Americans doing Business in China – Part 1/16

Before I started putting this series of posts together, I read an ABC News piece by Bill Weir on “A Trip to the iFactory: ‘Nightline’ Gets an Unprecedented Glimpse Inside Apple’s Chinese Core” — (Note: clever play on words.)

Weir’s piece is a long one but there are some telling points I’m going to share before I launch into a series of guest posts from an American that did business in China successfully for a number of years. Each one of these guest posts stands alone but provides a glimpse into another person’s experience doing business in China.

However, in 2010, Apple was crucified in the Western media due to a number of suicide at Foxconn, which is the Taiwan owned company that assembles/manufactures about 90 percent of Apple’s products. If you were not aware of it before, many Taiwanese do business in China and Foxconn is an example.

In his piece, Weir said, “They (the suicides) went up during a three-month span in the spring of 2010, when nine Foxconn workers jumped to their deaths. A total of 18 Foxconn employees took their own lives, or tried to, in recent years and given the company’s massive size, it is a suicide rate well below China’s national average. But when people started jumping in a cluster, Woo tells me that Tim Cook rallied a team of psychiatric experts for advice. They suggested nets, on the chance it might save impulsive jumpers.

“But Foxconn wasn’t Apple’s only problem. The company says they stopped a supplier named Wintek from using a toxic chemical to clean iPhone screens after 137 workers were injured…

“Apple says they have been ordering audits of its suppliers since 2006, and since 2007 have been publishing the sometimes disturbing results…

“It is a Monday after a Chinese holiday, and since many overworked migrants will just stay home, the people who lined up before dawn know that the chances of getting an assembly line job are better than average. And in a country of 1.3 billion, where jobs are scarce, getting there first matters; especially for their families back in the village, where most of their paycheck will end up…

“Starting salary is around $285 a month or $1.78 an hour. And even with the maximum 80 hours of overtime a month, the Chinese government considers them too poor to withdraw any payroll taxes…

“We mostly found people who face their days through soul-crushing boredom and deep fatigue. Some complained of being overworked, others complained of being under worked and almost all said they were underpaid…

“We do have labor unions at Foxconn … but it’s not a freely elected labor union yet. I expect to see that in the next year or two, they will become more like a collective bargaining union, and they will be freely elected. In fact, I see that some legislations in more progressive provinces (of China) would require labor unions to be sitting on the board of companies…”

The exclusive full report from ABC’s “Nightline” will air Tuesday, February 21 at 11:35 p.m. US ET/PT. This link to Hulu is where much of the full episodes of “Nightline” are posted for online streaming the day after the original broadcast.

Continued February 22, 2012 in Americans doing Business in China – Part 2 (a guest post)

______________

Lloyd Lofthouse is the award-winning author of The Concubine Saga. When you love a Chinese woman, you marry her family and culture too. This is the love story Sir Robert Hart did not want the world to discover.

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6 Responses to Americans doing Business in China – Part 1/16

  1. merlin says:

    That was Foxconn!? FOXCONN IN KUNSHAN! I am feeling a little uneasy at the moment. IF only it hit me sooner than it just did! Larice. She never told me it was her company having all those suicides. Oh man what must’ve been going through her mind all that time. She quit her job and moved to Shanghai to be near me, but by then I was in jail for my stupid expired visa.

    I’ve yet to run my good luck streak.

    • Larice? She quit her job and moved to Shanghai to be near me?

      Romance?

      Hmm, sounds like a good true-to-life story! You never mentioned Larice before.

      “I’ve yet to run my good luck streak”

      I was a card counter at the game of 21 in Vegas and Reno back in the early 90s, so I assure you the odds will eventually favor you but fortune is capricious. Some that read this may believe card counting is illegal but it isn’t. It is only a method to see when the odds are in the players favor. Just don’t get caught. Casinos have the right to refuse service to anyone caught counting cards, bar you from gambling, and share this info with all the other casinos. They do not like seeing the odds tip away from the house. Counting cards is hard work because the player must turn his brain into a human calculator that does not forget any of the numbers flowing through it and the running total changes with each card that appears on the table.

      However, as for Larice, I hope you stayed in touch via e-mail.

      • merlin says:

        Yea, I’m thinking of maybe creating something small for starters on ebook/kindle.

        On the topic of Americans doing business in China, I’ve heard it’s a tough game to play. On the other hand, if you can jump the hoops, I imagine it’s pretty enjoyable to be a business owner in China. The Chinese are always stretching to the “American Way”. Not only becoming a consumer driven society, but they want to be almost exactly like Americans in dress, speech, action, education, etc. A growing market potential. To me, starting a business in the US is dangerous. There’s many licenses, policies, paperwork, etc. Plus, trying to get a person interested in what you are selling (product/service) is easier said than done. It’s just my assumption because I’ve been trying to find a way to startup my own small coffee shop or hawaiin ice for many years. Usually the first step that burns the bridge is the capital required to start a business. Following that is licensing, getting an inspection from the health inspector, marketing, finding a rental space, acquiring equipment, acquiring product, etc. In China, thankfully the exchange rates take 10,000 USD and can turn it into approx 60,000 rmb. On that kind of money I could survive half a year without work.

        Your run through Vegas sounds enjoyable. Off topic, but I agree it’s not illegal. Your defense of card counting sounds similar to a magician’s trick. Magic is not illegal, yet these professionals with a good hand can easily swindle thousands of dollars out of an audience by pulling a rabbit from a hat. Card counting sounds similar, except their audience doesn’t pay a ticket price to watch their performance.

        I try to stay in contact with many of my friends. I miss them. They were kind enough to help a stranger they just met. They were creative and offered good advice when needed. In a business setting, a person would pay for consultation or “help”, so I’ve always felt I owe them.

      • Merlin,

        Yes, everything I’ve read about starting a business in the US is that it is a challenge and the start up costs in China are much less.

        I’ve read that 70% of small start-ups in the US fail within the first three years usually due to poor planning and lack of financial resources. I understand that the average small start up takes about three years to turn a profit so these people must have borrowed or saved money in the bank to keep them afloat while they work to build a client base. Starting a small business without this cash reserve is risky. And you are right, in China, since the exchange rate allows one to have more money to survive that start up time, he or she has may have an easier time to stay in business while building that client base.

        However, some US companies are starting to come back to America because the cost of labor and the growing environmental movement in China is causing the cost of doing business to go up.

        I read that by October 2011, Starbucks had opened its 500th coffee shop in China. There’s this USA Today piece about “Why Starbucks succeeds in China and others haven’t”

        http://www.usatoday.com/money/industries/food/story/2012-02-12/cnbc-starbucks-secrets-of-china-success/53040820/1

        Then there is Network marketing, which is illegal in China, and door-to-door sales, which isn’t, and this sort of business doesn’t cost the individual much to start for most of those types of companies (the buy in is low), but still selling any kind of product in the US or China, for that matter, is a challenge since there is so much competition from giant corporations such as Wal-Mart, Sam’s Club, Costco, Target, etc.

        As for card counting, the player only has to scan the table with his or her eyes and as the cards are turned over, he or she keeps a running count in his or her head. Each card has a value. The card counter doesn’t need to pull any rabbits out of the hat or touch any of the cards except those he or she is dealt. There are actually books that guide one on how to learn this skill because it is a skill. To learn the skill of card counting required about year of practice until I could go through an entire deck of cards in less than a minute and keep the count accurate without losing it.

        Here’s one such book.

        http://www.amazon.com/Knock-Out-Blackjack-Card-Counting-Gambling-Theories/dp/0929712315

        There are videos on YouTube but be careful. Some of them are attempting to convince you that you can count cards playing blackjack on the Internet—impossible.

        The easiest game for a card counter is one where the dealer only has one deck. It is more difficult with a shoe. Then the player that is counting cards has to avoid the dealer or pit boss catching him or her scanning the cards as he or she keeps the count, which you will learn about in the following video.

        And of course, there are casinos in China in Macao.

        You said you were thinking of starting somwething small for an Amazon Kindle’s e-book? How small of a book are you considering? You may also want to explore using Amazon’s Create Space for a paperback sold through Amazon. In addition, you will probably want to have an ISBN number. This is important.

        It isn’t that difficult to publish through Amazon once you have a finished book. However, you want that work to be edited and revised heavily so it measures up to industry standards.

      • merlin says:

        70% failure? That’s why I stay away from opening a physical location in the US. I didnt know it was so high, but I knew it was complicated. I remember my old job flipping and subleasing apartments in Shanghai had about a year before turning a profit.

        If my boss would’ve kept up with it she would be turning pure profits by now. Of course, she couldnt keep her focus and the whole thing slid downhill dragging me along for the ride. Trying to set her straight was like a kid trying to tell a mature adult how to drive a car. You get a bad comment along with a nasty look that says you’re as good as dead.

        Starbucks is becoming a big market in China I feel because they are taking on an American lifestyle. People are beginning to be in a rush to go everywhere and requre that morning kick that coffee offers.

        One question, would Macao casinos have security that can easily pickup card counters as Vegas? Although are the casinos owned by crime affiliates such as the Triads and other such Asian mafia?

        Thanks for the tip on Amazon.

      • Here’s a piece at “Small Business Trends”. Scroll down to see the chart that shows the proportion of new businesses founded in 1992 that are still alive by year. The chart only covers from 1992 to 2002. By 2002, twenty-nine percent of the small businesses that started in 1992 were still operating.

        Scott Shane, the author of the piece, said, “The failure rate percentages are almost identical for all the cohorts that researchers have looked at. So, these are pretty much the one through ten year survival rates of new firms.”

        http://smallbiztrends.com/2008/04/startup-failure-rates.html

        The next link will take you to a piece at Microsoft Business that covers some of the most common mistakes small businesses make, which leads to failure.

        http://www.microsoft.com/business/en-us/resources/startups/business-plans-entities/7-biggest-mistakes-of-business-startups.aspx?fbid=AxUjDaF1GaR

        Regarding card counters: Usually it is the pit boss or someone on the other end of a security camera watching the tables that spots the habits of a card counter. To count the cards, the counter must scan the cards spread across the table as the dealer turns them over so he or she may keep the count. It is the scanning of the cards that gives the card counters away (the head movement or the eyes shifting back and forth). The pit boss and casino security know what to look for.

        They watch for teams too where one person scans and signals another that isn’t scanning. The person counting the cards places minimum cards and loses more than he or she wins while the other person the isn’t counting the cards watches for the signals and bets appropriately when the odds favor the player.

        One time at state-line just inside Nevada after leaving California, I finished scanning the table and looked up into the startled eyes of the pit boss. I smiled, acted strange and deliberately lost a few hands and then shifted tables after he stopped watching me. It took me about a half hour to win the money back that I deliberately lost before I left. Then I drove on to Las Vegas and stayed away from the crowded tables while gambling. Mostly I gambled from 3 AM to 3 PM and when fewer people were in the casinos and everyone on the midnight shift was tired. In the evenings, I took in shows. Its hard and stressful work. After a few years, I gave it up and stuck to my teaching job. However, once, while waiting in line for a show at the Luxor I was standing next to a blackjack table that used only one deck and scanned the cards for a few hands. The odds were favorable so I plunked down some money and won enough to cover the show I was going to see and paid for dinner afterward.

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