The Eastward Expansion of Capitalism

China impacts every business on the face of the planet. A billion people with the purchasing power of an evolving middle class create an economic frontier for B2B companies supporting the eastward expansion of capitalism.

At a recent China Business Council meeting of the Metropolitan Milwaukee Area Chamber of Commerce, the overwhelming consensus among business leaders who successfully execute in the communist country is finding a Chinese national you trust.

The ideal person to work with is what’s known as a “returnee” to China from study or employment in the United States. Both cultures and business environments are understood thoroughly by this person, allowing a team to be built on the ground in China around deep bilateral knowledge. The biggest mistake companies can make is hiring an American on the ground in China.

But how does one know who to trust? A couple of books have been receiving more attention of late in the quest to answer this question. The Art of War by Sun Tzu and 400 Million Customers by Carl Crow are becoming must-reads for corporate leaders who seek an understanding of the Middle Kingdom.

“Many authorities contend that the Chinese have a genius for misunderstanding which works to their advantage in many lines…,” according to an excerpt from Crow’s still-relevant book published in the 1930s.

Crow also observed, “It appears to be impossible to foresee all the twists and turns that force majeure or the acts of God may take, and they invariably turn out the disadvantage of the party to the contract whose function is to pay the money.”

Those attending the China Business Council meeting agreed cause for caution continues today, but echoed the Chinese are “dying to work with us.” It’s a matter of finding those who understand how to get things done in a culture and business climate very different from capitalist rules of engagement. Though, one lawyer in attendance did say he sees increased willingness to structure and operate business in ways consistent with capitalistic strictures. Some of the Chinese rules of engagement are outlined by Crow in a recent National Public Radio story.

Crow’s recount of business in China is consistent with a culture raised on and indoctrinated for millennia on the strategic philosophies presented in The Art of War. According to many scholars, this is an extraordinarily important book in Chinese culture and required reading by those who hope to successfully understand the mind of China.

The advice it offers extends beyond war to insights into Chinese philosophy of life. Popular culture continues to leverage Tzu’s mastery of strategy through television serializations, comic strips and a growing number of Chinese and English language websites dedicated to spreading his philosophy.

For more modern resources to understand China, visit Deloitte’s Focus on China. Executives interested in fair trade issues should visit U.S.-China Economic and Security Review Commission testimony recently presented by business professor and author of The Coming China Wars: Where They Will Be Fought, How They Can Be Won Peter Navarro. Deloitte has regular podcasts discussing trends in China and Navarro’s testimony, while lengthy and challenging, presents some eye-opening perspective.