
Shut Out at Home, Americans Seek Opportunity in China - mjfern
http://www.nytimes.com/2009/08/11/business/economy/11expats.html
======
chipmunkninja
Look, we can get one thing clear here: "Communist China" is not some dark
gulag where people are beaten while walking down the street for having vaguely
pro-democracy thoughts or something.

Indeed, it's increasingly not accurate to call China a communist state any
more. Communism is about collectivism, planned economic policies, and
egalitarianism. China began abandoning these policies nearly immediately after
the death of Chairman Mao in 1976. Granted, there are still warehouses full of
grain and pork, and only the government can officially "own" land, but the
reality at street level is that it's a pretty thriving capitalist state with
100 year leases on land, increasing dismantling of state-owned enterprises
(SOEs), and a vibrant mercantilism I've not seen anywhere else in the world.

What China is, though, is an autocratic state with a single party central
government that maintains tight control over the press. Look closer, however,
and it exercises the tight control over a few key topics with which most
Westerners are familiar (and porn - porn is bad). If you are a reporter, then
these controls can be frustrating, if not downright aggravating, but
otherwise, life here is pretty relaxed and open.

The reality on the street? The locals engage in vibrant discussions and
arguments about Taiwan, Tibet, or whatever online on a daily basis. Sometimes
they use encoded keywords to keep the noise level down, but they talk about it
all the time. What the government really cares about is people organising -
that is verboten. I've tried to avoid talking about all these "sensitive"
subjects in my years here in China (largely because politics stresses me out),
and I am constantly approached by locals who want talk about it and give me
their opinions.

The Great Firewall isn't nearly as big of a deal as you'd think either. No
Twitter? Facebook? Livejournal? Guess what? The locals weren't using it anyway
(not in appreciable numbers). They were (are) using local Chinese equivalents,
which are far better at catering to their needs and desires. I don't know a
single foreigner who hasn't found a way around the firewall to use Twitter on
a daily basis either.

So, to summarize: China is an autocratic state, it has some definite problems
with various values and things that many Westerners take for granted as
important, but to just sit on the sidelines saying "Boo, China" isn't going to
change a thing. China will gradually change by engaging with them and by
working to move forward with them. Indeed, by not coming here to visit and or
spend a bit of time, you're denying yourself experiencing one of the more
vibrant and fascinating places on earth.

~~~
tjmc
No need to tell the head of Rio Tinto in China about dark gulags. He's been
under arrest without charge for several weeks now for allegedly stealing
"state secrets" that allowed Rio Tinto to negotiate good prices for iron ore
from China's steel mills.

Yesterday the Chinese authorities said Rio's "spying" had cost the country
$102 billion over 6 years. Only problem with that story is that Rio's total
_worldwide_ iron ore revenues for the last 6 years was $40.75 billion. More
here: [http://www.businessspectator.com.au/bs.nsf/Article/The-
real-...](http://www.businessspectator.com.au/bs.nsf/Article/The-real-Rio-
story-pd20090810-USBZ8?OpenDocument&src=sph)

So by all means do business in China - just don't be too successful. Because
your competitive negotiation with a state run business might just turn into
spying on "state secrets". The Chinese government has some growing up to do.

~~~
sho
Also no need to tell the head of Rio Tinto about bribery, corruption, theft of
state resources, perversion of justice and even murder - his company has been
implicated in all these and more at numerous sites around the world. Their
involvement in the Grasberg mine in Papua has been particularly egregious.

I don't have many good things to say about the Chinese govt, but Rio Tinto is
an absolutely awful company and it would not surprise me if they had tried
their dirty tricks one too many times and been caught trying to bribe or
blackmail officials.

Let's wait until the facts come out in this case.

~~~
tjmc
Not a big fan of Rio either, but does simply working for a bad company justify
imprisonment of the local management without charge? The facts should come out
before arrests are made, not after.

~~~
sho
It doesn't justify it, of course, but it does set the scene, as in it's quite
likely there's been bad behaviour of some type. If we're going to be drawing
conclusions about China's intentions, it behooves us to consider all the
relevant information.

These mega-corps always work within the letter of the law, but not the spirit.
They can wreak horrendous damage, taking actions in obvious bad faith, and yet
get off scot-free because they've legally dotted every "i". Well, it would not
surprise me if some part of Officialdom there is really pissed off at Rio for
something they've done, can't actually hang anything specific on them, so is
just holding them without charge for a while to punish them. That is also
within the letter of the law, but not the spirit.

China could be sending a message here - "you play dirty, we'll play dirty".
Anyway, just a theory and probably not a good one, but I hope it demonstrates
that Rio's unclean hands are relevant to any discussion of the matter.

Simply stating "be too successful in China and this is what happens!" is
unlikely to be the whole story.

~~~
sho
I'd like to follow this up with the information that Hu has now been formally
charged:

[http://www.businessday.com.au/business/rio-spy-case-stern-
hu...](http://www.businessday.com.au/business/rio-spy-case-stern-hu-
officially-charged-20090812-ehc0.html)

As expected, the charges are commercial bribery and obtaining "commercial
secrets of China's steel and iron industry through improper means" in
violation of "the country's Criminal Law".

I am not trying to whitewash China here, but I doubt this case is all that
unreasonable, and I for one am hardly less confident about business dealings
in China because of it.

------
patio11
_Unemployment in urban areas is 4.3 percent, according to government data._

Credulously reporting unemployment statistics from the US government is naive.
Credulously reporting unemployment statistics from a Communist dictatorship is
journalistic malpractice.

~~~
whughes
They said that it was government data. For anyone who knows anything about
China, that's a tip-off. Credulous reporting would leave that tidbit out and
treat the statistic as fact.

~~~
patio11
_For anyone who knows anything about China, that's a tip-off._ It appears to
me that the writer does not know anything about China then, because they make
a non-obvious positive claim and then back it with government statistics.

 _[T]he Chinese economy is more hospitable for both entrepreneurs and job
seekers, with [government lie]. Unemployment in urban areas is [government
lie]._

Absent the statistics, the "more hospitable" claim is the reporter pulling
something totally out of their hindquarters to make the story work.

------
bwd2
I've been working in Hong Kong for almost 6 months, and there definitely seems
to be opportunity here. There is a lot more optimism than I've been seeing in
the states when I go back, and software is perceived as an area in which the
skill levels that you can find among the local Hong Kong population are lower
than you would expect from westerners because there is such an emphasis on
finance here.

~~~
philwelch
Is Hong Kong still an appreciably freer market than mainland China? China has
always seemed like it has problems with political corruption, to the point
where having influence over the right people in the party/govt. is an
essential business skill. How is Hong Kong on that?

~~~
bwd2
There might be certain areas of the economy where this is the case but I
haven't seen anything like that since I've been here. I work for a startup
financial firm and we have no "local" partners I'm aware of. The regulatory
requirements are similar to operating a financial business in the US or UK.
The legal system here is based on common law, I'm able to read and understand
contracts as well as I can in the states, and I've personally met people who
received legal training in the UK and practice in Hong Kong. Frankly, I think
the market here is appreciably freer than that in the US given that the taxes
are much lower and the infrastructure is on par.

------
rationalbeaver
“It’s China’s fault that I’m still here,” he said. “It’s just so cheap to
start a business.”

This is just an anecdote, but it really caught my attention and made me think
about what the future may hold. That's a Harvard graduate who left the US and
ended up starting a business in China.

------
marcusbooster
Is there a start-up scene in China?

I would think doing a web based company would be limiting if you have to deal
with the government's internet policies.

~~~
est
most of Internet start-up here in China are, rip-off of existing sites and
translate of interface and function.

And any user generated content is strictly forbidden by the government because
eventually UGC will involve politics topics.

And corruption, you have to go through months apply process of a video site
'license', or blog site 'license' or news site 'license', and they are managed
by different bureaucratic departments of the central government.

And big companies like QQ.com is likely to copy your idea and deploy it on
their own QQ.com infrasture and overtake your start-up by one day.

So overall it's very hard to do start-ups in China, unless you have a very
strong social background.

~~~
chipmunkninja
I'm sorry, but nearly every single one of these statements is simply
incorrect.

1\. Chinese sites are all "[rip-offs] rip-off of existing sites and translate
of interface and function"

When anybody comes up with a good idea, a dozen other people will try the same
thing. Have you ever seen Freundfeed? How many blogging sites are there out
there (livejournal, blogger, blogspot, wordpress)? Copying of your idea
encourages competition and innovation.

Indeed, the reality is the EXACT OPPOSITE of what you said: western companies
fail here in China because they come and translate the interface and
functionality, and then expect the locals to flock to their site and use it in
the same way westerners would. They bring in a team of western managers to
hire some locals to do the translation, and then basically sit there waiting
for the $$ to roll in.

The problem is, the locals use the Internet in a radically different way from
Westerners. The locals are nearly all kids, spend hours and hours a day in
front of the computer, and are lonely and bored. (single child policy). They
don't want to "connect" with their friends and post daily updates of what
they're doing / eating for breakfast. They want to meet new people and play
and talk about crap.

So, companies like xiaonei, that take the basic Facebook formula, but then add
in tonnes of gaming and fun ways to interact with other people will of course
kick the foreign companies' collective derrières. Ebay failed because they
don't understand how locals pay for things. Taobao came along with a better
idea and won the market.

2\. "... any user generated content is strictly forbidden by the government
..."

China has a zillion BBSes (sorry, I don't have the exact number. It's huge).
There are over 2 billion registered BBS users here in China - For only 300+
million internet users. People spend hours online with multiple accounts and
personalities so that they can chat with their various girl- and boy- friends
and take on different viewpoints in different places. (* note these are not
old school dial-up BBSes but basically online community forum websites they
just call BBSes).

People talk about politics all the time, either directly, or indirectly via
codewords and the like. Avoid talking about organising large demonstrations
and strikes, and you're likely to avoid the ire of any officials or censors.

Websites like Tudou.com, youku.com, and yupoo.com have massive massive massive
amounts of content uploaded to them daily. Of course, lots of it is pirated TV
and movies, but the locals are also constantly uploading the same kinda stuff
you see on youtube and flickr. (Funny sidenote: the locals go to Herculean
efforts to try and get around the ban on pr0n too. It turns out, they like it
as much as anybody else in the world).

3\. Months to get a license.

You can get an ICP, which is the local internet content license, in a matter
of days. One of the big restrictions is that you usually need a local to do
this registration for you. However, the reality of the matter is that few (if
any) foreign companies succeed without local partners and the like here anyway
(foreigners -really- don't get the local market), so it's not that onerous.
Worst case, find somebody with a local husband or wife and just get them to
help you with the whole process.

4\. Companies copy your idea and overtake you.

What company in the US or Europe doesn't worry all the time that Google,
Microsoft, or Apple isn't going to do the exact same thing? This is like
saying "competition is bad". It's the cornerstone of what we're all doing
here. And again, if your idea is good and you know what you're doing, you'll
have a big edge over these guys. (There are one or two big examples to the
contrary to what I've just said, but they're in court here in China and could
very well go the way of the "little guy").

Every market in the world has its peculiarities, differences, and problems.
China is no different. Look closer, spend some time really trying to
understand the market, look at the numbers, and you'll find that this is a
very fun place to do startups. Only 25% of the country is on the internet here
right now. There are hundreds of millions of bored and lonely kids (and
adults) who want to play and connect with others. The growth opportunities are
staggering.

------
AndrewWarner
This link should get you past the registration:
[http://www.nytimes.com/2009/08/11/business/economy/11expats....](http://www.nytimes.com/2009/08/11/business/economy/11expats.html)

~~~
mjfern
It's the same link?!

