China Business Blog and Podcast

The office of the United States Trade Representative (USTR) just released their report on the state of trade with China. Based on the way journalists, lawyers, consultants and others in the China Geeks Without Real Lives club have been effusing about the release of the report, you’d think this was the new J.K. Rowlings romp with Harry Potter. Nope. There might be a section on potions (Intellectual Property) and prestidigitation (legal enforcement), but this is all pure USTR prose.

For those interested in reading the report (and the reports on the reports), you can look here. As our friends at the China Law Blog have so pithily observed, we are all commenting on the report without having actually read the dang thing. To me, this says as much about the author as it does the reader: If they would write in a more exciting manner, I wouldn’t have to be hopped up on Red Bull Espressos to get through it in some state of consciousness.

My only comment at this point revolves around the places in the report that say “The Chinese Government has made a commitment to do such-and-such…” or “The Chinese Government will begin to regulate this-and-that more strictly…”

The “Chinese Government”? Who dat?? Despite what it might seem – and a reputation that proceeds me – I am not trying to be difficult here. I mean, I know they mean “the Chinese authorities” and, at some level, “the Party” and that saying “the Government” is a shorthand way of including all such powers here. But using such shorthand is mighty misleading because the “Chinese Government” can’t do anything here because IT DOESN’T EXIST!

The Chinese governing structure is – like Shrek’s onion – comprised of layers; and layers of layers. There are many points at which the Party’s rule is administrated: National, provincial, county, township/city, district and neighborhood (and I am missing some in there, I am sure). Often, administrative positions and people are repeated; for example, there will be a Party secretary at each level; a person in charge of land administration; someone in charge of communications (it is still called the Ministry of Propaganda here, a shout-out to less P.C. days in China). Each level is somewhat responsible to the one above it but each, in its own way, runs its own kingdom and has its own royalty.

To get anything done in China requires the cooperation – or at least the benign neglect – of many levels of the “Government”. Major props to the late Tip O’Neil’s universal observation that “all politics is local” – because, at some point, you will need to know who the local authorities are in your particular situation and you will need them on your side. Or at least get them to not say “no.”

A client of ours is very proud of their “connections” in the Central government in Beijing. They have spent a lot of time developing relationships (read “drinking like a sailor on shore leave”) with various departments and leaders. Given the opportunity, our client’s management (none of whom live here) will talk endlessly about the “great discussions” they have been having with said Central government leaders and bragging about their latest bai-jiu bacchanal.

However, four weeks ago our client was having a terrible time getting some of their product produced and shipped out of a manufacturer here in East China. They tried to get the assistance of their drinking buddies in Beijing and, despite many promises of “immediate action,” nothing happened at their East China supplier. Our client called us in to help. One of our senior guys, Daniel, went to the factory and spent a day or two there getting to know the local leaders – it was a state-owned factory, so their management were also local government leaders as well. Daniel listened to their grievances about our client (many of which were valid), broke bread and bottle with them, and got most of the issues solved … with the promise to solve the rest once the products were manufactured and shipped. What our clients “friends in the Chinese Government” could not do in months, a simple visit and many follow up phone calls accomplished in a week.

So when a report like this comes out touting what the “Chinese Government” is going to do, we should be encouraged that this is being discussed, but we should not start laying money on the fact that something is going to be done right away (or, if it is, that it will be done consistently across all of China). If you are involved in a situation with regulatory implications, I would encourage you to step back and assess just who you know and who you don’t know. If you don’t know people at the various local levels where your business is located, that’s where you should start working. The illusive “Chinese Government” is not going to help you out; they are not listed in the phone book because they don’t exist.

This entry was posted on Wednesday, January 21st, 2009 at 4:47 pm and is filed under China, government, law. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.