Don't just buy from China, sell to China if you would.

In 2007, China imported 2100 billion us dollar from the world. Yes, that is USD$2,100,000,000,000

Have you considered being part of that 2100 billion?

Private foreign exchange service is allowed now.

All these are happening one after another. China is making changes fast these days.

Foreign currency exchange used to be handled exclusively by banks. Today, two private companies got their license for this business.

Recall the private loan breakthrough few days ago?

This makes me think that China is taking away the power of monopoly from banks step by step.

Good news: small loan companies are allowed now. Bad news: Foreign companies can not invest in it.

It is said that starting in Sept., Zhejiang authority will accept applications for small loan companies.
This is a breakthrough!!

However, the company can not have any foreign shareholders. I am not surprised. However, rules like that have never stopped foreign capital in the past. You can find a Chinese to handle it for you. Or you can set up a company to control another company to control another company to invest in.

Figure it out and jump in!

When can private loans become legal in China?

Banking is tightly controlled by Chinese government. But recently there was a report by the central bank of China, suggesting a legal status for private loans. This can open up a new business niche for foreign banks.
Most private loans are for companies who can not get loan from Banks. The interest is as high as 200% per year right now. Yes, this is not a type. 200% is widely accepted in private loan market because banks are not lending them any money. Not because of bad credit, but because the central bank has direct control on how much each commercial bank can lend per quarter. Yes, planned economy still rules here.
But now, it seems China is going to loosen up a little. This is huge. We will see how it progress.

Antitrust Law in China

On Aug. 1st, 2008, China's own antitrust law went into effect. Some say it is a "new face of protectionism". Is that because every country's antitrust law is just "new face of protectionism"? If true, what is the point to say it when everybody already knew? If not, why think it in a negative way when China has one?
Some say "it could be used to protect national corporate champions while keeping foreign corporations out of the Chinese market" But look at what happened in the last 30 years, are there more foreign companies in China or fewer? Why would you think China wants to go back and kept the rest of world out?
And if an American company is getting into China by making itself a monopoly, why can't China keep it out?

67 thousand companies went out of business

Since 2005, People's Bank of China, the Chinese Federal Reserve, has been carrying out a plan to reduce amount of loans that private companies can get from Bank. It is totally working. Now large number of small companies are going out of business because of lacking of cash.
State owned business always get favorably inclined when applying for loans. So they don't really feel the pain. It is the private sector who is dieing from all the squeezing.
It is a good time to buy out those private firms in China if you have cash and business plans.

Is a translator all you need?

A few years ago, David, a friend of mine, came from America to China to meet his supplier in Beijing. His supplier speaks English. So my friend did not hire a translator. He had a meeting with his Chinese supplier the day after he arrived. We planned to have dinner with some mutual friends that evening. So I arrived at his supplier's office to pick him up at 4 p.m. sharp since he expected to finish up arround that time.
David looked frustrated. "Rebecca, I am glad you are here. Maybe you can help. I don't know why. We have talked for more than two hours. But I feel we were running around the core issue and just could not get into it. ", he said.
He quickly went through his agenda with me and explained to me that he wanted to decide on a feature list for the new products. We all sat down and I started to listen to their conversation.
It did not take long before I realize that David wanted to get the actual feature list done and his supplier thought this is just a meeting to exchange some ideas and the actual technical detail will be discussed sometime later. Therefore, David was trying to get into detail and his supplier just kept saying "...yes, that is good, we need to work on more detail of these features." instead of actually discussing the technical detail. I shared my observation with both of them and they suddenly understood why the conversation had been a little weird. David's supplier then scheduled a meeting for David to talk with his chief engineer and his marketing manager the next morning since the supplier is the general manager and did not handle those detail himself.

After we walked out the factory, David told me he did not expect this kind of problem at all since they both speak English. But I told him I saw this kind of issue all the time. Different business cultures have different ways of doing business. Although globalization has been a buzz word, culture doesn't change as fast as you wanted it to. Good communication is more than conversation in the same language. You need to understand how people are doing business in China even if you plan to get it done your way. You know what you want. But you also need to know what it is right now to figure out how to change it from its current state to your expectation.
Very simple, but hard to do.

China Business Law

Sometimes I feel lawyers enjoy making laws so complex that normal people have to get help from lawyers to survive the business world. If our legal system can improve like operating system, we can all handle our legal issues and make fun of lawyers.
But let's face the real world, you got to understand the local law to do business there. In China, the legal system is rather confusing. There are so many regulations, laws, guidelines. You would have no time to do business if you decide to figure them all out by yourself. And even if you figure out what the text mean, you still don't have clear image of what you can do because the big words are sneaky. When you have to deal with laws, you need professional help.

A friend was telling me a story early today, which reminds me again how important to have professional advice available to make big moves. An American company was in a join venture deal with a private company in China. This American company planned to buy 51% of this Chinese factory. The negotiation did not take long and both sides agreed on a deal. As part of the deal, this American company wired two million US dollars to this Chinese company for the 51% share before they found out the deal was not valid without local authority's approval. Now the money is in Chinese factory's account and the deal can not proceed.
It is amazing that someone would jump into a deal like this without professional accounting and legal advisers in his team. But these things happen. Maybe it is not a problem in the US. And the assumption that things work in your own country will work all over the world is dangerous.

What business people need to travel in China

Last Thursday morning, I was at Shanghai Pudong airport, waiting for a taxi. A guy came over and asked me which bus he should take for Yiwu which is the most famous market place for small merchandize in China. I could not tell which country he is from. His dark skin suggests that he may be from Africa. But I am not sure since Southern Asian can also have dark skin. His English was not good at all. I can hardly communicate with him in English.
Going to Yiwu is not a simple trip that I can tell him at his English level. After 15 minutes broken conversation, I had to give up. Poor guy. I can imagin all kinds of problems he is going to have before he makes to Yiwu.
Although it is not difficult to arrange a trip to Yiwu, it is for sure an adventure for a overseas business man/woman to figure that our by herself/himself.
I wish he had found 4 or 5 friends and contact me in advance. I could arrage the trip for them so easily.