Notes from the Lemonade Mill
It’s too early to look for full-on hope just yet, but it’s worth noting that China, the US and Europe all have decent, mature leadership at the same time – for the first time in a long time. Let’s exploit this window of opportunity to lock in any gains we can before it’s too late.
There’s no guarantee that this relatively happy state of affairs will continue indefinitely. So before we start seeing the ‘Limbaugh-Palin in 2012’ lawn signs (Partnership for a Meaner, Crappier US), right wing factionalism in Europe and protectionist, and a more nationalistic, xenophobic PRC, business leaders in China would be wise to figure out the best way to insure that they don’t suffer from any international fallout.
How can individual business owners & entrepreneurs take advantage of our present rare state of affairs when politics outshines economics?
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1 - Establish your footprint early. If you aren’t in China now and are thinking about it, find a way to take incremental, low cost first steps. The same goes for existing businesses who want to safeguard their position or change their model. China isn’t likely to kick anyone out for holding a foreign passport, but they can make it a lot more cumbersome to start up a new WOFE or radically change your business model. Things are dull right now – the perfect time to start a slow, sleepy waltz with your favorite neighborhood administrator, regulator or planning office. Rules change quickly – bureaucrats move slow.
2 - Prepare for an uneven recovery now. You need two contrasting plans. A fairly pessimistic view is that the US is approaching a bottom around the halfway mark of this year, and China is probably still on the way down until 3Q or 4Q. A second view is that China’s dip is relatively mild and will start to reverse while the US is still down & out. Those are two very different economic scenarios, and entrepreneurs need to be ready with two strategic responses. Take the time to think about what a post recessionary world will look like for your business – then consider how to position yourself for uneven growth around the world.
3 - International relations aren’t necessarily getting worse, but they sure aren’t going to get much better. Give some thought to what could happen if relations do get worse. Issues to consider might include: less travel, no more firing or termination, less investment, slower approvals, higher administrative costs and stricter enforcement of existing regulations. How closely are you following those pro-forma business plans you submitted when you applied for your WOFE license? Is all of your paperwork in order? This is a great time to make sure you are in compliance with all the details, big and small, that set a Chinese bureaucrat’s heart a’ fluttering.
4. Secure first mover advantage in new areas of business. Prepare to exploit advantages that you gain simply from being here in China. Think about operating in a world where Chinese capital is flowing back to YOUR home country. Can you profit from Chinese FDI moving into the US or Europe? Can you help your partners access your home market? Can you act as a conduit for complimentary or even competitive investment from western businesses that are just now making a move into China? The future may not be global – it may be regional or bilateral. Think about ways to capitalize on investment leaving China and heading to your home market.
5- Don’t trash your gains. I’m hearing some outrageous stories about frustrated business owners having temper tantrums that will yield them momentary gains but cost them dearly in the long term (if they have one). Don’t overstay your welcome, rip off partners – and for heaven’s sake, don’t make enemies if you can avoid it. This is not a good time for hot-headed, emotional moves. This is a great time to lay low, get along and make new friends. In a bull market, there is always another buyer, supplier, partner, or job candidate coming down the pike. In slow markets people have more time on their hands – and some will use it to plot and gossip.