Smaller Overseas Entrepreneurs Find China Too Frustrating

If people invest money they shouldn't, without due diligence in environments they don't understand with partners they don't know, that doesn't reflect as much on the environment as the investor.

China is very welcoming to foreign investment. Once you have done the paperwork, you can basically stay indefinitely on a work-related visa for a small minimum investment. The total required money in real terms was only 30,000USD a few years ago. I'd be interested to hear if there's any another country with such a dynamic economy and physically safe environment, great food and range of climatic conditions that welcomes people from around the world for such a small personal investment? Sure, China has its issues, many of which such as an immature and ill-documented financial system, utility issues, poor internet connectivity and a weak courts system affect business, but openness to investment is not one of them.

There is no distinction made in the article between the WFOE ("woofie") or wholly foreign-owned enterprise and the JV or joint venture. Instead, an alarmist view is painted of total ruin lurking around the corner for all foreign-involved businesses. (The sums I refer to above are for a personal WFOE: no need for a local partner.)

Everybody knows the courts are oversubscribed, slow and corrupt. This results in different ways to solve problems, including less willingness to extend trust to strangers, the frequent writing off of bad debt, and in some rare situations corrupt regulator-based vindictive ingress, violence, kidnapping and so forth. (Most of the time things are not ugly though, and incidence of violence is extremely low across all of society, not just business. Much lower than the west in my experience.) Because of this situation with the courts, very often contracts are worthless (simply ignored). Cash is king. If you don't trust an employee (eg. sales manager who stole USD$60k in the text), don't give them access to funds. This is business 101, and is in no way unique to China. Why should a Sales Manager control your bank account, anyway? Why should you allow client payment direct to untrusted employees by theft-prone cash? This is just an example of management naivety - no inkling of common sense.

While I am still sometimes amazed at the uselessness of contracts here (I've experienced the "signed the contract? paid the rent? now pay double!" thing personally... solved with a mutually acceptable outcome - I moved out quickly and received a full refund), mostly it's just about learning how to deal with an unfamiliar business environment.

Overheads are often low, potential profits are often large, and we're allowed to come here and do business despite being foreigners. It's not always a walk in the park (frustration and "bad China days" are certain), but overall China's environment is not bad. Given the low regulatory threshold, taxation and overheads, it's really more of a land of opportunity than the west. In a western context, I never could have afforded myself the experience in business that China gave me.

This sounds a lot like the unfounded "don't tell anyone your idea, it might be stolen!" fear in Silicon Valley. If you are relying on security through obscurity to protect your business' viability, you're doing it wrong.

You need locals to handle staff. You're just a foreigner to be taken advantage of.

In my experience if you speak basic Chinese, personally hire and manage employees and pay and treat them fairly and offer income security, they will see you working hard and personally work hard and be extremely loyal to you, especially if you offer new skills and challenges.

The great firewall can be a bastard and your best with infrastructure inside the country and local knowledge.

Yes, domestic infrastructure is usually necessary due to poor international reliability and speed, but that's hardly an insurmountable or troublesome issue.

Chinese will often find a way to get something done with horribly inefficient routes and deals to the goal. Don't stress trying to make it efficient, this is China.

China can also be amazingly efficient. Look at automation in electronics supply chains, dirt cheap national next-day couriers, a relatively inexpensive national culture of 'book it the day you fly' travel, and often free international financial transfer to Chinese banks in foreign locations. Compare sea-freight, Fedex, rent-seeking travel suppliers, and the pain that is SWIFT. Not to mention Taobao versus driving to the mall, e-bikes versus cars, or permanently open restaurants everywhere! (Not to mention completing divorce proceedings for 8元 = USD$1.50!)

Dont expect your JV partner to work in the companies best interest.

Self-interest is normal in business anywhere. Trust and good partners are hard to find.