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When the economic crisis first hit the U.S. people assumed that foreign investors were going to go on a shopping spree for U.S. distressed assets immediately.  That hasn’t been the case.  What has been occurring however, is a slow and calculated pattern of purchases, in addition to the formulation of a couple of funds that will been insutitutional purchasers.

I suspect that as more transactions close, the trend will pick up — as long as the U.S. economy remains steady.   We will see.

seaport

Back when I was heavily involved in procuring products from China, Chinese manufacturers were scrambling to get their products into the States.  The payment terms on contracts were loose and flexible, providing much wiggle-room for the American buyers.   Long lines of credit and long-term consignment agreements were not out of the ordinary.  And now that the U.S. economy has taken a hit, these chickens have come home to roost.     

Automobile part and sub-part suppliers based in China have felt and are continuing to feel the pain of slow sales.  Textile and furniture manufacturers in Guangdong Province have been holding on for better times.  They should have protected themselves and not been so hasty to get their products exported– instead they signed contracts hastily.  Hindsight is 20-20, but at least Chinese exporters will now remember these simple rules when exporting and how to assess your buyer:

Know your buyer

  •  How many years has your buyer been in business?
  •  Who owns the company?
  • Who else has this company done business with?
  • What is the financial status of the company?
  • How much cash does the company have on hand?
  • How large is their line of credit?

  Contract Terms

  Make sure there is a written document which contains the material contract terms, these terms include:

  • the time, place, and form of payment
  • penalties and interest for non-payment
  • dispute resolution process (mediation, arbitration, or court proceeding)
  • choice of law provision
  • strict time limitations on quality claims
  • timely inspection and verification of quality of goods
  • a clause regarding attorney’s fees
  • a provision discussing the nature of the transaction
  • other defaults and ability to request financial disclosure

Determine Your Capacity and Risk Tolerance

  •  Think about what is a good credit limit for clients
  • Revisit the business relationship periodically
    • See if the people you trust have changed, or if the financial relationship has changed.
    • Give a call or send an email to see how operations are running

Good Job New York!

Sister-state relationships between governments are a wonderful way to promote educational exchanges, mutual business opportunities and cultural understanding.  Chinese cities and provinces are always setting up some kind of forum or cooperation to gain off of one another’s advantages. 

This trend is becoming increasingly popular among U.S. states and Chinese provinces.   Connecticut and Shandong have such a cooperation agreement in place, although Connecticut has not shown as much commitment and dedication to advancing the cooperation as Shandong, which betrays the fact that Connecticut does not get itNew York however does get it — or at least a couple of NY legislators do, which speaks volumes for the state. 

The theory is one which is based in economics.  Some sovereigns have an abundance of capital, others have an abundance of labor, and some have an abundance of high technology.  In order for a society to be optimally efficient, it may need to use or exploit the resources of another.

Unfortunately, the U.S. is starving when it comes to entrepreneurism.  People would rather have a steady paycheck than to pursue a business venture inherent with risk. Perhaps our American culture that places such a high value on academic degrees, high-paying jobs, and certain status symbols does not properly reward or encourage entrepreneurs. 

In China however, entrepreneurism is rampant.  The government provides subsidies, tax-benefits, and other economic incentives which promote entrepreneurism targeted to certain sectors.   And even if they didn’t provide such incentives, because the average per capita income in China is about 21,700 元 (roughly $3,200 USD) the Chinese have a different value set when it comes to needs and wants.  (That is not to say that our Beijing and Shanghai friends don’t love to shop — they do.)  But for the rural and average Chinese, a high disposable income is a dream worth dreaming — hence the high levels of entrepreneurship in China. 

Now just to be fair – entrepreneurs come in all shapes and sizes.  A Chinese farmer who spends $1,000 USD to buy livestock is just as much of an entrepreneur as a person who spends $80,000 USD in developing a new makeup line.   An entrepreneur is someone who organizes a business venture and assumes the risk for it, someone who can visualize the skyline while standing amidst the hustle and bustle of a city street.  Someone who can see the forest for the trees. 

20060508165126_bizarre_forest_for_the_trees

Most people have a talent, skill, or an idea that can be exploited for a profit.  As long as it is legal, why not try it?

Although China has made strides in the promotion and advancement of professional women in corporations, most executives in China are men.  Therefore foreigners that happen to be female as well, will find their China experience much different from that of your male counterparts. 

It is hard to say whether being a female while doing business in China is an advantage or disadvantage.  One disadvantage could be that your male counterparts don’t take you seriously.  However, I have not come across much of this attitude.  If you are a female executive with the authority to execute contracts and negotiate on behalf of your organization, your signature will hold just as much weight as it would if you were male. 

In retrospect, I have never felt as though a transaction or matter was not being taken seriously, or I was being treated unfairly or with disrespect by male counterparts while doing business in China.  This is not to say that it doesn’t happen.  I am sure it must.  But perhaps it is different for foreign females? 

My advice for women looking to do business in China is:

1) Remain professional.  I cringe whenever I see a foreign woman falling victim to 白酒, or some other alcoholic beverage.  If you can’t or don’t drink, don’t decided to start while in China.  You won’t be able to keep up with your male counterparts, and in the end a drunken female is the epitome of being unprofessional.

2) Be yourself.  There is no need to wear a pantsuit to each meeting, nor a turtleneck in July.  Whatever your would describe as business attire in the U.S. should work there, but use your discretion.

3) Show your skills.  Obviously if you are doing business in China you are no slacker.  Show your substantive skills, intelligence, and ability to get the job done and you will go far.  Unless you are trying to save face for a superior, there is no need to hide your talent and your successes.  Ultimately, it is these qualities which will make your transaction a success.

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I just realized from my last post, that I spoke about my sons (Kai and Ming) and never really formally introduced them.  This pic is a bit dated, but is one of my favorites as it shows them at play.

Our household is bilingual so they understand both Chinese and English.  I think it is really important for them to be just as familiar with their Chinese roots as their African-American roots.   When they get older, should they decide to get involved in cross-border transactions, they will have full knowledge of both languages and both cultures.

我的家在东北

Everytime I watch this video I think about my winter Harbin wedding and how freakin’ cold it was.  I more so think about how my sons will react once they get a bit older and I take them to northern China to my visit my husband’s family.  My father-in-law really does dress and look like the older men in this video and there really are kitchens in the ground. 

The older one has been to Beijing before, but a trip to northeastern China is a totally different experience –should be fun.