The quirks of doing business in China
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Kai Ryssdal: The Olympics start three weeks from today. And as the Games get ready to begin, a whole lot of business in Beijing is grinding to a halt. Hundreds of factories are going to be shut down to clear the air. Half the city’s cars have been ordered to stay home. It can be tough to turn a profit when the rules are changing like that. But here’s the thing, the rules in China always change. And business types who’ve been around the block know it. Marketplace’s Scott Tong reports from Beijing.
Scott Tong: (sound of a pizza parlor) The best pizza in town comes from a joint called the Kro’s Nest. So say the foreigner crowd.
Will Bernholtz: Green peppers, olives, pepperoni …
Store manager Will Bernholtz ticks off a fan favorite on the menu — the Kro’s Special. But starting this weekend, the Kro’s Nest will become an empty nest, by government decree. The restaurant sits right next to the heavily protected Olympic soccer stadium. Ergo, security risk.
Bernholtz: We have been notified through channels that we would be closing during the Olympics, because the Workers Stadium area is a safety zone.
The Kro’s Nest has no choice in the matter. So it stands to lose thousands of dollars in business throughout the Olympics.
Bernholtz: That’s one thing we’re used to here in China. In China, you have to stay flexible and be ready for the government to tell you that you need to do something differently. And you gotta cooperate to operate.
Cooperate to operate. Because in this Olympic season, security comes first. In fact, China brags that it’s built “the most strict prevention and control system” in the history of the Games. (street sounds) As of Sunday, every single car entering Beijing will get checked for outsiders. Large commercial trucks will be banned from the city center. And most billboards have been removed.
David Wolf: The landscape has literally been denuded of advertising.
That’s marketing consultant David Wolf. He’s not that surprised, because in his view, the rules in China always change. For instance: (sound of sewing machines) Factories that export once enjoyed big tax breaks, until they got taken away. And then restored again. Foreign investors, once wooed, now see many of their deals canceled. And the heads of Chinese state-owned companies can be here today, gone tonight. In each case, the central government has a higher purpose. But for the business community, abrupt shifts can create corporate casualties.
Wolf: China is the Vietnam War of American business.
Again, David Wolf.
Wolf: We’ve sent more young promising careers home in body bags than almost anything since the fall of Saigon. It’s kind of a morbid way of thinking about it, but it really is true. The people who come in body bags, who don’t get the rhythm of the way businesses is done here.
China veterans have developed a host of survival skills: Get good information on when the goal posts will move, as they often do. Explain to headquarters that China’s different; it’s an unpredictable emerging market that sometimes defies common sense. And, learn to count to 10. Try to relax. If all else fails, try what pizza maker Will Bernholtz does: When the rules change, just spout the party line. In Chinese.
Bernholtz: And it’s all like the Chinese say, wei renmin fu wu. It’s all in service to the people, so we at the Kro’s Nest are also taking part in that attitude.
Consider it a cost of doing very good business, in a country whose authoritarian roots are still showing.
In Beijing, I’m Scott Tong for Marketplace.
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