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Thursday, April 1, 2010

Why do business in China?

A very good article from the Economist

Schumpeter -The panda has two faces.

Basically doing business in China is a pain. See Google and Rio Tinto, but the opportunity is huge. The Chinese car market is now greater than the US and China's economy is still growing at 10% a year. 75% of foreign companies surveyed in China are making money there, and half had higher margins in China than they did globally.

Two rules to remember:
  1. There is a negative history of foreign involvement in China for the last 150 or so years. Opium War, Boxer Rebellion, Rape of Nanjing, etc. ie the Chinese feel that foreigners have repeatedly mistreated them. And there is a lot of Chinese nationalism and pride in their history. Per the Economist senior executives need to spend 30-40% of their time in China smoothing things out with regulators and local officials.
  2. Never abandon your principles for short term gain.



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