Wednesday, September 26, 2007

‘Little Red Book of Business’

Posted By on Wed, Sep 26, 2007 at 12:00 AM

The China that James McGregor describes in One Billion Customers isn't the China of Associated Press photographs, bustling street scenes briefly broadcast on television news programs, undergraduate Eastern philosophy courses, Nixon-era Doonesbury chicanery or fortune-cookie koans. Nor is it the intensely mystical and deeply personal China Susan Sontag fetishized in her '70s essay, "Project for a Trip to China":

Chinese forms placed about the first living room I remember (we moved away when I was 6): plump ivory and rose-quartz elephants on parade, narrow rice-paper scrolls of black calligraphy in gilded wood frames, Buddha the Glutton immobilized under an ample lampshade of taut pink silk. Compassionate Buddha, slim, in white porcelain.

Rather, McGregor's China is a hustling, money-grubbing, resource-sucking nation that's a big fat target for ambitious investors and a potentially formidable political rival. Written with hapless American businessmen in mind, Customers offers a look into the Chinese mind-set, tips on how to court and exploit it, and a litany of cautionary tales summarized in tidy "Little Red Book of Business" bulleted lists — perhaps a time-saving measure for executives who, presumably, are too busy making deals, pricing yachts or scanning The Wall Street Journal to complete the book. But McGregor, a former Journal bureau chief and Dow Jones exec who's lived, reported and made business in China, translates his insider's perspective into something evenhanded yet riveting.

The vast majority of Chinese corporations are government-controlled enterprises subject to the whims of competing bureaucrats. Because employees aren't generally paid well enough to survive, bribery is frequent. State laws are commonly bent or skirted, if doing so is profitable enough to be worthwhile for everyone involved. Deals with foreign companies (and such deals are legion) universally center on what's best for China, specifically, how much technological know-how and expertise can be extracted with the least amount of effort, expense or commitment. The cultivation of strong and valuable personal relationships with Chinese government leaders demands a level of high-maintenance foreplay, including late-night carousing, gift-giving, long meetings and lots of joke-telling, in which most outsiders aren't prepared to participate.

"Negotiations can take forever and the resulting agreements can be promptly ignored," McGregor writes in his preface. "Corruption is frequently the lubricant that greases the wheels of commerce. Business in China has always been conducted behind multiple curtains and amid much subterfuge, and that hasn't changed."

While a lingering Communist mind-set endures, McGregor adds, a strong capitalist pulse beats beneath the surface: "I have never met a real Communist in China, somebody who believes in the abolition of private property."

It can be hard to separate winners from losers. A promising joint banking venture between Morgan Stanley and the China International Capital Corporation collapses due to vast differences in expectations, with the Chinese eventually giving business the American company thought it was guaranteed to its competitors at Goldman Sachs. By teaming up, harnessing U.S. political will and employing Chinese-style sneak-attack tactics, Dow Jones and Reuters cannily fend off a monolithic, mid-1990s power grab from Chinese propaganda agency Xinhua that would've sent less experienced companies packing.

Rural farm peasant Lai Changxing's mercurial entrepreneurial spirit allows him to amass considerable wealth and buy influence; when he pushes his luck and carries illicit smuggling operations too far, he becomes the poster child for an official's anti-corruption crusade. Lai seeks asylum in Canada, but the repercussions are considerable: The Chinese government imprisons and executes dozens caught in the tangled web he wove. Reading this book makes you wonder why anybody would seek to do business in this snake's den.

The answer is the book's subtitle. China is one of the world's few remaining relatively untapped markets, what McGregor describes as "a startup and a turnaround." The country struggles between opening itself up to an international community, one that frowns at its abuses of human rights, and continuing to close itself off from outside interference. This new China is a schizophrenic work in progress. McGregor's book merely represents the first chapter in its story.

Raymond Cummings is a book critic for Metro Times. Send comments to letters@metrotimes.com.

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