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The China Twist: How To Do Business In China, Or Not
Just finished reading The China Twist, a fascinating, easy to read, and very helpful book on doing business in China. The China Twist is written by Wen-Szu Lin, and it is described as “the firsthand story of two Wharton MBAs who brought a beloved U.S. food franchise [Auntie Anne’s Pretzels] to Chin and encountered outrageous obstacles that will make anyone in business laugh, cringe, and think twice about doing business in Asia.”
Really? All of Asia?
The China Twist
In reality, instead of making you think twice about doing business even in China, it should make you realize how important it is to go there prepared and with an experienced team in place to assist you. This is an excellent book, but it is much more a cautionary lesson on how not to do business in China than as a lesson on why not to go to China (much less all of Asia) at all.
I use the following legal mishap as an example of this. This excerpt comes from the chapter, “Tripping Up on Chinese Labor Contract Laws”:
Let me see if I understand this correctly. So what you are saying is that even though we have paid our employees on time for the past three years, including raises, bonuses, overtime, and six inusurances, they can sue us for double pay since we “took advantage” of them by not having a renewed contract?” I asked our HR lawyer, Adrian.
“That is absolutely correct. According to labor contract laws, after the original contract ends, you must renew within a month. Otherwise you have to pay double for the entire period that they are not under contract. It is not the same as the US. You guys are foreigners so you do not understand,” Adrian explained.
“That is bullshit! Several people told us that if we do not sign a renewal contract, it automatically renews after one month.
* * * *
We were learning the hard way that the underlying concept behind labor laws in China was drastically different from that of US laws. Although we had HR lawyers draft all of our legal contracts, we were unsure about the details and the technicalities of how they were to be implemented.
Let’s parse out some of this paragraph. Rather than discuss what to do with his HR lawyer before the company’s employment contracts with its employees expired, he relied on what “several people” had told him. Not only is not wise to “crowdfund” your legal advice, it is particularly unwise to do that with China’s employment laws because they are so local. I touched on this in an article I wrote for Forbes Magazine earlier this year, entitled, China’s Hourly Workweek: Think Locally:
I have avoided writing on China employment law because it is so complicated and so localized. My fear has been that any single article can only scratch the surface.
I am also troubled by his argument above for sympathy. He is essentially saying that because he followed China’s laws on bonuses and overtime and insurances, he should be allowed to violate China’s laws on the requirement of a written contract. Really? So if I go ten days in a row without violating a law, I should not be fined for going over the speed limit on the 11th day? And again, would he not have been better off having sat down with his China HR lawyer proactively and discussed China’s employment laws both generally and specifically, rather than “learning the hard way” about them?
Nonetheless, it is still a very fine book because the problems (both legal and otherwise) are exactly the same problems that befell most American entrepreneurs that seek to do business in China. It is a well-written and forthright book, and even though I sometimes found myself disagreeing with Mr. Lin regarding the reasons for some of his China business problems and some of his solutions as well, it does provide real life hands-on insight for those considering setting up a business in China. Had Wen-Szu Lin read his own book before he had gone to China, his chances of success there would almost certainly have been higher. That should be reason enough for you to read China Twist.
The post The China Twist: How To Do Business In China, Or Not appeared first on China Law Blog.
We will be discussing the practical aspects of Chinese law and how it impacts business there. We will be telling you what works and what does not and what you as a businessperson can do to use the law to your advantage. Our aim is to assist businesses already in China or planning to go into China, not to break new ground in legal theory or policy.
Source: http://www.chinalawblog.com/2015/06/the-china-twist-how-to-do-business-in-china-or-not.html
