For Sale In China Blog

Having given a lot of thought to how China is developing and the course its development is likely to take I began to wonder what opportunities would present themselves for the generation of tomorrow. What should Chinese parents be advising their children to consider as careers for the future and what do they themselves consider the best opportunity for advancement.

Medicine? Engineering? Politics? Accountancy?………… Maybe Hospitality or Entertainment or possibly Hairdressing or Personal Grooming?

None of the above! What is clear, is that China is heading for a dramatic and fundamental shift in its thinking and when it comes the world had better watch out.

Why?………….For years Chinese have lived in and being educated in a system where individuality is discouraged. In times past it was much more than discouraged, it was often physically beaten out of people. It is little wonder that Mainland Chinese are very conformist by nature, keen to ‘fit in’ and of course keen to be seen to take the Government line on everything. Even Political hierarchy were keen not to be seen as an alternate thinker. Until very recently the Political elite was comprised almost entirely of qualified Engineers, as that was considered a safe degree for someone in Political office to possess. No Economists, no Lawyers, no Political Scientists and certainly no Businessmen. But the tide is turning and the Politicians are beginning to appear from differing backgrounds, many who may have had experience of some education in the West.

So what will be the ‘Best Job in China’. ………. The Entrepreneur …………….

On every street corner in China you see Entrepreneurs selling anything from food to clothes and fancy goods. The streets are literally bursting with small shops selling anything imaginable, but concentrating on a very limited scope of products. Every town is full of thousands if not tens of thousands of people or families trying to earn a living from their own devices. A true entrepreneurial spirit is alive and thriving in today’s China, but with one enormous drawback. The typical Chinese entrepreneur is not accustomed to operating in a market economy. It is almost as though there is a huge Cartel operating in China but without any of the economic benefits of such an operation. It appears that their are unwritten rules about who can trade in what and where. It appears that traders are happy to operate in this manner without the greed that a market economy would force.

Enter the Retail Entrepreneur …………Ten years from now I predict a huge shift in the way retailing in China will operate. Currently people shop locally, in small, inefficient, understocked outlets. Why? Transport! Either they do not possess their own vehicle or the public transport service is inadequate or expensive. This is an immediate barrier to Western shopping habits. However this is guaranteed to change in the next decade.

Local shops may have the captive audience but are not taking advantage by offering a variety of goods and maximising sales opportunities. In some towns where they do have what can loosely be described as Department Stores, you will find at least as many staff as customers and as a result prices that are beyond the reach of most Chinese. The future lies in giving the average Chinese shopper good access to fairly priced merchandise in adequate surrounds with efficient staff, properly trained to service the needs of the shopper. Everyone thinks of China as the Worlds mass producer …………but retail and shopping is one area where this simply does not apply. Everything is small scale and times past.

When China gets its transport infrastructure sorted, Western operators such as Argos, Wall-Mart and B&Q will be quick to pounce.

But in the meantime the Chinese Entrepreneur has time to act. Time to get a toehold in what will be a burgeoning retail market place. Time to establish a brand that will pay dividends or maybe just time to get started so when the big guys do want to spread their wings the Chinese Entrepreneur may be in a position to cash in by selling out.

Whilst discussing Chinese ‘face’ and ‘one upmanship’ with one of my Chinese suppliers he told me a rather funny joke……..

I was in a Chinese railway station and I accidentally stood on a Chinese mans foot.

He said ”I’m Sorry,” I said ”I’m Sorry Too”

He said ”Ha, I’m sorry three” I said ”What are you sorry for”

He said ”Ha, I’m sorry five!”

Admittedly, probably a lot funnier after a few few Chinese beers and plenty of ‘Gam Bay’ which is when I heard it.

China’s laws in relation to business ownership and in fact property ownership in general are entirely different to anything I am accustomed to. In fact it is not just the laws to ownership but the attitude that is alien. I guess decades of communist rule have a major part to play in peoples expectations.

To operate my business in China I first needed to incorporate a Honk Kong registered company which in turn became the owner of a subsidiary Chinese company. I then had to appoint a Chinese National as my appointed representative to head the Chinese business. Obviously there is a huge amount of trust involved as the risk is great and the temptations for Chinese operators are huge. Anyway having now incorporated two foreign companies you have to set about creating banking facilities in two countries and all the normal business requirements that seem so easy in your own land.

I engaged a Hong Kong solicitor and accountant who in turn engaged Chinese solicitors and accountants. At my first meeting I was told ‘I will require money for which I cannot give you a reciept’. Strange statement………but this was my first experience of how China operates. The solicitor explained that it would not be feasible to operate through normal channels as it could take years to accomplish, if at all. He said it was at this stage that most potential operators back off due to the lack of trust and faith that things will proceed the way they hope. I had the feeling that the solicitor was conveniently finding a way to accommodate people……mainly himself. I needed to get things moving so put myself and my money in their hands.

It took several months for the necessary process to be followed but eventually it happened and I mistakenly thought we were ready to go.

Oh no! Not so easy. It now seems that we had significant hoops to crawl through in relation to being able to export from China. Yes, it is fairly easy to get hold of products, but to legally export them is not so easy. You need to have an export license…………..but most companies don’t, so what they do is pay other companies to put the products through their export licence. Again, fraught with problems, however, do-able. So we began, but set off down the road of acquiring our own export licence, which I am pleased to say we now have, but after two years and considerable expense………..Everywhere you turn in China there is another ‘fee’ to pay, either legitimate or not so legitimate. The rules from Central Government are fairly clear but the interpretation at a local government level are significantly different. It seems that the more you are prepared to pay then the quicker things can get done.

Then you try exporting under your own licence, and the goods we had being exporting for the previous two years, suddenly required a whole new series of testing procedures and approvals…………..more time and expense, and once again the more you pay the quicker you get it done.

It can be frustrating at first but the system does seem to work. In England we might call it fast tracking and charge a premium for the service in China the ‘premium’ is by negotiation. Is it fair? Is it decent? Is it proper? Who am I to judge. I get equally frustrated with the business practises of Western companies with their ‘clarity’ of charges and their ‘customer charters’ and local authorities with such overburdened protectionist beaurocracies where getting an answer to a simple question is difficult and getting someone to make a positive decision is nigh on impossible.

China works and the more you understand it, the better it can work for you and those around you. China will continue to develop for the benefit of its business’ and its citizens. It will undoubtedly follow Western ‘Best Practise’ but ultimately won’t operate much differently than the way it does now.

My experience so far tells me that most Chinese are inherently fair and consider to some extent the good of all. Is this at least one positive result of Communist collective thinking? I only hope they can retain this philosophy as they ‘develop’ as a nation.