BOOK REVIEW: CHRIS HORNreview Doing Business in Chinaby Christopher Torrens: Economist Books; £20 (€24)
“HORN XIANSHENG, we very much like your products but we will not buy any more,” a senior executive from a major Chinese mobile operator told me.
I was disappointed and asked her why. She responded: “Your products are excellent, but your technical staff here do not understand your own products well enough.”
I was astounded and told her that although we were expanding quickly, in fact we had not yet recruited any technical staff in Shanghai, and instead supported her company from our team in Beijing. “You are wrong, Horn Xiansheng: here is the business card of one of your own consulting engineers in Shanghai.”
I looked at the card. It was apparently one of our corporate business cards but was made out fraudulently instead with the name of a technician employed by one of our local resellers. Needless to say, the contract with the reseller was quickly rescinded and we immediately built our own team in Shanghai. The customer subsequently increased her business with us significantly.
Undertaking business in China reveals fascinating perspectives on the attitudes and ethos of the Chinese and indeed perhaps of human nature itself. While I was a child and teenager in Ireland, many in China were reduced to a survival diet mainly of grass and leaves in their famine-stricken countryside. Now they, and especially their children and grandchildren, have an opportunity to personally exploit the most rapid enrichment that any nation has ever experienced.
A race to a high standard of living with well over a billion participants naturally leads to competition, envy and friction. Rules are broken, short-cuts are taken, and nearly everyone feels an urgent right to grow rich. We in turn can shake our heads and tut-tut, but we experienced our own somewhat similar fervour during the late property boom.
Many books have been written to help guide westerners to undertake business in China and no doubt more will emerge.
In my view, the best focus on the spirit of the Chinese themselves, which has largely remained steadfast despite rapid and momentous change.
Torrens's Doing Business In Chinacaptures some of the passion of China and of the Chinese project, but he writes as a sterile outside observer. The voices of the Chinese themselves are rarely sought to give colour and illustration. Torrens is indeed a foreigner, but apparently not an investor: he has little to offer on the balancing of opportunity and risk-mitigation, of reward and safeguard. Neither, apparently, is he even a business strategist: there are scant details and specifics given for the business projects that he mentions in passing and little analysis and assessment of the usually subtle lessons therein.
His Doing Business in Chinais in fact not really about doing business in China. Genuinely, a reader should be forgiven for concluding that the message from this book is "don't do business in China – it would be far too fraught". Instead, the book is possibly an economist's perspective on macro trends, percolated with grains of filtered business and political events.
The book is conceivably best occasionally tasted rather than laboriously ingested. It is repetitive: for example we read more than once that Hefei is one of Unilever’s largest manufacturing sites; likewise, that Lenovo acquired IBM’s personal computing business (in 2004, or was it 2005? Torrens gives both dates in different parts of his text); and likewise, how domestic competitors in the mobile phone market have placed Motorola and Nokia under pressure.
The book is severely unbalanced. The first three of its 10 chapters contain more than 50 per cent of the text, and by the end of the fourth we are 65 per cent done. The introductory chapter is arguably the best, but sometimes confuses outsourcing manufacturing to China for re-export to the global market, with strategies to enter and sell into the Chinese domestic market.
The second chapter summarises national political structures and social stability. The third discusses national consumer trends, the regions of major economic growth and investment zones. The fourth looks at a selection of risks, including protection of intellectual property. The remainder of the work gives a cursory tour of corporate structures, acquisition mechanics, human resource management, governance, social responsibility and fraud.
Many of the observations and recommendations are applicable just as much to many other jurisdictions as to China itself and therefore will not be particularly insightful for the seasoned global player. The book halts abruptlyby outlining three future national scenarios, analysis of which would be a worthwhile contribution. However, very little is forthcoming. The book runs out of steam and stops short.
Torrens sums up his own manuscript well when he quotes a Chinese proverb at the start of his chapter four: “A conversation with a wise man is better than 10 years of study.”
His book is apparently derived from time devoted to reading reports, news and wire services, and is insufficient regarding real insights and direct personal experiences of business in China.
Chris Horn is co-founder of Iona Technologies and a member of the Government’s Innovation Task Force.
