China – the Den of Thieves, Crooks and Scoundrels.

When I read the news on how Alibaba and Ja Ma are cheating Yahoo and just robbing its partners (Y! and Softbank), I am LEAST surprised.

Its the nature of everything Chinese to CHEAT. 

I have had a 5 year hands on experience working and living (intermittently) in China.

Mobile2win was a Company that we set up in 2001 that was LUCKILY acquired (by Disney) in 2006.

Produced are excerpts of my writings on my experiences in China with links to the articles for further reading.

If you want to do business in China – do so on your own RISK. It will be like writing your own death certificate.

From : The Dragon Fears Food Poisoning

China censored the word ‘Egypt’ from Chinese blogs and Chinese Internet sites yesterday.

This means that if you search for ‘Egypt’ on Sina.com, you will get ‘results not as per law’ and similar messages. 

What does this mean? 

The Big Chinese Dragon fears poisoning. 

Over the years of extension dealings with China, I have become its biggest skeptic. Its a land built on  scams, supression, false promises and complete deceit.

Let me narrate a real experience:

In 2003, I was making a fervent pitch to the Hong Kong Tourism board in Shanghai for mobile marketing campaigns while working for my start up Mobile2win China (we were based in Shanghai).

I was very excited since we had done lots of good work with Tourism boards of many countries in India and were successful in migrating those relationships to our office in China.  

While hearing me excitedly pitching, the lady director of Hong Kong Toursim smiled and said ‘Alok, allow me to interrupt you for a minute. Tell me, how do you go to Hong Kong from India’?

I didn’t understand the question and she repeated it, asking me to describe the process.

‘Its simple’ I said. ‘I just book my seat, make sure I have a Visa, go to the airport, board the plane and land. Isn’t that the way anyone would travel to any new country or city’? 

‘Nope’ she said. ‘Not in China. Here you need police permission to travel overseas – and thats despite Hong Kong belonging to China. Mostly permissions are denied and if they are granted, they force you to go in groups and come back together’.

I was shell shocked.

Consider the human rights situation in China: 

– You cannot move with cities freely in China. So if you live in a small province or village in China, you cannot come to Shanghai or Beijing without a police permit. When you try and apply for one, its almost always refused. (The logic is to prevent mass migration and chaos).

– You cannot assemble beyond a few people in groups in China. This applies even to Multi Nationals who may have conferences and just group gatherings. Police permissions are requested and usually ‘unofficial spies’ are present to check what’s going on. 

– Media is STRICTLY controlled. Local Newspapers are full of propaganda material, and television stations mainly state controlled. Only in 5 stars and private apartment complexes can you see CNN etc.

From – A Diamond is an Entrepreneur’s Best Friend

In India, people are truly the masters of their lives.

Most of our Politicians are public jesters and thieves – forever screwing up, getting caught, being whipped in public media, replaced and forgotten. Even jailed once in a while.

While they play their Circus out, they don’t interfere in Business and Entrepreneurship. Forget the bribes and red tape that you may encounter for heavy duty brick and mortar businesses, but in new age start ups, they have no role to play. This is very crucial when it pertains to media and its regulations. 

In China, when I sold my Company Mobile2win to Walt Disney, we had to write to the Chinese ‘Ministry of Culture and Information’ detailing why we were selling and begged for their approval!

As an Indian entrepreneur, I was shocked to even ask permission to be able to sell my own Company. Of course, as we all know, it’s impossible to create consumer media Companies in China without Governmental intrusion.

Another example – In China, you cannot hold rallies or meetings (even the biggest Multinationals) of over 40-50 people without prior police permission. During the Olympics, all large meetings were banned. This stems from a fear that the Chinese govt. has regarding public gatherings leading to unrest. 

The fact that the government is non-interfering in Business in India is our biggest blessing. 

The legal system in India is fair and it works.

In 2002 in Seoul, I met the CEO of Actoz Software – the global pioneer of massive online multiplayer games. In 2001, he had (unfortunately) licensed his game to a Chinese online games Company that very quickly cheated Actoz by duplicating their game and also not paying Actoz the committed royalty payments.

This Chinese Company grew very fast and became a giant and also listed on the Nasdaq. Its valuation today is U.S $2.5+Billion. Believe it or not, it also bought Actoz out at throwaway valuations since they had anyway bankrupted the tiny Company. 

I asked the Actoz CEO if licensing his game to this Chinese Company was his mistake. 

‘No, Alok! That was not the mistake. Our blunder was agreeing with filing for arbitration in Chinese courts if we had a dispute with the Chinese Company. The day the case came up for hearing and the arbitrator realized that it was a Korean Company against a Chinese Company, he decided the ruling against us even before hearing the arguments’.

I was too stunned to react! (Ps – that’s also a reason why lots of global agreements today settle for fair Countries like UK, USA, etc, for Courts of Jurisdiction). 

From – Airports and Countries

China – Shanghai Circa – forever – ‘It’s always about cheating and negotiating’

In my probably 50th trip to China, I landed in Shanghai this time at 3 am. Even at that unearthly hour, the business model of deception, lying, and cheating was alive and kicking. The official taxi stand manager of the airport actually told me to take a ‘private’ taxi rather than the public ones that he was supposed to be manning.  (The broker of the public taxis conveniently stood  next to him and openly gave him a commission to do so).

I insisted on taking the public cab and asked the driver to take me to a hotel  in Puxi – just skirting the Bund (Old Shanghai City). As I had anticipated, the taxi meandered all along the way before arriving at my hotel ( a trip that would normally take 70 minutes hours took almost 120 minutes). Never to be defeated, I did what I have become adept at doing in China – and especially with Chinese taxi drivers – I looked at the fare meter – shrugged vigorously and said the word ‘ no – too much – police – too much- police’ repeatedly. The taxi driver  quickly understood my grooming and said ‘no problem, no problem – how much?’ – He took a good 30%  cut on the fare and vamoosed. 

This philosophy perfectly reflects China. Having stayed there for months in between 5 years, built and sold a company, it’s all about taking advantage of people, being very short termist, trying to make a quick buck and then quickly retracting if needed. As the ex Indian co-founder of my Chinese Company brilliantly put it once to me ‘ Alok! In China, the folks can’t understand WIN – WIN – it means that you have something you shouldn’t have… for them it’s always WIN-LOSE – and they want to win and make you lose’.

From – The New Scam in Town

There is a new class of e-mails that we all (specifically those who operate websites) have received: 

This is what it looks like:

(If you are not the person who is in charge of this, please forward to your CEO, as this is urgent, thank you.)

From – Madam are you Pregnant?

We had established a 30 odd headcount office in Shanghai in early 2001 and were steadily ramping up our operations as Mobile2win, China. Contests2win and Softbank were the original investors and we were operating under strict Mainland China’s government’s guidelines.

As the paperwork increased, we began looking around to hire secretarial staff.  As soon as we had spread the word, we intriguingly began receiving resumes of many women – all in their twenties, married and well settled.  One afternoon, one of our rather talkative and assertive Sales Head took me in confidence and revealed something quite chilling – He said that all those women who had applied were actually pregnant and were applying for jobs, that they could lock into and then claim maternity benefits as per the dictated statutory guidelines. This was a standard ploy of gaining  ‘free employment’ and we should be avoid falling into such traps. 

Simultaneously, I was pavement pounding the streets & meeting clients in frozen China. I had a strange situation on my hands. Across Shanghai, Beijing and Guangzhou, large Chinese local Brands dominated the marketing scene and were big budget spenders. Sure, the Fortune 500 brands were around, but the Chinese brands made quick spend decisions on Internet marketing and were lucrative customers. 

The only problem was that all these Chinese brand managers expected ‘gifts’ to be left behind for them. It was not money but surely enough a bribe in exchange for business. My local Chinese team members who accompanied me told me, ‘Sir, this is the way business is done in China’. 

Both the cases above presented ethical dilemmas to me. They forced me to walk the tight rope of being ‘righteous’ vs. ‘practical’, ‘academic’ vs. ‘practical’ and most importantly a ‘rigid businessman’ vs. a ‘practical one’. 

Was I supposed to ask the ladies who came for the interviews indirect questions leading to figuring out if they were indeed pregnant? Pretend that we needed men secretaries’ because they might be required to work the night shift? 

In my meetings with the local Chinese firms, was I supposed to carry gifts bought in China and pretend they were from India and just hand them over as a token of friendship?

*****