Corrections or additions?

This article by Bart Jackson

was prepared for the March 13, 2002 edition of

U.S. 1 Newspaper. All rights reserved.

China’s Capitalist Cousin

Fifteen years ago, the trade routes into China were

fraught with unwieldy committees, endless rounds of seemingly social

meetings, and the fabled Chinese bureaucracy, little changed in some

ways since the days of the emperors. But today things are different.

The gateway has flung wide onto Hong Kong — China’s can-do,

capitalist

laboratory. Here, at last, is an Asian port that operates in the good

old American business fashion. Or does it?

Profitable protocols into the East will be the subject of the seminar

"How to do Business with Hong Kong," on Thursday, March 14,

at 8 a.m. at Mercer County Community College. This workshop is one

of several breakfast meetings designed by the MCCC Global Business

Center to help small and medium size businesses establish markets

abroad. Lewis Ho, director of the New York office of the Hong

Kong Trade Development Council, will cover the more macro, global

aspects of entering this new economy. William Webster will

provide

specific advice based on his years in Hong Kong working for Paris

Technologies and several other firms. Cost: $25. Call 609-586-4800,

ext. 3639.

"The company extending its products or services into the East

will find really no major differences — cultural or legal —

in dealing in Hong Kong," insists Ho. "Sole proprietorships,

partnerships, and corporate unification all operate in the same

way."

Bringing it even closer to home, Ho notes that many Hong Kong firms

already have working ties to the Trenton area and are seeking new

partners.

Information technology, software of all sorts, environmental products,

and electronic components and services currently stand highest on

both China and Hong Kong’s most wanted list. Ho feels that firms in

these industries should have no trouble establishing a presence in

Hong Kong.

"One of the most practical, primary tools," says Ho, for

anyone

planning an Eastern exchange is the Hong Kong Trade Development

Council

(TDC). Admittedly, Ho is a bit prejudiced. He joined the TDC back

in l980 when, he says, "markets everywhere were a lot

different."

He worked to advance Hong Kong’s business interests first in the

Middle

East, then in other cities around the world, and now he has taken

over the American desk in New York.

The optimum way to mine the TDC’s wealth of information is to study

at length its astoundingly exhaustive website — www.TDCTrade.com

Relatively friendly, this site is a library in itself. Up to the

minute

webcasts, divided into trade topics such as sporting goods, jewelry,

and electronics fill readers in on China and Hong Kong’s financial

relationships around the globe.

Additionally, the Pacific economic scene is available on the site,

offering HK Exchange quotes, market profiles, and analysis. Getting

to the heart of it, the "Starting Up A Business" section lists

full advice and documentation specifically categorized for anything

from a sole proprietorship to a fully expanding corporation.

Documentation

is spelled out, and statutory requirements are quoted chapter and

verse. The site even offers a checklist of required certificates.

"Of course our crown jewel," says Ho, "is the Trade

Development

Center’s extensive databank of trading partners." Thousands of

companies, cross categorized by size, product, expansion needs, and

investment capabilities, are ready to be linked with American firms

seeking to profitably combine. Since its inception in l966, the TDC

has linked thousands of suppliers, partners, and customers.

William Webster agrees with Ho that ever since the l997 reversion,

Hong Kong has made the gateway into China wider. "But," he

adds, "the differences are very real and you are not just going

to slide in like an eel through a swamp."

As a long-time international trading port, Hong Kong currently stands

midway in the business style between the Western and the Chinese.

"China," Webster explains, "remains very much in the grips

of GuanXi — an older Eastern business protocol in which through

a series of introductions, favors and time, your partner gets to know

(and trust) the content of your character."

While traders in Hong Kong are more likely to care about how much

you can deliver, rather than who you are, some of this more personal

approach underlies most dealings. "This often frustrates the hasty

American deal maker who storms in with a thick contract and no time

in his hands," says Webster. "But this more personal approach

to doing business can hold great advantages." Frequently the

excessive

(and costly) spelling out of nitty-gritty obligations can be forgone.

Secondly, once you are in the door, your reputation is made and other

business partners will tend to trust you.

Webster himself has long experience with developing this personal

business style. In l986 he bought a one-way ticket to Hong Kong and

began looking for any trading opportunity. He found it with an

import/export

man who dealt in Armani shirts and other upscale textiles. In l994

he tossed in his lot with Exxon in its Pacific Rim efforts. Shortly

afterwards, Webster founded his own Hong Kong firm, which in l997

became affiliated with the global software developer Paris

Technologies.

Today he not only oversees that firm’s technical development, but

acts as China/Hong Kong liaison, making frequent trips to the East.

Having observed American firms taking the Oriental plunge with varying

success over the past 17 years, Webster offers the following caveats:

Be patient. Expect to invest in Hong Kong for the long

haul. Building time in the East is slow, because it is necessary to

establish your name.

Bring gifts. Some local governments or businesses may

renege on payment. Also, gift giving is customary, and goes beyond

the typical scope of gift exchanges among business people in the

United

States. Recently the Independent Commission against Crime (ICAC) has

cracked down on many of the more blatant abuses of this practice.

Go with deep pockets. Prices are high in Hong Kong, and

business entertaining tends to be expensive. "While the Chinese

are very prestige conscious," says Webster, "it may prove

more effective to entertain in fine restaurants than set up an office

in a prime real estate area."

Be culturally aware. Write all manuals and direction

sheets

in both English and Chinese. Zippers, like autos in China, run on

the opposite side. "You really must go there and stay and

study,"

suggests Webster.

Beware quotas. Most manufacturing has moved out of Hong

Kong proper, and north into China. Some has moved into Sri Lanka and

Cambodia. All these nations have definite quotas as to what quantity

of which type of goods a business can export. Thus, you could be

awarded

a magnificent contract, fulfill it, but not be able to move your goods

out of the country.

Yet despite all the cross-cultural problems, China and its new

gateway offer an ever-widening market. Just within the past two years

it has become possible to establish a wholly-owned United States

company

in China. But as Webster warns. "If you are planning to make the

big leap, best to begin by standing firmly in Hong Kong."

— Bart Jackson


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