China's sure-footed lurch into a capitalist society

Tim Clissold's book, titled "Mr. China" in the US distribution, is an interesting account of ten years (roughly 1985-1995) of the author's experience visiting factories all over China and investing in about forty of them. Clissold and partners established one of the first foreign private equity firms in China and invested approximately $500M in controlling interests in joint ventures with apparently unimpressive returns; it is not clear how much of the original investment capital put up by investors (primarily US pension funds) may have been returned.

The book is a light and entertaining read featuring some funny comments such as these examples: the localized version of flavored condoms might be spicy bean curd, the image that investors might have to take their dividends in shampoo like some factory workers had to accept their wages, and the government trade representative accusing the investor of "talking in dog farts."

The major Chinese cultural themes highlighted in the book are indirectness, ambiguity, lack of transparency, and a different outlook on theft and morality in dealing with others, especially outsiders. The Chinese culture is portrayed as being quite different from Western cultures: speech is elliptical and metaphorical, not direct; infinite reserves of patience are required to wait out bureaucratic and regulation-heavy processes and saving face and giving others the opportunity to save face is critical. The government and the communist party wield control through rules and regulations that they may not even know themselves and which may not communicated externally to those being regulated. The relationship between the government/party and the budding business community is that business people/entrepreneurs generally look down on the sinecured and possibly corrupt government/party officials. One further challenge to business is the absence of a functioning and trustworthy legal system.

The book does an excellent job of showing exactly how different and much more challenging doing business in China was the early 1990s than doing business in the US or Western Europe. Some people would say "Forget it, that's way too hard" when presented with these challenges while others, like the author, grabbed the opportunity. Clissold's firm initially went about matters in the ways of their Western cultural background and met with less than successful results until they switched to more of a Chinese approach which understood and responded to the cultural business challenges more locally; for example, instead of depending on the bank to freeze accounts under dispute, the firm moved the money to another account first.

The implication of Clissold detailing how business was being done in China in the 1990s is the implication for any interaction between different value systems. As with any communication, those who receive and understand the other party and meet that party in their words, body language and cultural values will succeed. The world may or may not be going to brown, the increasingly homogeneous globalized poli-econ-social landscape of work, life, consumption, enjoyment, dreams and values, but chameleons who "speak local" will always have value.