Thoughts on Business in China

Well, I didn't get to do this post before I left but I have a few minutes in HCM (Ho Chi Minh City) to get this out of the way. It was really interesting meeting the people we did from such different companies and industries. Again, we met with folks from the US Chamber of Commerce, Lowe's, Owens-Illinois, and Apple. They all have different views on doing business in China.

The US Chamber guys talked to us about how the central government wants to expand business from the coastal region and more into the interior of China. They talked about how the government is trying to improve the infrastructure and all that. On the other hand, Scott Jenkins from Lowe's told us how bad the roads and that they won't get fixed anytime soon. Very interesting to hear the academic/government version versus the man on the ground businessman version.

It seems that Lowe's and Apple are doing it right in that they are sourcing their products and not directly running a factory nor establishing a retail presence. Lowe's has no plans in the future to establish retail stores after watching the problems that Home Depot has had after buying a local company, I forget the name, and then realizing that what they thought they bought and what they actually bought were not quite the same. So they are now slowly and quietly fixing that and Lowe's doesn't even try that route yet. It's much more effective for them to be the middle men between Lowe's USA and the manufacturers. Apple is working the same way and it appears to be working well for them both. It seems that the business environment still has some maturing to do before companies can feel confident in merging with or acquiring Chinese companies. I don't know how long that will take but it looks like Lowe's thinks it will be a long time.

Owens-Illinois seems to have the hardest go of it since they have to deal with a lot of political issues and are much more in contact with corruption. It's an interesting contrast to Lowe's and Apple. Since O-I runs the plant in partnership with local people, they deal directly with the labor laws, the workers and their skill sets, or lack thereof, and the ramifications of running a huge plant. After working at the plant for one year, a worker is entitled to 1 year of sick leave. And they can just take it off when they decide to or when a doctor just tells them. Their concept of safety is definitely lacking from the West and can cause problems with workers getting severely hurt. Also, since the Asian culture is not of confrontation, many times Chinese workers or managers would be tasked to do something and go off and do it, with no follow up with the tasker to ensure they are doing what is wanted. So, if they do it wrong, than they have just wasted a lot of time. Another problem with running a manufacturing plant is that China has a law that no second hand equipment can be brought into the country, it has to be brand new. This is because companies were bringing in all kinds of garbage and effectively dumping it in the country.

All in all it was a great visit. The companies and the people we talked with gave us some great insights into doing business in China and many of the issues they have to deal with. As Scott Jenkins told us when someone asked him, it's like the wild west where you never know what you’re going to face and what fires you’ll have to put out that day. He loves his job and loves working like that. If someone would think about doing a job like that, they should take some time to really think about that as it takes a special kind of person to enjoy that job. Many people want some stability.