10 reasons there's no easy money in China
On Friday I have officially been in Hong Kong for seven years so can apply for my permanent residency card.
Unlike some who buy it, I've actually earned mine by living here the entire time. I wouldn't say Hong Kong is an easy place to live as a New Zealand female it has definitely had its moments.
After this time I do however feel qualified to at least share a top ten of things I have learned doing business here and in the Mainland so you can see just how difficult it is for aspiring New Zealanders who think they can come here and rule the world.
1. Any Westerner or even Chinese person who claims to be an expert in doing business in China, is not. The experts are already rich and they don't like sharing. Every part of China is different, every industry and every person has different morals, ethics and way of doing things. Just like back home.
2. Cash is not only King it is Queen and the Prince. Limit allowing Chinese to run up credit. Cash upfront, especially on volume deals where they've offered to buy 100x of a product. Tomorrow usually never comes.
3. Lowest price when pitching almost always beats quality of service or even loyalty. Regardless of what is said about service being important. The market in China hasn't evolved that far. I have found they will put up with bad or negligible service before putting up with paying even slightly a higher price.
4. Chinese will claim poverty when it suits then arrive to the meeting in a chauffeur driven Rolls Royce wearing head to toe Patek Phillipe, Chanel and fur coats. Take everything at face value. No one here is as rich or as poor as they seem. They lie, scheme and bullshit to make a buck. Just like every other group of people in the world.
5. It is hard for Chinese people to make money in China. It is very hard for a Westerner. Witness how few New Zealanders have made successful businesses here. Never underestimate how good a businessperson has to be as an outsider to make money in China. It is not easy. It is easier to live here as a Westerner and make money doing business with the rest of the world.
6. The first time a Chinese person rips you off do not go on a bender in Shanghai. It is far cheaper and safer to turn around and simply throw your chair through the hotel window. Glass and labour to repair the glass is cheap and you probably never wish to return to the hotel anyway.
7. When you eat "chicken penis" and all the other weird foods around, the Chinese are laughing at you not with you. Avoid all dining experiences where possible unless you have an iron stomach. No good can come from being in the eating situation. Send your staff to "eat for the company".
8. Never do anything free when promised future value. The future will never arrive and they'll find another sucker who will do something for free. Be very cynical with promises of riches ahead. Never spend any money before it is in your bank account.
9. The value of a contract is equal to your ability to enforce the contract. Which is often zero. You can't just wander off to the friendly High Court and get a fair hearing. There's law here and then there is enforcing the law. The rule of law here is a very fluid concept which is what makes it different to doing business back home or with say our friendly Australian neighbours.
10. This is still and I think always will be the wild west for Westerners. Don't cry when you are ripped off. No one here cares. Even the media. There's no Kevin Milne or Fair Go or Bernard Hickey to run to. And no political sympathy for foreigners or any sitting in Parliament to help.
Cathy Odgers is a Hong Kong-based lawyer. She blogs as Cactus Kate.
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Comments and questions38
Absolutely fantastic summary, should be tattooed on the backside of every wide eyed newbie heading for the region on business.
Often witnessed European corporate types especially Germans constantly returning despite mega losses until it became obvious the visits invariably involved more personal benefits.
Incredible amount of truth to this, I've been flying in and out of China for the last 5 years and spent a lot of time in Beijing, Shanghai, and Hong Kong. They are not there to make friends, and will scheme, cheat and rip you off. Although some honesty prevails in a perverted sense if your buying fake top labels, iphones, clothing etc, when you ask if it's original, they say "Yes , Chinese original". There you go!
My favourite is the "no photo" sign on the doors of shops retailing rip offs of art.
Simply brilliant. Cactus Kate adds significant real-world value to the NBR and should be kept on. We need more of this.
Thanks CK As one who has followed your blog and often comments you say it as it is. AND thats why we should be very very cautious of doing any business with Chinese or other Asians. Its not a case of racisim Its a case of us having a different set of morals and ethics. What we regard as honest Chinese see as plain arse dumb
To NBR: Why don't you publish CK's next blog as well on asset sales? Too risky?
A very concise and hard hitting summary.
Reads like good reporting;more like this please
liberte
I am surprised by bloggers reaction to this piece. Really, didnt you folks know it was like this? You all seem surprised and informed by what is the 'bleedin obvious'.
Even from your armchair Sir you will find that common sense is never that common.
I wonder how long the Editor of this reduced publication will take before he/she removes all of these mean comments about our esteemed business partners from the Orient?
I ventured an opinion similar to this regarding NZ cosying up to a well known Chinese telco provider, Caveat Emptor I said......it was removed by the editorial staff. What are they scared of?
Ater reading this just how free is our free trade agreement. Heavily favouring China I suspect.
Are we as a nationality really any more honest?
What about Freemasons, who look after their own and can distort justice. I heard one comment that 90 % of NZ judges are in the Lodge (sounds a bit high to me).
Overseas Investment Office be damned.
What are letting into the "incorruptible" New Zealand economy?
See my comment.
Are we any better?
Problems are with not only Freemasonry.
Deceit & fraud are interwoven into our national psyche.
sounds like doing business in China is very similar to doing business in Aussie.
no dingos in china
Having first hand expereince in dealing with these orientals, I can vouch for the fact that a signed contract to them is not a signed contract but simply the start of nergotiations. Great to see on TV last night that the USA is bringing some of its manufacturing back to the USA to create jobs at home. As an R&D organisation, we have adopted the same strategy -bring our manufacturing home! If our product costs a bit more then so be it. We are trading on value, reliability,on the spot back up service and warranty to overcome the price objection and we have had our best year ever since being established in 1992.
Some years ago a certain person bought a container full of jandals,he locked it, he weighed it, when the container arrived in nz he checked the lock, checked the weight every thing seemed fine till he opened the container and found it full of waste concrete,he lost,he paid in full when the container left China,be carefull.
Brilliant and so true!
I have been working with the Chinese for some 25 years and totally agree with all said!
At least cactus is still free to express an opinion in Hong Kong. That's part of the legacy left by the ugly British colonials.A few miles north of where she is now and she'd be off to the gulag for that.
China has changed a wee bit since you were last there.
Excellent article.
The China Chinese will not be in the least offended by the article. The truth is the truth is the truth.
Only qualification is that NOT all China Chinese are business people.
If you go to bed with a giant, you are very likely to get squished. Just ask Canada about the NAFTA. NZ in bed with China or place like the US will never ever go in favour of NZ.
Insightful article Kate!
Which probably explains why there's still a lot of business still done in the SAR i.e. in Hong Kong under the one country, two laws doctrine.
On the other hand, there's still folk who are still up to their necks in sand about how the place has progressed in the past 10 years, let alone since the Union Jack came down in 1997... doing business there is like anywhere else, research, consult and above all, take a good long hard look at trusting your partners.
To paraphrase an Australian Skipper about batting first at the toss, chose to limit your risk 11 times out of 12 by keeping your cash in your pocket, on the 12th time, think about paying early but then keep your money in your pocket anyway.
Nice article - short and to the point, saying that getting it right is rewarding. Takes patience, being on the ground, access to resources, stumbling a few times and some balls thrown in for good measure!
Yes, I agree with the Cactus although I must say the 10 reasons also apply to India, Russia, some Euro countries and America (to varying extents).
An expat doing business in China is pretty dangerous. The following sums up an expat's business experience in China:
1) Walk into a pitch black room
2) Close the door
3) 5 seconds later, walk out of the room
4) Realise that you are stark naked having been robbed of everything on your body
5) A sheepish look on your face with no idea of what just happened
"It's a dangerous business, going out your door. You step onto the road, and if you don't keep your feet, there's no telling where you might be swept off to" (Bilbo Baggins, 1401 in Shire-Reckoning)
I've had dealings in Russia... You're a lot safer doing deals in China...
Now come on, there must be some nice guys in China.
After all we sell them our farms, Don't we ?
In fact we even propose to look after them and I guess at some stage they will do the right thing and sell us some milk too.
Don't be a sarcastic housewife on NBR
Having worked there for over a decade I can only tell you what Kate mentioned are too subtle and just tip of the ice burg.
They don’t do it to expats only. They do it to their own kinds too. That is part of the DNA of the greater majority, but not all. That is why no one trusts anyone there, especially in the business community.
My first lesson by a Chinese business person was not to trust anyone at all, except immediate family members and perhaps some old childhood friends only. Now you guess the depth of distrust even in personal relationships, how much more in business dealings.
I'm glad she is an expert on Chinese matters, and for that we should be grateful.
However, as far as New Zealand goes, she is a pure amatuer
Hohoho!
And what and who do we have in NZ?
Finance companies with some of the biggest crooks in the world!
Property developers who take investors' money, enjoy the high life, lose their monies and still live the high life (courtesy of legalised theft - family trusts).
Lawyers who promote acrimony in every facet of NZ life - family, civil, contract, treaty, criminal and professional - so that they can generate excessive fees.
Tax exiles who claim patriotism and promote racism for their own ends.
Do not attempt for one second to preach business ethics in other countries when we have some of the scummiest businessmen in the world.
Well said - we have plenty of crooks and flakes here.
Given our small population we must have one the highest numbers of flakes, conmen and fraudsters per 1,000 people in the world.
People think China is corrupt. What about our finance company sector here?
There is easy money in China - ask the Taiwanese who have opened up huge industrial complexes and businesses there.
It's called taking risks and it's called expertise. What expertise do and can New Zealanders bring to a place like China?
Dead Right. New Zealanders definitely cannot bring any expertise in huge bribery, either in kind or cash.
You as a Taiwanese elder should know it well how much bribe money and luxury gifts such as luxury cars and properties, expensive jewellery, etc,etc is being handed down for business favours in your motherland.
Its a cost of doing business in China. You either accept it, pay up and get on with business, or you pack your bags and go home... and don't think you can take the moral high ground and change this.
NBR, can I suggest that you drop the option for commentators to use the "anonymous" designation.
Not only is it somewhat cowardly but it makes it almost impossible to refer back to a comment.
I know this will not find favour with many but I do urge you to give it serious consideration.
Peter Martin