China isn’t China anymore…  This once Communism nation has been transformed into a thriving, capitalistic society that just happens to have a one-party government.

I’ve witnessed the evolution of China over the last 25 years… from the ground… not from watching some “over-winded” TV analyst filter the world view for us uneducated souls.

So, here’s my  “take” from belly of the beast, covering a range of topics comparing China THEN and NOW….

DOING BUSINESS

Then: The government owned and subsidized most industries. Factory managers who I knew, measured their importance by how many people they were over. Mr. Lee was in charge of 20,000 workers in a mammoth group of ceramics factories in northern China. He believed his job was to display his importance like a peacock and to out-drink his customers and adversaries, both of which he was very good at.

I remember my first drunken banquet dinner where he was telling me through his interpreter, how important he was. Now before telling my story of that evening, I’ll describe the all important “banquet dinner.”

A Chinese banquet dinner is an alcohol fueled train wreck in which the Americans are goaded into matching professional Chinese drinkers… drink for drink. “Ganbei” is the war cry that prompts participants to drink all their drink. The empty glass is then quickly filled by an attendant and believe me, the glass is not empty for long.

Seated at the large round table, you’ll notice 4 or 5 factory managers… two pretty girls that go by the title of administrative assistant (okay…,) a young man you’ve never seen before, a designated interpreter, and the “drinker.”  The unknown young man is probably a Shanghai University graduate who understands English and is planted there to figure out what you and your American counterpart are talking about among yourselves. The assumption is that you’ll be drinking and loose lipped. The drinker is obvious… he’s the catalyst for multiple Ganbei’s.

After a couple of hours of eating unfamiliar food and downing “who knows how much” beer, I asked Mr. Lee:  “So, are you powerful enough to negotiate price?”

He slurred his Chinese to the interpreter who answered: “Yes, Mr. Lee does this all the time, he can do whatever he wants to… he’s the boss.”

I held my beer glass up “Ganbei!”  and drank my beer down. Mr. Lee almost beat me to the bottom of his glass. I then asked “Do you really have power over pricing?” Then I added “or is the beer talking” and I laughed.

The interpreter delivered my unfiltered message. Mr. Lee gave me a pompous look and mumbled something. The interpreter leaned over to me and said “Mr Lee very powerful… he will give you 5% reduction. He is powerful.” His tone bordered on “condescending.”

Now… for a little New Castle guy, a 5% reduction of my million dollar order was 50 Grand. Without missing a beat, my comeback was “Are you powerful enough to give me 10%?”

At that moment, drunk or not… Mr Lee knew he was been “had.” His lower toned response was interpreted as “no, I’m not THAT powerful.”

The Mr. Lee’s of his day we’re not all that bright. They ascended to their paper thrones via politics, not by their abilities. That was Communism then.

 

NOW: There is no Mr. Lee. In the late 90’s, the government started shutting down or selling unprofitable industries.

Today, I deal with the sons and daughters of the Mr. Lee’s. This new generation attended US universities. They ate at McDonalds, lived in a free society, obtained a great education, a sense of business ethics…. and they came home to China to take over their parent’s companies.

Today, they are good business people who understand my customer and the quality standard demanded by the market. They know that they must constantly improve even when they are among the low cost producers on earth.

Business owners in China use world class design and production techniques that rival any country on earth.

When you are smart and you work hard, you are a tough, tough adversary. This is the China of today…

Look for more topics of then and now as seen from the trenches…