Is The “China Dream” Real? Or Did Western Businesses Get Suckered?

Sunday, January 24, 2010 8:16
Posted in category Uncategorized

A lot of conversation over the last few weeks about what China is for many firms. and what it is not.

It is a conversation that, while recently catalyzed by Google’s announcement that they were looking at pulling the plug, is a conversation that I would say is had on a basis that is more frequent than many would like to admit to at time. Typically preceded by an event of some sort, commercial or political, and can be defensive, self defeating, or well analysed depending on the person, and one of the more interesting analysis I have seen lately comes from James McGregor in his recent piece in Time, The China Fix, where he writes the following:

The foreign business community in China has deep respect and affection for the Chinese people and their hard-earned success. But more than a few foreign business leaders are asking themselves if they have been bamboozled by the system. Multinationals have been solid citizens in China, handing over heaps of capital, technology, training, source code, best practices and proprietary products to joint-venture partners they were forced into bed with. They have funded schools, orphanages, disaster reconstruction, overseas scholarships and all manner of poverty-alleviation programs. But now that the China market matters more to them, it appears that China couldn’t care less. Increasingly difficult China-market access is the immediate worry. But many are looking ahead and losing sleep over expectations that their onetime partners are morphing into predators and that their own technology and know-how will be coming back at them globally in the form of cut-price products from subsidized state-owned behemoths.

Some would say that this paragraph sums it up nicely, and that what is described above amounts to a big China bamboozling.

For me, while I agree that there is a general negative vibe going on, what I am consistently surprised by (perhaps disappointed is a better term) is that people really will fool themselves into believing anything about China at any given time, and when you look at the recent case of Google.. it is really hard to sympathize on some levels as their executives came in believing they could change the structures of the market.

It is a belief that has lead many bad retail strategies, joint ventures, and investments, and it is a large reason why I typically advise an organic growth strategy.

But, that being said, has the situation changed? Has a new day dawn upon China? Have Westerners (firms and managers) outlived their useful shelf life?

Or is this another case of anecdotes clouding sound judgment?

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