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Smaller Overseas Entrepreneurs Find China Too Frustrating

nytimes.com

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Re: Smaller Overseas Entrepreneurs Find China Too Frustrating

#31

Post by mahyarm »

seanmcdirmid wrote: post #21
[deleted] wrote: post #19

Earlier quoted context omitted.

[deleted]

Working for a large American company in China, our company takes FCPA (and anti-corruption in general) very very seriously. We also emphasize non-retaliation in reporting compliance issues.

The funny thing about the FCPA is it doesn't apply in the foreign -> USA or USA -> USA interactions, only with USA -> foreign interactions as far as I can tell. Foreign and american organizations can do actions that would be illegal in the FCPA itself with the american government. It's pretty funny.

Like a Canadian oil organization can pay huge speaking fees to an American politician and then start getting favorable treatment in the USA. But if an American oil organization started paying huge speaking fees to a Canadian politician and then start getting favorable treatment in Canada, they would probably have a winnable FCPA liability against them.

Either that or the american politician makes sure the law doesn't get enforced in that case.

Re: Smaller Overseas Entrepreneurs Find China Too Frustrating

#32

Post by mahyarm »

seanmcdirmid wrote: post #20
TeMPOraL wrote: post #9

Earlier quoted context omitted.

It might be benefiting the world in a way already - those who want western businesses in their area may decide to not require them to bribe so hard.

Or you know, if you want western capital, clean up your government.

They can also make it official law. It's not illegal under the FCPA to pay official rush fees, just the unofficial ones.

So in corrupt government X, you make a special western investment tax. The funds of that tax goes to a special fund used for development projects. Those development projects have to go through a convoluted procurement process, which co-incidentally only gets approved with a few politician's organizations. Those organizations then go on those make-work projects, and siphon off a lot of funds and never get them done. The make work projects also help them get re-elected because they create 'jobs'.

Re: Smaller Overseas Entrepreneurs Find China Too Frustrating

#33

Post by mahyarm »

contingencies wrote: post #30
mahyarm wrote: post #28

Earlier quoted context omitted.

Let's say you are making a computer game. You've hired a team of 10 people. That team will work for you until you have a finished game, and then copy all of the source code, assets, etc and go sell the same game you just paid them to make. And it would be the majority of the staff. Maybe they'll swap out a name and few art assets to make it 'different'. And you can do shit all about it in china. This story came from…

If you managed the staff differently, nobody would have a complete enough view of the system to walk away with anything functional. This is how they do it in the defense industry, and it's fair management policy in unknown environments with unknown staff. There is a saying "trust is the availability of effective recourse"... if you have none, act accordingly.

That is exactly how they deal with that. They make them use offline non-admin computers with all the ports burnt off. If they need to look something up, then only a few trusted people can go to the 'internet' computer, where everything is recorded. For good measure, the offline employees are recorded too.

But it's also incredibly inefficient compared to the average 10 person game studio. In the USA, nobody has to do that to make a computer game.

You also missed the part of %80 of the staff walking away to start their own venture.

Re: Smaller Overseas Entrepreneurs Find China Too Frustrating

#34

Post by KJP191 »

contingencies wrote: post #16
fspeech wrote: post #15

Earlier quoted context omitted.

Good to know. I was referring to "green card" when I said "legal immigration".

China gives out green cards to foreigners who apply after they have stayed for something like 5-10 years paying taxes with a registered business. However, they are in practice also a lot more friendly about being in-country on random visas, happily provide extensions, and do not kick you out within 10 days under threat of imprisonment if a business-linked visa expires, like they do in the US.

This is not actually true. Although the conditions for permanent residence are pretty lenient on paper, they are hardly ever given out. Less than 5000 were issued in the 10 years to 2014 (in total, ie less than 500 per year). In practice it's FAR harder to get a Chinese green card than an American one.

Also, many of those 5000 "foreigners" are actually the children of senior Chinese officials who have taken foreign citizenship then returned to China. The number of "real" foreigners with permanent residence is even lower.

Re: Smaller Overseas Entrepreneurs Find China Too Frustrating

#35

Post by argonaut »

contingencies wrote: post #27
ssalazar wrote: post #22

Earlier quoted context omitted.

>> Employees will attempt to steal IP and copy the business. > This sounds a lot like the unfounded "don't tell anyone your idea, it might be stolen!" fear in Silicon Valley. Its much different. Mechanical drawings, materials processes, and electrical designs that might have taken thousands of man-hours to develop, test, and refine are actually valuable, unlike "this great app idea I came up with in the shower." > If…

Mechanical drawings, materials processes, and electrical designs that might have taken thousands of man-hours to develop, test, and refine are actually valuable Sure, but even these things are not valuable unless you can actually use them to start a successful rival business within a reasonable amount of time. In other words, if there are 10 idle factories tooled to copy your product for the same price or less and yo…

I think this is missing the forest for the trees. It is totally fine to tell people in China your idea. But the point is, your local employees might steal the execution as well. That is, they'll steal blueprints, designs, code. They'll poach other employees. They'll take with them knowledge of your suppliers, your buyers, your customers. And so on.

In SV the common wisdom is that it's fine to tell people your ideas. But nobody is suggesting you give out your code or your blueprints and designs, and put up a spreadsheet on your website of the contact info for all your suppliers and buyers, and all your customer data.

Re: Smaller Overseas Entrepreneurs Find China Too Frustrating

#36

Post by brazzledazzle »

contingencies wrote: post #29
justabystander wrote: post #25

Earlier quoted context omitted.

> > Employees will attempt to steal IP and copy the business. > 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. This is completely different. An idea itself doesn't have a lot of value without the business plan and capital to make it happen. The S…

Your secret server sauce could show up at another company with source code, documentation, comments and everything. If you rely on "secret server sauce", you are probably sunk anyway, since a half-decent reverse engineer can probably replicate your business just by looking at it as a black box system from a client's perspective. Many times they'll even use your logos and deliver a lesser product based on your brand n…

You really can't see a difference between needing to reverse engineer something and just getting the source with no strings attached?

Re: Smaller Overseas Entrepreneurs Find China Too Frustrating

#37

Post by fsloth »

contingencies wrote: post #29
justabystander wrote: post #25

Earlier quoted context omitted.

> > Employees will attempt to steal IP and copy the business. > 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. This is completely different. An idea itself doesn't have a lot of value without the business plan and capital to make it happen. The S…

Your secret server sauce could show up at another company with source code, documentation, comments and everything. If you rely on "secret server sauce", you are probably sunk anyway, since a half-decent reverse engineer can probably replicate your business just by looking at it as a black box system from a client's perspective. Many times they'll even use your logos and deliver a lesser product based on your brand n…

"a half-decent reverse engineer can probably replicate your business just by looking at it as a black box system "

Think of a program with business logic spanning millions of lines, with intricate detail spent on lots of domain specific automation steps.

Re: Smaller Overseas Entrepreneurs Find China Too Frustrating

#38

Post by Pyxl101 »

> More than two years and $1 million in costs later, he is still waiting for the shipment. Chinese customs officials have demanded a permit for importing medical devices

Familiar story. I tried to have ordinary computers shipped to a facility in China, and they were held up in customs for months for no reason.

Re: Smaller Overseas Entrepreneurs Find China Too Frustrating

#39

Post by squidlogic »

jhancock wrote: post #26
squidlogic wrote: post #14

Earlier quoted context omitted.

Doing business in China is definitely doing it in 'hard mode' from my experience. If you can become successful there, where contracts mean nothing and guanxi with people in power is everything, you will probably plow right through anything you find in the states.

I think if you reflect on "contracts mean nothing and guanxi with people in power is everything" you may find the seed to an answer. China has 1.4 billion people. There are many that will follow a contract or work with you to adjust agreements to both parties' mutual benefit. If you are leveraging guanxi, ask yourself why you feel it is ok to further empower a person that is causing harm to society. There are many in…

You are also correct. There is a beautiful simplicity to business interactions when you tell them up front: hey, I'm only going to tell you the truth, I'm not going to buy you gifts and alcohol and prostitutes. I'm just going to try to find the best outcome for all of us.

So much easier.

Yet so much harder.

But that's China ;)

Re: Smaller Overseas Entrepreneurs Find China Too Frustrating

#40

Post by IIAOPSW »

contingencies wrote: post #13
Gustomaximus wrote: post #4

Biggest rules I've seen from working with chinese JV's; 1) Employees will attempt to steal IP and copy the business. This may happen while they are still working for you. If it's easy for your business to be stolen this way don't even bother setting up. 2) You need locals to handle staff. You're just a foreigner to be taken advantage of. They push rules and issues at you all day trying to get more. A local manager wi…

Employees will attempt to steal IP and copy the business. 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 hi…

>Yes, domestic infrastructure is usually necessary due to poor international reliability and speed

Real funny how that international reliability and speed go way up when I have a proxy on. It's almost as if foreign websites are throttled cough cough

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