Success in China starts in Hong Kong

I hope this blog will serve as a guideline for businesses thinking of entering Hong Kong and China. I am taking note of some significant events that have transpired recently in Hong Kong and China with regard to my understanding of business and how this experience will guide my future decisions. This blog is not political, but it is a learning essay based on the political actions in Hong Kong recently which did much to create my best understanding to date of business in Hong Kong and China.

cash-cow

Two significant events have happened in the last month. The first is the Occupy Central and the other is a conference on the future of business in China held in Shanghai which I was a speaker. I will present my views by detailing what the experience was like in Hong Kong and Shanghai during these events.

Hong Kong during Occupy Central was inconvenienced slightly. My flat is so close to Central that  if it had faced East rather than North I might have been able to see the happening from my front window. Nothing in Hong Kong shut down and despite what I saw in the overseas press other than an inconvenience to get to Central little changed. The protests were peaceful and contained and for us that live in Hong Kong and know it to be the most walkable city nothing was really effected. Those that were troubled depended on motorized travel (tour buses, private cars and delivery trucks) into Central and with all the public transportation and walkability it has long been questioned why cars even need to be allowed in Central. Aside from the unfortunate actions by the Hong Kong police, the worse that happened was the air was cleaner.

 

China during Occupy Central and the trip to Shanghai was much different. My agency manages social media in China for a number of companies. During the Occupy Central so many restrictions were put in place in China such as aggressive censorship, shutting down of business and personal profiles on social sites, disrupting internet and VPN channels, banning Instagram (note Instagram was the first non-China app to have a native interface to both Facebook and Sina Weibo which was revolutionary. That is now gone). This along with the Golden Week holiday crippled the ability in China to conduct normal business for social media and digital agencies. We had to move our operation to Hong Kong and support our China work solely from Hong Kong because, even though the “trouble” was in Hong Kong a small city of 7 million, it was unphased and the the giant nation of 1.3 billion was brought to its knees. The conference in Shanghai started with a series of speakers that were or are currently significant in the Central Party planning for business development, SoE’s and financial reforms. What they said shocked me. I was not expecting such bold statements criticizing China. But what they said explained a lot and sadly confirmed some of my prejudices based on my experiences of business in China. The three speakers described a sense of chaos where decisions are arbitrary, rules and guidelines non-existent and the atmosphere of frustration, confusion and unwillingness to make mistakes in the absence of guidance common. One example summed it up well. He stated that the current crackdown on corruption was hurting business in China. This was because government officials do not have guidelines to manage tenders or allocation of resources and funds. In the absence of guidelines, bribes were the most efficient method of managing decisions. Take that one method away without a replacement and things go tits up fast.

Summary:

The takeaway from  these recent experiences are several. Basically it is now and always has been unclear on the benefits of doing business in China. What was not discussed in this blog was the high cost of doing business and that most Western companies, though showing great results, fail to turn an adequate profit. Also is the issue of work environment. During my stay in Shanghai I did not leave the hotel because the pollution was so bad and coming from and going to the airport I witnessed 4 car wrecks. Additionally employees lack adequate international exposure to be effective in dealings outside China and the concept of customer service is almost non-existent. From Hong Kong I have always been able to deliver a better, more stable and less expensive solution to China than I ever could from within China. So when thinking about doing business in China because it is a “cash cow”, maybe you might want to consider that it is not necessary to sleep with the cow. Hong Kong is what China can never be, an oasis of order and stability with full access to the cow.

Much success,

Doug

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