It's hard to make money in China. Meddlesome bureaucrats, shifting policies, and chaotic, competitive markets make China rough going even for big, savvy companies. The difficulties have made some companies give up on China. And they've prompted questioning of the Clinton Administration's policy of constructive engagement, which uncouples China's miserable human-rights record and patchy record on weapons proliferation from trade and investment. Why bother cozying up to the Chinese when many companies are running into trouble, profits are thin even at successful ones, and China is running a $40 billion trade surplus with the U.S.?
But it's too soon for ambitious businesses--and the U.S. government--to give up on China. From software to soda pop, the China market is real. The 19th century dream of British manufacturers and Mississippi cotton merchants of a vast Chinese market open to their products is coming true for companies ranging from Procter & Gamble to Intel. Economic reforms are firmly in place, and growth should be at least triple that of the developed world for the next quarter century. No global giant can afford to ignore China.
Despite frustrations, China is mostly moving in the right direction and becoming more of a market economy. To keep the country on track, Clinton and the Jiang government need to ensure that China enters the World Trade Organization sooner rather than later, and on terms that will mean a fair shake for foreign companies.
Meanwhile, corporations investing in China can learn from experience. They need to get smarter about picking partners, focus on modest and profitable projects, and transfer useful skills to the Chinese while retaining control over key technologies. In the end, it will be the skillful, energetic, and quick-moving companies that succeed. Those that prosper in the world's toughest emerging market can make it anywhere.