Why it’s OK to not like China Inc.

But it is not ok to ignore or discount business opportunities because you don’t like China.

I’ve been back in the US for a year now, and I’ve noticed that Americans don’t talk about China much.   That’s a big contrast with life in China, where one can’t discuss the weather or current events without some reference to comparable conditions in the US.  But Americans aren’t just not talking about China — they are blocking it out of their collective consciousness.  American’s treat China’s rise the

Learn to negotiate successfully in China
Learn to Negotiate Successfully in China

same way they treat street violence in Liberia or the loss of the polar ice caps.  Vaguely bad news that seems inevitable – but is not really our direct problem.  Nothing can be done, so ignore it.

From an emotional perspective, America’s ambivalence towards China is somewhat understandable.  The party line out of Beijing is often hostile and aggressive towards the West.  China’s rules and regulations seem arbitrary and unfair to outsiders. It is difficult to separate the real feelings of the people from the nationalistic enmity of the state-controlled press.  (To be fair, Chinese say much the same about the US.)

China Inc. is here to stay

As a nation we’ve waited for China Inc. to go away – and it hasn’t happened.  We’ve expected them to flame out, fade away or collapse — but so far there are no real signs that any of that is going to happen.  In fact, China looks like its holding steady as the second largest economy in the world, and heading for number one status pretty quickly.  But US decision makers – from Wall St to Main St to Washington DC- have allowed suspicion and resentment to translate into bad policy, myopic strategy and poor execution when it comes to business opportunities.  American managers and businesses aren’t facing up to the new challenges or adequately exploring new opportunities.   Wall Street is still unable or unwilling to perform proper due diligence or assess risk correctly as evidenced by the recent case of fraud at Caterpillar  or the debacle surrounding Vision China  and DMG.   American small and medium sized businesses have avoided expanding into China – and have been reluctant to embrace Chinese opportunities within the US .

 

American Positions vs. American Interests

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The highly influential “Getting to Yes” by Fisher and Ury teach negotiators to separate positions from interests to achieve the best results – and it works for strategic decisions as well.  You may not like China much.  You may actively dislike it.  Ok – that’s your position, and there is very little that can be done about it.   That position, unfortunately, is in direct opposition to your long term interests.  China is no longer just a source of cheap plastic widgets and semi-skilled sweatshop labor.  There are at least 5 areas where China is going to impact on your company’s bottom line profits over the next few years.

1.  Supply chain hub
2.  China’s domestic market
3.  Competition coming out of China
4.  China as an investment target
5.  China as a source of investment funds

 

You don’t have to like China but you do have to develop a strategy and find a way to accommodate a rising China.  Not only is China not going away, but it’s likely to play an ever larger role in your domestic business.   You may not be interested in doing business with China – but China is increasingly interested in doing business with you.   The risk of hiding your head in the sand is far greater than the risk of engaging with China.

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