They might walk the streets of Shanghai one week and drive across the Midwest the next.
But on May 31, 2012, some top business leaders and consultants will be at the Toledo Club to talk about Chinese-U.S. business relations.
Toledo-based marketing and communications firm Becker|CMCA, Toledo Free Press, Communica, The Hylant Group, Sinn Consulting, Wei Shen, Inc. and Brennan, Manna & Diamond are sponsoring the China Business Summit. The conference, running from 8:30-11:30 a.m., will present a panel of experts to discuss economic opportunities in China, the legal and financial hurdles to overcome when businesses cross borders and the differences in etiquette between American and Chinese business people.
Becker|CMCA sought to conduct the event because the firm has helped a number of large businesses expand to China. BASF is one of the many clients that Communica advertising designers have helped to saturate the Chinese market. George Becker, president of the company, and Jim Rush, senior vice president and partner for Communica, said the collaborative targets mid-size cities in China.
“The cross-border traffic just started moving up pretty recently,” said Wei Shen, who started BridgeConnect LLC. “I think both parties started to appreciate more of each other and had time to recognize the differences because both sides realize they need each other. It’s a gradual progression.”
Jessica Xie, vice president of the Hylant Group, and Jim Rush, senior vice president of Communica.
Shen led the General Motor’s marketing team that took the Buick to China. But before she left her Shanghai home 25 years ago, such a large-scale international business move would have hardly seemed possible. Shen said the country around her was impoverished before she fled, as many of her younger years were marked by the government’s tight grip on the borders.
She left the country in the late 1980s with the maximum amount of cash the government permitted her to take: the equivalent of $40.
Jessica Xie, vice president of the Hylant Group, moved to the U.S. from China in 1998. The maximum amount she and others were permitted to take was $10,000 — an example of how quickly China has changed, she said.
Both will present at the business summit, along with William Sinn, president of Sinn & Co., a consultant company that specializes in establishing operations and distribution networks in China. John Tang, head of the Shanghai-based China Practice of Brennan, Manna & Diamond, will also speak.
Tang helps American businesses maneuver through licensing and networking in China and helps Chinese businesses sort out regulations and new concepts in America. Even as borders become more fluid, Americans have a tougher time setting up a business in China than Chinese business people do in the U.S., he said.
“In China, the law is not very clear and a lot of it is based on relationships and who you know over there,” Tang said. “Knowing the law is half the battle. Getting that business license is not a right, it’s a privilege.”
That’s because the government sets a minimum on the amount of registered capital your new business could start with, he said. For example, an American seeking a business license in China would likely get rejected if he or she registered only $10,000.
It helps to know officials, particularly the Chinese equivalent to the secretary of state, to get your business recognized, he said.
Chinese businesses moving to America have quite the learning curve too. The financial structure of business is simpler in China, and derivatives and credit swapping is a foreign concept, he said.
Collaborating with American businesses has also led to a concept new to many Chinese business owners: liability insurance. Xie counsels some clients who expand their business to the United States and are now
required by law to buy liability insurance, such as businesses in the automotive industry. They often question why they have to buy product liability insurance if they know their product is a quality one, and if they know their parent company in China could cover any losses in the future, she said.
“It’s an expense — Chinese culture is such that we value savings and we don’t like to spend money,” Xie said. “They don’t see the value of buying insurance.”
Cultural differences between the two nations can also complicate business deals. When an American businessperson visits China to sign a deal with prospective partners, his or her initial visit may be a shock. The first four or five days of the meeting might involve tours, meals together and mingling — with no business talk at all. This is because Chinese businesspeople want to build relationships and become friends with their partners; they want to trust someone before they sign over money, Tang said.
On the other hand, when a Chinese businessperson comes to America, he or she might feel extremely rushed and uncomfortable when the American starts gabbing about money right away.
“They (Americans) can still come across as very arrogant,” Shen said.
The American recession saw a jump in Chinese investment that continues to this day. As real estate was cheaper, Tang said many Chinese saw the recession as an opportunity. Whether they took incentives from the government to expand overseas or whether they saw the opportunity to collect assets quickly, setting up shop here became alluring quickly, Tang said.
Programs such as the EB-5 visa, which offers a speedy track to permanent residency in exchange for $500,000-$1 million of investment in an American business endeavor, also helped draw interest.
EB-5 visas have existed for about 20 years but are growing in popularity. U.S. Citizenship and Immigration Services fielded at least 3,805 petitions from prospective foreign investors in 2011. Fewer than 800 bids were made four years prior.
Tang said individuals looking for a safe place to invest their money are more likely to take advantage of this than are large corporations.
Despite the obstacles in the beginning, the allure of starting a business in China is undeniable if not essential to success, he said.
“The biggest incentive is that China is the largest market in the world — it’s a no-brainer,” he said. “Even for domestic businesses, they can’t think they’re going to just stay domestic because their competitors are going global. In order to stay competitive, they have to think globally.”
Shen said walling up financial borders and suspicion of international business taking root in the U.S. hinder the well-being of both the U.S. and the Chinese economies.
“We need each other,” she said.
