6 ms·

No, this is much more than something like "Buy American". It is not an appeal to the consumers patriotism. It is structural and government favouritism and out

by poutine 17y ago

No, this is much more than something like "Buy American". It is not an appeal to the consumers patriotism. It is structural and government favouritism and outright corruption. If it were up to the Chinese consumer they would actually prefer to buy a foreign product assuming they could afford it. Foreign brands are associated with quality and status. And after all, foreign companies are not poisoning their milk and killing babies.

est 17y ago
> It is structural and government favouritism and outright corruption. It's not free market and it's not fare game, but each side has their own shorts and longs. What if I tell you Baidu is not an Chinese company either? http://www.tektalk.cn/wp-content/uploads/2010/01/baidu.jpg http://www.tektalk.cn/wp-content/uploads/2010/01/baidu.jpg Baidu got its investment from US even Google. Its boss Robin Li has a US passport. Strictly speaking, many large companies in China are, in fact, not actually Chinese companies.
- poutine 17y ago
  No, many companies are WFOE (Wholly Foreign Owned Enterprise). The local entity is still a Chinese LLC company and exists at the whim of the Chinese government and all restrictions therein. The main difference being that the shareholders in this company are foreign entities.
- jhancock 17y ago
  You are technically correct on some of your points. However, the net is that most of the value created stays in China. This is the nature of the game. The real or de-facto operating entity, is almost always Chinese.
  - est 17y ago
    Pardon my ignorance, it surprise me there's even a term WFOE specialized for this. lol > the net is that most of the value created stays in China. This is the nature of the game. The real or de-facto operating entity, is almost always Chinese. This is true. It will take some time for the Chinese to realize market is not always a zero-sum game. I blame the Communist education, sub-consciously everyone think capital is dirty and tries to grab their share as much as they can to feel secure. Voices inside the country are always fear of US invading China, this is laughable but it is true. So in business 'foreigners' are often excluded precautiously. However it's important to realize that nationalism & patriotism is non-reversible for China. It's necessary to act like your business in China is doing good for China.
    - poutine 17y ago
      Having gone through the process somewhat myself there's 3 ways you do business in China from a structure point of view (IANAL, see the China Law Blog for more accurate and up to date info): - Wholly Foreign Owned Enterprise: This is a Chinese LLC with foreign shareholders. All management and IP reside within the Chinese entity (or are licensed to). Management operates under Chinese laws and there are restrictions on how many Z Visas they'll give you to bring in foreign workers. - Registered Office: This is just basically an outpost within China. It is quite limited in what it can do, notably it may not bill Chinese companies for services or products offered. Thus you can't sell anything from it. Interestingly here they tax you in China based on your Chinese expenses (since you have no revenue). - Joint Venture: This is when you team up with a Chinese company and create a new company that has local management and IP which then engages the Chinese market. As you can see your options for doing business within China are pretty restricted and pretty much always puts you at the mercy of the Chinese.
      - jhancock 17y ago
        Good summary. When I first started in China, this was also the deal but the laws and processes for forming and managing these entities was uneven. One positive change is that the rules on these entities have become much more clear. I wouldn't say you are at the "mercy of the Chinese" as you put it because in any country you operate a business, you submit yourself to the country's rules. For now, for many types of companies, the rules are clear enough to operate effectively. Getting your profits out of China is another story. I encourage many foreigners wanting to make money in China to be sure they understand that much of their gains will stay in China. If you're comfortable with that, ok. If not, think hard.
        darien 17y ago
        How exactly do they prevent capital outflows, aggressive taxing?
        jhancock 17y ago
- lolcraft 17y ago
  To be fair, the only thing that image proves is that Baidu's owners are too greedy. I don't think you can say a company is not Chinese just because it is registered on fiscal paradises. Hell, then I guess most of the Fortune 500 companies would be from the Cayman Islands, the new economic center of the world and emerging superpower.

by poutine 17y ago

est 17y ago

> It is structural and government favouritism and outright corruption. It's not free market and it's not fare game, but each side has their own shorts and longs. What if I tell you Baidu is not an Chinese company either? http://www.tektalk.cn/wp-content/uploads/2010/01/baidu.jpg http://www.tektalk.cn/wp-content/uploads/2010/01/baidu.jpg Baidu got its investment from US even Google. Its boss Robin Li has a US passport. Strictly speaking, many large companies in China are, in fact, not actually Chinese companies.

poutine 17y ago
No, many companies are WFOE (Wholly Foreign Owned Enterprise). The local entity is still a Chinese LLC company and exists at the whim of the Chinese government and all restrictions therein. The main difference being that the shareholders in this company are foreign entities.
jhancock 17y ago
You are technically correct on some of your points. However, the net is that most of the value created stays in China. This is the nature of the game. The real or de-facto operating entity, is almost always Chinese.
- est 17y ago
  Pardon my ignorance, it surprise me there's even a term WFOE specialized for this. lol > the net is that most of the value created stays in China. This is the nature of the game. The real or de-facto operating entity, is almost always Chinese. This is true. It will take some time for the Chinese to realize market is not always a zero-sum game. I blame the Communist education, sub-consciously everyone think capital is dirty and tries to grab their share as much as they can to feel secure. Voices inside the country are always fear of US invading China, this is laughable but it is true. So in business 'foreigners' are often excluded precautiously. However it's important to realize that nationalism & patriotism is non-reversible for China. It's necessary to act like your business in China is doing good for China.
  - poutine 17y ago
    Having gone through the process somewhat myself there's 3 ways you do business in China from a structure point of view (IANAL, see the China Law Blog for more accurate and up to date info): - Wholly Foreign Owned Enterprise: This is a Chinese LLC with foreign shareholders. All management and IP reside within the Chinese entity (or are licensed to). Management operates under Chinese laws and there are restrictions on how many Z Visas they'll give you to bring in foreign workers. - Registered Office: This is just basically an outpost within China. It is quite limited in what it can do, notably it may not bill Chinese companies for services or products offered. Thus you can't sell anything from it. Interestingly here they tax you in China based on your Chinese expenses (since you have no revenue). - Joint Venture: This is when you team up with a Chinese company and create a new company that has local management and IP which then engages the Chinese market. As you can see your options for doing business within China are pretty restricted and pretty much always puts you at the mercy of the Chinese.
    - jhancock 17y ago
      Good summary. When I first started in China, this was also the deal but the laws and processes for forming and managing these entities was uneven. One positive change is that the rules on these entities have become much more clear. I wouldn't say you are at the "mercy of the Chinese" as you put it because in any country you operate a business, you submit yourself to the country's rules. For now, for many types of companies, the rules are clear enough to operate effectively. Getting your profits out of China is another story. I encourage many foreigners wanting to make money in China to be sure they understand that much of their gains will stay in China. If you're comfortable with that, ok. If not, think hard.
      - darien 17y ago
        How exactly do they prevent capital outflows, aggressive taxing?
        jhancock 17y ago
lolcraft 17y ago
To be fair, the only thing that image proves is that Baidu's owners are too greedy. I don't think you can say a company is not Chinese just because it is registered on fiscal paradises. Hell, then I guess most of the Fortune 500 companies would be from the Cayman Islands, the new economic center of the world and emerging superpower.