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Chinese business & politics

Due to the cultural and social distance among China and the western world, it is often thought that doing business in China is extremely complex and politics can easily interfere.

It is not entirely a wrong thought. Indeed, doing business in China is not simple for a Westerner, due to the great differences in the way that Easterners do business.
But it is not really that complex. It’s like learning a new game, with its own set of rules.
In other words, trying to do business in China using the methods to do business in USA is like swimming underwater while trying to play football. Or playing tennis with a baseball bat. It may work once upon a time, but that’s not reliable.
Japan, or Egypt, have their own set of rules as well: as a matter of fact, even among Westerners there are strong divergences that bring to various stereotypes – so it is normal to expect a similar thing with China. Learning the rules is not easy, but if you manage to learn the logic behind it, for example the culture of “saving face” or properly using “relationships”, it will become easier and sometimes even instinctive to do the right thing.

But what about politics? Can you achieve the understanding we talked about before in business culture for the political system of another country? Our answer is yes, but it takes more effort.
China’s political system is so different from anything else in the world that it’s hard to strike a comparison, but most people are aware about one political feature of China: censorship.
We will use this topic to provide an example of the relationship between business and politics in China. We also wish to add that this is not a detailed analysis: it’s more like an introduction and an invitation to learn more about China bringing up some examples which are easily uinderstandable.
I like to use some examples from videogames field to explain the situation. After all, if we see the strength of the intervention of China in a “trivial” area like home entertainment, we can understand the type of control that is being held and what to expect in other areas as well.
In videogames, China is one of the biggest emerging markets. There are players of both sexes, and of different ages. They play lots of different genres, and they do not mind whether the game comes from China, Japan, Europe or USA or anywhere else, as long as its good. They do mind not being able to play in their language, though. Chinese gamers feel indeed kind of being discriminated against, because some games are accessible in many languages, but not theirs, which is the language spoken by most people as their first language in the world.
Although the reason behind the lack of investment in Chinese market by foreign companies might be due to fear of censorship by the Chinese government, the result is not in favor of the consumers at all: reducing the potential of a 1,4 billion people market to the minority who doesn’t mind playing in another language, which can have a huge impact on text-heavy games. Furthermore, it creates the perfect environment for Chinese competitors to provide the much-needed game to the potential customers who want to play something in their language. The result: Chinese people will not have the game they want, but something similar, and the video game studio who created the original game will lose in profit.
Let’s move onto another example – mass production. Lots of news are shown on the media in the West about the Chinese copies of this or that Western-made product. In theory that should make all these people outsourcing production in China to change their mind, no? But it doesn’t. There are still so many factories in China producing OEM for Western companies, with high quality output and at a convenient price. Plus, China is slowly becoming more and more the right place for complex manufacturing, leaving the space for low-level manufacturing to other countries in the South-East Asia area.
The reason is that the control that the government may have on the way you do your business is not as strong as it is being depicted – otherwise nobody would do business with China. Furthermore, there is government control in any place you want to work – even in the most free countries there will be regulations, standards and guarantees to give. If we speak about the videogames field again – censorship can be found also in countries such as South Korea and Germany, but that does not stop anybody from marketing and publishing games there. South Korea itself has one of the most thriving gaming markets, the 4th worldwide, just behind China, USA and Japan. Germany closely follows. Software houses will apply the changes requested to get into these markets, and that’s it.
The trick is to balance the effort you need to put to adapt to the local laws with the potential income you are going to get.
Those who write that is always a bad idea to work in a specific country are just following the stereotypes of their own culture: in order to make business, you need to find opportunities where others won’t see them.
So, we can say that politics indeed do interfere, although often indirectly; and that, although for some businesses working in China may not seem so worth, it is extremely profitable for others.
Just like in any other country.

At any rate, it is strongly advisable for whoever is approaching to China for the first time to have some professional aid, and for some specific conditions it would be convenient to do so later on as well.

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