Clearing Misconceptions about China: Is it still worth it to do Business?

Although there are an increasing number of foreign brands coming to the China, Beijing will move to at its own pace. The fact is a number of unrealistic assumptions exists such as Chinese firms are all crooks or foreign businesses can’t thrive. here are some truths:

  1. Chinese Consumers Vote with their Wallets: Starbucks and other global brands are more popular than ever – or anywhere.
  2. Beijing Bureaucrats and Shanghai Shoppers:  Two Trains Running – Right at Each Other : The gulf between official industrial policy and consumer preference raises more questions than it answers.  There are two trends running head-on towards one another, and it’s not going to end well.

There are 3 possible themes for how the second part ends:

  1. The New Foreign Devils.  Beijing doubles down on the dangers of Western cultural influence.   Growing – and increasingly direct – pressure on international businesses attempting to access the Chinese market. Unequal standards for foreign and local firms will eventually make China the pre-glasnost Soviet Union of international markets.  On the surface, both MNCs and CCTV will pretend that an open economy exists, but in reality Western firms will start viewing China as an expensive niche market with prohibitive unofficial hurdles that will preclude most commercial efforts.
  1. The Home Plate Effect.  Large MNCs will be restricted and over-regulated, but under-the-radar entrepreneurs of all stripes and colors permitted to flourish as long as they do the right thing (i.e.:  follow local laws and don’t command too high a market share).
  2. Beijing declares victory and we all get on with business like it used to be. MNCs are still held to more stringent regulatory standards, but the headlines will be about big fines for corruption or food safety – not arrests over national security.

Whatever the outcome, the only thing we know for sure is that Beijing will move according to its own logic, for its own reasons.