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We Have Moved -- www.chinalawblog.com

Posted by Dan Harris on July 2, 2007 at 01:33 PM

If you are coming here via a search engine, you have come to our old Typepad version.  Thanks to the Net Nanny/Great Chinese Fireawall's blocking Typepad websites, we can now be found only at www.chinalawblog.com.

Chinese Law Gossip -- Boy Oh Boy/Man Oh Man/My Oh My

Posted by Dan Harris on June 29, 2007 at 08:38 AM

New blog out there called "The Life of a Lawyer at a Chinese Law Firm: Practicing Law in a Country Where There is no Law."  It is a most unusual blog and certainly worth a look-see. 

The writer has wisely chosen to remain anonymous, though it took me one e-mail to get the writer's name.  The writer explains his purpose as follows:

I want to explain who I am and why I am writing this. Some of this info comes from my blog/diary entries that I wrote and kept private for the past 20 months while working at Zhong Lun law firm, one of China’s largest law firms (five offices, about 300 attorneys–all Chinese except me initially, and later another two foreigners added (see the bottom of the list), in addition to some semi-volunteer summer interns like Travis Hodgkins who spent a couple months at the firm and for some reason and somehow survived on the US$10 per day salary the firm paid them).  [CLB Note:  Travis is spending this summer with us in Shanghai where we are paying him considerably more than $10 per day] I’ll mix the notes I have that track my time at the law firm with comments about current legal issues here, so there’s a mix. I kept my blog while working at Zhong Lun because some of what I saw was so incredible, and I’d guess others– especially US attorneys– would agree. I am now doing mergers and acquisitions work, still based in China, at a specialty firm, also in Beijing.

Here’s my background. I am a US attorney, graduated from the U of Virginia in 1997, got two job offers here in 2005 after living and working in NYC for about six years for a firm that preceded Winston Strawn. I spoke minimal Chinese when I came, and learned that in 1988-89 while living in Taiwan and studying at Taiwan Normal University where they have a program for foreigners to learn Chinese , and now speak more fluently. I came here since I had the job offers and was reading about China nearly every day in the newspapers and media back home, and wanted to get involved in what was happening.

I am writing this for a few reasons, some more admirable than others. The more admirable reasons are that I’ve met foreign law students during the 2+ yeas Ive been here who are trying to figure out how a foreign attorney can get a job here, and make decent money, since most of them just get slave wages as interns at Chinese firms like Zhong Lun and others that hire them to polish English or serve as the model foreigner for clients. In addition, I’ve received calls and emails from people abroad– it happens nearly every day– asking the same questions: how do I get job over these. That’s a good reason to write this. Another good reason is that blog are becoming popular, and I like to read some of them, especially the China Law blog and Ben’s Blog– an American working in China. Also, there is a gap missing– there are no lawyer blogs from lawyers who are here. That may have something to do with the fact that lawyers are supposed to keep everything about their clients and work-relations a secret, and in fact that leads me to the less-admirable reasons to write this. Maybe its because what some lawyers do is dull– I don't know.

A reason I think it is interesting to read about what a US attorney does in a Chinese law firm is because the law in China is a charade in many ways. There are laws here, certainly, and regulations, and plenty of them. However, the court system is corrupt and doesn't work and there really isn't any way to enforce laws so for all intents and purposes they don’t really exist.

Well, rather than dwell on general thoughts about China, I’d prefer to dig in and start discussing what I’ve seen and continue to see here. I think it is worth recalling the noble advice that Ed Lehman of Beijing-based Lehman Law gave me when I left working for him after three months. He said, “Jeff, you are not going to survive six months working as the only foreigner in a large law firm like Zhong Lun. Americans can’t tolerate Chinese as colleagues or bosses, and even Chinese can’t stand working with other Chinese. Chinese are smart and hard working, but they don’t get along.” Well, Ed’s hardly a role model and was wrong about one thing– I lasted 20 months at Zhong Lun– but the rest of his advice was pretty accurate. But, come to think of it, almost anyone can be profitable when they charge clients US$350 per hour, and pay employees US$200 per month. Way to go, Ed.

Oookaaay.   

So in his first post he who goes by the name Jeff, slams two law firms, maligns the management skills of 1.3 billion people and writes off China's nascent legal system in its entirety.  He also wrongly claims there are no American lawyers blogging from China even though Steve Dickinson, who co-writes this blog, lives and works in Shanghai. 

Reading the Life of the Lawyer blog is for me somewhat like staring at a car wreck on the side of the road.  I do it and I think I somewhat enjoy it, but it makes me feel uncomfortable. 

Is this blog intended to contribute to the discourse on law and lawyering in China?  Or is it merely a temporary outlet for anger and revenge? 

I would love to hear what others think on this one.

Can China Law Blog Get Mushy Here?

Posted by Dan Harris on June 28, 2007 at 10:04 PM

Just a brief GFW update.  I am hoping that by tomorrow China Law Blog will be independent of Typepad and, thus, no longer prey to the Net Nanny. 

Now for the mushy part.  During this time of "blockage" we have received countless words of support online and via e-mail and they mean a lot to me. If I have failed to thank any of you for this before now, please accept my heartfelt thanks now. 

I would particularly like to thank Chris Devonshire-Ellis and Andy Scott over at the China Briefing Blog, Andrew Hupert over at DiligenceChina blog and the somewhat anonymous force behind the ImageThief Blog, all of whom offered me concrete assistance.  I am just glad all three of these blogs were already on our blogroll based strictly on their quality, for I fear that if they were not, I might have to consider adding a second criterion for inclusion.

Again, thank you all.

Working With An Interpreter -- The How Tos

Posted by Dan Harris on June 28, 2007 at 09:49 PM

Anybody who does international business knows how important it is to have good interpretation.  Now, thanks to an excellent post over at ImageThief, entitled, "How to Work With Interpreters," we have a better idea of what we can do to help assure this occurs.  This post is a must read.

China Bible For SMEs?

Posted by Dan Harris on June 27, 2007 at 10:00 PM

China Briefing has just come out with a new book, entitled, "Small-Medium Enterprise China Business Bible.  Its only 124 pages and only twenty dollars.  I have not read this book, nor even seen it, but if it is like the China Briefing Books I have read, it will serve as a good basic introduction to what SMEs need to know to do business in China.  China Briefing describes this book as follows:

This Guide is a detailed overview, specifically targeted at the International Small-Medium Enterprise, of all matters of China business and trade, including sourcing, selling to China, processing trade agreements, outsourcing production to China, IP issues, the various types of business establishment available, operational risks, human resources, taxes, claiming back export taxes, and is an essential collection of material designed to assist the international SME understand the Chinese business environment, its pitfalls and how to make money trading, servicing or manufacturing in the fastest growing economy today.

The topics listed for the book certainly make a lot of sense for an SME looking at China: 

  • CHINA TRADING
  • Effective China Sourcing
  • Selling Goods & Services to China
  • Processing Trade Agreements
  • Outsourcing To China
  • SETTING UP IN CHINA
  • Representative Offices
  • Foreign Invested Commercial (Trading) Enterprises
  • Wholly Foreign Owned (Manufacturing) Enterprises
  • Joint Ventures
  • Mergers & Acquisitions
  • China’s Development & Free Trade Zones
  • OPERATIONAL ISSUES
  • Basic Due Diligence
  • Faulty or Inefficient Business Applications
  • Common Mistakes Foreign Investors Make in China
  • Intellectual Property
  • Managing Human Resources
  • CHINA TAX, AUDIT & COMPLIANCE
  • Tax Planning
  • Chinese Tax Reporting
  • Structural Inefficiencies Caused By Lack of Attention to Detail
  • Obtaining Export Tax Rebates
  • Extending China’s Tax Holidays
  • Annual Licensing & Renewal Obligations

I hope to eventually read and review this book, but, in the meantime, I would love to hear from anyone who has read it.

Bad Chinese Tires And More

Posted by Dan Harris on June 26, 2007 at 11:25 PM

Must read story in today's Wall Street Journal entitled, "Accident Raises Safety Concerns On Chinese Tires."  To summarize, an American tire "distributer" imported about 450,000 Chinese SUV and truck tires and it now appears many of them may have been dangerously defective.  Company appears to have been slow to learn of the problem and then slow to report the problem once it learned of it and is now claiming not to have enough information or money to mount a recall.

Foreign Tire Sales Inc. (FTS) of Union, New Jersey distributed the tires and sold them under the brand names Westlake, Telluride, Compass and YKS for sport-utility vehicles, pickups and other light trucks.  All were sold as replacement tires, not original equipment.  In FTS's own words:

FTS said an unknown portion of the tires either lacked a safety feature designed to make them more durable or had it in an insufficient degree. The company, which said it doesn't have the money to pay for a recall, estimates the defect could be present in as many as 450,000 tires imported from China's Hangzhou Zhongce Rubber Co. since 2002. It said it believes other U.S. distributors have been selling virtually identical tires, which could account for as many as an additional half-million tires.

According to the article, "FTS knew about the tire defect, which it reported to the National Highway Traffic Safety Administration earlier this month, as early as last year -- when it conducted its own tests in the wake of an accident in New Mexico that didn't result in any serious injuries or deaths."

Last August, there was a fatal wreck where the tread allegedly separated on a tire, killing two people.

FTS has made a filing with the National Highway Transportation Safety Association (NHTSA) that, according to a senior associate administrator at NHTSA, "indicates they have a safety defect and an obligation to recall. " This NHTSA administrator added that "We're just outraged it's taken this long to get to this point," he added, "because they knew that they had this problem for some time."

FTS "has told NHTSA it doesn't have the money to pay for a recall, [and] it said it can't even clearly identify the tires affected because the Chinese manufacturer has failed to provide it with the identification numbers of the tires that were made with the missing safety feature.

FTS has filed a lawsuit in the United States against the Chinese tire manufacturer, Hangzhou Zhongce, accusing it of removing the safety tread.  The distributor's

Surprisingly, FTS's own lawyer, Lawrence Lavigne, admits "FTS suspected a problem as early as 2005, when it noticed a significant increase in claims from consumers for compensation. This typically arises when consumers are dissatisfied with the performance of a tire and return it for a refund or replacement. He contends the Chinese manufacturer initially insisted the tires were built to the specifications and only much later admitted they had been altered."

The plaintiffs' lawyers in cases against FTS will probably be asking questions of FTS similar to these: 

  1. Did you just go with what your Chinese supplier was telling you about the safety of its tires?  Why?
  2. Did you do anything to test the tires yourself?  When did you do this testing?  Why not any time before then?
  3. What made you first suspect problems with the tires?  What did you do in response to this?  Why did you wait until then?  Did you immediately contact the government?  If not, why not?  Did you immediately cease importing them?  If not, why not?
  4. What did you do to make sure the tires you were getting matched the specifications you required? 
  5. What specifications did you require of the Chinese tire manufacturer?  Is this in your contract with  them?
  6. Who at FTS first knew about the safety problems with the tires?  What did that person do to try to remedy things?  Who at FTS made decisions on tire testing? 
  7. What would it have cost FTS per tire to fix the problems?

I suggest all companies involved in bringing product into their country from China read my earlier post, entitled "How To Protect Your Company From Bad China Product," on how to try to prevent such problems.

China: Beijing Cares About You And Me

Posted by Dan Harris on June 25, 2007 at 11:12 PM

New Blog, The Pacific Narrows, has a very interesting post that pulls extensively from EastSouthWestNorth's exceptionally fine coverage of the recent incidents involving slave labor in China. I have not done anything on this important story yet, mostly because there is plenty of excellent coverage on it already.  But I am writing on it now because I so much like the questions Pacific Narrows raises:

The parents (as quoted from a story in Southern Weekend) wrote a letter to Wen Jiabao and tried to use a television station in order to accomplish their goals. I am sure they tried the police, but clearly that is not an avenue that was extraordinarily effective.

                                            *   *   *   *

And, as I often ask myself when I hear stories of local-level-corruption ... at what point does the central government begin to be held accountable for the sins of its representatives at the local level (if ever)? As noted in this story, the aggrieved parents thought it worth their time to appeal to Wen Jiabao ... setting him up in the traditional role of the center as the well-meaning father figure whose wayward local representative has gone under the radar to violate the rules and abuse citizens. Will this change?

And how is it that the center perpetuates the belief amongst common people that it is listening and that appealing to Wen Jiabao is an effective use of one's time? Some of these poor supplicants travel immense distances and expend plenty of their scarce resources to appeal at the Center ... is it effective? I assume someone has done a study on the success rate of these Last-Resort/Beijing-Pleading trips, right? And I know China recently made doing this a no-go, right? The presentation of petitions in Beijing is now a no-no, no? Has it stopped the process? Has there been any popular blow-back to this tradition? Were there any popular, negative repercussions along the lines of, "oh, so now they don't want to hear us, hunh?

So is the center good and always fighting with the peripheral or is it all one core?   I am of the view that Beijing would prefer this sort of thing not go on, but not enough to fight against it as vigorously as it must.  It seems pretty clear that when forced to choose between the masses and the apparatchiks, the masses had better really mass to have any chance at all. 

I am hoping Mutant Palm will comment on this because he and I have had similar/related discussions at various times and involving various aspects of governance and I know he has something insightful to say on this.

Update:  The Useless Tree, thoughtfully answered some of these questions in its own post, entitled "Confucian Apparatchiks."  The Useless Tree is of the view that China's system can never really work well for the little guy.  I agree.   

China's Joint Venture Jeopardy

Posted by Dan Harris on June 24, 2007 at 05:45 PM

The Wall Street Journal just ran an article I wrote, entitled, "Joint Venture Jeopardy".  It is on the Danone-Wahaha dispute and it gives a few basics for avoiding joint venture problems.  For those of you coming here for the first time from that article, I say welcome. 

The easiest way to find us again is to go to www.chinalawblog.com.  If you had to use a proxy in China to get here, it is because all Typepad blogs are being blocked these days by the Great Firewall. 

If you are interested in reading more on the Danone-Wahaha dispute, check out these previous posts:

For those interested in reading more on Chinese joint ventures and wholly foreign owned enterprises (WFOEs), check out the following:

Oh, and feel free to stay a while.   

China's Legal Revolution, July 3 On PBS

Posted by Dan Harris on June 24, 2007 at 01:17 AM

On July 3rd, 9:00 pm Eastern Time, PBS will be running a documentary on the Chinese legal system, entitled, "The People's Court: China's Legal  Revolution." And is it just me, or is the guy on the far right of the site a near dead ringer for Lloyd, from the HBO series, Entourage?

PBS e-mailed me regarding the show, describing it as follows:

FROM NEIGHBORHOOD DISPUTES TO LIFE-AND-DEATH CASES, WIDE ANGLE FOLLOWS JUDGES, LAWYERS AND ordinary citizens SEEKING JUSTICE AS CHINA BUILDS A LEGAL FRAMEWORK FROM SCRATCH FOR ITS NEW MARKET ECONOMY, IN THE PEOPLE'S COURT

WIDE ANGLE Launches Its Sixth Season Tuesday, July 3 at 9 p.m. On PBS.

When a state judge brings her mobile court to a hillside village to resolve its first lawsuit, the entire community shows up for the public spectacle.  When a crusading lawyer risks government retribution to defend farmers rioting against a massive dam project, a teenager is tried and executed in secret.

It may be the court of "the people," but it's a long, long way from Judge Wapner's California courtroom.

As WIDE ANGLE returns for its sixth season of in-depth documentaries about issues that are shaping the world today, The People's Court takes viewers inside the courtrooms and law schools of China to provide an unprecedented and unexpected portrait of its rapidly
growing legal system.  The People's Court premieres Tuesday, July 3 at 9 p.m. (ET) on PBS (check local listings).

Poised to surpass the United States as the largest economy in the world, yet facing mounting domestic and international pressure for fair and transparent framework of laws, China is racing to reshape the rules of society.  With Chinese from all walks of life taking to the streets in record numbers (official figures count an average of 200 incidents of unrest a day) to protest land seizures, corruption, pollution, or unpaid wages, China is under duress to provide a release valve for mounting social discontents.  "Rule of law," originally a Western concept, was recently adopted in China's Constitution for the
first time ever, and legal reform is high on the state agenda, despite the Communist Party's continuing monopoly on power. Above all, a market economy requires a reliable framework of property rights, without which international investors cannot do business with China. 

In the past quarter century, the country has opened nearly 400 law schools, trained hundreds of thousands of judges and lawyers, and launched education campaigns to encourage people to bring their grievances to court rather than taking to the streets.  Few nations have ever attempted to create a new legal system so quickly.  Yet the transformation is incomplete and the judiciary far from independent. Senior judges are appointed by, take orders from, and receive their paychecks from the Communist Party.  Hundreds of Chinese lawyers have been jailed in recent years for challenging state
leadership or taking on overly sensitive cases.  More than 99 percent of criminal cases end in convictions.  And China executes more prisoners every year than the rest of the world combined.  The People's Court reports the shocking story of the recent secret trial and execution of one of the 100,000 peasants who protested the loss of their land to a
huge hydroelectric dam project on the Dadu River. 

WIDE ANGLE was given exclusive access to film in Chinese courts -- a first for a Western documentary.  Profiling itinerant judges, law students, a human rights lawyer, and ordinary citizens, The People's Court examines China in flux, revealing the lengths to which Chinese people must go to obtain justice and raising crucial questions about
their present system of law:  Is it possible to get a fair trial in China today?  Will the "rule of law" transform Chinese society into one that protects the legal rights of all citizens?

After the film, WIDE ANGLE anchor Daljit Dhaliwal will conduct an interview with a foreign policy expert to examine the global implications of China's legal reforms and connect the dots for American viewers.

Though it certainly sounds interesting and I most certainly will be watching it, I am a bit skeptical it will be able to tell us much in its one or two hour slot.   I will report back. 

Take Advantage Of "China's Rampant Employment Discrimination"

Posted by Dan Harris on June 23, 2007 at 08:14 AM

Employers will always discriminate on the basis of something.  As human beings, we just cannot help it.  Obesity, ethnicity, height, looks, disability, race, gender, religion, age, sexuality, the list is endless.  Smart employers try to avoid this.  Basic economics dictates this.

The employer willing to pull its employees from a larger pool of potential employees than its competitors should end up with better work force for less money.  It is like arbitrage in that the non-discriminating employer takes advantage of an inefficient market to hire employees others do not want for reasons unrelated to job performance.

China's employee market is woefully inefficient and small foreign companies are very well positioned to take advantage of this.  How? 

A recent Xinhua article in entitled, "Survey: Employment discrimination persists in China" highlights the extent of job discrimination present in today's China.  The article is based on a survey of 3,454 people in 10 cities including Beijing, Guangzhou, Nanjing, Wuhan, Shenyang, Xi'an, Zhengzhou, Yinchuan and Qingdao conducted by the China University of Political Science and Law this year.

The results are as follows:

  • 86 percent said discrimination exists in China's employment market
  • 51 percent see the discrimination as serious.
  • 22 had been denied job opportunities for physical disabilities
  • 19 percent had been denied jobs "because of their low level of academic attainment" [is this really discrimination?]
  • 19 percent had been denied jobs because their registered residence origin was not the same as the city where they were hunting for a job.

"The survey showed that discrimination is common in government departments, with gender, registered residence origin, height and appearance being the four criteria most frequently cited."  The "63 percent said they would not employ HIV carriers, 56 percent said they would not recruit hepatitis B carriers, and 53 percent said they would not hire patients with venereal disease."

The article then details the job-hunting experience of "Guo Hui, who will graduate with a doctor's degree from China's top-notch Beijing University:"

Guo, a native of Handan in north China's Hebei Province, became paraplegic when she was 12 years old after a misdiagnosis.

She has sent out more than 100 job applications to employers in Beijing, Tianjin and Shanghai since November but did not receive a single reply, Wednesday's People's Daily reported.

After quitting primary school because of discrimination, Guo --who is bound to a wheelchair -- studied by herself.

After getting her Master's degree from Shandong University, Guo applied for a job as a teacher, but was rejected because she was disabled.

She passed exams to enter the doctoral program at Beijing University in 2003.

Fluent in English and French and the recipient of several state-level scholarships, she could not even get a job as a part-time teacher when she was studying in Beijing.

"(I didn't get the jobs) -- not because I was unqualified, but because I was physically disabled," Guo said.

I cannot the only employer who when reading about someone with the brains and sheer determination of a Guo Hui thinks about hiring her.  I must have heard at least ten times from small business clients doing business in China that they prefer hiring women in China because they can get much better employees that way and because the women they hire (unlike the men) do not come on board with an overriding and wholly unjustified" sense of entitlement."  The male/female hiring gap in China is huge.

Regional discrimination is also huge in China and it too presents great hiring opportunities.  We have a client with a factory in Shandong province who hires gets most workers from Sichuan because so many other companies reject them simply because they are from Sichuan. 

Another discrimination in China is against "villagers" without a degree from one of China's top two or three universities.  Another opportunity.

Take advantage.

The Long March to Law Firm Success In China

Posted by Dan Harris on June 19, 2007 at 10:35 PM

I know if I write on something relatively neutral and light like Chinese food or great Presidents I will get a lot of comments and no e-mails.  I know if I write on a highly technical legal subject I will get just a few comments and a few probing e-mails.  I now know that when I write about law firms in China, I get surprisingly few comments but a whole host of e-mails.  My recent post on an ABA Journal on foreign law firms in China in which I was interviewed is a great example of that.

In received a whole slew of e-mails in response to that post, many of them of them of the "isn't such and such firm a joke" or can you even believe so and so is still...." variety, usually concluding by asking me to do a post on this.  I usually respond to these e-mails by saying I too am fascinated in this stuff, but that I do not think I am terribly well positioned (mostly here in Seattle) to write on such things and I am not sure I would want to even if I could. 

A very loyal reader at an absolutely top tier international mega firm with a very strong China presence wrote me the following e-mail in response to my ABA Journal post:

I read with interest your recent post 'Chinese Foreign Lawyer Ethics Rules Unclear?'. 

I didn't post a comment on the blog, because this one is a bit close to home!

I'm very curious about anything on the legal services market in China, particularly on the different models law firms use, which have been successful and which have been unsuccessful, and especially which are predicted to be successful in the long term and why. 

I think this ties in very closely with China business in general.  I am always interested in reports of the issues that foreign companies run into in China, especially management issues relating to Chinese staff, and reports of foreign companies just rolling out their international business plans in China, and failing.  The common thread, as you and others have said many times, is that success in China requires some knowledge of local conditions. 

I think some law firms approach China business in the same way they approach any country, and so far, because they don't sell a product or deal with the Chinese marketplace, they don't suffer, or at least don't realise that they suffer.  However, on the basis that Chinese companies will more and more become clients of foreign law firms, and that foreign firms will become more and more savvy on the quality of their China advice, I don't see this situation persisting.  I see the distance between the true cross-cultural lawyers and the lawyers in China who only have a slim understanding of China widening rapidly.   Do you agree?

A good example concerns international law firms whose China expertise is based in Hong Kong.  Though Hong Kong is desperately trying to hang on to its position as the gateway to China, the mainland does not need Hong Kong to broker its deals any more.  The knock on for the lawyers is that native Hong Kong lawyers and foreign law firms whose business is based around China advice are facing more and more competition from mainland Chinese lawyers, and are behaving like the proverbial dog in the manger.  They still push the view that Hong Kong is the place for China advice.  Though there is of course a lot of expertise in Hong Kong, this is getting less and less true.  Hong Kong lawyers are already at one remove, definitely from an environment like Beijing, which is very different to Hong Kong.  Law firms often seem not to understand that Hong Kong Chinese are not mainland Chinese.  I wonder if this is true of UK firms more than US firms!

The topic of which law firms will succeed in the long term in China, or at least what strategies will succeed, might be worth a post!  I'd be very interested to hear what views are out there. 

I still check the China Law Blog almost daily, and agree with pretty much everything you post, unless the topic is the US!

To which I responded:

That is a good idea for a post, but I am not sure I can pull it off without looking like an ass.

You are right about the declining importance (other than in their own minds) of HK lawyers re China.  The action is in Shanghai and Beijing. 

I think you are also right about how the gap between those who really know China and those who are just there will continue increasing and that is exactly what is happening.  This will be complete when more foreign lawyers speak and read Chinese. 

At this point, hardly any Chinese companies make good clients for US and British law firms because they do not value lawyers enough and are not willing to pay.

China's market for foreign law firms is going to go just the way of the US (and UK?) in that you are going to have the international big firms that will succeed by doing big work for big companies and you will have the small firms that will succeed by doing everyday work for small and medium sized companies.  We fill that small market and it is still woefully under-served.  There is little to no room for the medium market and those firms which go to China to open an office with no real reason for doing so beyond being able to say they did will never make it.  Those firms without a compelling person in China will not make it.  Mid-sized firms who think they can open a China office with a mid-tier Chinese national who got his or her law degree in the US or in the UK are going to get crushed.

How do I turn this into a real post?

To which I got this response:

I've been thinking about how to deal with this topic for a post, and I've canvassed a few views from colleagues.  The topic is a bit like corruption - the only examples I can give are anecdotal, because no-one wants to jeopardize their position. 

One colleague helpfully scribbled down a questionnaire on the topic:

"The Long March to Law Firm Success in China." 

Here are a few signposts for law firms to follow on the route:

1) Are you opening to 'boast' of presence in China.  If yes, leave now.  If no, go to 2).

2) Does the head of your office understand Chinese culture?  If yes, go to 3).  If no, book business class flight home now.

3) Is the head of your office able to relate across East West cultures?  If yes, go to 4).  If no, quite now if you are an equity partner.

4) Does the head of your office understand integration issues in a transition economy?

5) Does the head of your office understand the Chinese legal system?

6) Does the head of your office know how to relate to the Chinese media?

7) Has the office a definite "client profile" at which it is aiming its product?

8) Does the head of your office know how to build client contacts in China?

I think it is obvious she feels the office head is very important. 

A colleague also related a story of what a friend told her about his experience of looking for lawyers in China.  The guy in question was an old friend of hers from law school, who had since become a private fund manager.  The fund is fairly big, and employs about 500 people.  She met him for lunch during one of his business trips to Beijing.  She told me he said he had been looking for lawyers in Hong Kong, Shanghai, and Beijing, but could not find anyone in whom he had confidence.  He said he found there are generally two types of lawyers in China:

i) Foreigners who think they are managing but aren't.  They are not adapted to the market.  They have US or European products, which they are convinced are brilliant but which take no account of local conditions.  The example he gave was that he had been advised that the best structure for a recent deal was a reverse takeover, when in fact a simple share offering would have been better and much cheaper.  His main point was that he didn't want someone to talk to him about London, he wanted someone who could talk to him about local conditions.  He considered taking the lawyer to see the project, a port on the Yangtze River, but the HK lawyer he considered taking thought the Yangtze was in Guangdong.  He soon realized that if he did take the lawyer, he would probably end up looking after the lawyer, not the other way around. 

ii) The second type are local Chinese who are being kept down because of management concerns that they won't be able to sell.

When asked what his ideal China lawyer would be, he said it should be a local person, with considerable overseas experience, who has good local knowledge, and good local commercial sense. 

To this I would add that from what I have seen, local Chinese lawyers are kept down in foreign law firms not just because management are worried they can't sell, but because international law firm management does not by and large understand Chinese culture or Chinese people, and does not have any interest in understanding Chinese culture or people.  Because they don't understand the Chinese staff, they don't trust them. 

My guess is that law firm management's perception is that their Chinese staff are happy to work for a foreign law firm, and are generally happy with their lot.  My experience of Chinese staff at foreign law firms in China is that they make significant sacrifices to continue doing their jobs, for various perceived benefits.  For example, maybe they feel that a few years at a foreign law firm will give them opportunities later.  Whatever the reason, it is clear that the Chinese staff at foreign law firms make constant concessions.  The key is that while the management feel that everything is peaceful, the Chinese staff are constantly working very hard to resolve ever-present conflicts. 

The other thing that the international law firms do not sufficiently take into account is that the local Chinese foreign qualified lawyers are in a booming sellers' market, and are in short supply.  While not all are good, this is the pool that the good ones come from, and that pool is limited. 

What this means is that far from being stable, there is a tipping point in the market.  We are already seeing national confidence growing very fast in China, and to me it looks like there will be a point where the rug will suddenly be pulled from under the feet of the foreign law firms, and by and large, they will not see it coming.  This point will come when the balance between the tensions the Chinese staff experience and other opportunities that exist changes sufficiently. 

The market will divide along the lines of the firms which are sensitive to the cultural environment, the market, and their staff, and the firms which aren't.

I responded by saying I loved the analysis and would post it pretty much word for word and I have. 

I am in near total agreement with this person's analysis of China's legal market and I just love the questionnaire compiled by this person's colleague.  Hell, I even agree with the assessment of my being pro-U.S., though for some unknown reason there are those over at NBC's Worldblog who might disagree. 

Anyway, for once, let's get some discussion going on here regarding these issues.  Please. 

Because we are offline in China right now (I hope and believe this is only temporary), I may end up keeping this post front and center for longer than usual.   

China: Losing Face By Looking At A Menu

Posted by Dan Harris on June 18, 2007 at 04:28 AM

Interesting blog out there called NewFrontierChina Blog, written by Cooper Strange, who owns and runs a cafe and a consulting business in Liuzhou, China. 

Strange describes Liuzhou as "in Guangxi Province (officially 'Guangxi Zhuang Autonomous Region') touching both Vietnam and the South China Sea. Guangxi is the only coastal province in Southwest China, which is comprised of Guangxi, Guizhou, Sichuan, Yunnan provinces."  The consulting company is called New Frontier and it is "located in Sanjiang County, which is within Luizhou City. Sanjiang County is the northernmost point of Guangxi Province, touching Guizhou and Hunan provinces." 

This is a long-handed way of talking about what is essentially the middle of nowhere (yes, I know GM is there, but still) and that is what makes both New Frontier's consulting business unique and its blog so interesting.  Both the business and the blog focus on rural China, where seventy percent of China's people still live:

New Frontier Consulting is positioned to lead the development of China's next frontier: the rural areas. Seventy percent of China's most valuable resource, its people, is still in the countryside. In addition, most raw products and resources begin in China's interior, but producers lack the ability to market their products globally.

We provide China-based, professional assistance for your business's needs. We can serve as a sourcing consultant, locating resources and finding the information you need to know. We understand the needs of conducting business in China, and can provide the necessary services for foreign businesses and organizations to function successfully in a cross-cultural environment.

In addition to our services for foreign companies, we also help extend local companies' marketing presence to global markets, partner with local entrepreneurs to establish small businesses, and continually strive to innovate new ways to facilitate the development of China's rural resources.

I am writing on the New Frontier blog now because I particularly liked its most recent post, aptly titled, "Losing Face Just Looking at a Menu."  The post is on a conversation Strange had with a friend "about the feel or mood of a restaurant in China as interpreted by the Chinese, particularly in the menu and how products are sold and marketed," but the lesson the post teaches holds true for all business in China (and probably everywhere else as well).   The lesson is that Western companies in China must be careful to avoid offending their Chinese customers by appearing condescending.      

The comment went something along the lines of, "some restaurants might have excellent products, but many foreign-run restaurants sell the food in such a way that the Chinese customers just feel like you are saying they are stupid." They lose face. I had to ask him to explain.

I had made a comment about "educating the customers". Now, all I meant was letting them know enough to be able to make an educated purchase, that is, buy the thing they want. That phrase raised some red flags for him, though.

His point was that if restaurants—this is going to be more applicable to Western food places—push the authenticity of their food so much and feel a need to help the customers know what good Western food is supposed to be, the Chinese will often feel ignorant. As my friend said, "they may need some education, but they do not want to feel stupid when receiving it." Good point.

So, I started thinking about it a bit. There is nothing wrong with little informational pamphlets or other explanatory propaganda for those who really want to be informed. But really, most people will either get what their friend suggests or go with the first interesting picture they see. That is, unless the sales staff are particularly good sales people.

And I really think that is what is comes down to. The people behind the counter can communicate an educational message in many different ways: everything from condescending to helpful. I have only begun to think it through for myself and my own cafe though. I would say it comes down not to the message, but how the message is communicated.

The lesson is basic, but I have seen Westerners act condescendingly towards Chinese far too often not to run this post.  I think all of us are susceptible to inadvertently acting condescendingly when dealing with people from other cultures, particularly when they are communicating with us in a language other than their native tongue.  There is a natural tendency to misunderstand an inability to communicate or understand a foreign language with an inability to understand substance.  From there, it just becomes far too easy to be condescending. 

Even we lawyers are sometimes not immune.

Shanghai Condo Buzz, Of The Illegal Kind

Posted by Dan Harris on June 18, 2007 at 02:31 AM

By Charles Moure

I just returned from a couple of weeks in Shanghai, where illegal condo "sales" seems to be the talk of the ex-pat town.  Seems a common trick of Chinese condo developers is to "sell" large numbers of their condos to their own companies/individuals, set up as "straw men."  This allows the developer to claim 90% occupancy and to show potential buyers inflated prices purportedly paid for the condos.  The Shanghai Housing and Land Administrative Bureau is now on to this trick and is investigating.  And it is not just small players getting caught up in this net. 

The Shanghai Daily did an article on how three developers and one real estate agency are being investigated for this, including Tomeson Group, Ltd., the developer of the Tomson Riviera, the site of China's highest priced condominium ever sold:

Tomson Riviera, located in the heartland of the Lujiazui Finance and Trade Zone of Pudong New Area, is being quizzed after reportedly selling three of its apartments at 110,000 yuan (14,400 U.S. dollar) to 120,000 yuan per square meter and then cancelling all deals.

                                                           *   *   *   *

In August, Tomson sold one apartment for 130 million yuan, or 130,000 yuan per square meter, the highest price for a condominium on China's mainland.  The Riviera project has been suspended by the bureau.

Shares of Hong Kong-listed Tomson were suspended Wednesday afternoon, pending an announcement "in relation to price-sensitive information." 

Shanghai Jiahe Real Estate Co. Lt.d, is "accused of buying 204 apartments of its own 276 apartments" and Shanghai King Wai Holdings Co. Ltd. is "suspected to have cancelled 300 sales contracts of its property in an attempt to stall sales." 

The China Daily states that "Shanghai's Oriental Morning Post quoted a sales manager for Kingwai City Oasis, another developer, as saying: 'It is common practice in real estate sales for the developer to intentionally keep some good suites. This gives the impression that the sales are good.'"

Caveat emptor.

China's "Next" Top Ten Cities for IT Outsourcing

Posted by Dan Harris on June 17, 2007 at 01:57 AM

Alsbridge Consulting, a Dallas, Texas, based consulting company that describes itself as an "award winning outsourcing, offshoring and shared services advisory firm, just came out with its list of "China's Next Top Ten Cities for IT Outsourcing" (h/t to the Alan Weinkrantz Blog).  Alsbridge's press release regarding this list says these ten Chinese cities were selected "based on accessibility, population, education, resources and economic stability. These attributes complement the notion that China offers a wealth of outsourcing promise and that the larger cities such as Dalian, Hong Kong and Shanghai are not the country’s only outsourcing hubs." To see the full report, click here [pdf]. 

In alphabetical order, these ten "next" cities are, as follows:

If you ask me, this list is quite strange in that it is missing both Shanghai and, most importantly, Beijing.  I guess we are to assume both cities are in today's top ten cities for IT outsourcing and this list is just the "next ten." But if that is the case, why is Dalian on the list when Alsbridge specifically says this list is meant to go beyond cities like "Dalian"?  I cannot even imagine what other eight cities round out the present top ten (beyond Shanghai and Beijing), especially if Dalian is not on this list.   

Can anyone help me out here? 

China Trends 2007

Posted by Dan Harris on June 16, 2007 at 09:18 PM

By Charles Moure

I attended AmCham Shanghai's June 8, 2007, China Trends Conference at the Pudong Shangri-La Hotel.  I was quite impressed by both AmCham and the conference itself.  The large conference room was nearly full.  Brenda Foster, President of AmCham Shanghai, gave the opening remarks and she noted AmCham Shanghai is one of the fastest growing AmChams in Asia. 

Steven Ganster of
Technomic Asia gave the first speech.  My firm has worked on a number of matters with Technomic Asia (mostly with Kent Kedl, who is based in Shanghai) and we hold them in very high regard.  Steven gave an excellent speech on how when Chinese and Western companies compete for the same customers, Western companies usually lose.  Chinese companies simply have too many advantages in their relationships, their labor costs arising from their willingness to take a harder line with labor, and their ability to pay lower taxes.  Western companies typically have the advantage in access to finance and in more sophisticated management techniques. 

John Leary, Managing Partner of White & Case's Shanghai office spoke next.  My firm has worked with White & Case on a number of matters in Russia and we have always found them to be absolutely superb lawyers and Mr. Leary certainly did nothing to dispel that view.  His talk was entitled, "Recent Changes and Trends in PRC Law" and yet he managed to keep it light and interesting.  He started off with a good lawyer joke (note to self, use it the next time I speak).  He said he had asked his wife how to keep his presentation short, while still covering so much material.  His wife advised he should keep in mind he would not be able to bill anyone his normal hourly rate while presenting. 

John did a great job briefly highlighting recent trends in China's labor, intellectual property, tax, mergers & acquisitions, real estate, and dispute resolution laws. 

John anticipates China's draft labor law will become law this summer. John talked about how non-compete clauses in employment contracts are getting enforced in China and employers should consider these to prevent employees from taking intellectual property.  He also talked about how employees in China must have written contracts and on how it is difficult to fire them.  Most companies get around this by entering into short term contracts with their employees (maybe for a year or so) and then not renewing the contract if things do not work out.

John then talked about how China is considering changing its requirement that patents arising from research and development done in China must first be filed in China.  John also briefly discussed the Beijing "Silk Market" case where a landlord was found liable for having allowed counterfeit product to be sold in its buildings.   

John talked about how though foreign companies in China have a lower tax rate than Chinese domestic companies, tax compliance by Chinese companies is reputedly less.  John left open the question as to whether the new unified tax law will cause the Chinese government to take tax enforcement against domestic companies more seriously.

In discussing dispute resolution, John promoted using an offshore arbitration clause, preferably Hong Kong.  I asked John about his firm's success rate in getting foreign arbitration awards enforced in the Chinese courts and he said they have had a good success rate in converting those awards into Chinese judgments.  I found this interesting because co-bloggers Dan and Steve are always fighting over whether to include a Chinese arbitration clause (Steve's usual position) or a Hong Kong, Vancouver, or Singapore one (Dan's usual position).   

Unfortunately, I had to leave the conference early to participate in a bankruptcy conference at the
Allen John law firm so this was all I got to hear.   

I shall return.

Chinese Food And Seconding The Call For Dumpling Diplomacy

Posted by Dan Harris on June 16, 2007 at 04:44 PM

Whenever I return to Seattle from China, I cannot eat Chinese food for months.  I simply do not want to spoil the memories.  I know I am not alone on this.  And since Seattle has a large Asian population and a relatively sophisticated food scene, I very much doubt things are any better in other U.S. cities. 

Just a couple of days ago, the Seattle Times did a story on Chinese restaurants in Vancouver, British Columbia (that's Canada, people), entitled, "Have chopsticks, will travel? Go north for Chinese delights."   The gist of the article is that Vancouver is THE North American city for Chinese food:

This is where hotshot Hong Kong chefs create innovative dim sum that trickle down to restaurants in Los Angeles and San Francisco.

This is Vancouver, where the Chinese culinary bar is raised higher and the Cantonese restaurants are more trendsetting than anywhere in the United States.

"Hands down, I think [Vancouver's Chinese food] is superior to other cities' in North America," said Nathan Fong, a Vancouver-based food-stylist and noted expert on Chinese cuisine.

The Chinese food scene here exploded due to mainland China's takeover of Hong Kong 10 years ago, which brought a flood of wealthy Chinese émigrés and injected much competition in the Vancouver restaurant industry. That's why the Vancouver area has been serving Chinese food that is arguably as good as in the homeland, much like Vietnamese cuisine is in Westminster, Calif., or Indian cuisine is in London.

So true

The article goes on to describe my favorite Chinese restaurant in North America, Sun Sui Wah, as follows:

But the overall star attraction remains Sun Sui Wah Seafood Restaurant in Vancouver, considered by many critics and local chefs to be one of the best Chinese restaurants in North America, especially for seafood and dim sum.

I once suggested (begged?) a friend of mine, whose wife's family owns a number of very large and very successful Chinese restaurants in Asia, talk to his in-laws about opening one in Seattle.  He reported back that Seattle could not support such a restaurant because such restaurants need to serve meals late into the night and there are just not enough Seattleites who go for that.  He then noted this was why Seattle did not have any great Chinese restaurants and why it never would.

Nina and Tim Zagat (of the Zagat Guide) wrote an op-ed piece in yesterday's New York Times, entitled, "Eating Beyond Sichuan," first bemoaning and then explaining the extreme dearth of great Chinese food on these shores:

Chinese food in its native land is vastly superior to what’s available here. Where are the great versions of bird’s nest soup from Shandong, or Zhejiang’s beggar’s chicken, or braised Anhui-style pigeon or the crisp eel specialties of Jiangsu? Or what about the tea-flavored dishes from Hangzhou, the cult-inspiring hairy crabs of Shanghai or the fabled honeyed ham from Yunnan? Or the Fujianese soup that is so rich and sought after that it is poetically called “Buddha Jumps Over the Wall,” meaning it is so good that a Buddhist monk would be compelled to break his vegetarian vows to sample it?

The historical explanation for why "the lackluster Cantonese, Hunan and Sichuan restaurants in this country do not resemble those you can find in China" is the lack of "key ingredients" from China, but that is no longer the case.  The reason the United States is today mired in Chinese restaurant mediocrity is that it is nearly impossible for Chinese chefs to get visas to come over here. 

Not sure if the Zagats are right about this, but they do provide some anecdotal proof.  And, hey, if opening the floodgates to immigration would raise the level of Chinese cuisine over here, than I say "open." Food trumps politics, hence the call for dumpling diplomacy.  Might even improve China-US relations.  Of course, our visa policy holds back more than just great Chinese cooks, but people, let's stay focused here. 

In its post, entitled, "Hear, hear for dumpling diplomacy!" Foreign Policy Magazine weighs in on this crucial issue with its own whine:

And they're [the Zagats]  absolutely right. Let's face it — most of what America considers "Chinese" food SUCKS. It's too sweet, too sticky, too oily, too heavy, and too bland. There are exceptions, of course. (Notably, my mom's kitchen and the Chinatowns in New York, San Francisco, and LA.)

But take Washington, D.C., [please do!] for instance. I've been living in this city for nearly two years, and have yet to understand why it's so hard to find a single decent Chinese restaurant in the nation's capital.

Again, so true.  I have always suspected PF Changs to be the leading cause of increasing sugar prices.

The Rose Cantine Blog is skeptical of the reasons given by the Zagats for the "abysmal state of Chinese food in the United States."  According to its post, "Is 9/11 to blame for bad Chinese food," Thai, Vietnamese and Korean chefs are subject to the same restrictions and yet their food is good.  The Rose Cantine, posits the following reasons for the difference: 

1. Thai, Vietnamese and Korean restaurant owners are relatively new immigrants to the US and have not lost touch with the authentic recipes. Because US-born Chinese are no longer in touch with their homegrown cuisine, restaurant owners have to import Chinese chefs and the visa restrictions are making this impossible (Zagat theory).

2. The type of Chinese cuisine that got locked in was Cantonese which is relatively bland.

3. The Chinese who settled in the US and Europe cook differently when they make dishes for Western people than they do for themselves.

This posts makes me wonder though if what the Zagats are saying about Chinese food holds true for most Asian cuisines.  I know very little about authentic Thai food, so though I love what get of it here in the United States, I am not qualified to compare it to the motherland. I have eaten great Vietnamese food in both the United States (particularly in California) and in Vietnam.  I am generally not a big fan of Korean food (seeing as how I do not eat meat and I do not think food should be judged on how long it has been buried in some old auntie's backyard), but every Korean in Seattle with whom I have discussed restaurants has told me there are no good Korean restaurants here.

Daniel W. Drezner, in his post, "I want to believe the Zagats -- I really do," is also skeptical of the Zagat explanation and he also posits three of his own:

1) Because China has a larger internal market, there is more innovation and competition at home, leading to more frequent innovations. Without a reliable transmission mechanism (i.e., migrating chefs), Chinese cuisine in China will improve at a faster rate than in the U.S.A.

2) Law of averages. There are 41,000 Chinese restaurants in the U.S., but only 9,000 Japanese restaurants. If quality is a function of quantity, then the average Chinese restaurant will simply be of poorer quality than other cuisines.

3) Innovation in a different direction. As this Washington Post story from last year suggests, American restaurants tend to innovate by using new cooking styles to present more traditional foods. Indeed, as the Zagats observe, this tendency is strongest in cuisines that have been here for a while -- like Chinese. This roils devotees of "pure" national cuisine, but delights everyone else.

The Zagats end their article with this clarion call: 

So, we welcome Chinese chefs to share their authentic cuisines with us. American palates, unlike those of previous generations, are ready for the real stuff.

To which, I would think we can all say, amen.

China Court Kills Yamaha Imposter's Joyride

Posted by Dan Harris on June 15, 2007 at 12:04 AM

A recently decided Chinese Supreme Court case highlights both the lengths to which Chinese companies will go to counterfeit product and also that the courts there are really starting to crack down on such violations.  The case involved the well known Chinese scooter manufacturing company, Zhejiang Huatian, which manufactured and sold scooters under the name of the world's second-largest motorcycle company, Yamaha Motor.  Forbes Magazine reporter, Shu-Ching Jean Chen describes the case more fully in his article entitled, Yamaha Copycat Crashes in Court (h/t to IP Dragon and to The Light is Green):

The Chinese company....registered a shell company in Japan's remote Ishikawa prefecture in 2000 under the same three characters used by Yamaha to render its name in Chinese.  This Japanese shell company then signed a licensing agreement with Zhejiang Huatian, allowing it to market its scooters in China under that name. Zhejiang Huatian went a step further by printing Yamaha's name in English letters on its scooters.

The case took five years but just ended in a landmark decision by the Supreme People's Court in China awarding Yahama Motor $1.1 million, the highest amount of damages ever awarded in China in a trademark dispute involving a foreign company. 

In a statement made by Yamaha after the ruling, the company said, "We hope our lawsuit serves as a useful reference somehow to other enterprises confronted with similar trademark infringements."  It should.  It is further proof that China's courts take intellectual property rights violations seriously and that such cases are worth pursuing, even for foreign companies. 

New York Times And Steve Dickinson On The Danone Wahaha China Dispute And On Avoiding Your Own

Posted by Dan Harris on June 14, 2007 at 09:34 PM

David Barboza, who has been doing a great job covering the Danone-Wahaha dispute (see his New York Times article, "Rancor Level Rises in Rift Over Danone China Venture"), just came out with a new story on the dispute in the International Herald Tribune and the New York Times, entitled,  "A brawl threatens a huge investment by Danone in China, in which he interviewed CLB's own Steve Dickinson.   For background on this dispute, check out my earlier posts:

  • "Danone v. Wahaha -- Which Of Us Is The Most China Rookie?"
  • "China Litigation: You Want Government With That?"
  • "Danone and China's Wahaha: A Lecture on How (Not) to Make Allies Enemies"
  • Barboza's new article does a great job explaining some of the things that caused this venture to go wrong and Steve does a great job explaining how Danone's joint venture problems are anything but unique.  The article starts out talking about how two years ago Danone "began noticing something peculiar in the financial figures coming from their joint venture here with the Wahaha Group."  A "lengthy investigation" led Danone to conclude that Wahaha's chairman, "Zong Qinghou, was operating a series of secret parallel companies outside the joint venture - companies that were mimicking the joint venture and siphoning off millions of dollars." 

    The article then discusses how after months of negotiation between Danone and Zong the parties could not resolve who has rights to the Wahaha brand and as the fight for control over Wahaha continues. 

    Barboza rightly deems this fight as emblematic of the "pitfalls of doing business in China" and Steve Dickinson agrees:

    "This is a cautionary tale," said Steve Dickinson, a Shanghai-based lawyer at Harris & Moure. "This is not a message that you can't do business in China, but if you come to China and let the Chinese run the business without supervision, they can do this kind of thing.

                                                  *   *   *   *

    "This is a flashback," said Dickinson at Harris & Moure. "This is why a lot of companies don't do joint ventures any more. Many of them ended up like this. You need to have protections in place."

    Taking up where Steve left off, Andrew Hupert at the Diligence China blog has a post, entitled, "Don’t get Danonized – 5 Steps for Protecting Your JV or Partnership Interests in China," setting forth how not to avoid emulating Danone in China.  Hupert sets forth the following five steps, all of which must be in your contract with your joint venture partner:

    1.   Have people on the ground. Your OWN peopleNot your Chinese partner’s classmates or relatives, but someone who will protect your interests.  You want need to choose the joint venture's key people and that means Human Resources (HR), Procurement/Purchasing and Finance.  You need to have your own top managers make regular visitors to interact with key departments and to make management know you are part of the team.

    2.   Institute multiple data flowsThe head of the joint venture's HR department reports to your head of HR.  "Same with Finance, Ops, Marketing, Etc."  This gives you regular reporting and it maintains interaction between your people and theirs.

    3.   Recognize HR, Finance and Purchasing are key choke points.
    Westerners focus on Marketing and Operations as the key areas for data flows, because this is where the most sensitive information is easiest to measure.  But since Chinese operations "run on HR and Purchasing" it is there that you will get a clearer picture on what is happening with the joint venture company.  "Look at who your sources for products and services are – that’s how your local managers are building their new ops."

    4.  Rotate their people through your offices.  Every department head or senior manager should be rotating through your head office every year.  Hold conferences outside China (Macao, HK, Singapore, Hawaii) to "get key people off their home turf where your people can build stronger relationships."  Wine & dine key middle managers and "drop broad hints about bringing them over to high-profile posts in the US or European branches:"

    There’s an excellent chance that these important staffers don’t have any great love for their Mainland bosses — but they don’t think they have any alternative. If these people think they have a shot at a western career path, they may get a lot more loyal to your interests in a hurry.

    5.   Move quickly to co-opt or get rid of shadow leadersEvery Chinese organization has a ‘shadow leader’ who informally controls a wide range of activities.  You can use these shadow leaders initially to "help organize your operation quickly, effectively and at low costs, " but once they have served this purpose "you need to get them on your team or get rid of them."

    Yogurt anyone?

    Time's The China Blog Has Something To Say

    Posted by Dan Harris on June 13, 2007 at 10:03 PM

    When Time Magazine's The China Blog first came out about six months ago, I hated it.  In fact, I hated it so much I did a post on it:

    It is ironic Time's China blog offends me so much since its overriding goal seems to be to say nothing so as not to offend anyone.  Actually, that is what offends me. 

    Time starts a China blog and then leaves out the good stuff that makes a blog a blog.  It reads like none of its writers have read any other China blogs before starting this one.  It has no heart, no voice, no soul.  It has nothing to say.  No reason for being. 

    There are excellent China blogs out there with which I nearly always agree.  DiligenceChina, ChinaBusinessServices and ImageThief come to mind.  There are excellent blogs out there with which I usually agree, like Chinese Law Prof blog, EastWestNorthSouth, Silicon Hutong, and Angry Chinese Blogger.  There are excellent China blogs with which I sometimes strongly agree and sometimes strongly disagree, like the 88s, Peking Duck, Sinocidal and China Confidential.

    I immensely enjoy all of these blogs (and many more) and I strive to read them every day because they might have something to say that nobody else is saying.  It may be a new tidbit of information, a new story, a new way of looking at things, or a new idea.  I do not know what I will find on these blogs, but I do know that if I do not check them regularly I might find myself out of the China loop on something and I cannot brook that.  I have been checking Time's blog each day, but just to see how long it can go without saying anything of any import. 

    Every Time China blog post is a rehash of what someone has already said, mostly weeks or even months ago.  Here is a list of their posts so far:

      • China's one child policy creates brats
      • Beijing is polluted
      • "If you take your eyes off China for even a few days, a lot can change"
      • Beijing is clear today
      • Bird flu is back
      • Where are the children's playgrounds?
      • A building was here yesterday and now it is gone
      • Migrants and Money
      • Danwei, China Digital Times, EastSouthNorthWest are great. "I'm now going to write about them. Then maybe they'll write about us."
      • It's not easy being green.

    And remember, it is not some ESLer in Nanjing I am picking on here, it is the Time-Warner empire, which has the money and the people to do so much better. 

    So Time -- get bloglike or go home.  More advice: if you want to tell people CLB has it all wrong about you, do a post entitled:  Screw China Law Blog.  I dare you.

    Well they ignored me and I ignored them.  Until recently.  The other day I read a good article in Time Magazine on China's courts and blogged on it.  Time's China Blog then blogged on my blog post and that drew me in.  Once in, I found myself going back and reading a number of its archived blog posts.  I also found myself being impressed.  Time's China Blog has hit its stride.  It is well written and, most importantly, it has started to leverage its  China contacts to write really interesting stuff.  And not just what you might find in Time Magazine either.  Blog stuff.  Posts on controversial issues and posts with opinions.  Good stuff.

    No boycott. 

    I just added Time's China blog to the blogroll. 

    What do you think about that?

    China's Big Government Hand Works Just Fine

    Posted by Dan Harris on June 13, 2007 at 08:12 PM

    In a post last week, entitled, "China Cell Phone Chargers -- Capitalist Market With Socialist Characteristics," I questioned the propriety of Beijing mandating all cell phone chargers go USB.  The always excellent How the World Works Blog just came out with a "follow up" post, entitled, "Cellphone Charger Authoritarianism," positing that Beijing's willingness to move markets may be exactly what is needed for energy conservation: 

    Two more Chinese data points:

    • On May 31, China's Ministry of Information Industry ordered that, starting June 14, all cellphones intended to be sold in China must be designed according to a "universal cellphone charger standard" that requires a uniform USB plug interface. According to MII, 100 million chargers are thrown away every year in China. Under the new law, any charger will work with any phone, which should eliminate the waste. (Thanks to the China Law Blog for the link.)
    • On June 12, China's government recommended a moratorium on new grain-based ethanol plants. The price of pork has jumped 43 percent in the last year, in part due to surging corn prices. Enough is enough, decided the commissars, and from now on, new ethanol plants must use non-food items as their feedstock, such as cassava or sugar-cane. (Thanks to Resource Investor for the link.

    The common denominator -- unilateral decisions by an authoritarian government. The contrast with how energy policy is currently formulated in the United States, as basically a vast bidding war between special interests moving their bought-and-sold politicians like so many pawns, could not be more stark.

    Which is not to say that How the World Works endorses totalitarian rule -- far from it! -- but it does pose an interesting question. Which country will ultimately be more successful at adapting to an energy-constrained future, the one that allows car companies to thwart efforts to raise fuel economy standards for decades at a time and refuses, at the behest of oil companies, to do anything about global warming, or the one that can decide, in one fell swoop, that all cellphone chargers be as one?

    Interesting question.  I am quite used to seeing discussions like this when comparing India and China, but it comes as somewhat of a surprise to see it used to compare the United States and China.  Since I believe innovation (not government) is going to solve the big energy issues, and since government tends to stifle innovation, my feeling is that the government, should keep its hands off my car and my cellphone.

     

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