I was living in China in 2003 when the US invaded Iraq. Regardless of how you may feel now – or felt then – about the military action, it is a safe to say that that the invasion was not a popular move among Chinese in general and a big portion of the non-US expat community in China. Then-President Bush’s decision to launch a full-on war was seen as unfortunate by some – and downright evil by many. The next few years did little to burnish the US’ reputation abroad — Guantanamo Bay, Abu Graib, Haditha, and the rest of the grisly newsfeed of the day did not show the US at its best. During this time China was in the midst of what we all thought was to be a far-reaching market reform effort, building a vibrant middle class and experimenting with social and political liberalizations as well. Europe was riding high on an economic boom and experiencing new levels of EU cohesion and influence. To many, it seemed that the US had lost its way.
2003 was a complex time, and it wasn’t always easy being an American working overseas. Our government was extremely unpopular with many of our trading partners, and individual expats found themselves doing business with people who did not think highly of our foreign policy. Now the situation is changing and Washington has once again found its moral compass. The PRC, as evidenced by its unfortunate vote in UN supporting the Assad regime in Syria, seems to be moving headlong in the opposite direction. China is becoming a frightening, threatening place that routinely abuses the rights of its own citizens, countenances sweatshop conditions that would be illegal in the US, bullies its neighbors, breaks international law and supports tyrants around the world.
So where does that leave Americans doing business in China? The relationship between Washington and Beijing has always been politically charged, but so far that hasn’t affected us on the ground too much. Up until now, Chinese trade policy has been a trickle-down affair for expats, and we have only had to deal with the ups and downs of trade relations through regulations and bureaucratic red tape. China’s foreign policy may be taking us on a new trajectory where front-line managers have to make hard decisions.
As someone with experience doing business from both positions on the moral see-saw, I have a few helpful hints for those just starting to do business with Evil Inc.
1. Your direct counter-party is the same guy he was when the tables were turned and America was looked down upon. The odds are he doesn’t make a lot of foreign diplomacy decisions. You weren’t on Rumsfeld or Cheney’s speed-dial when the US was making bad policy, and your counterpart is just as removed. When Chinese or European businesspeople tried lecturing me about US policies in the 2000s, I saw them as petty and foolish – regardless of their arguments. Chinese tend to be more nationalistic than most Americans, so be advised that small comments may have big reactions. It’s best to focus on the business and leave politics out of it.
2. You don’t get paid for morality, but you may pay for immorality. If you are working with SOEs or sensitive industries like oil service, international finance and dual-purpose technology, you have to be very careful and perform serious due diligence. If you are seen to be aiding an organization that contravenes sanctions on US enemies like Iran, then you are going to have big problems. The same goes for Americans whose supply chain depends on child labor or inhumane working conditions. Remember that many US laws apply to American citizens no matter where they are – including rules about corruption and bribery.
3. You will have to go home again. Even if you do not care about politics, that doesn’t mean you can ignore political issues. People back home don’t know how the business gets done, don’t want to know, and have no intention of trying to understand. Right now practices like outsourcing jobs, selling technology and cooperating with Chinese SOEs is par for the course. It’s great to have government connections and to be photographed with officials. The Chinese expect you to preserve harmony by saying the right things to media and at public events. In China, you are expected to observe the rules of Chinese business etiquette. But you will go home again, and home has not always been the most accepting of places. Standard operating procedure in China will raise eyebrows in the US. The new head of Apple, Tim Cook is finding out the hard way that American consumers (or at least American reporters) are willing to express fresh outrage over stale news if the political equation favors it. Former US Ambassador to the PRC, John Huntsman saw his loyalty to America called into question, and he worked for the US government! China is moving further from the US-centric community of nations, which means your trip home is getting longer. Make sure that you aren’t carrying the wrong kind of baggage home with you.
Americans in China have to plot a more deliberate course in their China relationships than they used to. The Chinese side of the equation is likely to be a bit more defensive and prickly than in years past when it seemed that liberalization and reform were going to be the norm. But ‘Chinapologists’ and those who curry favor with officials may find that their home fires have gone cold when they return.
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