DiligenceChina

There seem to be signs that China is becoming more nationalistic, and that anti-western sentiments are on the rise. Is this something that should concern investors and managers entering the China market?

I’m willing to go out on a limb here and say Yes, No and Maybe. Bold, I know, but that’s how I feel.

Yes – You should be concerned about Chinese Nationalism and anti-western feelings.

Definitely. You are essentially a guest here, and the Chinese government’s acceptance of your presence is definitely a matter of convenience and self-interest. That’s true in just about every cross-border commercial arrangement. You are being watched and judged all the time. Remember it, and act like it. You are not at home, and have relatively few rights here. Be sensitive to that fact, and make your decisions accordingly.

Unequal application of rules. This seems to be a growing issue. The latest Fast Food Scandal about salary rates conveniently ignored the fact that local companies treat their staffs far, far worse. Whenever the Chinese feel pressured into making a new law or regulation, they always apply it more stringently to overseas-invested companies.

Insults and slights sell papers. Or get clicks, in the case of blogs. Anti-western scandals are sexy and emotive in China. It’s a hot-button issue, and it’s getting hotter. Aggrieved ex-employees, cheated customers and loss-making local competitors have an eager and active audience.

Branding issues. The internet polls have already started to rank western brands as untrustworthy and vaguely threatening to the welfare of the nation. Marketers and investors will have to bear in mind that the Chinese market is fickle in general – and particularly ‘bi-polar’ when it comes to western brands. Brands that seem safe and reliable will do fine. Companies that seem unreliable or exploitative will be penalized.

No –You really don’t have much to worry about when it comes to rising Chinese Nationalism.

Anti-McDonalds vs. Anti-YOU. There have been 100% more anti-McDonalds riots in Paris than in Beijing. I’m American, and I don’t feel that McDonald’s represents me or my values ANYWHERE – especially overseas. Hell, I have a pretty negative image of McDonalds and other fast-food conglomerates, and that doesn’t make me unpatriotic (yet).

Distrust of institutions is universal. Those nationalistic blogs and polls tend to focus on large MNC institutions – not people, nations or races. The average Chinese person is far more polite and friendly toward Americans than is the average European or Australian. Westerners consider distrust of large, faceless, profit-oriented corporations to be a sign of sophistication and intelligence. Let’s not be hypocritical here.

Not really widespread or commonly held. I’ve met plenty of Chinese MBAs who feel that they should be doing their ex-pat manager’s job – but that is not anti-western or xenophobic. It’s ambitious. In general, Chinese are still well-disposed toward international brands and foreign people. The anti-western rhetoric tends to get trotted out AFTER a scandal has already unfolded.

Applying rules to western MNCs isn’t unfair – not applying them to local firms and SOEs is. This isn’t just semantics. Western companies are expected to follow the rules and should expect to be busted if they don’t. When a subsidiary of the provincial government gets away with an infraction, that doesn’t mean western business is being persecuted. It means that local companies are getting away with an infraction.

Maybe — Signals are mixed about the future.

China tends to see status as a Zero Sum Game. Ultimately, China will define its position in the world relative to the US, Europe and Japan. China understands ascendance and understands struggle. It’s not so great at parity. China is either on top or someone else is.

Will worsen in a slowdown. Right now China is setting records and struggling to rein in growth. Some day, the numbers will be less attractive, and then attitudes towards western companies will be tested. If the past is prelude, feelings towards foreigners will rise or fall with the GDP level.

Income disparity. Look for the widening gap between rich and poor to be laid at the feet of international forces – EVIL international forces. That would be YOU.

Puts western corporate behavior under the microscope. Western managers don’t like to admit this, but we have a lot of impact on how people regard us. If we act like saints, we will be well-regarded. If we act like pigs, we will be regarded as pigs. Paying kids crappy wages or charging premium prices for low-quality products doesn’t make friends anywhere. It’s not about the flag, it’s about the actions.