Thought provoking article from Jeffrey Wasserstrom in The Nation about U.S. perceptions of China. As someone who has given China market advice for quite a few years, I constantly find myself dealing with foreign investors that treat the China business environment as either completely foreign or exactly the same as their home country – big mistake either way.

Wasserstrom tells us why China is perhaps not so different from the experience of other developing countries, and he's right. His fundamental point is that before the U.S. judges Beijing or the practices of Chinese enterprises:

We should try to work from a novel starting point whenever we want to criticize China — or indeed when we want to praise it or simply try to understand it. Namely, assume that despite its unusual size, distinctive history and other things that set it apart and make it anomalous (such as being run by a Communist Party that has embraced elements of capitalism), China has many features that are familiar, not exotic.

Wasserstrom points to past U.S. (and other countries) misdeeds and compares them with current practices in China, essentially arguing that there is a bit of hypocrisy involved here. Or to put it in more traditional terms, "Let he who has not sinned cast the first stone."

We can take this one step further, though. In a business context, a big question for foreign investors is "How local should I go?" in adapting to this market. This is not just an HR issue but covers almost every aspect of business.

Note that there are entire service industries over here set up to give advice to foreigners, not to mention countless blogs. It is in their interest to push the "exotic China" theme, and it amuses me to no end to hear some of these consultants adamantly argue why foreign companies need to completely reinvent their business from the top down for the China market. If they do not do so, scary dire consequences will ensue.

Not to belittle the importance of localization, which is harder in China than in most jurisdictions for MNCs, but I agree with Wasserstrom's basic point that there is also a lot that is familiar here. One should always wonder whether that consultant you are talking to is pushing the "China is different" theme because it is true for a certain situation or because it results in higher fees.

Small example from the legal field, and you'll appreciate this because it is definitely not self-serving. It used to be that if you wanted to do business here with a local company, you needed to use a "Chinese style" contract. This generally meant a short, vague document that stressed things like cooperation and was not too one-sided. MNCs were cautioned that their international pro forma agreements were next to useless and should be abandoned. This was great for lawyers here in China like me because we were able to charge our clients for drafting completely new documents. Good work when you can get it.

Times have changed, and Chinese enterprises are much more likely these days to be familiar with a lengthy, tough, Western-style contract. The dirty little secret in the legal community over here is that 85% of an MNC's pro forma agreement is going to be just fine for China and may only require a little tweaking to be acceptable locally. I am not talking about commercial terms, but rather legal "boilerplate" and general format and drafting style. International convergence with respect to legal drafting has been significant in recent years and has had a dramatic effect on legal practice here.

So, yes, China is exotic in many ways, and localization is absolutely crucial if you want to do business here. However, don't throw away all your hard-earned knowledge, internal processes, documents, etc. when setting up shop here. Reinventing everything is a big waste of time and resources.