One of my pet projects is MyChinaStart. A China Directory chuck full of China related websites.
I have started an interview series with the people/companies behind the websites in and related to China.
The first interview is with Daniel Borin, one of the partners of EnjoyChina, the company behind the Enjoycard and the Enjoyclassifieds magazine.
Check out the EnjoyClassifieds interview
Sometime ago, back in March, I wrote up a fictional story about business in China, based on a story in the Dutch press.
Two readers added their own stories and these are some great examples of the pitfalls of doing business in [tag]China[/tag].
Read the stories of China Business Scams, and if you have any of yourself, feel free to share.
Something like this probably happened.
Employee walks in to the office of the CEO, forgetting to knock due to all the excitement.
Employee:
“Mr. CEO, I just got an email from a huge [tag]Chinese company[/tag] and they want us to do [tag]business[/tag] with them and soon”
The CEO’s blood pressure, hearing these words is rising. New energy seems to be flowing into his mind. This is his chance to expand, a chance to break open a new market, sell to multi-million consumers, lift his career to the next level.
But he keeps his cool.
CEO:
“What do they want? Do we know that company”
Employee:
“They invite is to come over to [tag]Guangzhou[/tag] and sign the contract. The amounts they are talking about are really huge. No surprise, as they have so many people there”
I never heard of them, but heck, this is a real opportunity
The employee chuckles after finishing this last sentence, this is really a no-brainer.
The CEO ponders a bit, he doesn’t want to show the employee he would rather be there yesterday.
CEO:
Ok, book the tickets, get me that book, [tag]Murdoch[/tag] recommended, what’s it called , oh right “10 Tips For Guaranteed Success in [tag]China[/tag]”, make some [tag]business cards[/tag] with those [tag]characters[/tag] and buy some presents.
A couple of days later they are in the plane. They had to postpone one day as the CEO went to the plastic surgeon to have an eternal smile fixed on his face. Always look friendly, he read.
Landed they find an impressive delegation waiting for them. Wow, the CEO thinks, these guys are serious. Outside a [tag]Buick[/tag] is ready to bring them to their 7 star hotel after which they are invited to an enormous banquet.
No business is talked yet, he knows about that, first get to know each other. He finally though has the chance to exchange business cards and he feels they really appreciate the fact he studies theirs for at least 5 minutes each.
The next day they visit one of the top notch offices of the [tag]Chinese[/tag] side. Again, Wow.
That evening he gets into a really good talk with the Chinese CEO. The[tag] translator[/tag] is a lovely girl he wouldn’t mind, no he is here for the deal.
The Chinese CEO explains that they are impressed by his company, want to buy whatever he has in stock. The Chinese CEO also explains that as a proof of faith from the foreigners side they like them to contribute to some of the cost they have made.
It seems a bit much, he thinks, but on the other hand it’s normal. This way the Chinese side will know that we are serious on doing business.
The CEO orders the employee to have a considerable amount of money transferred.
This is China, this is how it works, the deal is as rock hard as steel and if this it what it takes to tie up the loose ends, please. Compared what we’ll make on the order it’s peanuts anyway.
A contract is signed and on arrival back in [tag]Foreign[/tag] town, the board is waiting for him to congratulate him. We’re in, we’re doing business with China. Who ever said that doing business there is not easy is a fool.
A week goes by and they haven’t heard from the Chinese side as agreed. That’s China, he thinks, give them some time. Another week goes by and the CEO asks the employee to give them a call.
The Employee calls and hears.
“Sorry, the number you dialed does not exist”
The above is fiction but based on a story in [tag]Dutch[/tag] newspaper based on a warning on the website of the [tag]Dutch embassy[/tag] (only in Dutch)
Apparently they have realized in the provinces [tag]Guangdong[/tag], [tag]Yunnan[/tag], [tag]Henan[/tag] and [tag]Guanxi [/tag]that there is a China fever going on. Everything foreign wants a piece of the [tag]dumpling[/tag] and will throw overboard any lesson they learned during their [tag]MBA[/tag].
In a way it makes me smile.
Sources: Volkskrant (Dutch), Embassy of the Netherlands (Dutch)
A related story about doing business in China
Pictures: Dumpling 1 , Dumpling 2
With amazement I read about the IPO of Baidu and the way the price of it’s stock has been going up. China is hot, sure. Internet was very hot one time, it is pretty much mainstream these days but it seems to be getting hotter again. Internet and China combined makes bloody hot although it is hard to find any reason why this combination justifies so much heat.
These two factors are likely the reason that the stock of Baidu has been trading at $ 154,- ?
That means that “..Baidu, which earned $1.4 million last year, is currently valued at $5 billion (based on the $ 154,- price), raising the question of whether we’ll ever learn not to let greed get the best of us and whether this company’s shares are likely to trade below $100 in due time.” source: Investors.com
I screendumped a chart from Yahoo Finance.
I am no financial wizard but it seems like a lot of value given last year’s earnings. Hell, even this website maybe worth something:)
To read some quotes of more informed persons, read the nice list of quotes compiled by
The China Net Investor (China unwalled version), which all seem to point in the same direction… BUBBLE
Also talk starts to spread that Baidu’s market share might be smaller than published.
Additionally there are some copyright lawsuits in progress as well as some new ones are pending .
Originally I wanted to take this topic a bit deeper but lack of time leaves you with the above. Just a short conclusion. Next to the over valued price of Baiduand the small chance they will actually will be able to live up to all the financial expectations etc. there is something else investors may want to consider. Internet in China is perceived as media. The media are supervised by the goverment. Regulations are changed at least once every year. Then again, if you like to gamble, something which is not allowed on the mainland, I suggest “BUY”
Just read on Fons’ Blog that the Bank of China is bailing out the Industrial and Commercial Bank of China with some pocket money
China’s central bank has agreed to give the country’s four debt clearing agencies 459 billion yuan ($56.6 billion) to buy bad assets from top state lender Industrial and Commercial Bank of China, the China Securities Journal reported on Friday.
The four would buy the bad assets from ICBC as part of the process of cleaning up the bank’s finances before an eventual planned public listing
No doubt the listing will be a success.
Source: Reuters
Just listened to an audio interview (is that already called a podview..) by Pacific Epoch with Paypal China‘s country manager Jeff Liao.
To listen directly to the audio interview click here (mp3 format)
Interestingly enough they won’t charge anything directly in their Chinese version. They seem to want to get market share first. I am sure once they have that, charges will be applied.
The audio quality is not great (use your headphone) but for anyone interested in this kind of stuff it’s worth your time.
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