Teaching Comparative Government and Politics

Tuesday, August 18, 2015

Will "the ugly Chinese" replace "the ugly American" meme?

Political culture outside of China is different than inside China. (Remember, most Chinese companies are SOEs.)

Chinese companies face culture shock in countries that aren’t like China

Faced with slower growth at home and rising labor costs, Chinese entrepreneurs are seeking foreign markets as never before. But as they rush abroad, they are grappling for the first time with unruly trade unions, independent courts and meddlesome journalists. And for many, navigating the unfamiliar waters of multiparty politics and confronting the power of public opinion makes for heavy going.

As they venture into foreign democracies, many Chinese companies experience culture shock. Having made their money in a one-party state, where political connections are the key to a successful business and the rule of law is easy to sidestep, they are finding things just aren’t as simple abroad.

From the United States to Asia, Chinese entrepreneurs have a litany of complaints and have made a succession of costly mistakes…

[He Enjia, president of the Textile Enterprise Association of the Chinese Chamber of Commerce in Cambodia complained] “In the last two years, things changed in Cambodia.” He explained that factory owners used to be able to hire police to suppress striking workers. “Now it’s impossible. The influence of the opposition party is growing, with the help of the Western media.”

By some measures, outward investment from China outpaced foreign investment into the country for the first time last year. But abroad, where the public often demands greater transparency and courts enforce stricter environmental and labor laws, it is a steep learning curve for many Chinese companies…

[A]s China’s economy slows… companies are being forced to diversify abroad, to “play catchup” and learn new skills in order to survive.

It has not been plain sailing. Indeed, there are countless examples of costly miscalculations.

In the United States, Chinese companies are facing hundreds of millions of dollars in damage claims over drywall imported to rebuild thousands of homes in the wake of Hurricane Katrina; it is alleged to have emitted toxic gas…

In Texas, state-owned Aviation Industry Corporation of China (AVIC) is being sued for $7.5 billion by a former joint venture partner, Tang Energy, which claims it cheated on their deal to develop wind power — partly by creating competing businesses in the same field. It is something AVIC might have gotten away with at home, but not in the West.

“In China the state owns the enterprises, and it owns the court. So if you’re a state-owned company, you never have to worry about having a fair fight. And here they have a fair fight on their hands,” E. Patrick Jenevein III, Tang’s CEO, said last year…

All over the world, Chinese companies have faced a political backlash for bringing in their own workers rather than employing locals — and for mistreating the locals they do employ…

But Li Yi, secretary-general of the Guangxi province branch of the Chinese Chamber of Commerce in Cambodia, says Cambodia’s many nongovernmental organizations are a nuisance…

There are cultural differences, too. Chinese managers complain that Cambodians are not as hardworking as Chinese, but their heavy-handed efforts to increase productivity are not always successful.

In June, a Chinese construction site manager was reported to have screamed at his workers once too often for being lazy, according to the Phnom Penh Post. After their shift was over, a group of workers returned to the site at night and hacked the manager to death with an axe…