Mar. 23, 2006. Review: One Billion Customers, by James McGregor

One Billion Customers, by James McGregor, reveals the shortcomings and virtues of doing business in China. The book is a collection of real stories, many of them describing foreigners doing business in China and how they dealt with Chinese business men and the Chinese government. The main purpose of the book is to enlighten businesspeople of what to expect in China, and more importantly, what not to do in order to survive. At the end of each section, McGregor summarizes the main points in his version of "The Little Red Book of Business." The summaries emphasizes many do's and don'ts that is expanded upon in each story, and offer practical business advice. The informational value of the summaries are very good, and should serve as a basic guideline for foreigners looking to do business in China.

The major strengths of the book are its detailed, yet concise sections entitled "What This Means to You" and "The Little Red Book of Business." These sections summarize the story and emphasize the major pitfalls or shortcomings that were made in the business dealings, and how to avoid them. For instance, McGregor's personal experience with the Xinhua news agency describes his company's (Dow Jones) difficulties in keeping the Chinese news service and government from putting him out of business. McGregor goes to great lengths to describe the meetings and interactions he had with the Chinese government, and points out cultural differences along the way that businesspeople need to take into account to be successful.

McGregor's advice to study Chinese negotiation stategies and tactics is excellent advice, especially given the fact the differences in negotiation styles between Americans and Chinese. McGregor suggests Lucian Pye's Chinese Negotiating Style as the benchmark in helping foreign negotiators understand how to use Chinese negotiation tactics. For the businessperson looking to enter the Chinese market, both McGregor's and Pye's texts are invaluable in offering competitive advantages and most importantly, a better understanding of Chinese business culture.

McGregor makes it clear that his experiences have led him to believe that the current state of China (in particular, businesses and government) makes it difficult for anyone except large multinational companies to enter the market. As McGregor explains, without the large brand name and pocketbook of a multinational corporation, small and medium size companies can be easily taken advantage of by the Chinese. Thus, McGregor explains that for entrepreneurs without the luxuries of a multinational corporation, it is wise to wait until better infrastructure is established in China before attempting to enter the market.

In contrast, after reading a few of the stories, it seems that McGregor has had very negative business dealings with China, and this sticks with the reader. In describing the corruption, the lack of infrastructure (both politically and technologically), and the way Chinese people do business and negotiate, McGregor paints a dismal picture of doing business in China. While his candid honesty is refreshing and welcome, McGregor seems content most of the time on bashing the Chinese for what they aren't, instead of offering unbiased opinions on the state of industry in China. However, McGregor does offer insights on understanding the Chinese business culture better as an American, and presents leadership examples (Bob Hitt, Austin Koenen) that serve as models and guidelines for American management.

McGregor presents the Chinese in a way that seems culturally insensitive, despite his efforts to offer advice on being culturally sensitive Americans doing business in China. McGregor seems to include too much personal emotions and experiences in describing the Chinese, however, it is understandable given the fact that he is sharing his personal business experiences and any frustrations that occurred as a result. Overall, this does not take away from the message of the book, but it does make doing business in China seem like a collection of bad experiences.

By including personal experiences as well as those of colleagues, McGregor offers a no-nonsense book of stories about doing business in China. The stories allow entrepreneurs to forecast and plan appropriate strategies and tactics in dealing with the Chinese businesspeople and government. The information provided by "The Little Red Book of Business" is probably most helpful for business people to understand. This information often times includes advice on how to deal with cultural differences, and how to use these differences to your advantage. In addition, McGregor offers to his readers the notion that as businesspeople, they should stand up for themselves and sometimes use Chinese negotiating tactics to gain respect from the Chinese. McGregor would argue that the Chinese need foreigners just as much as we need them to experience economic growth.

Overall, the book offers excellent stories and experiences for which to draw upon while doing business in China, or contemplating whether or not to enter the Chinese domestic market. By focusing attention on political issues in China, McGregor explains what to expect when dealing with the Chinese government. The summaries offer invaluable tips and advice, and should be used to establish a business advantage over Chinese counterparts. As McGregor explains, the Chinese respect businesspeople that understand them and their culture, and the tips provided by McGregor go a long way to help a businessperson from inadvertently offending the Chinese. The experiences in One Billion Customers offers businesspeople an excellent starting point in knowing what to expect when doing business in China.

Mar. 21, 2006. Good Management vs Bad Management

While reading "One Billion Customers," by James McGregor, one section really stood out to me. After describing the lagging CICC venture by Morgan Stanley and China Construction Bank, McGregor describes the management style of Austin Koenen. To the Chinese employees, he was "openhearted," and it seemed his style motivated his employees to work hard for him. All through Organizational Behavior, Professor Rami Shani emphasized the role that motivation plays in managing. Mr. Koenen's predecessors were unattached to the employees, and communication was largely difficult due to language barriers. However, Mr. Koenen was able to convey his sincerity to his employees, which made them want to work hard for him. It is not shocking that CICC was faltering prior to Mr. Koenen's arrival, and it is unfortunate that he was not able to lead the company further due to a fatal heart attack.

Yet, looking at the U.S. business environment today, I have a hard time naming any company that stands out as having good management, even among the most well-known companies. From what I've experienced and learned, only Yahoo comes to mind as a company that understands the role managers need to play in an organization. I read somewhere that between 50-75% of Americans dislike their job, and while that is alarming, it is not surprising.

The question is how many managers really know what they are doing? I'm sure they are competent enough to be managers, but are they capable to be leaders? How do you motivate your employees to work hard, and stay upbeat? How do you retain employees, because it costs so much to train new employees? I think I can say with reasonable certainty that a majority of the managers are not concerned with establishing a rapport with their employees, but are concerned with their personal payday. As a manager, the primary role should be to motivate and lead your employees. Be a mentor, not a dictator. Maybe it is more difficult than it seems, but I find it disturbing that the current business environment is what it is. I commend the firms that are managing and leading the right way, and I wish we could do more case studies of good vs. bad management in our MBA program.

Mar. 17, 2006. China's booming auto industry

Excellent article regarding China's growing automobile manufacturing industry:
http://www.nytimes.com/2006/03/12/business/yourmoney/12ford.html

I have always been intrigued by the automobile industry, and I think China has been fortunate to have so many foreign companies establish an infrastructure for them.

It is interesting to juxtapose the troubles of US auto manufacturers with the growth of Chinese auto manufacturers. At this point, I think both suffer from lack of creativity and innovation, however, China is not burdened with labor/union disputes compared to GM. The challenge for Chinese auto manufacturers in the future will be to establish an infrastructure that will allow for sustained growth. It seems that right now, Chinese workers are more than happy to work for low wages, but how long will that continue until the industry becomes developed?

Someone please correct me if I'm wrong, but I think Japanese workers and auto manufacturers also have strong union/labor ties. However, I think the difference between US and Japanese manufacturers has been in the innovation. You don't have to worry about trimming your workforce when they are producing products in demand. GM/Ford and also DaimlerChrysler need to begin designing products that are forward looking and ahead of its time. Out of the three, I think only Chrysler has recently recognized that. But I think it's too late for GM, and they probably won't be able to turnaround until they declare bankruptcy to clear itself of its debt.

I could talk all day about the auto industry, and what I think manufacturers need to do to be successful. If anybody has connections at an auto manufacturer, please let me know. Next to running a sports organization, my passion is in the auto industry.

Mar. 13, 2006. Art of War, by Sun Tzu

I was going through my stuff, and found my Art of War book and decided to read it again. It is a quick read, only about 130 half-length pages. In response to Peter Begley's comments on Starbucks (http://credoadvisors.com/blog/business-ethics/starbucks-new-rwanda-blu-bourbon-coffee/), I found an interesting quote from Sun Tzu's military guidelines: "One who recognizes how to employ large and small numbers will be victorious."

I think Peter's effort towards advocating awareness is commendable, but earlier I thought they were wasted because awareness by itself does not create change. However, the more I think about it with Sun Tzu's strategies, I think Peter is right. If after reading an internet blog, one would-be Starbucks customer decides not to buy anything from Starbucks, then I think it is worth it and change is being made. That one customer will tell ten more people, and if one of those ten people decides not to buy anything from Starbucks, and in turn tells ten more people, and the cycle continues, then suddenly what began from one person's internet blog becomes public awareness. So to Peter, keep doing what you're doing, and hopefully more people will catch on. For now, I will try to avoid Starbucks, and try to begin the cycle by raising awareness of those around me.

edit: By the way, I am not advocating the boycott of Starbucks just to boycott Starbucks. The real issues at hand are questionable Fair Trade practices, and the elimination of small, family owned coffee shops. I am not advocating small business for the sake of small business. If a small, family owned coffee shop engaged in the same practices as Starbucks, then I would not support them either. I feel that Starbucks has the power to change its image, but fails to do so because it will cut into profits. I am almost certain Starbucks can ensure farmers of its coffee beans are guaranteed Fair Trade level prices, but fails to do so because it would be an extra step and an extra dollar spent. Instead, Starbucks deals with middlemen and claim it offers them Fair Trade prices, but the farmers don't get the full price for their crop. That is what I have trouble with; marketing its coffee as Fair Trade, while the reality is that the farmers don't get what Starbucks say they do.