China Law Blog wrote an article about a US company who complied with the law here, and still lost their business.
The American started a business selling soft ice cream out of vans in Suzhou. He did well and then drivers started to quit and compete directly with him except they would use a different name and not copy his. What they did was fair.
The competition got tougher and the government seemed to favor the Chinese ice cream trucks over the foreign one.
If you do something that is visibly popular, people in China will copy beyond your wildest nightmares. Children in China are taught to follow the model. They are rewarded for copying. So the Chinese are great at copying.
I guess he did not think enough when hiring. He had a massive risk of people learning and then starting their own business right next to him. So, he needed to take extraordinary care to find and retain people who really want to work with him and build the business with him. He like others did not know what to do and so threw his hands in the air. Perhaps he hired people who looked friendly. He then felt perplexed when his hires competed with him or even damaged his property.
A generation ago in China, I developed a small loan product that helped 1000’s of small businesses. The banks saw our success and all copied our product down to the kind of paper we used to advertise the loans. They faked being customers to learn how we talk to customers and then copied that. They undercut our pricing,
Be Careful About China Hiring – It Helps
I had carefully hired and trained a team who stood together with me through the stress of that time. They were even key to us thriving despite and even because of severe competition. The method and even those team members are still in the market making small loans 15 years later.
Also, Engage the Government
As a foreigner, I knew I was not the government’s first priority.
I and the great team I hired engaged the government and stayed with them and helped them succeed through what we were doing. I proactively served them and thought from their angle.
Great Hiring is a Decisive Business Advantage
A person from the US Global headquarters came to learn how I had succeeded in a program where theft of the cash was very hard to control. He knew it was even harder doing it while facing the government and the competition. He realized that what we did was not what he had been thinking for a bench mark. It was not my system that was world class. I had succeeded by fabulous hiring. 15 years later those people I hired are still my friends, and I smile when I think of my government friends there as well. See also It Is Hard to Avoid Hiring Jerks.
Great hiring that we provide is incalculably valuable. It is often a decisive advantage. Get the right Chinese people on your team. The wrong Chinese people will sink your ship or at least make it always leak.