Reviews
China Law Deskbook: A Legal Guide for Foreign-Invested Enterprises
by James M. Zimmerman. Chicago, IL: American Bar Association, 2005. 1,172 pp. $169.95 softcover.
The second edition of the China Law Deskbook: A Legal Guide for Foreign-Invested Enterprises is a significant contribution to the China law field. In 24 chapters, the Deskbook provides a clear, concise yet comprehensive, and accessible discussion and analysis of legal issues affecting foreign investors in China. Everything one needs to know about how the PRC government regulates foreign investment—from contract law to government procurement—is contained in the Deskbook.
Several things set this book apart from run-of-the-mill legal guides to China. Zimmerman concisely explains the development of law and the role of lawyers in China, providing valuable historical context to today's legal development. He also succinctly explains the roles and powers of China's many government entities whose actions and inactions affect foreign investors. The Deskbook successfully integrates China's myriad World Trade Organization (WTO) commitments into its analysis, and the author paints an accurate and realistic picture of the moving target that is China's compliance. Zimmerman's discussion of foreign banking regulation includes analysis of how WTO commitments, due to be implemented by December 2006, will affect foreign-invested banks. Zimmerman provides an honest and candid assessment of these commitments, the implementation process, and how such commitments and processes will affect foreign investors. He also analyzes the various investment vehicles available to foreign investors, the pros and cons of litigating in Chinese courts, the sometimes-thorny issue of land-use rights, and new regulations on mergers and acquisitions.
The Deskbook also provides helpful links to primary source material—the sometimes hard-to-find statutes, regulations, and rules that govern foreign investors' China operations. Zimmerman includes sample contracts and contract clauses, including sample employment and distribution agreements. The final two appendices include a research bibliography and electronic research guide, as well as a listing of all the relevant contacts in Chinese central and city-level government entities, US government offices in China, and trade associations.
The Deskbook is accessible to the experienced China hand, the China neophyte, and the reader who is looking for an introduction to PRC foreign investment law. Zimmerman's writing style successfully balances the needs of each set of readers without talking down to one group or over the heads of another.
I have used the first edition of the Deskbook almost daily since its publication in 1999 and am confident that the second edition will be just as indispensable. The China Law Deskbook is an invaluable resource and an incredible achievement. It belongs on the desk of any lawyer doing China-related work.
—Michael E. Burke
Michael E. Burke is an attorney in the International Practice Group, Washington, DC, office of Williams Mullen. He also is a visiting fellow at the Asian Institute of International Financial Law at Hong Kong University Faculty of Law and is a past vice chair of the American Bar Association Section of International Law's China Committee.
Mr. China: A Memoir
by Tim Clissold. New York, New York: HarperBusiness, 2005. 320 pp. $24.95 hardcover.
Mr. China is essentially a memoir of Tim Clissold's early fascination with China and experiences from the late 1980s though 2002, which led to his employment with one of the first large foreign investment houses in China. The title of the book refers to the grand vision that the Wall Street-trained company founder, "Pat," as he is referred to in the book, had for developing modern enterprises in China. "Pat" had the right concept, but as elaborated in the book, he and the author had to deploy a large amount of capital within a relatively tight time frame in a market with limited viable investment options, leading to undesirable outcomes in several cases.
For executives, the most useful books on China tend to be those that are rich in practical examples of how to do (or not to do) business in China. By that standard, Mr. China is one of the best books on China business in recent years. Clissold's account of his experiences developing and operating multiple corporate entities in the PRC is highly entertaining for China veterans who have been doing business here since the late 1980s, not least because they will be able to relate personally to many of the same situations Clissold found himself in.
At the same time, as China goes through yet another boom cycle in foreign investment, this book offers sobering advice for newer entrants. Specifically, Clissold shows how the best of intentions and plans can go awry when a company has an aggressive investment strategy combined with a limited infrastructure to manage rapid growth. Clissold's employer was one of the first to attempt to localize senior management, and as the book richly illustrates, not all local employees work on behalf of their employer when entrusted with a key managerial slot.
To be fair, in the earlier days of the company's growth, professional local services and management were quite limited compared to today's China. Nonetheless, the common denominator throughout the book is due diligence—or lack thereof. Even with efforts to understand what they were getting into in terms of partners, markets, products, staff, and government affairs, Clissold and his associates encountered unpleasant financial and operational surprises in a number of their projects, many of which could have been foretold by experienced advisers.
Although it is unlikely that all of their problems could have been avoided, many could have been mitigated with a higher level of due diligence prior to investment. Nonetheless, all of the problems they encountered are still highly relevant to the current market, particularly for companies that plan to invest in China's interior provinces, which are not as sophisticated as the heavily foreign-invested boomtowns on the coast.
Overall, Mr. China is an excellent China business book and well worth a read—it is both entertaining and full of anecdotes that hardened China veterans and newcomers alike will enjoy.
—Patrick J. Powers
Patrick J. Powers is vice president of China Operations at the US-China Business Council in Beijing.
Doing Business in China
by Tim Ambler and Morgen Witzel. London: Routledge Curzon, 2004. $32.95 paperback, 256 pp. $114.95 hardcover, 272 pp.
When Western businesspeople enter the vast China market, they often focus on solving problems that stem from language barriers, bureaucratic red tape, and unreliable statistics. But to conduct business successfully in China, foreigners must also understand China's long history and culture. In the second edition of Doing Business in China, Tim Ambler and Morgen Witzel build on their fundamental theories from the first edition, incorporate implications of China's World Trade Organization (WTO) entry, and add new marketing strategies for doing business in today's changing China.
Drawing on their distinguished expertise on business and China, Tim Ambler, a senior fellow at the London Business School, and Morgan Witzel, honorary senior fellow at the School of Business and Economics, University of Exeter, UK, bring updated insight and knowledge to this second edition. The book balances vast historical and cultural information with practical advice and risk assessments aimed at the novice Western businessperson.
Doing Business in China is divided into two parts. The first half offers a historical overview of Chinese culture and philosophy in an easy-to-read format, with summaries and relevant case studies at the end of each section. The second half reads much like a how-to manual aimed at Western businesspeople; it is full of check-lists for forming, marketing, and running a business in China, including current case studies and advice. The authors pay special attention to the differences between overseas Chinese and mainland Chinese business cultures.
The authors do not claim to possess all of the right answers for non-Chinese businesspeople; rather, they present a framework to assess the available information and to view China through Chinese eyes. For example, to reduce the frustrations that stem from dealing with China's frequently inconsistent and unreliable economic statistics, the authors recommend that Western businesspeople "distinguish between what they must know and what may be nice to know."
Ambler and Witzel also present a model for anyone doing business in Greater China. The key pillar is relationships (guanxi). This model recommends that Western businesspeople slowly build relationships by getting to know key Chinese players, preferably through reliable third parties. They claim that "true guanxi cannot be bought" but that Western businesspeople must distinguish between legitimate and illegitimate payouts. The remaining pillars center around cultural values of respect for authority, face, and harmony between the individual and the group.
Because China's economy is rapidly changing, the book provides few details on macroeconomic data, current political and economic reforms, or China's WTO entry. But the authors list places to obtain more economic information and encourage businesspeople to conduct ample research. Moreover, the authors advise business managers to expand their view of doing business in China and apply their recommendations to work with the growing Chinese commercial presence in the West.
Doing Business in China is both a practical reference guide and a risk-assessment manual for entering the China market. The book offers functional insights for Westerners working in China and with Chinese businesses around the globe. By emphasizing both the advantages and the disadvantages of doing business in China, Ambler and Witzel attempt to provide non-Chinese businesspeople a philosophical and strategic framework for achieving successful business ventures in China.
—Joanna Lo
Joanna Lo is an international trade analyst investigating antidumping cases for the US International Trade Commission.
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