//
you're reading...
Australian Current Affairs

Australians face perils by doing business in China


China Handshake

China Handshake

The perils of doing business in China have come into focus again recently, with allegations that staff from the British pharmaceutical giant GlaxoSmithKline paid $500 million in bribes over several years.

Four executives from GlaxoSmithKline were arrested in July, while its British-born head of China operations has been prevented from leaving the country.

There are now more than 40 Australians in Chinese jails – at least five of those are believed to have been jailed over commercial disputes.

The most high-profile case involved the former Rio Tinto employee Stern Hu, who was found guilty in 2010 of accepting bribes and stealing state secrets.

Earlier this year, the Department of Foreign Affairs and Trade issued a briefing paper, warning the jailing of Australians was putting considerable strain on relations with China.

Sinogie Consulting managing director Bruce McLaughlin says many of the people who have fallen foul of the law in China have wrongly assumed that business is still done as it was 20 years ago – when connections would go a long way to getting deals done.

“If anybody comes to you and says ‘Oh I’m really well connected’, without saying ‘I’m really good at making stuff’, or whatever it is that you want, then they’re selling you something you don’t need,” he said.

Hayes Knight corporate advisor Paul Dubois says foreign firms operating in China need to play by the same rules as they would in their home countries.

“I think you’re just as likely to get burnt on a business deal here in Australia,” he said.

“The important thing is, like everything, you’ve actually got to go and spend the time there. So if you go and want to just make money and have a quick kill in China, you’re probably going to end up losing.”

China full of scam companies that ‘don’t exist’

Mr McLaughlin says foreigners trying to do business in China often fail to do their due diligence – getting the right advice from lawyers and accountants, and doing background checks on the companies they plan to deal with.

“About a third of the companies that we look into don’t exist,” he said.

“Another third of the companies that we look into are not what they claim to be.”

Despite those risks, China is still an attractive destination for Australian firms.

Compumedics, which makes diagnostic equipment for sleep disorders, has seen 30 per cent sales growth in China over the past year and is now outsourcing part of its manufacturing to China.

Compumedics chief executive Dr David Burton says it has taken a long time to build strong relationships.

“We’ve had to really find the companies and we’ve done that through the knowledge and integration in the region,” he said.

“We certainly haven’t been able to do that through finding opportunities off the internet.

“It’s been a long process and it’s been testing runs in small steps.”

Martin Cooper, managing director of Sota Tractors, imports hundreds of Chinese-made tractors each year.

He says there are many cultural differences that can make business in China difficult.

“One thing which we’ve found in Asia, particularly in China as well, is that they will say ‘yes’, yes they can do it, and not because they want to lie or not tell you the truth. They don’t like saying ‘no’ to you. They want to make you happy,” he said.

“What you need to ensure is that the infrastructure is in place that when they say ‘yes’ that they can actually make something happen.”

Sota director Bruce Cooper says a mistake that many foreign firms make is to not visit China regularly.

“I think it’s a big mistake. If you’re in it for the long haul then I think it’s very important to go over,” he said.

“I know people who deal with China without ever visiting China. That’s something which is unusual to them and they say that. They sell to customers who haven’t ever visited and they can’t understand why that happens.”

Source: The Australian – Foreign firms flock to China despite business risks
 

About Craig Hill

Teacher and Writer. Writing has been cited in New York Times, BBC, Fox News, Aljazeera, Philippines Star, South China Morning Post, National Interest, news.com.au, Wikipedia and others.

Discussion

No comments yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

If you liked what you just read, click "Subscribe" to become a follower of the Craig Hill site. You will receive an email each time a new post is published.

Join 15,046 other followers

An archive of all my old posts

Follow me on Twitter

Most Recent Posts Post on My Blog About China: China News

Pentagon plans to improve airfields in Guam and Australia to confront China

Pentagon plans to improve airfields in Guam and Australia to confront China

The Pentagon wants to improve bases in Guam and Australia to counter China following a review of U.S. military resources around the globe. The Global Posture Review (GPR), of which an unclassified version is set to be released later on Monday, “directs additional cooperation with allies and partners who advance initiatives that contribute to regional […]

Cadence Column: Asia, November 29, 2021

Cadence Column: Asia, November 29, 2021

China faces a very serious and very real boycott at the Olympic Games. The Olympic Committee awarded China as the host country and claims that politics isn’t its business; other governments need to handle that. Boycotts are under serious consideration in the United States, Canada, Australia, Great Britain, and the European Union via Lithuania. If […]

China targets ride-hailing operator Didi for delisting in New York

China targets ride-hailing operator Didi for delisting in New York

China’s internet regulator has ordered the operators of a major ride-hailing app, Didi Chuxing, to delist from the New York Stock Exchange, in an ongoing government crackdown on the country’s technology sector, international media reports said on Friday. The Cyberspace Administration has ordered Didi Global Inc to devise a plan to delist, out of concerns the […]

US sends warship through Taiwan Strait in message to China

US sends warship through Taiwan Strait in message to China

The U.S. Navy’s Arleigh Burke-class guided-missile destroyer USS Milius (DDG 69) sailed through the Taiwan Strait in a routine operation on Tuesday. The transit sparked anger from the Communist Chinese government, which considers Taiwan its territory, and it characterized the U.S. warship’s actions as a provocative act. The U.S. 7th Fleet announced the USS Milius’ […]

How China is trying to turn the U.S. against itself

How China is trying to turn the U.S. against itself

As Congress advances a set of bills to protect against Beijing’s efforts to subvert American democracy, China is using our system of government to block and tackle. On November 12, Reuters reported that Chinese officials have been pressuring American companies, executives, and trade groups to lobby against the legislation, threatening to reduce their share of […]

Chinese geo-strategic expansion in the Levant: A case study of Lebanon

Chinese geo-strategic expansion in the Levant: A case study of Lebanon

As soon as the People’s Republic of China was established in 1949, China and the Middle East faced a series of challenges. In recent years, China’s influence in the region has expanded due to its economic interests in energy, trade, infrastructure construction, and diplomatic contacts with the region’s countries. This is linked to President Xi […]

The Chinese Communist Party still thinks it owns the future

The Chinese Communist Party still thinks it owns the future

A rising chorus of analysts now describe China as a “peaking power”—one that might take greater risks to revise the international order before its strategic window of opportunity closes. They cite the country’s aging population , slowing economy , and hostile external environment  as evidence that time is no longer on China’s side. The “fear of decline,” they […]

Chinese maritime militia threatens order in South China Sea

Chinese maritime militia threatens order in South China Sea

Hundreds of Chinese maritime militia vessels are operating in contested areas of the South China Sea on a consistent basis, according to a new U.S. think tank report that says this poses a significant challenge to “maritime order rooted in international law.” The Washington, D.C.,-based Center for Strategic and International Studies (CSIS), says that for […]

Cadence Column: Asia, November 22, 2021

Cadence Column: Asia, November 22, 2021

The world is not responding well to the so-called “plandemic”. The important thing is not whether the global disease, as said by Judy Mikovits to have been developed under the supervision of Fauci, was actually intended to do all this. The public thinks it was because governments haven’t work carefully to earn public trust. Even […]

Tackling Chinese technological advantage 

Tackling Chinese technological advantage 

“China has won the artificial intelligence battle with the United States and is heading towards global dominance because of its technological advances”. When the Pentagon’s former software chief Nick Chaillan made this claim, it felt as if the whole world had come crashing down. The whole episode gave rise to the debate about who’s ahead […]

%d bloggers like this: