30 March 2010

Doing business in China Prt 3

Guanxi

Guanxi can be loosely translated as contacts. In the UK there is the old saying it's not what you know but who you know that gets you places.

For example Peaches Geldof would never have gotten anywhere without her dad being famous.

The same applies to Kelly Osbourne and also Hack Helene Hegemann all sorts of people like that, there is a similar thing in China too in that you need to contact the right people. Finding contacts is the hard part of course in that for every good decent business man out there, there are probably 10 maybe 100 shysters.

Where to look for such contacts? There are various tactics for this:

Approach the British Chamber of Commerce in Hong Kong hang around some bars in Lam Kwai Fong and or approach some established businesses. Remember Hong Kong and Macau are safer placers to do biz than China.

Hong Kong shares British business tradition of limited liability companies which is good but it can also be an arse, in that they can steal your money liquidate the company and bugger off.

A good way to do this is if you do find a contact is to check up on them and request their accounts and or directorships for the past couple of years, if they have a habit of liquidating and running away this will show up. HK people and Chinese people are assigned ID card numbers that you can't escape!.

Anyway once you have your contact it is in effect a begging mission I hate this too, in that you have to take him out to dinner YOU'LL have to pay for it and generally massage their ego to get permissions to get permits or further contacts. You may well lose your shirt doing this as they will take the piss and exploit you ruthlessly. This applies even if you go through the chambers of commerce. You must massage their egos until the project is done and dusted and it is in operation as people you will meet who can get things done for you will invariably have contacts of their own.

In 2008 for example there was a story of a guy who opened a hotel in Zuhai (I know him personally) it is a fairly middle sized hotel, but the contact who set him up with builders and staff and permits was not invited to the opening. So what happened from this snub? The contact fixer phoned up the electricity company and cut them off. Myself and friendly girl (not girl friend) had to go and find him and then almost beg for him to turn it back on. He insisted that my friend drink a ton of booze and sort of demanded to have sex with her, we ended up walking out the electricity wasn't turned back on, so we went to find some petrol generators, except the fixer was good. He had told the people selling petrol generators not to deal with us. And the owner had to go grovelling back (for historical reasons I can never kneel or prostate myself or beg anybody a habit since 55BC). Finally after lots of bribes were passed back and forth the electricity was turned back on, but it was too late the grand opening had been ruined.


As many have said corruption is rampant, and in the UK you'd go to a judge and complain except the judges can be just as corrupt too..

The moral of the tale is all this could have been prevented by acting humble as if the fixer/contact was the sole reason you could get into this place. So if you find a contact a non corrupt one (like a needle in a stack of needles) you are going to have to act humble and invite him as an honoured guest until you are established. Once you become established you start growing your own contacts and fixers and cease to be at the mercy of your original fixer.

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