. As I try to check in for my domestic transfer, I find out that Delta won’t accept luggage over 50lbs from international flights other than Delta flights. No exceptions. 62lbs means another bag or $50\. What ever happened to an “overweight” tag? I guess all the Delta flight attendants are wearing them on their butts. Anyway, I repack my bag into the extra duffel I brought and not so politely inform the desk agent that I have a choice with whom I fly and I no longer will chose to fly Delta. You’d think that during a well publicized hostile takeover the service would be better than average rather than worse than usual. Then, joy of joys, I get selected for screening and set off the security screening alarms not just once but twice. “Male Assist. Double Alarm.” They offered me a private room for the impending pat down—really! Then my shoes register some chemical residue and have to be completely wiped down, re-x-rayed and check by a supervisor. I get “wanded” twice and then patted down. After that every single piece of electronic equipment (watch, camera, phone, mp3 player, computer, extension cords, portable hard drive, jump drive) gets wiped down and tested for chemical residue. Of course everything is unpacked and I’m unzipped and standing spread eagle in the hallway by the time we’re done. One more “beep” from the wand and I’d be naked—they told me that. Next time I’m taking the private room. Now, I’m glad that someone is helping us be safe, but honestly, wouldn’t it suck to work for TSA?! I mean, there is no one that is happy to be selected, is there? These TSA people have to deal all day with people who are basically pissed off that they’re just doing their jobs. Cudo’s to Fernando Jr. for being polite the entire time. So now, finally, I’m at the gate. Delta announcer says: “This is a beverage flight only. You still have a few minutes to run and get some food to bring on the plane if you want.” Are you kidding me?! While air service is getting better and better around the world, why does it seem to be really digressing in the US? Security delays aside, why is flying in the US such a pain now days? Flying in the US today means poor service, rude air hostesses and fees for everything. FYI: it costs as much to fly one-way from LAX to SLC as it does to fly roundtrip from Hong Kong to Bangkok; but HK-BKK flight is longer, uses a bigger planes with more passengers per flight, flys out of the biggest airport in the world, offers a full meal each way and I get great service to boot! It took me three hours just to get from terminal 3 to terminal 5! At least I got to people-watch and didn’t miss my flight. And, since I have time while I’m waiting to board (zone 9, of course) I can say that after 6 years in China, I love that American is more and more (obviously) multicultural each time I come back. The security guards in customs were African Americans, the customs agents seemed to be all Asian or White Americans. The baggage guys were all India(n) Americans. The Delta employees were all old White or Asian American women wearing way too much makeup. The TSA people were all African or Hispanic Americans except for the supervisors who where all white—everyone. The “missionaries” outside were African American while the Salvation Army people were all old Whiteladies. The counter workers in every one of the shops were Hispanic Americans—I stopped into a few extra shops just to make sure I wasn’t just over generalizing. And, just so I’m not called a racist—remember, this is just what I saw waiting and waiting and waiting in LAX.Finally, EVERY ONE REGARDLESS OF RACE IS GROSSLY OVER WEIGHT!! We obviously need to start exporting more food to Asia—let’s balance out the trade deficit and drop some lbs at the same time, eh? Welcome to America. ### What’s the difference between a Beijing duck? URL: https://www.silkroadintl.net/whats-the-difference-between-a-beijing-duck/ Last updated: 2026-07-18T14:48:48.000Z I was out of Guangdong Province last next week making some factory visits on behalf of clients. I was in Jiangsu, Anhui, Shanghai, Zhejiang and Fujian visiting with about 10 different manufacturers over a 7 day period. So this is a good time to make some general observations between the different locals and cultures. Five observed differences between North/South China.1\. Demographics of the labor force. The labor force is much older in the North than in the South. It was obvious in each and every factory that we went to that Guangdong has gotten the lion’s share of the youth—mostly 18-25 year old women. My unscientific guesstimate is that the average age difference is 10 years. When I mentioned this age difference to one factory owner he told me “yes, our workers are older, but they are also more experienced.” At least I’m not as concerned about child labor. I found that this age difference was also apparent in Fujian Province too. Hardly a “Northern” province, Fujian lies just to the north of Guangdong and makes me think that this demographic shift may be Guangdong specific. I know that other provinces where I’ve worked/visited also have an older demographic: Hubei, Shandong, Chongqing/Sichuan, Guizhou, Jianxi.2\. % of State owned factories. The percentage of factories that I visited that were state owned goes up dramatically as I went further north. We worked with one factory that owned more than 150 other local factories including a tradeshow center, a couple of very large/modern hotels and numerous KTV bars. Some of the most interesting aspects of working with these state owned factories includes their network of associated companies. Everything that we’ve ever produced they have someone that is currently manufacturing the same types of things. Another interesting aspect is the tax/price situation. State owned factories typically own their own land or have special tax incentives that allow them to offer lower prices.3\. Size vs. experience of factories. The difference in the North (Yanzi river) and South (Pearl river), in very broad general terms is that Shenzhen started in the manufacturing business in 1980 and Shanghai/Zhejiang area didn’t really get into the act until the middle ‘90’s. That doesn’t mean that the Yangzi river delta is 15 years behind, in fact the fact that they weren’t the earliest entrants means that they have some of the more modern factories in the country. In fact, for very large factories I believe that the North is ahead of the South. For mid-sized production capacity though, the South is the place to find more options. The fist time I went to visit factories in Zhejiang I was turned off by the lack of mid-range options. It seemed to me that there were either huge multi-national JV’s or small Chinese start ups. Really nothing to compete with Guangzhou/Dongguang/Shenzhen. But all that is changing—and very quickly too. There still seems to be more mid-sized options in the South, but the newer factories are in the North.4\. Manufacturing Costs are location dependant—this is East/West more than North/South. No secret here—labor costs are always cheaper the farther you get inland—or even much farther south, like Vietnam. Factories are going up in Guizhou, Guangxi, Hunan, Hebei and Henan. Land costs, incentives to move inland, labor costs, and other advantages are combining to make inland China more and more attractive. Shenzhen’s advantage in years of experience becomes a disadvantage when you factor in the cost of a more experience labor force, limited land and even some taxes are more expensive than inland.5\. Language. Cantonese/Mandarin in the South and English/Mandarin in the North. It’s always an interesting experience to go to and factory for qualification/inspection and speak English the entire time. Work in Guangdong, for me, is in either Mandarin or Cantonese. I rarely if ever speak English at factories down here. But on this trip every factory in Jiansu, Anhui and Zhejiang had very competent English speaking staff. Only in Xianmen did I speak Mandarin again. ### Basketball Zhongs? URL: https://www.silkroadintl.net/basketball-zhongs/ Last updated: 2026-07-18T14:48:48.000Z I don’t usually don’t find cross-cultural nuggets on ESPN, but I couldn’t pass up this one. Let me set the stage for you: Sunday night Yao totally destroyed Shaq and then both were interviewed after the game. The game itself is a big story here in China, but I think the comments of the two men are even more interesting than the game. The full story is [here.](http://silkroadintl.net/blog/wp-admin/%28http://sports.espn.go.com/nba/recap?gameId=261112014%29.&ref=silkroadintl.net)From the article:“Shaquille O'Neal was dominated, but he wasn't impressed. Yao Ming won his match-up with O'Neal, finishing with 34 points and 14 rebounds Sunday night to lead the Houston Rockets to their fourth straight victory, 94-72 over the Miami Heat. "He's pretty much the same, just big, 7-6," O'Neal said. "He's just doing what he's supposed to do. "Yao scored 20 points in the second half, when Houston outscored Miami by 25 points. "My only chance against Shaq is to keep him on the run," Yao said. "Shaq is much stronger and bigger than me. My only chance on beating him is to keep running and running against him. Every time I score on him I was happy like a kid, like a kid getting candy on Halloween because it's really too hard to score on him, too hard. He's just great. "I have to say that sometimes I’m embarrassed that those of us from the US culture find it so hard to complement the achievements of others, especially “foreigners.” It’s almost like success is a zero-sum game—other people’s victories translate into our losses. As the world becomes more and more international this is going to be a position that is harder and harder to defend. Rabid “made in the USA” supporters are going to find their base increasingly eroding as manufacturing of almost all goods shifts to international locations—as it should, in my opinion. There is nothing “wrong” with manufacturing jobs, but the US economy is much more an information economy than say, China, Mexico, Vietnam, India, etc. Why would we want to pay more to have the goods manufactured in the US? I understand the personal impact of job (even industry) loss and have, like most, experienced it first hand. But temporally saving a few thousand domestic manufacturing jobs that will eventually be lost due to overwhelming international economic forces flies in the face of reality and personal growth and economics. Like Shaq, who’s pride can’t allow him to give credit to Yao, there is often a mentality in the US that does not agree with the changing realities of international economy—whether it be sports or economy or military strength. The world, it is a changing and we need to be educated/experienced enough to deal with it rationally. By the way, if you don’t think that China is going to dominate the 2008 Olympics you’ve got another thing coming! ### Welcome, Tyler Hooper URL: https://www.silkroadintl.net/welcome-tyler-hooper/ Last updated: 2026-07-18T14:48:48.000Z SRI welcomes our newest team member to China--Tyler Hooper. Tyler will be in charge of project management for current client projects while here in China. Tyler comes to SRI with a degree in Business and Chinese. He's worked in Taiwan as well as in the Banking/Finance industries in the US. He also comes married to Andrea, his wife of 4 years. SRI is proud to include them in our family. 欢迎! ### Culture Clash URL: https://www.silkroadintl.net/culture-clash/ Last updated: 2026-07-18T14:48:47.000Z We’ve had a couple of clients come to us with some serious production difficulties in the last few months. As I listen to their dilemmas and try to figure out how they got where they are and what we can do to help them, I keep coming back to a couple of general themes. Westerners do business, and indeed live their lives, with a couple of unconscious cultural assumptions influencing their expectations, business decisions and the way they then interact with their Chinese counterparts. While everyone obviously carries their own unconscious baggage, Western assumptions are often inaccurate or even completely wrong in a Chinese environment. These 4 assumptions are by no means exhaustive and are not meant as a critique of either Western or Chinese culture. But these assumptions do represent personally observed and reoccurring themes in Western/Chinese interactions. First, Westerners assume that all people are innocent and honest until proven otherwise. The Chinese, on the other hand, believe that anyone outside of immediate family is probably dishonest and will treat them as such until proven otherwise. I am not saying that Chinese are dishonest. I am saying that generally Chinese believe that all other people are not honest and are not to be trusted until a serious and confirmable connection/relationship has been established—in other words, there is guanxi. The innocent/honesty mentality fundamentally changes the way that Chinese and Westerners view the world and interact with people. For example Westerns assume (and expect) that employees are basically honest, government officials will do their jobs and that services will be meted out more or less evenly. Chinese assume that employees are dishonest, government officials will not do their jobs unless paid off and services are given only to those with special connections. The consequence is that Westerns will hire the best qualified applicant while the Chinese will often hire an adequately qualified family member or friend (this is a generalization, of course). Westerners are frustrated that official stamps, registrations and procedures are constantly changing, never clearly defined and seem to depend more on who is in the office than the specifics of the case. Chinese assume inequality and corruption are standard and find a connection to overcome the differences. James McGregor in “One Billion Customers” states that foreigners “often come to China with too much trust” to work effectively. The second assumption afflicting foreigners in China is the assumption of equality: “All men are created equal.” I personally believe the truth of this statement, but foreigners must know that Chinese society does NOT support this belief. Chinese society is not horizontal (non-hierarchical) as much of the West is. China is very vertical—everyone has a place and a role. The Chinese language is marked for social hierarchy (English has one word for cousin while Chinese has eight terms reflecting maternal/paternal and older/younger of each individual). Titles and specific names are much more important to Chinese than they are to Western companies where everyone is a “manager” of something. This is not just anthropological mumbo jumbo. The Chinese government, that vanguard of the proletariat, has codified at least two different levels of citizens in the hukou system (house registration)—urban and rural—with the rural at a significant disadvantage socially, economically, politically and in every other way. This inequality is not just a product of the recent socialist system either. Historically relationships in China (most of East Asia, for that matter) are vertical and clearly defined. And just because this is the 21st century does not mean that things have changed socially. Modern relationships between boss-employee, rich-poor, white collar-blue collar, junior staff-senior staff are noticeably unequal. Specifics of gender inequalities are different than in the West but are also disproportionately favor males over females. The abundance mentality is the third mindset that Westerners bring with them to China. Most Western managers are from the middle to upper-middle class of the richest countries in the history of the world. Having lived their entire lives in the most prosperous 50 years in history they come to China—a now huge booming economy—with an engrained abundance mentality that is wholly foreign to most Chinese and all of Chinese history. In direct opposition to the wealth of the West, the last 50 years, indeed the last few hundred years of Chinese history are marked by extreme poverty, war and politically induced starvation and failure. Chinese mentality is scarcity, not abundance—there is a limited supply of money/resources and you better get yours while the getting is good. Chinese have been (wisely) taught to get as much as they can for themselves and their families whenever the opportunity arises. I am not saying that Chinese are greedy. I am saying that they are opportunist and certainly fatalistic in their understanding of opportunity and resources. China may have a long memory and even longer history but business relationships are notoriously sacrificed for personal profits on a one time deal over long term consistent buying. What this means for business is that time is not money in China. There is always enough time and usually enough people to do whatever it takes. Money and other resources are seen as being in limited supply. Solutions to problems in China are often solved with people/labor rather than technology or money. Some individuals in China see the opportunities to pad expense accounts as an extension of the opportunistic strategy—I’ve been told more than once that not padding your expense account is just “stupid.” The sale of counterfeit “fapiao,” official receipts that can be used for business reimbursements is rampant in every city in China. The fourth piece of baggage that foreigners bring to China is a set of absolute ethical standards. The Chinese, due to historical opportunism, political turmoil and corruption (among other things), are much more situational in their view and application of moral standards and ethics. Since China is not governed by the rule of law, but still a rule by law (i.e. powerful men) where you stand depends on where you sit. For most Chinese, offending officials is still dangerous, even deadly. In business this means that Chinese typically don’t feel guilty about lying or charging different people different prices. This is how negotiations are conducted. Instead of guilt, Chinese feel shame if they are caught in a lie—a loss of public face is more important than any eternal standard that would guilt them into compliance with universal standards. ### Chinese Word Games, Part II URL: https://www.silkroadintl.net/chinese-word-games-part-ii/ Last updated: 2026-07-18T14:48:47.000Z While we’ve all had problems with various websites in China, you can put your conspiracy theories away. It’s now official. If you can’t access a specific website like BBC or Google or falungong or Tibetan sites it’s just a network or hardware problem, not a censorship issue. According to a government official at a UN report yesterday, China “doesn’t have restrictions at all” on the internet. Of course, almost everyone outside of China has heard about the extent of censorship of the internet in China—the Great Firewall of China is (in)famous. Estimates are that more than 20,000 sites are continuously monitored and blocked in China. Most recently Wikipedia and Blogspot were just un-blocked in August of this year. Bold face lies Alternative interpretations are common in China where official policy is more important than acknowledged reality. For me the biggest surprise was the incredulous responses from the attendant journalists rather than the official pronouncement. Really, what else do you expect Chinese officials to say?!In the same report this well versed official also said that there are no restrictions on journalist in China either. In fact he claimed that journalists with “legal problems” have “nothing to do with freedom of expression.”From the article:In China, we don't have software blocking Internet sites. Sometimes we have trouble accessing them. But that's a different problem. I know that some colleagues listen to the BBC in their offices from the Webcast. And I've heard people say that the BBC is not available in China or that it's blocked. I'm sure I don't know why people say this kind of thing. We do not have restrictions at all. Nick Gowing, BBC anchor and session moderator: Would you like to elaborate on that? Chinese official: How can I elaborate on it if we don't have any restrictions? Some people say that there are journalists in China that have been arrested. We have hundreds of journalists in China, and some of them have legal problems. It has nothing to do with freedom of expression. For the complete report, read [this](http://news.com.com/China+We+dont+censor+the+Internet.+Really/2100-1028%5F3-6130970.html?tag=mainstry&ref=silkroadintl.net). ### The 10 Different Types of Foreigners in China URL: https://www.silkroadintl.net/the-10-different-types-of-foreigners-in-china/ Last updated: 2026-07-18T14:48:48.000Z As a foreigner here in China, today I’ve decided to (over)generalize my experiences with other foreigners and have a little fun with those of us that are of the paler persuasion. When I first arrived in China my wife and I walked down the Bund in Shanghai and there were almost no other foreigners there! We were mobbed by Chinese people dying to speak English and touch my hairy arms and my wife’s blond hair. Everyone wanted to take pictures with us (of course they didn’t have any cameras, they wanted to use mine—don’t ask me how I was going to get the photos to them). We couldn’t find any shops selling bottled water or Cokes and the domestic flight was a prop-plane with seats that weren’t bolted down. That was my first day in China. Wow! Talk about overwhelming. Since then I’ve had the opportunity to work all over China and meets hundreds of foreigners of various abilities, education and attitudes. Generally, the people I meet are good ambassadors for their home countries—kind (if not a little impatient), generous (if not a little condescending), and typically good salt-of-the-earth kind of folks. I will admit, though, I have often been shocked at how little they know about China or how few speak Chinese. It’s always impressive to me to see someone who is both good at what s/he does and fluent in Chinese. And even more impressive to find a foreign spouse and kids that can speak Chinese too. Now, before you send me hate email and call me a racist pig, you need to know that I readily admit that at least 7 of these are/were me at some point in time in the last 10 years. People learn and life changes us all. Just because someone is a Pollyanna today doesn’t mean they won’t be a McCarthy Holdover next month. So here it is. My totally biased analysis of foreigners in China. Feel free to add to the list. I’ll post the additions next week.1\. The Clintonite—Don’t ask, don’t tell. This guy has typically been here a couple years but doesn’t speak any Chinese. He visits factories twice a year and willingly believes it’s this clean all the time. Reads the social compliance reports and accepts that all is well. It’s much easier to not question the other 364 days of the year or talk with all the subcontractors that supply the one factory that submits to the social compliance inspection. Typically he knows that he’ll get what he asks for and so just doesn’t ask. AKA The Floydian—Comfortably Numb, if he’s Republican.2\. The McCarthy Holdover—Red Scared. Still sees anything “red” as a threat. Can’t get over the army’s involvement in the Chinese Govt. See’s the economy as feeding the military for it’s eminent take over of Taiwan (and then Korea, Japan, Hawaii, etc..). Still talks incessantly about the Cultural Revolution, Mao, Chicoms, Tiananmen ’89 and Tommy Huang. Typically can’t distinguish between Chinese and any other Asian. Could be a guest on King of the Hill (“Are you Chinese or Japanese?”).3\. The Pollyanna—Don’t you just love China!? “Look at the growth! Look at the opportunities! Just step over that body laying there, no problem. Look at the development. The Chinese will be the biggest (insert any industry here) in the world in just 10 years!” If he lives in China he’s a Taoist “convert” who practices fengshui learned from Wikipedia. Responds to anyone that says anything bad about China with: “Oh, yeah! And your government doesn’t do that too?!” Has never been outside of the big cities on the East Coast. Most books written about China in the last 10 years fit into this category. If he’s a frequent business traveler he buys the pro-China books in the Hong Kong Airport and purports to have great guanxi.4\. The English Teacher—Unteachable; great photo album. Thinks he’s The Pro because he’s taught in three cities in his one year in China. Can obviously out debate anyone that disagrees with him since he only communicates with folks speaking Pidgin English—self confirmation of his Pro status. Often a “North American” (i.e. a Canadian) who hates the fact that Chinese people only want to learn “American” (i.e. US) accents. Teaches on the side, but is really a full time backpacker that expects to turn his experiences into big money in import-export “as soon as he learns Chinese.”5\. The Pessimist—Hate is a core value. Nothing works and every problem is confirmation that China is going to hell in a hand basket. Everything is better somewhere else and everyone knows he hates it here (but he won’t leave). Differs from The Leftover in that he can be a newly arrived professional, a spouse or even an Overseas Chinese. Talks about the Chinese like they aren’t all around and can’t understand English. Thinks that guanxi is the root of all evil.6\. The Fam—What, me speak Chinese? For all intents and purposes, the families of most expats in China still live in the West. They live in a private villa in a gated community, shop at the import stores exclusively, travel back to their home country at least as often as to other provinces or cities in China. Knows all the TV schedules for home TV programming and are Slingbox devotees. They only interact with Chinese in English and then only with maids, the nanny, the driver, the pizza dude and the security guards.7\. The Native—been there, done that. Chinese spouse, speaks Chinese, has been here for years (and will be here for years more). In-laws live with him in a Chinese community/complex. Typically a cross between The Pessimist and The Pro. Acutely aware of the fact that he will never be Chinese but has also been away from his home country for long enough that he doesn’t quite fit in there either. Has never seen the new orange/green ten-dollar bills in the US. Fantasizes about “home cooking” and “the way it was back home.”8\. The Tourist—Loves the scenery, hates the bathrooms. Loves the people, hates the bones in the food. Still thinks the bar girls really do think he’s cute. Loves the fact that he can cut 20% off the starting prices of knock offs in the markets. Can’t quite figure out why anyone still calls China a “Developing Country.” Is sometimes here on 10-day trips to “check up” on his Chinese manufacturer—spends most of the trip eating, shopping and golfing.9\. The Left-Over. Probably came as a Tourist and is now an English Teacher. Loves wallowing in the underground economy of Yunnan. Hates the Chinese, hates China, hates Chinese food and hates his own job. Speaks barely enough Chinese to order beer, get taxis and impress tourists. Has a Chinese ex-wife (or two) and a current girlfriend half his age. Used to live in Thailand but the black market there is too expensive nowadays. Usually found in bars, complaining. Likely to have legal issues back in his home country that prevent him from returning.10\. The Pro—Fluent in Chinese and works as a professional in Shanghai, Hong Kong or Beijing. Would be a native except for The Fam are all Westerners. Has a degree from Thunderbird and has been in China since graduation. Lives on an “expat package” that could support a small Chinese village. ### Rest easy, the campaign is finally over. URL: https://www.silkroadintl.net/rest-easy-the-campaign-is-finally-over/ Last updated: 2026-07-18T14:48:49.000Z We can all now sleep without the fear of jack-booted thugs breaking down our doors. Now that the “100 Day Campaign Against Piracy” has officially ended. That’s right, as of last week, October 25th, the campaign is officially over and we can all go back to our regularly scheduled lives. What? What do you mean you didn’t even know there was a campaign against piracy?! You didn’t notice that all the shops selling pirated DVD’s and clothes were closed? Didn’t see all the knock off computer equipment dealers shuttered for the last three months? Yea, I didn’t either. In case you want to know how the campaign went you can check [here](http://english.people.com.cn/zhuanti/Zhuanti%5F487.html?ref=silkroadintl.net). But if you don’t want to take (waste) the time I’ll give you a free review of the People’s Daily report: millions of illegal DVD’s destroyed! Thousands of illegal shops closed down! Hundreds of illegal manufactures arrested! There are no more illegal goods in China. None! Ok. The reality is that most, if not all, those who were affected by the government’s campaign are already back in business this week. At least they already are here in SZ. Lohu Commercial Market (featured on 20/20 last year as one of the biggest illegal goods markets in China) is going strong and actually never slowed down at all in the last 90 days. In fact, I would dare say that business is up as Hong Kong, Shenzhen and Guangzhou all host international trade fairs this month. Why isn’t anything done about this is China, you might ask. The answer, I might tell you, is money. Pure and simple.• China is the #1 source for illegal goods and the #2 market ($63.5 billion) in the world.• At $334 billion annually, the US has the largest market fore illegal products in the world (larger than all the rest of the world combined!!).• Total world market for illegal goods is approximately $1.085 trillion USD/year (China’s GDP is estimated at $2.22 trillion/annually).• For more status see [this](http://www.havocscope.com/?ref=silkroadintl.net). or [this](http://www.icgg.org/?ref=silkroadintl.net).A conservative estimate is that China’s market (domestic/international) for illegal goods is going to be somewhere over $200 billion USD annually. With a GDP of $2.2 trillion ($8.89 trillion when adjusted for purchasing power), that’s almost 10% of China’s GDP in illegal goods annually. It’s obvious that for Chinese officials, who are numbers and development/growth addicted, there is little incentive for enforcement of copyright laws. In fact there are hundreds of billions of reasons NOT to do anything. Which is exactly what happens as soon as the campaign is over. ### Utah's (Chinese) Governor URL: https://www.silkroadintl.net/utahs-chinese-governor/ Last updated: 2026-07-18T14:48:49.000Z I had a fun/interesting evening in Utah last week at the Governor’s Gala. Governor John Huntsman has quite an extensive history in Asia—speaks Mandarin, served as the (temporary) Ambassador to Singapore, has an adopted Chinese daughter and another adopted Indian daughter (in process). He claims that he is the only Chinese speaking governor in the US--probably true since most American's don't know China from Japan. My wife (who is Chinese) was duly impressed with his fluency too. By far my favorite part of the evening was the justification from MC and local talent, Kurt Bestor, for his (in the future) support for Gov. Huntsman. He said he likes him because: "1\. He rides a Harley, 2\. He looks good in a leather jacket, 3\. He plays the piano, 4\. He has a great looking wife. " No mention of political positions, but if you have a "hot wife" and look good in leather, who needs political positions!?Regardless of my views on his (lack of) politics, I believe that he has the vision that politicians and businesspeople need to have to work effectively in the new-increasingly-international world. He knows that Asia, China and India in particular, are important to domestic Utah business and consumers and he leads bi-annual “trade missions” to China and other Asian Countries (he’s in China this week). He doesn’t see China as a threat to Utah jobs, but as an opportunity for the future of Utah’s economy. ### Chinese Word Games URL: https://www.silkroadintl.net/chinese-word-games/ Last updated: 2026-07-18T14:48:49.000Z The Head of the Chinese Ministry of Religious Affairs was speaking at a conference about law and religion at BYU last week and made a couple interesting comments that I think apply to anyone doing business in China. First, when ask directly how many people died in the 1989 Tiananmen incident he said: “Not a single person died.”Second, when asked why, if there is freedom of religion in China, are there underground Christians and Christian churches. He said: “There aren’t really any “underground Christians or churches.” Those types of people just don’t want to go out to a church because it’s too inconvenient. They would rather just have church in their own homes.”While the legal system isn’t well developed in China, lawyer-speak (apologies to my friends who are lawyers) is a time honored art in Chinese. These two statements are representative of what you will be told and how business/politics is conducted in China. So what do these two responses really mean? First, the official line on Tiananmen is that no one died. So there is no way that a government official is going to reverse 17 years of stated position on what was easily the biggest mistake of the last 25 years. Bottom line? In public announcements, documents and the speeches of government officials the Party Line is the reality and will NOT be second guessed. Second, the Chinese constitution states clearly that Chinese people have “freedom of religious belief” as opposed to freedom of religious practice. Since Chinese can believe anything they want, there is no reason (in the minds of Communist Party policy makers) for there to be any “underground” religions. The Chinese people have religious freedom so anyone that is not going to a “real” church must have reasons other than belief issues, or so the logic goes. What does this mean for you doing business in China? It means that just as in the US, you’ve got to be very clear and very specific about what you want and what you are expecting/getting in return. Ideas for clarifying details include:• If you don’t speak Chinese (very very well) and don’t have a good relationship with your factory you need to make the default contract in English and make sure that you get professional (and accurate) translation of the Chinese contract. Don’t ever let your supplier translate the contract for you.• What ever is official policy or the law for your situation/industry is what you need to default to. You WILL be told that you can get whatever you want, even if it’s not legal, but you don’t want to go there. Ever. If there are problems, and there will be, you need to make sure that you have (at least) the threat of legal force behind you.• Get your Chinese supplier to confirm back to you, in English, what they are going to be giving you. Get it in writing, get a sample of the product, get photos, get everything you can with dates and signatures, etc. Keep records of all conversations (electronic, verbal, everything) and make sure that all parties have copies of these. The Chinese know that collecting and recording information takes time. They know that you are (probably) on a trip with limited time. And they would rather do business at a bar or over dinner than at the factory. All of these things give them the advantage in (not) recording details. Make sure you do it—they will NOT.• Work with someone you trust—this is the best way to get specific, honest information. Working with someone that has a stake in your success (i.e. the successfull completion of your product) means that they are invested in seeing you get all the information that you need. Many people recently are saying that guanxi is over rated in China and that you don’t need it any more. I beg to differ. I don’t care where you do business, it is ALWAYS better to know and trust who you work with. Maybe you don’t need a government official in your back pocket any more, but you do need connections with people who you can trust and who have connections to people who can get things done. It’s just as true in the US as it is in China—“it’s not what you know, it’s who you know.” ### China US Internet War?! URL: https://www.silkroadintl.net/china-us-internet-war/ Last updated: 2026-07-18T14:48:49.000Z Reports of an “[Internet War](http://www.cio.com/archive/071506/china.html?CID=22985&ref=silkroadintl.net)” between China and the US. China is apparently developing a new internet (CNGI) to increase “innovation” and global competitiveness in China. My first thoughts (ok, my second thoughts after—“considering recent trends this certainly means more government control”) are: Why is this a “war?” Why do we always have to fight? Why can’t we all just love?Really, why is the development of the Chinese economy always seen as a threat in the US? Don’t we want more/larger/more developed markets across the globe? Isn’t competition the key to Smithsonian free market principles that we claim to advocate? Why isn’t a “better” internet platform in China a good thing? (Granted, the probability of increased efficiencies in Chinese government control more than likely will accompany any “development” in national level technology developments.)The reality is that a better system does not necessarily mean more innovation or competition in either the short of long terms. First, the delivery systems for the current Chinese internet are crippling. The Chinese system that was already built to be “better than international standards” in the just last 10 years is painfully slow, limited by a lack of competition in distribution, poor quality final delivery infrastructure and government interference/censorship. Second, having a great system doesn’t mean that anyone will know how to use it effectively—certainly not the 90% of college grads that can't compete with the current system. Third, who knows what “better” is and if it will really even work or not. How many people/companies/regions will even have access?One can only hope that China will indeed soon become competitive in the areas of R&D and other innovations. This should be seen as great news in the US—not as a war of any sorts. Status Quo in China is piracy, mass production of Western-design products and sub-par domestic products. Furthermore, the ability of China’s current college grads to be competitive in the global economy has been reported (repeatedly) to be some where around 10% of total college grads—meaning 9 in 10 can’t meet international standards and could certainly use a does of “innovation.”Anything that develops the Chinese market, increase the knowledge and ability of both Chinese consumers and employees/graduates should be totally supported by the US! If market and consumer development is war, put me on the front lines! ### “It’s All Good Fun! But not as fun as 15 years ago!” [THAILAND COUP] URL: https://www.silkroadintl.net/its-all-good-fun-but-not-as-fun-as-15-years-ago-thailand-coup/ Last updated: 2026-07-18T14:48:49.000Z Since the coup in Thailand a couple days ago, I’ve received several emails from friends and had multiple conversations with Western folks who are wondering what the heck is going on in Thailand. All have been wondering if it’s safe. Some have trips planned and were worried about entering a country that just had a coup. Even after telling them that coups are no big deal in Thailand, that there have been some 20 coups the past 60 years, it still seems scary to them. My response to them has been “hey, Sabai Sabai, the mangos are still flowing…it’s no big deal. You probably won’t even notice it.”Well, I spoke with my Thai mother-in-law this morning to see how things are going. She could not have stated my point any better:“Oh, it’s all good fun (sanuk!) But not as fun as 15 years ago when they were shooting!”This sums it up! If you are planning to go to Thailand, GO NOW! Maybe there will be fewer tourists and you’ll have even a better trip! (Really, the common Thai thinks this is fun! so what's all the fuss about?) ### Minimum Wage? In China? URL: https://www.silkroadintl.net/minimum-wage-in-china/ Last updated: 2026-07-18T14:48:49.000Z Apple got busted. Not because Apple itself was doing anything illegal, as the evidence finally bore out—although their subcontractor may have been a little iffy on a few minor issue. Nor were Apple or their subcontractor doing anything that most other factories in China aren’t also doing. They got busted because they have a big name—and a lot of Americans are going to feel guilty that some poor Chinese peasants are being “forced” to make iPods. That was the point of the “exposure.”China does have a set standard for hours, wages, working conditions, age of laborers ,etc. For example, in Shenzhen the minimum wage is just over 800RMB a month (about $100). There is a set maximum of 60 hours a week per work week too. Apple and their sub-contractor confirmed that they were following these restrictions for the most part and promised to take better care of workers in the future. So what’s the reality of workers in China? We work with over 50 different factories on a consistent basis and many more on an infrequent basis. This is what I’ve seenLine workers. They are typically in over supply (except for recently in Guangdong Province there’s been a shortage) which means that it’s not necessary for factory wages to be competitive, or even at the national minimum since there are literally lines of people waiting at the factory gates. Line workers are supposed to get paid 800RMB (about $100)but there are very few factories that really pay that much cash out. Almost without exception the costs of housing, utilities, food, uniforms, being late, production mistakes, training and broken equipment are all taken directly out of the wages before they are paid. Monthly cash payments are usually much closer to 500RMB ($63) per month than the 800RMB national minimum wage. We’ve had factory owners tell us directly they can give us good prices because they pay off the Labor Bureau so they don’t have to pay taxes or insurance for workers making the national minimum wage. Not everyone does this, but it’s certainly more common than not. Some factories are more fair than others, but as I’ve said before, “In China, everyone’s at least a little bit ‘iffy.’”Line workers can work voluntary overtime, and it’s almost always available. And despite the multinational’s protestations to the contrary there is often overtime that is “less than voluntary.” For example, I just got back from a factory that is working on a large project for export to a very large multinational beverage company. I was in the factory all day on Sunday, from 8 until 8, and so were all of the 300 line workers, all the sales people, accountants and other administrators. None of them were officially clocked in and none of the professional staff were doing their normal jobs. The entire factory staff was building product and no one, I was told, was excused from the days work. Admin and other support/service workers. While they receive a much higher salary per hour, there is no way that sales people, drivers and other service workers are only working 60 hours a week—or working all their hours voluntarily. Granted this group may not in the US either. A couple of examples. We have a factory that almost always supplies us with the same driver as we go from location to location within the factory’s network. This driver is on call 24/7 for 29 days a month. He gets 2 days off each month and he makes 2500RMB (or $315) a month but doesn’t get housing or food. That’s an average of more than 23 hours a day for a 31 day period for about $0.42 an hour. Example number 2\. Sales people from most of the major factories are “strongly encouraged” to spend time with clients on a regular basis. This not only includes office visits and taking time with clients at the factory but also taking them out to dinner, out for drinks, dancing or massages and Karaoke. Since we don’t drink, sing or fraternize with ladies at night we’re a pretty easy client in terms of time spent per order. But sales people love to tell stories of dinners and Karaoke that last until 3 or 4 in the morning. Sales people are not only scared to lose their job if they don’t provide clients with entertainment they are convinced that hours per night and entire weekends are just “what’s expected” from management. Other administrative staff routinely clock out, eat dinner and then go back into the office without clocking back in. In many places it’s an unspoken rule—in just as many places it’s clearly defined as part of the job description. With Apple the social compliance folks got the press they wanted. But my experience is that international social compliance investigators in China are often just as carefree with the law as are Chinese factories. One experience is typical. We did a project for a large entertainment company last year and their office in Shanghai called us and told us straight out to select the best of the factories that we were using to make the products and make sure that they prepared before the inspectors showed up. The “inspection” lasted less than 30 minutes and covered 2 floors of a 6 story, 3 building factory complex. Certainly working in a hot and dangerous factory for 12 hours a day is different than driving a car or taking clients out for drinks. But hours at work are hours at work. China is not the US; wages, expectations, overt pressures to work long hours, the ease of firing and hiring, and work environments differ markedly. Apple didn’t so much break Chinese law as they got big and were an easy target for publicity. Unfortunately, tech plants like Apple’s are typically cleaner, better run, hire better educated employees and have to pay and treat employees better than factories that can use lower skilled laborers. There are many more factories in China that truly do need some bad publicity to motivate them to clean up. But this row with Apple was a just a routine story and is already dead in the Western press. I remember Nike was called on the carpet for the same things a few years ago in Vietnam—as are most multinational companies. They all weather the storm of bad press and continue—usually paying better than other local factories and providing benefits and environments at least as good if not better than local standards and regulations require. ### The Chinese Dichotomy URL: https://www.silkroadintl.net/the-chinese-dichotomy/ Last updated: 2026-07-18T14:48:50.000Z I spent 12 hours in a factory on Monday resolving concerns, fighting with resistant engineers, negotiation with managers, hobnobbing with the owners over lunch, discussing solutions with line managers, reviewing standards with QC/QA folks and generally working though every single production issue imaginable to try and jump start a stalled project. What did my 12 hours get me? A signed agreement that the factory will deliver the promised product a month late and I won’t be charged for it! I was quite pleased. Really. Now this factory is world class—in terms of production capabilities, machinery and facilities, that is. They have over 3000 employees, are privately owned and some minority owners are Japanese technology companies who are also the biggest customers. But problem solving, customer service, real-time communications and “win-win” are concepts that management has yet to embrace (or even define). This is nothing new in China, of course. While China leads the world in growth rates, largely on the back of manufacturing for export and domestic infrastructure, it is in no way anywhere near the top in the “science” of business management and customer service. In fact it’s probably one of the world’s worst. For example, China has gone from almost no cars in the 1980’s to the second largest market in the world twenty five years later. Ditto for the airline industry, home computers, beer and many others. But the average education level is still less than 6th grade. Technical skills and science are a focus for education in China but the application of that education, the ability to use abstraction and social sciences education are more than a little weak. Specifically, while China pumps out 3-4 million college grads every year, less than 10% of them are of the level necessary that they could work in an international company. What this meant for me at the factory on Monday was simply this: the factory can manufacture just about anything that I want, but if there are problems or if quality standards are not meet, resolving concerns and meeting international standards are difficult requests to accomplish. Changes are often difficult to accommodate even with Western educated engineers—even when the changes are coming from the factory engineers themselves in response to production problems. In China the typical answer to production problems or QC issues goes something like this: First, try to convince the client to accept the completed, but inferior product. Second, if that won’t work, stall, delay, and find whatever excuse there is to force the client into a time crunch so that the inferior product looks better and better in relation to a whole new production run. Third, if the client is still insistent on original standards, negotiate new prices. Fourth, present new samples, new production schedules for approval. If new samples are not approved return to step number one. In most Chinese companies the mentality is still “duck and cover” when there are problems. This is not surprising when the costs of mistakes are often taken directly out of the responsible party’s salary. And since upper level managers are never told bad news, when they are finally brought in it’s usually pretty late in the game. That’s where I was on Monday. Discussions about our production started with the engineers saying how badly the factory (they themselves) had underestimated the difficulty of the project and how much it was costing them. No matter how many times I hear this excuse it always shocks me. Basically, their saying: We were dumb, it’s our fault, but we’re not going to take responsibility for it. But this seems to be a standard line regardless of factory size and international experience. The conversation then moved to how difficult and inflexible my standards were. Of course I’d been hearing this same story for the last week as various sample products were rejected, so I waited until they were done before reiterating the same standards that we’d established together months earlier. Now, it’s not like these standards were new or had changed—they are listed clearly in the PO that the factory signed (I know, that’s my mistake—I assumed that a signed contract actually mean something!). There was no mention of why there were delays or problems, rather just how much it was going to cost to finish the project. Managers, new to the discussions on Monday, were initially angry with me for not being flexible enough, changing standards and not giving them enough time. At this point, when I was being falsely accused, it was time to go on the offensive. I brought out all the contracts and PO’s, the photos, the samples, and every fax and email the factory had ever sent us concerning this project. I knew going in that the managers had never head the whole story and probably hadn’t even ever seen the PO. My strategy was to answer every single objection and misrepresentation with the facts. Since I knew that I didn’t have the clout (small $200,000 order) or the inside track I had to help the managers see the whole story and “shame” them into honoring their previous agreements. To get the mangers on my side I also had to give them a way out—and that way out was to identify two engineers as the culprits. Throughout the day there were some moments of joking, some angry yelling, a lot of discussion of specifics by me each time they voiced a concern over price, process or standards. By Chinese design it was a contest of wills—who was going to give in first (sometimes called the “iron ass” strategy)—and I was already 3 months and $100K into this so I wasn’t about to cave. In the end, I got what I expected to get—I got them to retract their demands for more money and to complete the project according to the previously agreed to standards. Basically they’ll complete the contract late and not charge me for it. So what’s the Chinese Dichotomy? It’s the contrast between the most modern technology and the absolutely parochial mentality of some of the people running it. It’s the size and incredible growth of the Chinese market and the scarcity mentality that still pervades both domestic politics and business in China. It’s the advanced education necessary to use modern technology and the simplistic short sightedness of single project profit maximization. On a physical scale, it’s the few hundred million urban residents with money, education and exposure to the world vs. the eight hundred million rural peasants. As one of my friends described it “it’s like the Flintstones meets the Jetson’s.” That’s China—same planet different worlds. ### History with Chinese Characteristics URL: https://www.silkroadintl.net/history-with-chinese-characteristics/ Last updated: 2026-07-18T14:48:49.000Z Junior and senior school students in Shanghai get [new textbooks](http://www.nytimes.com/2006/09/01/world/asia/01china.html?hp&ex=1157169600&en=6ad0b40aa76be4c4&ei=5094&partner=homepage&ref=silkroadintl.net) as they start school this fall. So what? you may say. But these new textbooks are different. Writers and education officials have decided that focusing on wars and individuals is an outdated concept—which means that Mao Zedong is mentioned once! That’s right, once! Bureaucrats are looking at Western style learning of history and writing new textbooks that focus on cultures, religions, ideas (not socialism) and science is the most recent step in all-out headlong push to modernize China. What does this mean on the streets? In the short term it means that there is a conscious and dedicated group of influential bureaucrats changing both China’s future and it’s (remembrance of the) past. As one of my professors in college used to say: the Chinese Communist Party doesn’t believe in Socialism any more. The problem for them is getting out but still retaining power. I absolutely agree. The only real ideology in China today is self preservation through financial security. The long term effects of these new history books, if these books are adopted across the country (which is the plan), is that the memory of socialism prior to the addition of “Chinese Characteristics” will die with this next generation—if it hasn’t already. Coca-Cola, Man U, the NBA, Honda/Toyota, an MBA or Ph d. in science and Taiwan rock stars are already as easily as much a part of “Chinese urban culture” to China’s 25 and under population as is Mao. Not to mention making money. But the real test of a successful break with the past is if China can teach its students to forgive Japan. ### The Chinese RMB, US Politics and what it means for you URL: https://www.silkroadintl.net/the-chinese-rmb-us-politics-and-what-it-means-for-you/ Last updated: 2026-07-18T14:48:49.000Z As the Chinese government slowly, ever so slowly, allows the RMB to strengthen against the US Dollar, US politicians cheer from the sidelines—patting themselves on the back for being able to influence the Chinese monolith. Yea, right. US politicians have about as much influence in China policy decisions as the does the Dali Lama—that would be zero to none, in case you didn’t know. If anything, their ignorant grandstanding and annual calls for China’s head on a platter over human rights and artificially high currency valuations probably push the proud Chinese bureaucracy the other direction. But in the fight over a more accurately valued RMB the US politicians have an unlikely ally. Chinese financial analysts agree too that this is the best move for the Chinese economy in the long run. The problem for US law makers, who think in 2, 4 and 6 year cycles is that the Chinese think in terms of 5 year plans (at the shortest) and dynasty and legacy building on the long end. This means that there will be continued movement in the RMB, but at a paltry 3% a year. At most. But since must of us live in the short run, this change is immediately felt on the bottom line. For Chinese manufacturers everything they export is now 3% more expensive each year. This increase is a threat to their competitiveness at a time when India and Vietnam are competing for more and more of the labor intensive Chinese market. Logically then, for you, the mid to small US manufacturer or distributor, this means that everything you buy from China is going to be at least 3% more expensive each and every year—even if all other variables are held constant. And, unfortunately those other variables are not stagnant. Interest rates in China are being pushed up by a desire to limit credit and cool off growth (11% this year). That means that available cash for factories financing projects is increasingly limited. In addition to money, resource materials such as oil, copper, steel and labor prices are all on the rise (some due to market forces, some not). While these increases in cost are real, China is in no way pricing it self out of the world market for labor intensive production. Rather manufacturing is moving inland—out of the cities and into the undeveloped Chinese countryside. China still has an infrastructure that better than Vietnam’s or India’s and a government that is committed to continued, but stabilized, growth of the Chinese economy—with or without the support of US politicians. ### China Threat, part IV URL: https://www.silkroadintl.net/china-threat-part-iv/ Last updated: 2026-07-18T14:48:49.000Z Right on que, China provides the world with the answer to the question "why is China still haunted by the China Threat? "China's Ambassador to the US said to the BBC:"The moment Taiwan declares independence, supported by whoever, China will have no choice," he said. "We will do the business through whatever means available to the government. Nobody should have any illusions on that. We will do the business at any cost. "He added: "It's not a matter of how big Taiwan is, but for China, one inch of the territory is more valuable than the life of our people. We will never concede on that. "For full text, click [here](http://www.taipeitimes.com/News/taiwan/archives/2006/08/18/2003323649?ref=silkroadintl.net).Defending territory is understandble and even worth of support. But the final line is the kicker--people don't matter to the Chinese governement. That's the threat. ### The China Threat, Part III URL: https://www.silkroadintl.net/the-china-threat-part-iii/ Last updated: 2026-07-18T14:48:49.000Z In a recent article posted in the China Daily, the Chinese editor asks: Why is China always haunted by the “China Threat?” Of course, his answer is that any fears about China are illogical, based on ancient stereo types and/or put out by China’s “enemies” or those who are afraid of sharing power with China. In support of his answers he lists off billions of dollars worth of statistics, FDI, GNP, import/export quantities and then rehashes the old line of China as “peaceful neighbor,” and pathetic historical whipping boy. If the problem is that the question of the China threat is still being asked, why does he, or the rest of the Chinese government/education/propaganda machine think that the same old ineffective (by their own admission) answers will solve the problem? I don’t know why others consider China a threat—see my previous posts. But I do know why the “official” answers are not effective. The response to the “China Threat” question provides some insight to the reasons for the continuation of the “threat.” So I thought I’d tackle the official point of view ever so briefly.1\. If China really wants to fight “foreign propaganda” that projects China as a threat, the China Daily is probably the single worst possible news outlet to use. If there truly is legitimacy to the arguments put forth by the Chinese government there needs to be an editorial (at least) in a major foreign newspaper. Better yet, an academic study in a periodical or respected journal related to Asian politics. The China Daily reaches only news-starved foreigners in China, and Chinese studying English. CCTV is an equally illegitimate source.2\. General answers and random economic statistics in response to a general unreferenced question are not close to scientific and certainly not convincing. The world (the UN, the World Bank, independent foundations, research institutions and scholars) are all pointing to specific documented problems such as: the instability of the Chinese government, the insolvency of the Chinese banking system, the increasing lack of government control over crime, graft, and poverty, the inability or unwillingness of China to be a responsible neighbor (N.Korea, Pakistan, South China Sea Islands), lack of health care, uneven development, rise of (hidden) military expenditures, lack of governmental and corporate transparency, etc. etc. China apologists continually quoting the same FDI statistics doesn’t resolve any of these concerns. In fact it just perpetuates the image of China as an out-of-touch bureaucracy that is increasingly intransient and bellicose with nothing new to say.3\. The fact that Chinese apologists (e.g. the People’s Daily) are still asking this question at all says a number of things about the perceptions of the apologists themselves. First, insecurity is a dominant feature in the Chinese mentality—my personally experience is that there are no other people in Asia that are as concerned about what the world thinks of them as are the Chinese. I have often said that the Chinese have a national insecurity complex. Common expressions of this insecurity are: “But we have a 5000 year long history!” “We have 3.5 billion people but can’t find 12 decent football players.” “We will always hate the Japanese.” “America is only 250 years old, how come it is so powerful?” Second, a fear of attack from others (Japan, the US, Vietnam, the world political bodies, etc.) is a constant in the minds of the “historically” oppressed Chinese. Whether from a history of invasion or the government’s constant barrage of misinformation of both, Chinese apologists seem to be in perpetual fear of an imminent attack from abroad. The reality is that instability at home is a much bigger threat.4\. A threat by any other name… While China is not a threat to the US, the US certainly is in danger of losing it’s position as the world’s only super power, economically at least, with the rise of China. But, like I’ve said before, China isn’t a threat as much as are a lack of quality education and major consumer debt in the US. Maybe the US is also using the specter of a powerful China to deflect domestic criticism. Hmmm….I think that this is the answer—the China threat lives on mostly in the minds of Chinese who see themselves as victims of the global system in general and of American (previously British) capitalism in specific. They deflect criticism of current domestic situations by harping on the “threat” and persecution from the outside. The world both salivates over China’s markets and shudders in fear of its lack of transparency, standards and ethics in business. China’s own lack of domestic stability and paranoid bureaucracy is the only “China threat.” And this threat is only a threat to China itself. ### Marathon Monday URL: https://www.silkroadintl.net/marathon-monday/ Last updated: 2026-07-18T14:48:49.000Z Sometimes it’s just amazing what can be accomplished in China. The fact that I live in the middle of the worlds largest industrial zone (Guangdong Province) means that within 3 hours, in any direction, I can be at a factory for just about any given product sold the world over—really just about anything and everything is exported from the Pearl River Delta. Taken collectively, Shenzhen, Guangzhou and Hong Kong, is the busiest export area in China—yes, more so than the overly promoted Shanghai, Ningbo, Zhijiang area. So on Monday I visited 5 different factories—it took 16 hours. But I was able to confirm a mold at one factory, approve some died colors at a second factory, do print checks on 2 SKU’s of product packaging at a third, confirm assembly of a DIY kit at a fourth, and pick up production samples and do Outgoing QC at the last one. I didn’t schedule the day like that. Some factories canceled previously scheduled Sunday visits and others were ready earlier than the scheduled Tuesday visit. But just the fact that all these factory options are available and in such close proximity is absolutely amazing. I saw production that was to be shipped to the EU, the US and Australia. Goods going to Wal-Mart, Target, Michael’s and others. I can go from the highest of High Tech industrial parks to almost substance farming in literally a 30 minute drive. Sometimes I think that I’m in the Wild West with no laws but money. Sometimes I feel like I’m living on Gilligan’s Island and need the professor to peddle faster to make the intent work. Sometimes it’s Star Trek as I look down from the 11th story of a 40+story building in the financial district at the Ferraris, Bentley’s and Lamborghinis below. It’s never boring and it’s always changing. For example: A new elementary school was built and will be in use in less than 90 days. Three shipping export/import visas were applied for and delivered in less than 36 hours—they typically take 5 business days. The US Olympic Basketball team is just up the road (yea, I think that’s a big deal for China) for two days. Wal-Mart is China 5th largest trading partner/country. More than 200,000 people a year move into Shenzhen. Shenzhen has the highest per capita income in China—about $12,000 a year—while more than half of China makes less than $300 a year. Today I’m off to two more factories and the US vs. Brazil basketball game. ### One more step back URL: https://www.silkroadintl.net/one-more-step-back/ Last updated: 2026-07-18T14:48:49.000Z More news has come out on the freezing of North Korean assets in Macao. Last week I wrote and said that the freezing of assets was just a political maneuver and didn’t really mean anything. Guess what? I was right. The freezing of assets took place months ago to help the Bank of China’s IPO and the release of the news this last week was timed to quell the rising tide of criticism against China for their position on NK. Here’s a [link](http://in.today.reuters.com/news/newsArticle.aspx?type=worldNews&storyID=2006-08-01T100648Z%5F01%5FNOOTR%5FRTRJONC%5F0%5FIndia-261898-1.xml&archived=False&ref=silkroadintl.net).And another step backThe Ministry of Information Industry has confirmed that “a clamp-down on foreign internet companies was imminent and some foreign internet companies could be stripped of their operating licenses.” This is coming as the internet is starting to boom in China and both the flow of information and money are enticing the Chinese central government to get involved. China has the second biggest internet market in the world, behind the US.It is not surprising that both of these issues about government control have more to do with money than concrete solutions to problems. While information is power and no one knows face like the Chinese, the bottom line is that the government, to stay legitimate must be at least financially viable. With more than 87,000 illegal protests in China last year alone and government corruption at new highs the government needs to be at least financially viable to maintain legitimacy and control. And since the government is directly responsible for 38% of GDP and employees about 1/3 of the urban work force government financial viability directly affects hundreds of millions of people! ### News from the Healthy Department URL: https://www.silkroadintl.net/news-from-the-healthy-department/ Last updated: 2026-07-18T14:48:50.000Z My observation about Chinese hospitals is that the birth rate is higher than the death rate, so their still in business. They’re not saving lives, in fact I believe that it’s more dangerous to go to a hospital in China than not! The first time I came to China in 1995 the doctors in the “healthy department,” as my boss called it, asked me if I brought my own syringes. “Most foreigners do,” I was told. In the ten plus years that have passed the healthcare system here has certainly improved. Now they ask me “do you want real or fake medicine? The real is more expensive.” Even with these great improvements, the [Carnegie Institute](http://www.carnegieendowment.org/publications/index.cfm?fa=view&id=18110&ref=silkroadintl.net) ranks China in the bottom 3 of the world for fair access to health care—yes, that’s right only Burma and Brazil are worse. Half of the poor in China receive no health care at all. The Chinese government, bless their little red hearts, is trying to correct this by eliminating graft (Imagine that, corruption in China’s SOE’s!). No doubt this is a good place to start, but limiting big budget technology imports and back-door payments for surgery is not going to raise the standard of health care that most Chinese people receive. How about more incentives for bright students to go into medicine or more education for doctors to raise the quality of care given (4 years after high school is the standard now)? Or how about some competition in the industry? There is tons of competition in the cosmetic medical industry (boob jobs, nose jobs, eye lifts, tummy tucks and skin and teeth whitening) and the standards are much higher than the hospitals and clinics that serve the rest of China. ### Two steps forward, one step back URL: https://www.silkroadintl.net/two-steps-forward-one-step-back/ Last updated: 2026-07-18T14:48:49.000Z The news from the banking sector in China this week sends mixed messages for the international community. Moody’s pegs Chinese banks at Stable to Positive, a shot in the arm for a sector of Chinese SOE’s that rarely gets much respect. China’s banking industry as a whole rates as “E+” “which is one of the lowest on the agency’s global scale” [the article says.](http://www.forbes.com/markets/feeds/afx/2006/07/24/afx2898240.html?ref=silkroadintl.net) While China’s big banks are trying to prepare for international competition as they join the WTO, it is expected that Chinese banks will take a big hit as they try, for the first time, to compete with their international counterparts. China’s ascension to the WTO at the end of this year means that foreign banks can apply to have all the same privileges as domestic banks. A related story mentioned that Chinese banks in Macao had put a hold on the assets of North Korea. This PR move is obviously aimed deflecting some of the international criticism for their (mis)handling of the recent North Korean missile tests. The Chinese are masters at PR and this move is obviously calculated to point to the concrete efforts by the Chinese to move talks with North Korea forward. But sometimes I think the Chinese assume that the rest of the world will automatically make the behind-the-scenes connections that are not always obvious in their political maneuverings. Specifically, how many people are going to read the news about the Macao bank hold and realize that they Chinese are trying to make up for mistakes elsewhere? (The Bush administration, for one, doesn’t get it). But that’s Chinese politics in a nutshell. And finally, with these two relatively positive stories, we come to what should be the coupe de gras for a week of good news for the Chinese Banking Sector—an announcement of reshuffling of top administrators for China’s largest banks. Now, since transparency, a lack of accounting fundamentals, low capital investment and 20% of loans non-performing are the current concerns with Chinese banks, this new administrative shuffle has the potential to be a really positive move, right? As it turns out, the new banking administration will be like the old army joke about everyone getting a new change of underwear—“you change with him, you change with him, you change with him” and so on. That’s right, officials from one bank moved to another and vis versa. Really. Not only does this mean that people, particularly powerful or high position people are more important than an entire industry, but it also shows the degree of involvement that the central government still has in the banking sector. Both of these implications come as these major banks are preparing IPO’s and/or looking for foreign investment and management assistance. Not necessarily a positive move toward transparency. ### What's More Important? Part II URL: https://www.silkroadintl.net/whats-more-important-part-ii/ Last updated: 2026-07-18T14:48:49.000Z As I mentioned in the previous Chinese cultural knowledge vs. general business skills blog (What’s more important? part I) I’m of the opinion that you’ve got to have the business skills first. The cultural skills are also absolutely necessary but for different reasons and for resolving different business issues. This week, after numerous article about IP cases in China, some factory horror stories, some scary stats about Chinese government corruption and some questions about safety in China from a couple of clients, I’m adding a new wrinkle to the equation: non-Chinese specific cultural issues. Non-Chinese cultural issues include specifics about the current business climate in China that are not “Chinese” per se, but are more pronounced in China than in the States or Western Europe. Specifically, the lack of an environment of trust, governmental corruption, lack of legal recourse, and a general disregard for strangers. And before I get all the “China bashing” retorts, I will admit that all of these “cultural issues” are certainly present in other countries. But no would say that Europe or the US has an underdeveloped legal system. None of the Western States rank as high (or is it low?) on the corruption indexes as does China. And Western companies coming to China across the board fear IP theft. Not to mention that Western investors are undoubtedly more excited but also more cautious when investing in companies with Chinese assets due to lack of transparency. High profile Western cases such as Enron and Worldcom are the exception rather than the rule for Western business. Unfortunately scandal, theft and graft seem to be more easily found in China. This week’s news, for example lists some prime examples: By the government’s own admission, 60 to 90 percent of commercial land deals in major Chinese cities since 2004 are illegal (Chinese Ministry of Land and Resources, 2006). China is the largest source of pirated goods in the world. One of the top agenda items for the Communist Party Leadership for the last two years has been resolving internal corruption and restoring trust/legitimacy in the government and despite that, estimates are that corruption is on the rise, not declining. Accounting standards in China are NOT up to international par and most Chinese companies looking for international JV partners or their own IPO’s are hard pressed to meet these standards by WTO ascension at the end of 2006\. This includes the 4 major Chinese banks. The point is not that China is “bad” but more that business culture, or, if you don’t like that phrase, the business environment in China is different than in the West. Specific activities, not in the general news but usually trotted out as example of cultural differences, that are considered “common practices” for medium to large (but not yet public) companies in China are not the same as for similar businesses in the West. Common practices in China include loaning money to people you know/have relationships with so that repayment is assured instead of strict adherence to objective standards (no angle investors in China); working only with people whom you have established connections (less flight risk); flat-out honest racism and sexism (“is your boss a black or white foreigner” is a question that we’ve heard more than once; gender requirements and pictures required for any receptionist jobs in Asia); government connections to secure both what you want and make sure that you don’t have problems with what you don’t want; use of physical intimidation or holding product “hostage” to ensure payment; offers for kickbacks from factories to project managers to secure contracts (we get these weekly); nepotism (most Chinese people I’ve talked to laugh out loud when told that hiring family/friends can be illegal in the US). Many of these issues are a result of a couple of truths about China or any developing country: first, while progress is being made, there is still little or no legal recourse for small to medium foreign (or domestic) companies who’ve been wronged in China. Without a structured, effective, consistent, and fair legal system there can be no trust between strangers, no end to corruption, no consistent enforcement of laws, and limited development of international competitive companies. Second, government corruption and selective enforcement of laws is the norm rather than the exception. If the government is corrupt why should the private sector be legit? Since deals are made and enforced (or not) in an environment of powerful people rather than powerful laws corruption will continue (and grow) until there is incentive (positive or negative) enough to do business another way. Right now there just isn’t that incentive—although foreign companies are increasingly providing that incentive one factory and one deal at a time. These are not specifically Chinese cultural issues, but they impact business in China in a very real way. For example, almost every US businessman that works in China that I’ve talked with (mostly small to middle sized US companies) says something to the effect that “other people may pay bribes in China but we don’t!” The truth, from my experience, is that the bribes are indeed being paid for, they’re simply included in legitimate expenses (hence the infamous Chinese accounting problems). It’s more often a case of the foreign boss not knowing that he’s paying because his Chinese staff never translates these items for him. And, of course, there are never printed receipts for these items either. Another example is quality control. If you’re not on the ground doing your own QC, the factory is going cut corners to save money if they think they can get away with it (and with you 3000 miles away, they do think they can get away with it.) This is probably the biggest advantage of using SRI. We are not shopping-out project QC to HK trading companies who then transfer the responsibility to “their guys” in the mainland. We’re here in the mainland ourselves and we actually go to all the factories ourselves. More? OK. Foreigners coming to China have to know that they will be considered “stupid” to assume that strangers can be trusted until they prove otherwise. Chinese don’t trust “strangers” so why should you when you’re here? Locals and big companies that have been here a while know what “life on the ground is really like.” And what it’s really like is not the same as the West. Companies, large or small, must have strict and well thought out policies in place as well as methods for detection and compliance. ### The China Threat? Part II URL: https://www.silkroadintl.net/the-china-threat-part-ii/ Last updated: 2026-07-18T14:48:50.000Z Following up on yesterday’s blog regarding US immigration policy and the so called China Threat, I found this article in the NYT very apropos. [Click here.](http://www.nytimes.com/2006/06/22/world/asia/22china.html?ei=5070&en=bfde5292b71199d2&ex=1151812800&pagewanted=all&ref=silkroadintl.net)For 4.1 million college graduates in China this year there are approximately 1.5 million jobs. Most Chinese college graduates are from technical or vocational colleges with only a small percentage coming from the social sciences. This seems to me to be a tailor maid opportunity for the US. With the US economy needing an increasing number of technical workers and Chinese wage expectations below US minimum wage couldn’t the US allow a greater number of these students into the US for work experience? This is a great opportunity for the US to fulfill its own needs and strike a great public relations coup too—when was the last time that the US was seen as a benevolent benefactor? Another uniquely disturbing situation is the well published gender in balance in China rising generations. As Chinese are limited to one child, or stiff penalties for subsequent births, the number of males in China greatly outnumber females. Now, I’d be the first to admit that college grads would be more “marriageable” than their lesser educated counterparts. I don’t know what % of these men are or will soon be college graduates, but it has to be at least a small percentage, right? If we combined the numbers of under and unemployed Chinese graduates with the estimated 30 million Chinese bachelors that have not opportunities to marry (due to Chinese desire for male offspring) the US could foster the creation of generations of Chinese American citizens with close personal ties to the US.While this latter appendix may be more amusing pondering than realistic option, the premise is realistic—The US has multiple opportunities to improve its relationship with China. Many options could improve both economies and the personal ties that bind the two nations. ### The China Threat? URL: https://www.silkroadintl.net/the-china-threat/ Last updated: 2026-07-18T14:48:50.000Z I’ve actually been told by other Americans that I’m “helping the enemy” by living and working in China. Are Americans really that insecure or really that stupid? I’m by no means in love with China, but by the same token, China is no threat. In my opinion, the biggest threats facing America today are our collective lack of international education, our debt and our entitlement mentality. North Korea, maybe. But not China. I’m convinced that increased engagement is the best international policy that the US can take. International exposure and competition can’t hurt the US and will only increase our ability to continue to project influence into the foreseeable future. In the light, China is an opportunity that Americans can either profit from now or pay for later. News reports regularly confirm that the most competitive US companies are doing what the US government will not—participate in Chinese growth. While Congressmen continue to argue over Taiwan (do you really think that we step into a cross straights fight at this point?), currency devaluations, security and piracy, other US companies are plowing ahead and solving problems or eliminating conflicts on their own—and making billions in the process. These companies are making it financially painful for either the Chinese or US governments to have any type of military conflict. Whatever your thoughts about Wal-Mart’s labor history are their growth in China is another example of the codependence and financial sense of the US/China relationship. Wal-Mart will have 80 stores in China by the end of the year and would be the China’s 5th largest trading partner if it was a country. Other visible US companies that are “aiding and abiding” include Visa, McDonald’s, Coca Cola, Pepsi Co. (KFC, Pepsi, Pizza Hut), Starbucks, Buick—these are just the ones you can see everywhere, everyday in China. And AmCham says that the growth of American business in China will double this year—smart money! Next year I expect to add scores of US and foreign banks to this “visible” companies list. The fact is that China is a great opportunity for anyone in the world, but especially the US. US and Western European educated professionals can, according to one recent news report, have their pick of jobs while 65% of graduates from Chinese universities will be un or under employed this year alone. The ascension of China to WTO standards will only bring more opportunities for US companies who are already WTO compliant by nature of US business/governmental standards. But the US government and educational systems continue to shackle the US and its future generations. Why do we still only get Spanish, French and German offered as foreign languages in high school? WWII ended 60 years ago—get over Western Europe already! US business is innovative and adaptable; that’s what’s made it us the biggest economy in the history of the world. So why is the pre-collegiate education system so archaic? Why is it that most US students can’t find China on the map but Chinese students can name the US president, and typically read some English by Junior High? Not only are we generally under internationally educated but the restrictive visa policy of the US makes further contact, professional exchange and even legal immigration more difficult than necessary. The US government is bad for US businesses—unless you are your senator’s pet pork project. So much for free trade. To those who think China is a growing threat to the US (and can actually find China on a map), I just have a couple of questions. First, how does a strong Chinese economy hurt the US? It doesn’t—rich Chinese people buy US production and travel to the US. More Chinese businesses use more Western developed tech and buy more Western materials/goods. US companies wish the rest of the world would grow as fast as the China market. Second, is a balance of military power more or less likely to force a confrontation? If history, even recent history, is a forecast of the future, we are more likely to head back to the Middle East as the loan super power than the Eastern Asia in a “balanced” world. And the dirty secret of cold wars is they can be financial and technological bonanzas for participating economies. If the European Union was growing at 10% a year would be scared because Italy and Germany and some former Soviet republics are members? Besides, what country, the US included, doesn’t want to be more “powerful” and have more influence? China is growing fast but it is not a physical or financial threat to the US today. Nor will it be in the coming decade. But, China is a threat to people in the US that are scared of change, are scared of competition or are undereducated. The US needs to get over it’s self. ### Who needs connections? or Business is business in China URL: https://www.silkroadintl.net/who-needs-connections-or-business-is-business-in-china/ Last updated: 2026-07-18T14:48:50.000Z Any one who tells you that connections in China, especially in the government, are not that important any more either hasn’t been here very long or doesn’t have any connections. The recent pulling of the film “The Da Vinci Code” after it had already been released in theaters is just the most recent example of how arbitrary and inconsistent the government can be here. For more on film censoring see [this.](http://www.latimes.com/entertainment/news/la-fi-hollychina18jun18,0,700612,full.story?coll=la-home-entertainment&ref=silkroadintl.net)As I read the books and blogs of various writers on China, a general theme seems to be that business is business and politics is politics and the two no longer mix. Yet, news reports are proclaiming just the opposite. For example, [read this.](http://www.iht.com/articles/2006/06/18/business/boc.php;?ref=silkroadintl.net) for statistical comparisons, see [ICGG.](http://silkroadintl.net/blog/wp-admin/www.icgg.org?ref=silkroadintl.net) Issues in just this weeks news alone could include any of the hundreds of recent articles about the “trial” of a NYT journalist and the sacking of the Beijing Vice minister for graft. I have to wonder where these optimistic bloggers are working/living. It’s certainly not China. Could it be that many of them are writing about China from abroad? Only coming here every quarter to stay in 5 start hotels for hosted dinner parties and sanitized factory visits? Or are they consciously and selectively reporting on news that enhances their entrenched investment positions? I am not blind to the vast opportunities here—obviously, or I wouldn’t be here. Nor am I a fear monger that is predicting the “Coming Collapse of China” as one writer has proclaimed. But caution, connections, culture understanding combined with significant amounts of due diligence and a high degree of risk tolerance are still required for doing business in China. The reality of China is that selective enforcement is the standard here. And, once in place, laws and regulations and even legal standards can and are over turned at the drop of a hat. Connections may not save you if your industry or product becomes the target of the week, but a well placed connection can warn you ahead of time and save you, personally. Good luck. ### The more things change… URL: https://www.silkroadintl.net/the-more-things-change/ Last updated: 2026-07-18T14:48:49.000Z On a personal level I really enjoy working and living with the Chinese. They are interesting, interested, and very kind. But environmentally, I’m not all that pleased with living in China. On Thursday, as I was coming into Shenzhen from Hong Kong, I was robbed at the boarder. It happened right in the middle of the metro station with video cameras, police and security all around. I was glad to have two young ladies report the theft to the security guards and try to help me identify the robbers. But ultimately the security guards and the video surveillance operators all said “it’s not really my responsibility. You should be more careful.” The police came 45 minutes later and said the same thing and added “you’ve lived here a long time; you should know what it’s like.”In addition to this bad experience, the fourth time in 3 years that I’ve been robbed here, there were four news articles in the last week identify separate issues that ultimately will and currently do now limit China’s potential and influence. The four issues are increasing pollution, a new bird flu outbreak (reported in HK but not in China), limited housing options for the middle class and limited civil and human rights for those opposed to or even reporting on the government. Now, despite the pollution and the theft I’m obviously in China because of the opportunities. But with each theft, each new disease outbreak, each new scare, I plan ways to leave. And despite the head-long lemming-like plunge of foreign money and companies into China, I’m not alone. Chinese people would love to be able to leave, if only for a visit to somewhere else (as evidenced by the rapidly increase numbers of Chinese tourists abroad). Even though people want to leave, I’m not predicting a brain drain any time soon. China’s economy is too robust for that. But I am claiming that the Chinese people are China’s greatest resource. And the lack of government enforcement of environmental and social regulations combined with the increasing corruption (as defined by the World Bank) to me means that the bureaucratic infrastructure is what is sucking a healthy % out of the economy and the spirit of individuals. While every conceivable degree of growth is monitored and ostensibly controlled by the government, more influential is the lack of security, both moral and physical, that people fell and fear in China. With an increase in corruption, pollution, disease (and subsequent lack of reporting) and a glass ceiling for the new middle class means that more and more Chinese are becoming disenfranchised with “just” economic growth. Chinese are much better off, especially in the urban centers, than ever before, but at what price? Economic growth has served as a brilliant distraction from the host of problems that accompany rapid and uneven economic growth for many Chinese. Another equally effective and must less costly distraction has been the arrival of the World Cup. China didn’t make it into the World Cup (and it looks the US will soon be out too) but that hasn’t limited the Chinese from participating. There were/are fears that Chinese gambling syndicates will try to influence some of the matches. Everyday in the office buildings in Shenzhen I see people coming to work wearing shirts of their favorite teams (Brazil and England mostly). You can’t help but hear the cheers and groans of people staying up all night to watch the matches live (matches are from about 9pm to about 5am each night). The World Cup has generally given everyone in China something else to talk about, drink about and enjoy together. Chinese I know were even disappointed to see the way that Japan lost their first match to the Socceroos. Empathy for the Japanese is a major achievement! Maybe the Chinese government should get out of the environment and crime control business and into football more. It’s working on a personal level already. DD ### Chinese Court Rulings on IP Rights vs. Enforcement of IP Rights URL: https://www.silkroadintl.net/chinese-court-rulings-on-ip-rights-vs-enforcement-of-ip-rights/ Last updated: 2026-07-18T14:48:50.000Z The latest ruling by the Chinese courts in favor of protecting IP Rights in China is significant, but only to Pfizer itself and those who believe that the Chinese really have IP protection as a nation and governmental priority. The reality of the decision is much less grandiose. Pfizer is a huge multinational company but Pfizer's sales of Viagra in China are small, rendering the decision more of a source of positive publicity for the Chinese legal system than any effectual ruling. This will be reported all over the world with most folks acceding to the opinion that the Chinese courts are falling in line with the rest of the world's not an incorrect conclusion, but not totally accurate either. Secondly, the last line of this [Forbes article](http://www.forbes.com/business/2006/06/03/pfizer-china-patent-cx%5Fpm%5F0603drug.html?ref=silkroadintl.net)clearly stats that enforcement and a court ruling are two completely different things. Further, unless the responsible government agencies decide to make Pfizer a personal priority, enforcement will most likely never happy. In countering the claims that they are the largest source of black market goods in the world, China regularly touts their facts that they have stricter IP regulations than the US or Europe. China apologists also claim that the size of the country and population affect the government's ability to enforce said regulations. So, does that mean that the counterfeiting of goods is OK or just inevitable? While only the most strident of anarchists will justify the complete elimination of any copyright enforcement (even Chinese companies are now realizing the value of domestic IP protection), the enforcement issue is one that needs to be dealt with. While I agree that China is large and that it has a large population, neither of these factors should influence enforcement in a police state with so much technological and human capital at its disposal. (if you doubt that China is a police state, just read this about the [2008 Beijing Olympics.](http://silkroadintl.net/blog/wp-admin/http:/www.msnbc.msn.com/id/13107271/site/newsweek?ref=silkroadintl.net) Anyone who thinks that this will not be the most picture perfect Olympics ever is delusional. Furthering the Olympic example, the event's accompanying paraphernalia is all licensed by the Chinese government and so there is an obvious stake in effective enforcement. The results? FANTASTIC!! You can't find fake Olympic dolls, t-shirts, pins, hats, or sponsor's signs in the large black markets in Shanghai, Beijing, Shenzhen and Guangzhou (all places I've personally searched in the last couple of months). If the government can stop the production of Olympic counterfeits why not Viagra, or Disney, or Sony or Calloway or the hundreds of thousands of Western brand name goods? Anyone that has lived in China for more than a couple of months can tell you of the China Daily article claiming all illegal CDs and DVDs in China have been destroyed. Really! 100% total clean up, or so the government run paper says. But like the Pfizer case, publicity and selective (or no) enforcement will be the end result. ### What's More Important (For a Successful Business in China: Cultural Knowledge or Business Knowledge)? URL: https://www.silkroadintl.net/whats-more-important-for-a-successful-business-in-china-cultural-knowledge-or-business-knowledge/ Last updated: 2026-07-18T14:48:50.000Z While the debate between anthropologists and accountants rages on, about the only thing that everyone agrees on is that it's great for book sales. Personally, I've met a ton of Westerns that can't speak a lick of Chinese and don't know chopsticks from Fengshui but do quite nicely financially in China. I've also know more than a few companies and individuals who were fluent in Mandarin who lost their proverbial shirts over here. So what's The Answer? Yes. We'd like to stake out a nice seat on the fence for this fight. Why so decisive? Well, without a doubt if you don't know your own business you are not going to be successful anywhere - even in your home country. You've got to know what your core capabilities are and stay focused on those. Having said that, if you're your company's Engineering Manager negotiating business development issues like foreign office set up and registration, hiring employees, finding an office in the best area of a foreign country, qualifying JV partners and factories, understanding tax code and incentives in Chinese and even driving a car over are probably not on your list of core competencies. All of these cultural things can not just distract you from doing your business they can kill your business. We'd like to ask some different questions. Instead of one or the other, how much of each? Between Anthropology and Business Strategy what are your priorities? Economists will point out that while the size of China is unique working in a developing market is not. Neither is working with a socialist government (even if it does have Chinese characteristics). So understanding the market, capitalizing on golden opportunities, managing resources and controlling growth and the bottom line will be keys to success regardless. Anthropologist will point out that the being aware of the uniqueness of the Chinese business culture (whatever that may be) will highlight the opportunities, help interpret the market and warn you of potential pitfalls. It's always fascinated me that from the Wal-Marts of the world down to the guy buying a container of t-shirts that the cultural/business issues with employees, production, QC and QA and on-time delivery seem to be very similar. Only the dollar amounts seem to vary. Large or small some things in business are the same and one of those business issues is that cultural problems affect the bottom line. Good luck!