McGregor, a journalist and businessman, has spent over 15 years in China. He lived in China during the transformation of its economy. In One Billion Customers, he outlines his insights and commonsense lessons about Chinese Business Practices. It is an entertaining and an easy read book that can be used as a handbook by the foreign businessmen seeking to harvest in this new economy.
Having some investments in India, I closely monitor some specific sectors of Indian economy. Before reading this book, I was under the impression that both countries are in the same boat and their economies are open to the world due to the compulsions of a similar situation. As I read this book, I realize that there are more dissimilarities than similarities. The dimensions of the market forces and business landscapes are totally different. The mindset of people is entirely different. An encouraging observation is that one economy cannot become a threat to the other. They seem to me as complementary to each other. I will cover this separately somewhere else in the blog.
In this book, McGregor creates vivid images of some brutal events in the reader’s minds notwithstanding his humor in few other places. In one section, he mentions, “I looked Chinese justice in the eye at a death rally in Mangshi,…” and continues, “…the prisoners were taken to the edge of the town, forced to kneel next to one another, and shot in the back of the head”.
I should mention how well this book has been laid out. There are 8 chapters in the book. The first briefs the history of China’s integration into the global economy, tracing the efforts that brought China into the World Trade Organization in 2001 all the way back to 1793. In the next seven chapters, through separate case studies, he explains the challenges of getting into Chinese market and suggests some cautions in each step. These seven chapters are independent of each other and can be read in any order. Each chapter begins with an overview and ends with sections – what this means for you and a quick list of some tips in the name of “the little red book of business”, which I felt, is a must read for anyone who wants to do business in China. Initially, he devotes a separate section to introduce main characters in the book – Chinese, US and British government officials, Chinese and US business people, Chinese media and scholars, and some of the historical figures.
Besides being a useful primer on business, the book also sheds light on the bigger questions about China such as – can its corruption be controlled? He says – “At its core, Chinese society is all about self-interest. It is very strong on competition but very weak on cooperation.” In the chapter – Same bed, different dreams, Mr. McGregor tells the story of Morgan Stanley and the Construction Bank of China, who set up a joint venture Chinese investment bank. He explains how both investors had a completely different view of what the venture was supposed to be.
He also explains his struggles with the bureaucracy, especially with the top leaders’ level. In 1996, Xinhua, the official Chinese news agency, tried to muscle in on the hugely profitable Dow Jones and Reuters financial information business in China. He suggests that – You can’t ignore the government, but don’t sit and wait for approvals. Do your politics at the same time you develop your business. He sums up the legal situation in – the most carefully constructed legal contracts will easily die when politics go against them. He also warns not to trust the Chinese feasibility study. It would be normally created to attract foreign interest.
He makes an interesting observation. The Chinese learn quickly by imitating, following role models, and absorbing prescribed solutions for every problem. The trouble is that in modern China, crashing its way onto the world scene as a rapidly growing economic powerhouse, there are no role models, no prescribed solutions, and no one to imitate. This is in line with what Sage (Pacific epoch) said in Tuesday’s meeting. But he quickly asserts that the scene is changing. Higher education institutes such as BiMBA (Beijing) are focusing on innovative business management techniques to build a new future for China. At the same time, he suggests that for foreign companies building an effective Chinese executive corps, the single most effective technique is well-planned mentoring. The mentoring must include real projects in which they learn how to make decisions by doing research, talking to experts and gathering information rather than relying on their gut. He refers to the IBM-Levono deal as the best laboratory to study a blended Chinese and Western management model formed.
Overall, this book helped me to learn a lot about Chinese economy, people, culture and the general managerial issues. I learned the history of China’s economy, thereby understood the challenges and opportunities in front of us as foreign entrepreneurs if and when we enter the Chinese market. Sometimes, I felt, he was too critical of Chinese mindset. For example, he says “Chinese society is all about self-interest. It is very strong on competition but very weak on cooperation”, “China’s rush to get rich is accompanied by a deep distrust of the system and anyone outside one’s immediate family or circle of close friends. This has created a business environment that is steeped in dishonesty and in dire need of transparency and fair dispute resolution systems.” In my opinion, such a generalization was unwarranted. However, the book appears to be a product of a lot of research, hard work and experience. McGregor did this by learning the new language, culture and people. More importantly, for us, it defines the to-do’s and not to-do’s when entering the Chinese market. I would recommend this book to all of you even if you do not pursue doing business in China.