A Billion Customers, A Thousand Blunders


By Randall E. Stross

Pantheon -- 330pp -- $25

George Bush argues these days that China's trade privileges with the U. S. should be renewed to promote political reform there. "I don't want to be the President that isolates China," is his refrain to a Congress angered by China's stance on human rights, arms sales, and trade abuses.

Can trade links change a nation's politics? The question applies to Eastern Europe and South Africa in the wake of reforms, and to the coming debate over lifting the U. S. embargo on Vietnam. But it is especially pertinent to China, where from 1979 on, businesspeople have outnumbered--and had more influence than--any other Americans, including diplomats and teachers.

Bush's stance is contradictory: He hopes to bring down Hanoi's Communists by denying aid and trade yet claims that sustaining business with China will speed the downfall of Beijing's hardliners.

Randall E. Stross, who has studied U. S. business ties with China over the last 20 years, is less equivocal. In Bulls in the China Shop, he writes: "We usually do not treat businesspeople as merchants of ideas, but . . . we find American businesspeople and their Chinese counterparts meeting at the intersection of culture and ideology." Predictably, the relationship has been mired in misunderstanding. But the political impact on China has been profound. Seeing foreign executives fight for sales, confront the party, and take responsibility on the shop floor has given many Chinese a new idea of what an individual's role and privileges can be.

Chinese-American business encounters have often been more like collisions, says Stross. His book is filled with examples involving Coca-Cola, RCA, American Motors, Occidental Petroleum, and dozens of other pioneers.

Americans and Chinese doing business together have faced deep-seated cultural differences. Arbitration of contracts is a case in point. One U. S. company found the Chinese unwilling to negotiate unless the Americans promised no legal action would follow. At heart was each side's notion of the bilateral "friendship" that had been toasted from Beijing to Washington. "Friends," said the Americans, stick to firm agreements. "Friends," said the Chinese, don't sue.

Americans managing Chinese have been tripped up often and hard by such differences. The manager of the Shenzhen International Hotel told workers to treat the hotel as their home. They did--pilfering food, cutlery, and linen.

Early on, says Stross, Americans who had been fed negative images of China were so relieved that their hosts weren't villains that they abandoned their critical faculties. A Pullman Kellogg official gushed in 1979 that the Chinese never raised the possibility of bribes because they "aren't made that way." But by 1989, Boston businessman Garrison Rousseau observed that "the difference between graft in China and other places is that in China, you can't get things done even when you've paid bribes."

There are many comic moments in Bulls, but taken together, the tales have, as Stross writes, "a tragic quality." Since the Tiananmen Square massacre in June, 1989, it is the Chinese "most influenced by American people and ideas" who have paid the highest price. Economists, students, and managers willing to test market forces have lost jobs, status, and, in the case of hundreds of political exiles, their homeland.

On U. S. business' misguided romance with the China market, the book is damning. As Stross presents them, the first U. S. executives in China, enthralled to be doing business in such a remote and novel land, forgot the wisdom gained elsewhere overseas. Envisioning an untapped market of a billion innocents incapable of corruption and ignorant of commerce, many were drawn into commitments and losses they would not have tolerated elsewhere.

As the veil lifted, U. S. salespeople learned what the CEOs had missed in their three-week tours: The Chinese system was complex and corrupt. Delays and evasions were grounded in strategy, not ignorance. Contracts were the start, not the end, of real negotiations.

Moreover, the objective of Deng Xiaoping's "Open Door" clashed outright with U. S. hopes. The party elite wanted only one thing, technology. They didn't wish to change the essence of their socialist system, says Stross, but rather to make it flexible enough to accommodate Western knowhow.

His more optimistic conclusion is that welcoming U. S. business moved China toward reform. If our hope that the Chinese would become more like us was naive, the Chinese nonetheless had to rethink their system to modernize it. New hotels needed new management and incentive systems and work ethics that challenged socialist ways. Enterprises made financially autonomous needed capital, which led to stock issues, exchanges, and debate on the Marxist principle of state ownership of the means of production. The need to import technology challenged China's pride and prompted dissident attacks on Chinese culture.

Stross calls the tension between the Chinese and American systems "gargantuan, almost geological." And Washington's debate over China's most-favored-nation status has raised that tension higher than at any point since 1972. Stross has done a fine job of illustrating how Chinese-American relations stumbled to this point. Business readers may be flattered, or horrified, to realize what a key role U. S. salespeople, ad executives, and engineers have played in the drama that climaxed at Tiananmen and continues now on the floor of Congress.