Ah, the American Dream.

Can you see it?

A successful business. A nice place to call home. Two-point-five kids.

Now, can you imagine that in China? A lot of people clearly do, but fewer Americans than should.

That’s according to some China business consultants, who have been busy character assasinating American businessmen, detracting from their traditional shoot-first-and-ask-questions-later mentality.

American kids may want to emulate Chuck Norris, Steven Segal, Clint Eastwood and Bruce Willis, but apparently, their corporate parents don’t give a damn. Take no prisoners? Yeah, and no customers in China if possible, they seem to believe.

American firms are not comfortable with the way business is done in China, Kirvan Henry Pierson III, principal of China consulting firm XLOCATE Ltd., said in a recent bizCult article.

“American firms want to make sure they are in total compliance with government regulations at all times, whereas the Chinese firms they are competing against don’t worry about that stuff,” Mr. Pierson said. “If the government finds you out of compliance, they will generally tell you you’re out of compliance. Unless you present a serious threat to somebody who has special connections, you will never get the police called on you and your operation shut down.”

But Americans are frequently too timid to operate in the face of such risk, as Dan Harris of Chinalawblog.com, noted:

One of the things I have noticed and am forever complaining about is how American companies are so often late in going into emerging market countries…. The high margins American companies expect and their high labor costs are no doubt factors, but I also wonder if it is not just plain and simple risk aversion based on an unwillingness to risk jeopardizing that which has already been achieved. All I know is that I have worked with an untold number of companies over the years that have come to the brink of going into an emerging market country (including China), but then backed down at the last minute because of some (often very small) risk that would not be present stateside…. So many times when American companies have been unwilling to go in, companies from other countries do go in and succeed…. I see this happening in China’s wine industry, where the French and Australian wineries are already establishing their distribution networks and their reputations while American wineries are, for the most part, still dithering.

Even Americans that are in China tend to walk a straight-and-narrow line while their European counterparts have less aversion toward veering off that path.

At a recent AmCham-China event, John O. Hjelset, a Norwegian by birth, and executive director of Norse Dragon Co. Ltd., didn’t advise foreign companies in China to engage in soft corruption. But he didn’t advise them not to either, and mentioned some things that competitors are likely doing. He knows of one company that handed over a nice car for personal use to someone exceedingly useful. And he knows of another company that provided a “scholarship” for the family member of a useful business associate.

However, David Wood, an American, seemed quite turned off by anything other than taking advantage of “good” guanxi.

The Chinese clearly are not following the tenets of business prudence, unlike Americans, which can be seen in a big way in Africa.

Paul Denlinger wrote about this at Chinavortex.com:

In the west, there is a whole industry called “risk consultancy”…. Originally, this was built around business risk and would answer questions like “How safe is it to invest $500M in an industrial diamond mine in the Congo (formerly Zaire)?” The consulting firm would then send practice consultants to the target country, where they would study sunk costs (including bribes which were never written about in the report, regulations, who was related to the president, political opposition, major competing firms, etc.) Most of these questions were positioned as questions which any board would ask the CEOs before they would greenlight an investment…. What is fascinating about China’s investments in Africa is that while the amounts of money and people who go to Africa are huge, China really doesn’t have risk consultancies, and Chinese really have not yet started thinking in terms of quantifying risk in the ways western corporations have.

Certainly, it’s good to weigh risk versus reward, and the Chinese may want to think about that more in the future. But Americans all too often about-face when they face China investment prospects, even when the scale is clearly tipping in favor of reward.

    Channel: Local Wisdom     |