Is It Good If Your JV Partner Or WOFE First Hire Is Well Connected?

is-it-good-if-your-jv-partner-or-wofe-first-hire-is-well-connectedThis is a much more complicated question than yes or no.

First, let me quote the very insightful Foreign Entrepreneurs in China in point nine of her 22 point JV survival guide.“9. Your Potential Partner is Well Connected … Maybe Good, Maybe Bad
Experience: It is quite common to be taken on the “big tour”, introduced to the city mayor, the bank’s president, and all sorts of top-end contacts.
Your partner will put especial effort into making a great impression and showing you how easy doing business in China is going to be if you deal with him.
! Tip: Do not be dazzled by your partner’s connections …They will not necessarily be used for your benefit.
The fact that your partner is well connected is good (you obviously don’t want to end up with a nobody), but it is also a fact that at times those connections are only used for their own benefit.”
A classic trap for Westerners starting in China is to have their Chinese employee go to China and start in their hometown. The Chinese worker is trustworthy in America, but her connections in China drag her down and she becomes untrustworthy.

Other JV partners also change after you invest. They then use their connections to take control of the venture in some form. Because the local government supports them, it is hard for you to get them out or change their behavior. Sometimes it is not obvious, and you have a certain fear like I mentioned recently.

If you do not have a trustworthy in China guide you understand, then you are better off sending your China employee to some place he has no connections. Of course, those employees often left China very young and have little in China working experience, so that is another HR risk.

In a JV, you may need a passive investor from outside where you are working.

Naturally, you usually need good connections, but to get them safely takes very good due diligence, HR due diligence. You need experienced and trustworthy China HR thinkers to help you avoid getting trapped in an uncomfortable relationship.

Always worst case analysis each situation with Chinese thinking and determine how to minimize those risks if people use power or connections against you. In the West we say, “Power corrupts, and absolute power corrupts absolutely.” It is also true in China. Beware signing your well connected first hire or JV partner.

Thoughts?

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Posted in: China, China Recruitment - Getting Good People, Chinese Culture, Market Entry

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