Doing Business in China Today

Tough business challenges and enormous opportunities—a special one-day AMA Current Issues Forum heard from experts on “The Business Opportunities and Pitfalls in Today’s China.”

Held at AMA’s Executive Conference Center in New York City, the program was put together by the National Leadership Forum on Global Challenges, a nonprofit organization that draws from the American intelligence profession and other seasoned professionals who have lived and worked overseas.

Speakers included: Ambassador Chas. W. Freeman, Jr.; Nicholas Lardy, Senior Fellow, Brookings Institute; Mary Beth Fulcher, Acting National Intelligence Officer for East Asia; David Gries, President, Asian Strategies Group; and Thomas J. Reckford, Chairman for the Event and President of the World Affairs Council and Senior Associate for the Center for Strategic and International Studies.

In his opening remarks, Reckford promised the audience the opportunity to ask questions throughout the program and to gain a realistic perspective on China as a viable market. This promise was clearly kept by keynote speaker Ambassador Chas. W. Freeman, Jr. and the speakers who followed, each of whom added to an understanding of the commitment that doing business in China demands.

The program began with an overview of China today and tomorrow, went on to review economic trends and the implications of China’s recent accession to the World Trade Organization and economic priorities of the Chinese government, examined the new leadership in China and the pressures for political change, described the practical problems in doing business in China, including the do’s and don’ts based on the experience of foreign investors and the likelihood of confrontation between China and Taiwan.

Looking to the long-term, Ambassador Freeman said, “It is not that China is growing in influence. Rather, it is that it is returning to a past position of wealth and power, one it held as late as the 1850s when it was displaced as the largest superpower by England.” According to Freeman, by the year 2020, the region’s GDP of the global economy will be from 50 to 60 percent. China holds huge potential for certain American exporters.

But there are challenges to doing business in China:

• China lacks predictability in its business environment due to lack of a consistent body of laws and regulations.


• China has a government that has made a partial transition to a market economy but parts of its bureaucracy still tend to protect local firms and state-owned firms from imports while encouraging exports.


• There are still remnants of a planned economy, prone to overinvestment and overproduction, unrelated to supply and demand.


• Investors do not fully investigate the market situation or perform the necessary risk assessment.

Said Freeman, “The tendency of U.S. firms is to sign a contract and then build a relationship to make it work. Contracts are not blueprints—and certainly not in China. There, a contract is like a prenuptual agreement—the contract is about who gets what when the business doesn’t work. In China, you need to develop the commitment up front to make the venture successful.”