The New Chinese Economy & You
The Chinese economy is already starting to look a little more protectionist and inward-looking. If you need proof, take a look at Sunday’s FT article that quotes a directive from China’s Civil Aviation Administration,
‘It also exhorted domestic airlines to unite and develop together “to form a ‘fist’ in the face of international competition” while avoiding competition with each other domestically.’
It’s starting to look like a Red Christmas in China. What can you do to give your China-based company a fighting chance in the new, redder China?
How nationalism-proof is your company? Ask yourself these five basic questions.
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1- Is your HR policy going to help you or ruin you in a more sanguine China?
Bamboo ceiling
Are the Chinese in your firm making big decisions, or do you think they are lucky to have even basic authority? If your Chinese employees are limited to clerical staff or building maintenance, then you are probably on the wrong side of the trend on this one.
Western companies that just happen to be in China
Would your company look a little TOO at home in The City or Boston? Is your business’ raison d’etre to service the well-paid European expat? If your org doesn’t even HAVE Chinese on staff who can handle upper managerial functions like hiring, sales or negotiation then you are very vulnerable to the whims of a reddening China. The days of selling to China’s expat community are becoming increasingly numbered.
Double counting
Are you counting that Singaporean salesman as a Chinese when the clients want a Chinese salesman and an expat when they want an expat? A – You’re not fooling anyone, and B – that will be the first guy to turn on you.
2- Phantom leaders
Those of you that HAVE sufficient numbers of middle management local Chinese should be on the lookout for local managers who feel they can your job better than you can. Since that includes just about every local manager in China, you can see how quickly this may get ugly. Try to identify the local hire who feels he’s been unfairly deprived a position or responsibility that an expat or overseas Chinese manager got instead of him. Also try to be aware of who the low level staff and line workers go to when they are upset. These are the people who want to see you dead. Well, some of the people.
The size of the expat community is dropping quickly in Shanghai and other international cities in China, and that’s going to continue as head-count freezes and localization policies do their work. You can’t reverse the trend, but you can stay out of the line of fire for as long as possible.
3- Festering resentment — Did you accidentally cause a trainee in the shipping department to ‘lose face’ sometime in the spring of 2004? Congratulations — you have festering resentment lurking within your organization. Like dry rot or radon, Festering Chinese Resentment (FCR) is a little-understood and largely invisible force that results in expensive, long-term structural damage that is very hard to fix permanently. The good news is that it can only cause serious problems for your organization in the unlikely event that Chinese masses spontaneously turn militantly anti-Western. The bad news is that this is scheduled for late March, 2009.
4- Super luxury / bad for China - Is your product or service considered bad for China? Does it strike the Chinese as decadent and gross (i.e.: too many weird forks)? Do Chinese people consider your business either unnecessary, intrusive or to be in direct competition with local traditional businesses? The funny part is that local Chinese will find nothing at all ironic about planning the boycott or spontaneous anti-western/brand demonstration on Nokia phones while sitting at Starbucks or McDonalds. After that, the humorous aspect of negative brand buzz goes flat in a hurry.
5- Legal gray areas – Are you in a legal business, or a ‘not illegal business’? ‘Not illegal businesses’ are great for bull markets when they help facilitate the flow of funds sloshing around. Unfortunately, they quickly turn into ‘not approved businesses’ when things get leaner. Think hard about your basic business model and make sure it’s bureaucratically bulletproof. In China, bureaucrats are the shock troops of a trade war. They live for this moment.