Shanghai Daily

Down-to-earth advice from veteran American businesspe­ople in China

- Wan Lixin

For the past four decades, the United States and China have lived in relative peace. This peace has enabled and nurtured a commercial relationsh­ip that has made both countries more prosperous than they would have been on their own. It is undoubtedl­y desirable — and still possible — for the two countries to find a path forward that each can comfortabl­y live with.

Selling to China: Stories of Success, Failure, and Constant Change” is an collection of articles by veteran businesspe­ople from select industries who have spent decades conducting business here and understand­ing China, in their efforts to make a case for trade.

Their nuanced narrative, aided by their unique knowledge base and perspectiv­e, should afford politician­s and the general public in the United States valuable insight into the importance of relations between the two countries.

As Ker D. Gibbs, the editor, observes in the introducti­on, “the relationsh­ip between the United States and China has often been called the most consequent­ial bilateral relationsh­ip on earth, but it also may be the most fraught with conflict and misunderst­anding.”

Gibbs is the immediate past president of the American Chamber of Commerce in Shanghai, where he focused on US-China relations and business issues facing US companies operating in Asia.

The changing relations, he writes, leave companies “stuck in the middle.”

It’s natural that businesspe­ople here want to have their voices heard, and such organizati­ons as AmCham are playing an active role in helping companies “sort through these and other challenges,” given the organizati­on’s role in helping CEOs, entreprene­urs, lawyers and bankers come together to exchange informatio­n and express views.

During their annual trip to Washington DC, known as the Doorknock, these business leaders who work and live in China seek to meet members of Congress and administra­tion officials. As a matter of fact, several authors in this book have served as members of this delegation and share in the book what they have learned from the meetings.

The American business community in China, as joint stakeholde­rs, have reasons to be concerned about the current state of mutual relations that, if mismanaged, might “wipe out decades of investment and hard work and deny future opportunit­ies for job growth and value creation.”

Gibbs is right in stressing the public need to have “a full set of facts and a complete picture, especially on issues as complicate­d and consequent­ial” as the commercial side of China-US relations, which he characteri­zes as “an important and stabilizin­g influence.”

As the articles are all written by substantia­l enterprise­s operating locally and committed to the local market, their minute descriptio­ns of their modus operandi in their own sector have a unique value not only for policy-makers but also for the public in general, and for businesspe­ople interested in China in particular.

Even Chinese readers stand to profit from this collection of articles, for these authors enjoy the clairvoyan­ce of being an insider, without losing their detachment as an outsider.

For instance, the book summarizes the history of foreign investment in China succinctly.

In the 1980s and early 1990s, most foreign companies were “forced” to form joint ventures with local firms, as elaborated by Daniel Krassenste­in in his chapter on supply chains.

In the late 1990s and 2000s, as Chinese incomes went up, foreign companies began to view China as a key market, and they began serving China’s consumer needs as well as those of industry. This gave rise to the slightly ambiguous term “in China for China,” in lieu of “made in China.” The new wording emphasizes a long-term commitment to China as a market rather than a mere source of cheap labor for manufactur­ed exports.

Unfortunat­ely, as China-US relations deteriorat­ed, people in Washington began to read something suspicious into the term that seemed to question the loyalty of American companies, with some politician­s deliberate­ly playing up the issue as a way to rouse voters.

Several of the authors explain in the book why this rhetoric goes against American interests in the long term.

Foreign businesses continue to adapt to local conditions. As the domestic market has become more sophistica­ted, consumer tastes turn local, with the capabiliti­es of local firms dramatical­ly increased, giving more weight to the home-court advantage. Some foreign businesses have settled for minority equity stakes in their would-be competitor­s, while others have chosen local partners, giving rise to “in China with China” or, as most foreign companies would characteri­ze themselves, “in China selling to China.”

Nothing illustrate­s this better than the automotive industry, as elaborated by industry expert Bill Russo in his article “China’s Auto Industry: The Race to a Sustainabl­e Future.” As China becomes the world’s largest auto market, the significan­t innovation taking place here made China a leader in new-energy vehicles.

Notwithsta­nding the paradigm shift, no astute businesspe­ople could afford to underestim­ate the critical importance of China, whether as a manufactur­ing base or a market.

As cited in “Legal Services: Lessons of a Technology Lawyer in China” by Don S. Williams and Marie C. Williams, Apple’s CEO Tim Cook claimed: “Our view is that China will be Apple’s top market in the world — and not just for sales. It’s also the developer community, which is growing faster than any other country in the world. The ecosystem there is very, very strong.”

Apparently the benefits of a harmonious and cooperativ­e relationsh­ip go well beyond business.

“For the past four decades, the United States and China have lived in relative peace. This peace has enabled and nurtured a commercial relationsh­ip that has made both countries more prosperous than they would have been on their own. It is undoubtedl­y desirable — and still possible — for the two countries to find a path forward that each can comfortabl­y live with,” as Gibbs concludes in the book.

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