What foreigner get wrong about Chinese Business

RELATIONSHIPS are VERY IMPORTANT WHEN IT COMES to BUSINESS IN CHINA. BUT, WILL THAT DIMINE AS RULES OVER TADE AND INVESTMENT BECOME MUCH STANDARDISEDER?

Yes and no. China is moving from being a relationship-dominated society to one that is governed by law. Because there were not many rules in the past, relationships were important for doing business. In the last 30 years, I have seen a shift from a society that valued relationships to one where you must follow the rules.

This is a good thing. However, Guanxi, or relationships, are still important in business. This is likely true in China as well as other countries around the globe, including the UK.

Sometimes, you have to know someone in order to knock on doors. But if you don’t have the skillset or the knowledge to actually do the work then knocking at the door is meaningless. The skillset is more important than the relationship, I believe.

China’s legal system doesn’t seem to be moving as fast as China’s economy.


Since I began to study China’s legal system, it has changed a lot. These developments are amazing and I’m glad to have helped shape the legal system. On the other hand, I completely agree with you. China’s legal system doesn’t seem to be moving as fast as China’s economy. It’s slower and farther behind.

China’s central government has many levels of hierarchy. This means that there are many inconsistencies in laws and regulations. It is difficult to keep up with economic development in China because of this.

These inconsistencies among different bodies and locations make the lag worse. This also impacts enforcement. Enforcement is just as important as the rule. Enforcement is greatly affected by inconsistencies.

While the law should reflect the economic development, it should also guide the economy in certain ways. Chinese law is not yet there, I think.

WHAT ARE THE BIGGEST INVESTORS AND BUSINESSES ABOUT CHINA?


We hear a lot of things about China stealing IT or China wanting to dominate the world with the Belt and Road. But I don’t see these things from the micro-aspect perspective I use in my day to represent clients.

If we discuss the transition from a dominant society to a rule-of-law society, my personal view is that many multinational companies and foreign companies don’t appreciate how much has happened.

Many Chinese investors forget the basics of doing business in China. While Guanxi is often referred to as the most important thing, they frequently underestimate its value and make mistakes that lead them in the wrong direction. They believe that having guanxi in one place will make them successful, but they neglect to research the industry and company in which they are located. If an agency or official promises preferential treatment it is probably not in compliance to central government laws or rules.

Many companies are still being caught because they don’t follow the same basic due diligence in their home country.

Similar to the British, US, or European companies that are approached by a Chinese company, I also see disappointment. Chinese companies are often reluctant to ask basic questions when they want to invest or acquire. Although they may spend many years in negotiations, they don’t know if the company has the necessary government approvals or have enough cash. There are many miscommunications.

Many companies are still being caught because they don’t follow the same basic due diligence in their home country.

WHAT SECTORS ARE THE CURRENTLY OF HIGHEST INTEREST FOR INVESTORS.


The government encourages both outbound and inbound investment in tech companies. The Chinese government supports large industries like fintech and other TMT [Technology, Media and Telecoms] and the life sciences. Renewable energy is the other sector. Renewable energy is not energy, but it is a large area of outbound investment.

It was revealed that the Chinese government had discussed opening up new manufacturing investments to foreigners at the Congress. This is a huge step forward. We will have to wait to see the details.

BRITAIN LOOKS LIKE IT WILL LEAVE EUROPE. DO YOU THINK THAT THE UK OFFERS OTHER OPPORTUNITIES FOR TRADE AND INVESTMENT?


To be completely honest, I am very, very confused about all of this. Many Chinese investors were shocked by the outcome of the referendum. In the past, many Chinese investors in Britain thought that the UK and Europe were one country. Because of its familiar legal systems, capital markets, and legal environment, they saw the UK as a gateway to Europe. However, many Chinese investors stopped investing in the UK after the referendum because there was so much uncertainty. Many people are still uncertain whether to invest in the UK.

Long term, I don’t believe it will slow down Chinese investments in the UK. The UK is one the most important markets for Chinese investor and it is hard to ignore. It won’t make much difference in the long-term, but it will affect current investment. Globalization is something I really like. Today, business is so intertwined that it’s likely to become more intertwined as we move forward. Separation is not something I like.

WHAT OBSTACLES ARE YOU AFFECTED AS A LAW BUSINESS FIRM?


There are many things I could add. You may feel isolated if you are surrounded by colleagues or peers. If they want you to go to a pub or play golf, they won’t allow you to. There are many of these kinds of activities, but it’s not the main problem.

The glass ceiling still exists, I believe. My peers always resented a female lawyer when I began my legal career. I can still remember how I used to bring two male colleagues to important client meetings because I wanted to gain weight. It wasn’t possible to make enough of the impact by myself. The client asked me questions that I couldn’t answer, and I had to answer them all myself. It happened quite often back then. I dressed more like a western lawer man, adding large shoulders to my suits, and trying to speak like a man.

I can still remember the day that a client of mine, a successful businessmen, said to me: Jun, you should just be yourself. Don’t try to imitate your male colleagues. You can’t. Be proud of who you are. You can be happier and more successful if you are proud of yourself.

I took her advice seriously and discovered that gender doesn’t give rise to any advantage. Only your professional abilities can show you are competent.

WHAT INSPIRING ADVICE DO YOU HAVE FOR OTHER WOMEN DESIRED TO SUCCEED IN A CORPORATE WORLD.


The corporate world is very much like a law office. Although it is dominated by men, there has been a lot of change. I see more and better women working there, getting promoted and accomplishing great things. Although there are more female leaders, I believe it still is dominated by men.

To my female colleagues, I’d like to tell them that we are just as smart as our male counterparts. We work hard (my view is that most females work twice as hard as men), and are as intelligent as our male counterparts.

Corporate women can offer a new perspective. We are all unique, so believe in yourself. Asian females, especially, are often shy and won’t tell others how great they are. They should know that it is okay to share what a great job you have done. Do not be afraid to share what you can do. Believe in yourself, and you will make a positive impact on the world.

The same goes for men. The core value of sustainable development and the corporate world is creating an environment that allows everyone to achieve their full potential. It is the foundation of tomorrow’s success. I want to tell my male colleagues that you play a vital role in this. All of us have to put in the effort. I believe we can all make a difference together. Making women equal is dependent on men’s contributions.

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