Apr 4, 2006

The high cost of doing business in China

Mark Kitto started a string of successful entertainment magazines in China.
I had fought off attacks from jealous rivals and been investigated by every bureau with the slightest connection to publishing, and by many who did not: nine in total. I had paid over 1m yuan in fines, and who knows how much more in administration fees to government "agencies." I had been accused of being a pimp, a China "splittist," a Falun Gong supporter, a pornographer and a spy. My staff had been extradited, my office computers confiscated, and my magazines impounded at the printers. I had got them all back. I had been through eight government publishing partners before China Intercontinental Press, and half a dozen advertising agencies.

But that wasn't enough. Eventually, the government took over the business completely.
There is a theory about doing business in China that says—surrender first, then hope to win later. But virtuous intentions and signs of good faith here are taken as admissions of weakness. By forcing foreign investors to surrender, China keeps the advantage in its hands. The furore about Google and other internet companies is just the latest high-profile example.

The handicap for western business people is that we believe in fairness. But today's China does not believe in fairness. It believes in power and money.

I did not surrender my soul to China, as so many foreign businessmen have, but I did pawn it for a while. Finally I was invited to give up my long-term dream and accept whatever short-term benefit I could salvage from a system that I naively thought I could change just enough to acknowledge a foreigner with good intentions. In the end, I refused.

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