Monday, June 13, 2011

Q&A on Doing Business in China

By Eric Jackson, Senior Contributor06/08/11 - 06:00 AM EDT

NEW YORK (TheStreet) -- I have been on a two-week trip to China since last weekend. Before I left, I asked several American colleagues if they had any questions they'd like me to ask the "real" Chinese about their perceptions of both China and the U.S.

On Monday, I met with a group of my followers on the Twitter-like SINA(SINA_) Weibo service. The event was informal and meant simply to be an exchange of ideas. There were representatives from tech firms, resource companies, and Chinese Internet firms.

Here is a summary of their comments to several of my questions:

Q: Do you worry about a U.S. default weighing on China or China's investment in U.S. Treasuries?

A: No. In general, they thought that the U.S. would be forced to take action in order to protect its own self-interests and those of U.S. Treasury holders. They also thought most average Chinese made no link between the U.S. debt and their own economic interests.

Q: Do you worry that there will be an economic crash in China caused by itself?

A: No. Americans don't understand that the Chinese take a long view to their investments. If their stocks were to drop suddenly, the Chinese would likely stick it out with the stock as opposed to Americans who would immediately sell it.

Q: Do you think the next Chinese president and premier will be more conservative or more permissive?

A: More conservative.

Q: What do you think of the way Jack Ma of Alibaba handled the transition of Alipay, negatively impacting Yahoo!(YHOO_) and Softbank?

A: Most educated people think that Jack Ma didn't do the right thing in the transfer. They can't understand why he would do such a thing. This has seemed very suspicious from the start.

Q: Why do you think so many American companies fail wheLinkn they come to China?

A: The most important point is that the U.S. company imposes a top-down management structure that is too rigid for the local management team. The companies which win are generally the ones who have given their team total autonomy to run their businesses the way they see fit for the local market. When the Americans put what they know has worked in the U.S., they tend to force local Chinese to follow orders, which isolates them.


[** This post is an excerpt of the full article, which is available on by clicking here. Free Site.**]

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