Derek Scruggs

As I’ve mentioned previously, I’m exploring business opportunities in China. I’ve been informally learning about the country ever since I met my wife three years ago. Over the last 10 months or so I’ve been more serious about it. On August 11 I leave for a month-long trip to China see it up close. I will blog about that trip as it unfolds.

In preparation for that trip I’ve been reading as much as possible and contacting everyone I can find who does business in China or knows someone who does. Here, in no particular order, are some of the things I’ve learned, albeit from 10,000+ miles away.

• There is a big difference between Chinese companies (especially state-owned ones) and multi-national companies that have Chinese subsidiaries. Foreign-owned companies hew more closely to Western style management practices, particularly with GAAP accounting (or something close to it).
• Guanxi (“connections”) is overrated. Yes, connections are good to have, just like they are in the US, but guanxi is not magic. It’s just a personal network. If you’re hiring a consultant on a project, you obviously want someone who is networked in to the sector you’re targeting. But a textile specialist with guanxi is not much good if you’re in the semiconductor industry. Unfortunately, some unscrupulous “consultants” have preyed on the all-too-common belief of Westerners that China is inscrutable and impenetrable. Don’t fall for it. Immediately disqualify anyone who sells guanxi as a feature.
• Blogging is popular there too. Some of the popular English-language blogs include Shanghaiist, China Herald, Simon World. A very popular one is (of course) about sex, authored under the name Mu Zimei. The most popular blog platform appears to be Bokee.com (formerly Blog China).
• If you want to hire a truly top-notch Chinese general manager – one who has worked for Western companies, knows how to motivate his staff, understands and practices transparent accounting, etc. –  plan on paying him or her what you would pay in the USA. They are in high demand and can command high salaries.
• Chinese people are generally uncomfortable at US-style networking events, so don’t expect to meet a lot of them at these kinds of things. However, in the major industrial cities these are quite common for expatriates. The American Chambers of Commerce often host events
• If you’re business is B2B, there are at least two distinct markets. One is Chinese companies. (Duh.) The other is foreign-owned multinationals. Multinationals are more willing to pay for intangible services (such as consulting) than Chinese companies, who by and large don’t like to pay for information and expertise if it’s not attached to a piece of hardware. (Think IBM in the 60s and 70s.)

I learned all of this just by contacting people who either live in China or have significant business experience there. Some of them I met through friends. A few I just emailed after finding them on the Internet.

Google is definitely a big help. For example, one day I got the idea to Google “Colorado trade mission China,” just to see what came up. Lo and behold, there was a free seminar put on by the city of Denver scheduled for about two weeks after I did the search. Jackpot! I contacted the people handling registrations, and they put me in touch with Paul Taylor, Denver’s liaison in Shanghai. I called him in Shanghai and we talked for 30 minutes or so. Then I went to see him speak at the seminar in Denver (he came back here just for that purpose). And of course I met several other people at the seminar. So now I’ve got my own touch of guanxi going on.

After last week’s huge IPO of Baidu, fueled partly on speculation that Google will buy them, it’s not a surprise to come across Baigoo.

Hat tip: Danwei

I never watch TV, at least not since I moved to Boulder in 1999. I own a television, but I don’t have cable because I know it would be such a distraction that I would never get anything done. (“Oh look, an old Bulls game is on ESPN Classic.”) And because I live near the mountains, reception for traditional TV is rotten. I can only barely pick up ABC and NBC.

Even on the morning of September 11, I got all my news from radio and the web. It wasn’t until I went downstairs for lunch that I turned on the television and saw the horror of the Twin Towers collapsing. At which point I immediately lost it and didn’t go back to my office the rest of the day.

I watched Peter Jennings nonstop for the next 12 hours. I remember being impressed with his professionalism and he had a calming effect on me. He also was obviously very tired, and a couple of times I heard a hitch in his voice which sounded to me like he was about to lose it too (though nothing like what happened to Dan Rather on David Letterman a few days later). But in spite of all the chaos and heartbreak, he was on his game.

Peter Jennings’ work on September 11 is the only positive memory I have of that awful day. I’m sorry to hear he’s left us.

Friend, business partner, noted writer and all-around great guy Dave Taylor has just released The Complete Idiot’s Guide to Growing Your Business with Google and it looks to be pretty comprehensive. I had the good fortune of reading some of the drafts as Dave was writing it. Dave’s knowledge of Google as a business tool is exhaustive and this looks to be a winner.

From the “WTF!?” department. I learned today that Hooters is in China.

Wal Mart, which all by itself is China’s eighth largest trading partner, is often the butt of jokes and not a little anger in the US because they are basically just a giant conduit for cheap Chinese products.

Try telling that to the Chinese. Wal Mart just opened a showcase store in Shanghai. “Only” 100,000 people showed up for the opening, and some complained that the prices are better elsewhere. In case you’re wondering, that 7.90 RMB pizza slice translates to about 98 cents in the US.

I’ll be in Shanghai August 18–25, but Wal Mart is not on the official itinerary.