Over the last couple days I read Mr. China: A Memoir (aff), by Tim Clissold. It’s kind of a Chinese version of Burn Rate (aff), which hilariously crystallized the the early days of the dot com mania. Except that, according to Clissold, China was much, much worse. Like the dot com era, there was insane optimism about China and rivers of cash poured in from private equity investors. The aggravating factor was lack of transparency.
In the US and the rest of the developed world, there is a clear legal environment for business, institutions that enforce them aggressively, and a culture that has assimilated the rules of the game into its ethics. Say what you will about the Bernie Ebbers of the world, but at least he ultimately paid the price. Contrast this with China, where the law is often no more than a guideline and the courts feeble.
According to Clissold, a lesson that he learned too late is, if you really want to get something done like, say, force your General Manager to stop embezzling your capital to a competitor where he plans to go to work in a few months (yes, that really happened), you have to wade into politics and put pressure on local party officials. The courts are usually a waste of time and can even make things harder on you because of the attention they attract. (Unlike in the US, full frontal negative PR is usually a losing strategy when you’re trying to influence an official of the CCP.)
And because of this, except for personal crimes like theft and assault, the whole idea of rule of law is alien to most Chinese employees. (In fairness, a lot of this has probably changed over the 15 years since Clissold started working in China.) And of course there are the corrosive effects of 40+ years of communism on basic incentives. Clissold tells amusing stories of his early days in China, when he had to practically force empty hotels to rent him a room, and when some restaurants intentionally closed during lunchtime to avoid the work.
I have special interest in this book because I’m trying to launch a business in China, but Mr China is fast-paced, witty and enjoyable regardless of your global ambitions.