International Law

Foreign Companies In China: A Chasm Between Big And Small.

By Dan

David Wolf is someone who just "gets" China and I lap up what he writes about it and I nearly always agree with it. He wrote something the other day on his Silicon Hutong blog to which my first reaction was along the lines of "amen brother, I need to write on this." What he wrote was the following:

Interesting report provided the viewpoint you want is that of Fortune 500 companies doing business in China. Most of my clients are in that category, but I've also discovered that viewing the China operating environment through that filter does not offer many forward-looking insights.

By contrast, the challenges that face SMBs and foreign entrepreneurs in China are massive, arguably more indicative of the regulatory climate as a whole, and are largely ignored by groups like AmCham and the U.S. China Business Council. The next time somebody wants to do some research on business attitudes in China, ask the little guys. You would be amazed how different the picture is.

The report to which he was referring was the American Chamber of Commerce's 13th Annual Business Climate Survey, which is nicely summarized here. No doubt many of the concerns brought out by the survey do resonate with SMBs/SMEs in China, such as IP protection and the discrimination they face as foreign companies. But other issues are, near as I can tell, pretty much non issues for SMEs. For example, both the survey and the media have made a big deal out of China's indiginous innovation policy, but only one client of ours has ever even brought it up with us and that is a company that sells almost exclusively to governmental entities. 

I am absolutely not criticizing the survey (which is, as always, incredibly well done and informative), but I do think it important to keep in mind that the Fortune 100 and the SMEs do, in many instances, operate on entirely different planes in China. 

What differences have you seen between how small and large companies have to operate in China?

Full post as published by China Law Blog on March 30, 2011 (boomark / email).