Just Don’t Go There
Google’s threatened withdrawal from China has re-opened debates on whether or not the Chinese market is worth the effort. I don’t think it is.
The Chinese Are Manning Her Now
China has always been a tough market to enter, witness the lengths the British and others went to in the early 1800s. I began working in the China trade in the 1980s and rapidly lost my enchantment – with the market, not the culture and history. Many large, otherwise “akamai” (that’s smart, clever, intelligent in Hawaii) companies foundered on the Chinese reefs. A profit-making venture was the exception. Many companies found back then that China would do virtually anything to obtain foreign know-how. And the Chinese were always quick to mount the warhorse of protecting their “internal sovereignty”.
China’s entry into the WTO brought to the fore the battle between protecting “sovereignty” and building an export economy, on the one hand, and creating the openness of national treatment and non-discrimination on the other. All countries face this issue, but few so starkly as China. Google’s great sin is that they have now gone against the norms of doing business in China. Google has dared criticize the Chinese Government and Beijing really can’t do anything about it because Google has relatively little invested. Other companies would have difficulty in withdrawing from the market, but Google has got them thinking. Already, I see more courageous bleats from businesspeople about how tough it is to go up against China’s preferences (legal or otherwise) for local companies, restrictions on distribution, effective subsidies for Chinese exporters, rampant corruption and piracy, and so much more.
If your company is not in China, you don’t have to expose yourself to this battle. Small exporters do not belong in China – though I will post tomorrow about one, somewhat safer way to do it. So often, when working for government or in my consulting practice, I have seen small companies (many of which have never exported anywhere) want to go to China because it is in the headlines. Don’t do it until you have substantial experience elsewhere (and I don’t just mean a U.S. company selling a hundred miles across the border in Canada). Get pragmatic experience dealing in Chinese societies and cultures by going to Hong Kong, Singapore or even Taiwan first. No would-be contender starts out with the big boys.
