 The Six Represents? Why this awkward, seemingly grammatically
incorrect title? When former Chinese President Jiang Zemin coined his
original phrase, “The Three Represents”, he articulated the
means by which the Chinese economic miracle would balance with the needs of its society.
Here are President Jiang’s translated words that were later canonized
in the Chinese constitution: “The Three Represents are the development
trend of China's advanced productive forces, the orientation of China's
advanced culture and the fundamental interests of the overwhelming
majority of the Chinese people."
For nearly a century, it seemed as though China slept through the
advances of modernization. Near the end of the 20th century,
illuminated by “The Three Represents”, the Chinese proclaimed a
commitment to energetically moving the economy forward, while
respecting and preserving its 5,000-year-old culture, and meeting the
needs of the modern Chinese society. The last commitment is intensified
by the phrase “overwhelming majority”, arguably a precursor to the
evolution of a more democratic society.
Taking my collective experience spanning over two decades, I have
crystallized six areas of focus both the Chinese and Western side need
to understand in order to achieve success in business. Similar to the
Chinese Canon, these focus on commercial success, respect for culture
and partners, and defining the interests of both sides:
1. Enforcing Contracts
How Westerners view contracts largely contrasts
with the view of the Chinese. The Chinese have viewed a contract as a
flexible agreement that changes with times and conditions, and has
resulted in many disappointing and costly situations. Gradually, the
Chinese are accepting the Western concept, and, with the WTO in place,
an “international rulebook” rests on both sides of the negotiating
table.
2. Selecting the Partner, based on quality and respect
Western
companies need to perform exacting due diligence when it comes to the
selection of a Chinese partner, who should meet the same standards as
those in the U.S., plus possesses the ability to navigate the labyrinth
of the Chinese bureaucracy. Once bound, the partners must maintain an
open relationship based on candor and, most importantly, respect. This
selection often is the single most important decision to the success or
failure of any venture in China.
3. Protecting Intellectual Property
For the majority of Western
businesses this is not a major concern, as the forces of the market
play a greater role in their success by (a) aligning with a partner,
who may have risk capital invested and (b) creating an aggressive
first-to-market strategy. But in the East, for those technologies that
require protection, there are essentially two forces at work: (a) the
Chinese government has advanced by a generation in the past 5 years by
formulating and enforcing strict IP laws and, of course, (b) its
accession to the WTO, and Western ingenuity in withholding key elements
of any product being produced in China, so the partner or manufacturing
does not even hold “the keys to the kingdom”. In addition, for patents
and IP protection, it is always wise to have experienced legal counsel,
and many Western law firms have established a presence in China or can
recommend qualified Chinese law firms.
4.Leveraging the “3M Advantage”
The foreign partner can invariably add
three elements to any Sino-Western partnership: Management, Marketing
and Manufacturing know-how. China, for all its head-spinning advances
since Deng Xiaoping’s declaration in 1982 “to become rich is glorious,”
still lags far behind the West in two of these areas. In Manufacturing,
however, it is universally agreed that China has advanced a generation
in the past five years. In many
industries, the factories, workers’ skills, and quality of production
in China match or exceed that in the U.S. Management and Marketing,
however, continue to present a superb opportunity for the Western
business person willing to commit time and energy to China.
5. Repatriating Profits
This is a problem that many companies still
face, as the Chinese have constructed many enticing schemes to enhance
profitability. But having stranded income in China is a perplexing
issue that multinationals have confronted for years. Three legal means
exist, as well as a fourth in the future: allowing the Chinese currency
to float. Those means now available include: (a) application to the
banks and government for export of profits; (b) counter-trade of
products that can be purchased in China and profitably resold in the
West; and (c) legally funneling profits to a Chinese subsidiary wholly
owned by a foreign parent company.
6. Navigating the Labyrinth
The complexities of culture and society,
language, custom, food, business practices, work ethic—all part of the
Chinese mosaic—create perhaps the most challenging place in the world
for a Westerner to conduct business. From the 2003 SARS outbreak to the
tensions over Taiwan and North Korea to the stressors of its widening
economic gap, China presents as many challenges as it does
opportunities. Only change is certain in China.
For the Westerner, the approach to conducting business in China should
be based on common sense: always behave as though you are a guest in
the home of your Chinese hosts, listen more, talk less and do not be
afraid of periodic silences during get-togethers, and finally find
yourself an honest and capable pathfinder.
Just as President Jiang Zemin’s coined phrase lands awkwardly on
Western ears, the “Six Represents” may sound unmelodious, but they
pinpoint the areas of focus to minimize the risk and maximize the gain
of doing business in China.
Having traveled countless times to China since 1992 with dozens of
Western companies—both large and small—I can honestly say that every
trip seemed worthwhile. Although the majority of ventures may not
succeed in their China initiatives, no one can deny the looming
importance of the Chinese as the 21st century unfolds. Whether we
realize it or not, China influences our every day, wherever we may
live. The entire world knows that China has awakened.
 Gary L. Wolfson
Chief Executive Officer
Genesis Technology Group, Inc
www.genesis-china.net
Genesis Technology Group, Inc. is a business development firm that
fosters bilateral commerce between Western and Chinese enterprises.
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