One Billion Customers: Lessons from the Front Lines of Doing Business in China » (Reprint)

James McGregor is well known and respected in Chinese business, political, and media circles. A Mandarin speaker, he has served as a key adviser to both the U.S. and Chinese governments. As The Wall Street Journal's China bureau chief following the 1989 Tiananmen Massacre, the chief executive of Dow Jones' China business operations during much of the roaring 1990s, and a venture-capital investor during China's dotcom boom, McGregor has negotiated every avenue of the labyrinth that is business in China. He is also a former chairman and a decade-long governor of the American Chamber of Commerce in China. He is a senior counselor for APCO Worldwide, and is member of the Council on Foreign Relations; National Committee on US-China Relations; International Council of the Asia Society; and serves on a variety of China-related advisory boards. He and his family live in Beijing.

Companies from around the globe are flocking to China to buy, sell, manufacture, and create new products, but as former Wall Street Journal China bureau chief turned successful corporate executive James McGregor explains, business in China is never quite what it seems. One Billion Customers offers compelling narratives of personalities, business deals, and lessons learned, creating a coherent pictures of China's emergence as a global economic power with a dog-eat-dog business climate that has turned bureaucrats into billionaires and left many foreign business executives with their pockets turned inside out.

Soundview Executive Book Summaries

Lessons From The Front Lines Of Doing Business In China
With a population of 1.3 billion people, China offers companies from around the globe a massive market for their products and services. According to former Wall Street Journal China bureau chief and corporate executive James McGregor, nothing about doing business in China is easy. In One Billion Customers, McGregor presents the stories, personalities, business deals, and lessons learned that can help businesses gain insight into how China really works.

McGregor explains that the consumer market in China has the potential to be larger than North America and Western Europe combined. In recent years, he writes, this sprawling country "has surpassed Britain as the world's fourth-largest economy." China has not only become the world's largest market for electronic appliances, but it now consumes 25 percent of global steel and 30 percent of cement.

Negotiations and Agreements
Why is working with China so difficult? McGregor explains that its laws are often only the law when they benefit China. He writes, "Negotiations can take forever and the resulting agreements can be promptly ignored." With an underlying reputation for corruption and secrecy, he adds, Chinese partners, customers and suppliers have a reputation for stealing technology and trade secrets from foreign companies. Why do outsiders fail in China? McGregor writes that foreign executives often get "run over by their Chinese competitors, the Chinese government, or their Chinese partners — or sink themselves through various combinations of unrealistic expectations, impatience, and lack of common sense."

To show outsiders what it is like to do business in China, McGregor offers the details of how specific business deals either worked or failed, and describes the actions of those involved on both sides of these deals, and how politics and prejudices affected expectations and outcomes. Through these stories, he describes the aspects that have both frustrated and rewarded outside businesspeople.

One Billion Customers is unique in its approach to delivering its business lessons. At the beginning of each chapter, McGregor introduces the players and the situation he is about to describe, and provides an overview of the context in which they find themselves. Next, he tells the story that unfolds as a narrative. Each ends with a summarization of what the preceding events mean to the reader, and how their lessons can be used to improve business conducted in China. Honed while working as a journalist and businessman during 17 years in that country, McGregor's easy-to-read style and first-person perspective make his observations highly digestible, timely and pertinent to readers.

Startup and Turnaround
McGregor begins One Billion Customers by pointing out that China is "simultaneously the world's largest startup and the world's largest turnaround." After 2,000 years of continuous imperial rule, and a "crippling encounter with communism that left an impatient, hungry and hardworking population determined to get rich and regain its rightful place in the world," McGregor writes that China presents opportunities and challenges to global businesses on a range and scale that have never been seen before.

To help businesspeople capitalize on the stories he tells, McGregor concludes each chapter with a collection of tips called "The Little Red Book of Business." In these sections, he boils down the fruit of his knowledge into several bulleted points that describe exactly what can be done to succeed in China.

Why We Like This Book
One Billion Customers is filled with a fascinating collection of valuable stories gleaned from numerous interviews with those on the front lines of China's rise to power. By offering a deep look into the minds of the Chinese people and their business practices, McGregor helps outsiders grasp the fine details that can either make or break deals with their Chinese counterparts. Full of great writing and international intrigue, One Billion Customers delivers a wealth of information and advice. Copyright © 2006 Soundview Executive Book Summaries

Map viii

Cast of Characters x

Preface xviii

Introduction - A Startup and a Turnaround - With one foot firmly in the past, and the other stepping into the future, China is simultaneously the world's largest startup and turnaround. - 1

1 - The Grand Bargain - Two hundred years of foreign domination and duplicity have left a residue of suspicion and distrust. Understanding that history is essential to doing business with the Chinese. - 21

2 - Same Bed, Different Dreams - Avoid joint ventures with Chinese government partners. The clash of civilizations in Morgan Stanley's joint-venture investment bank shows why and offers hard-learned lessons on how to cope. - 58

3 - Eating the Emperor's Grain - China's relationship-driven system is often incompatible with honesty. This peasant tycoon's journey into the dark heart of China's endemic corruption shows how it works and outlines your options. - 94

4 - Dancing with the Dinosaurs - Powerful bureaucratic opponents can be beat if you have China's interests at heart. Dow Jones and Reuters demonstrate how using China's own tactics can be useful. - 126

5 - Caught in the Crossfire - Government lobbying must be a key part of your China business plan, especially for technology companies that might be squeezed between hot competition and the Cold War. - 155

6 - The Truth Is Not Absolute - The Communist Party believes it must control information to stay in power, but China needs an informed citizenry to compete in a global economy. This leaves the media, from Rupert Murdoch to a crusading Chinese journalist, searching for the size of their cages. - 190

7 - The Best-Laid Plans - Government planning and manipulation of foreign companies fueled China's construction of the world's largest telecom system. But this saga shows how entrepreneurship and the market can beat the planners. - 225

8 - Managing the Future - China is a nation always cramming for final exams, but it will take innovation, not prescribed solutions, to pass the global business test. - 258 Afterword - 295
Acknowledgments - 303
Index - 311