China and Business: Expect the Unexpected. 9 things to Know before you go to the World’s most Populous Nation

Last night, I was chatting with a former classmate, now a high-flying hedge fund manager-cum China angel investor (most of my classmates are wildly more successful than myself). This person is indirectly funding a foreign corporate client for whom our firm is helping to organize a new variable interest enterprise (VIE) to help facilitate foreign investment in the media/IT space. Foreign investment in media/IT is technically prohibited by law in China, but is actually very widespread and well known. Alibaba, Baidu, Sina, Sohu, some of China’s most well known and successful IT companies, all were foreign funded and all float on overseas bourses. I was explaining to this former classmate that in China, just like our mutual hometown of Chicago, most things are possible, it often depends upon who you know, and finding a “work-around”.

He and I inherently understood such incongruities. We had learned such things growing up, through a kind of osmosis. Yes, such incongruities were second nature to us Chicagoans (the Chicago River actually runs backwards). Our beloved, “Second City” had not been America’s second most populous city since 1956. We had our own word for “guanxi” (关系, roughly in Chinese, “connections), which Chicagoans know as “Clout”. The Chicago of our youth was essentially a “one party system” (Daley Democrats). No less than four Illinois Governor’s during our lifetime had been convicted and sentenced to prison for corruption. Governor Rod Blagojevich our last Illinois Governor was convicted for trying to ‘sell’ former President Obama’s vacated Senate seat. That was our “normal” when growing-up. We as Chicagoans and Cubs fans suffered with the dubious reputation as ‘lovable losers’, much like China was labeled so-long as a developing country. Yet, to the surprise of many, (and the joy of Chicago), the Cubs won the World Series last year (finally), and China now has the second biggest economy in the world.

My classmate, who had never been to China (too busy), was joking that my Chicagoland upbringing really prepared me for living and working in China. I pointed out to him some things I have learned while living and working in China that he might not have realized. The following is the list I assembled recalling our discussion about China:

1. Do not be surprised if you notice what appears to be a “wrestling match” before a restaurant cashier between two or more patrons who just finished dinner at an eating establishment. Eating is a big deal in China, hosting a meal and paying for a meal, unlike in the west could be a very big deal. One should always at least go through the motions of feigning who is to pay for a meal, usually both persons are clear about who is to pay based upon a series of social cues timing and hierarchy.

2. Always refuse a compliment. My classmate is super smart and super wealthy. But I told him, when you finally manage to say 你好 (“ni-hao” or “hello” in Chinese), or  啤酒(“pi-jiu” meaning “beer”) inevitably a Chinese will say, your Chinese language is “Very Good”. Do not simply say, “Thank you,” as it’s seen as vain and selfish. Instead find a way to be humble by saying something like, “You’re very kind, but my Chinese is really very limited”. Still, I reminded him, “A compliment’s a compliment” and for most of our fellow Americans, a couple of words of Chinese could seem like fluency.

3. Eating dog is becoming increasingly unpopular. Contrary to what you might see on TV (think the drivel of Lisa Vanderpump, Real Housewives of Beverly Hills). According to CNN, the rate of dog consumption is declining and love of ‘man’s best friend’ is rapidly increasing among many Chinese. In some provinces there are regulations prohibiting restaurants from serving dog meat. There has been even talk of considering legislation passed by the National People’s Congress that would make eating cats and dogs illegal. Recently, Weibo (China’s Twitter) blew up with viral protesting against eating dogs. Most Chinese people these days prefer to keep cats and dogs as pets.

4. Breathing in Beijing air is not as bad as you might think. Although pollution in Beijing is a major issue, according to a recent study by MyHealthBeijing, breathing-in the air is only equivalent to being exposed to secondhand smoke (one-sixth of a cigarette) as opposed to smoking a pack a day, which is the popular belief.

5. Each Chinese character is not necessarily an individual word. Although some words use just one character, most words are composed of two or more characters. Chinese characters are usually morphemes, meaning a unit of language or word that cannot be further divided.

6. No one in space will be able to see you on the Great Wall. According to Universe Today, you actually cannot see the Great Wall from space with the naked eye, let alone the moon. The pictures that exist of the monument from space are usually taken with professional zoom lens cameras.

7. There is a good chance you will have to use a squat toilet at some point. Don’t be afraid. Like all men of a certain age, chat soon turned to ‘bowel movements’, one must always think about planning a dignified hasty exit to “use the facilities”. I told my classmate, using the squat toilet is of course more difficult and awkward, than the western commode. The squat toilet however, is vastly more practical and believe it or not, more hygienic (especially at crowded China tourist sites), than using a regular toilet (which are there, but usually way-more dirty). Just remember to bring your own toilet paper).

There was more, but this is enough for one blog post. If you would like to hear more China incongruities, or learn about the unique business and legal environment in China, send me an email at

elehman@lehmanlaw.com

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