Beijing Taxis and How Business is really done in China

Nigel had sent me a Google map with directions to the hotel.  The Beijing taxi driver was a virtuoso performer.  I passed him the map.  He looked at it in a noncommittal way, shrugged, and handed it back to me.  As we went through the tollbooth to get onto the main highway he made a pantomime of paying the 10 Yuan toll with a 100-Yuan note and palming the excess change to make it look as if he had only been given a 50-Yuan note in return.  He made a point of waving that around so that I could see it.  Then he sped straight to the hotel, a fairly long drive on a surprisingly beautiful for Beijing, blue-sky day, without further comment.  So, when we arrived at the hotel and he pointed to the meter and passed back a convenient 50-Yuan receipt that he must keep on hand for these occasions I knew he was trying it on.  Even if I had not noticed the tollbooth performance his indignant, loud, “Wah?” when I asked him to make change for a 100-Yuan note would have alerted me.  Luckily, in Beijing there is always a policeman close by when you need one.  The one loitering in the courtyard took notice of the fracas and began to move towards us.  Beijing hotels used by foreigners always maintain uniformed guards and porters out in front to assist arriving guests and perhaps to help them pay off their taxis.  Two of these quickly intervened and straightened out the fare.  I ended up paying the correct 75 Yuan instead of 115, a saving of about six dollars.  Welcome to Beijing!

It was not as if we were on a mission to stamp out corruption in Asia; but, on most evenings when Nigel, Angie, and I were taking stock of that day’s meetings with one of the several resellers we were recruiting, the conversation would always come back to this topic.  Perhaps Nigel’s recent experience with winning a very large deal in South Korea had made him overly sensitive.  Government procurements in Korea are overseen by the Public Procurement Service (PPS).  PPS had made Nigel’s life a misery in the last few months.  They demanded justification for each line item’s pricing.  There were pages and pages of line items.  They adopted a guilty of corruption till proven innocent attitude towards all parties involved in this deal, worth more than $30M.  Five years earlier, I had won an even larger deal from the same customer with the aid of a Korean consultant.  It went through reasonably smoothly.  Perhaps times had changed in Korea.  A former Korean President had recently committed suicide by jumping off a bridge after being impugned by corruption charges.  Nigel wanted to be cautious.  Angie and I helped to keep him in a high state of alarm.

Angie was Nigel’s assistant.  Angie hated corrupt business practices and spoke about such matters with vehemence. Her father was an official in the Chinese government who was working to stamp out corruption in Xinjiang Province.  This was the province where conflicts between the Han Chinese emigrants and the local Muslim people had lately been in the news.  From the news stories, it appeared that the Chinese authorities were quite heavy handed in Xinjiang.  Nigel did not understand Chinese.  So it was Angie, who after listening closely to the Chinese business people talking among themselves during the day would usually peach on them later that evening.   The common theme was that they thought we Westerners had no idea of how business was really done in China.  Although she was raised in Shanghai she now had an offshore perspective on China and viewed Chinese business ethics through an objective lens that has been sharpened by life experiences in the U.S.  As for me, well let’s just say that I’m an old timer who handed over the territory to Nigel to manage.  I had done well in India and Korea winning some very large deals and fair to middling in Singapore and Malaysia but I never had any success in China.  It was interesting to see how Nigel was going about getting things going in China.

I got a sense of how business was really done when I went along with two of the Shanghai reseller’s young sales staff, Henry and James, one Friday afternoon to visit a prospective customer, an aeronautical design organization. When we arrived at the design center, a building that had once stood next to an airstrip, now being built over as part of Shanghai’s expansive urban development, we waited at the security gate for some time in order to be escorted inside.  It was hot.  I shed my tie while we waited.  My companions were informally dressed.  Henry needed no badge to enter this secure site being well known to guards and staff.  James and I both needed visitor’s badges.  Once admitted, Henry introduced me to the Director of the Computer Center, Yang Wu.  He called her the beautiful Director Yang in English to her face and she smiled.  She was indeed attractive, a tall young woman wearing grey slacks and a light green blouse.  Her handshake was firm and her intelligent brown eyes sparkled as she welcomed me to the Center.  She was responsible for providing all of the computer resources needed by the aeronautical design engineers who were engaged in designing commercial, not military, aircraft.  Apparently, funding existed to hire another 500 engineers and they were planning to move to expansive new quarters that were being built for them.  In the U.S. it is now unusual to flirt with women in the office, but a different ethic, more 1960s pre-feminist, seemed to prevail in China.  It was not clear, as Henry and the Lady Yang spoke together in Chinese, who was flirting with whom.  They kept their eyes on each other and looked as if they were more used to meeting socially out of the office than in this business environment.  Later, James, a young bachelor who complained of having no girlfriend, and was facing a long lonely weekend, seemed to hint that Henry had a way with the ladies and that he also had a habit of making presents to his customers.  She certainly seemed to have bought whatever Henry was offering although her interest in my sales pitch seemed academic.   As we left, I was struck by Henry’s badge-less jaunty passage through the facility as if he owned the place and by the respectful approach to the Lady Yang of a well dressed Chinese man, possibly an architect or visiting official, who was waiting to see her.

Nigel did not come with me on that visit that afternoon making the excuse that he had to be very careful which organizations he met because much of our company's technology required an export license and he was wary of the U.S. deemed export regulations.  Under deemed export rules just giving a technical presentation on product technology that would potentially need an export license is a deemed export!  However, everything that I saw that afternoon indicated that this customer had no trouble buying equipment from other U.S. companies like Dell, IBM, and HP.  I sensed potential business to be had there in the future when they moved into their new quarters and bought new hardware to outfit the place.  The key would be to leverage Henry’s relationship with the beautiful Lady Yang.  I took to calling her that when I wrote up my notes.   I remembered the legend of the Lady Yang from the Tang Dynasty who featured in a long poem by Po-Chu-Yi.  I once helped a Chinese friend of mine translate Po-Chu-Yi long ago.  In the legend, Lady Yang came to a sad end as troops revolted against the Emperor and hung her, his favorite concubine, from a tree.  Was post-Maoist China, enjoying its current economic boom, similar to the glories of the Confucian Tang Dynasty?  Was the massive construction that had transformed Shanghai’s skyline in the last ten years the stuff of future legend?

Nigel avoided dinner that evening as well.  James had arranged for me to meet with an official of the agency that designed spacecraft for China’s manned space program.   Anything to do with rockets that might launch weapons of mass destruction is taboo when dealing with a country like China that has not signed the nuclear disarmament treaty.  Nigel was concerned that even by talking to this official he might somehow blot his copybook.  This was a plausible excuse but I suspected the real reason was that he had wanted to make other arrangements that evening, a meeting he wanted to keep private.  And so it was, that James and I had a most enjoyable meal with teetotal but cigarette smoking Dr. Chung. 

Once, in the early days of, now defunct, Cray Research when it was a small startup company in Minneapolis, I had been instructed to give a visiting delegation from China a presentation on the Cray-1 vector supercomputer.  This was back in 1977 when the state-of-the–art in presentations was to use view foils, transparencies made using a photocopier or developed from camera film.  The next day I was visited by a Federal agent who wanted to know exactly what I had told and shown the Chinese.  I explained that the visitors had been most attentive to the details of each picture I put up that showed individual parts of the computer, like the back-panel wiring, and the modules that made up the computational section of the system.  What were those handles for?  Is that hole for airflow?  Questions like that.  I explained that they had such good technical knowledge that they were able to have an in-depth discussion with me about how the abstruse technique of vector processing worked, in contrast to a technique called pipelining that was used in another powerful machine made by IBM.  It had seemed curious to me that they knew so much about the IBM system because presumably IBM would not have been allowed to sell them a supercomputer, or would they? Had the Chinese gained access to the IBM supercomputer in some way?  When they left, the delegation gave me a gift, a small silk covered booklet that when opened displayed four, foldout pages of colorful Chinese stamps, depicting historic artifacts, personages and palaces.  The Federal agent listened attentively to all of this and went away.   I am not sure if I told him about the book of stamps!  I still have that stamp collection!  Some years later the Chinese announced that they had made a Chinese supercomputer, a system they called Galaxy.  Dr. Chung chuckled when he heard this story.  Had I kept their name cards, he asked?  He probably knew all of those guys I had talked to who then returned to China and built the Galaxy machine, a Chinese copy of the Cray-1.

We concluded the meal with Dr. Chung seeming to have agreed with James that he would soon start the wheels turning to justify buying one of our systems rather than one of the domestic systems that his agency typically used.  Once again, future business would seem to depend on the relationship between sales person and customer.  Chung was clearly coaching James on what steps must be taken to get this planned acquisition past the bean counters.

Had I kept the name cards of those Chinese visitors from thirty years ago it was likely those contacts would have been quite influential by now.  Nigel would no doubt object, fearing that if he just so much as talked to them he would be transacting a deemed export; but, as I saw it, a sales guy’s job is to get orders.  It is up to the company and export control authorities whether or not orders are accepted.  It is human nature that people will always find ways to get around the rules.  Or to help get rules made that will be to their advantage.

The scenario that worried Nigel the most was a warning Angie had passed on.   We needed to worry about the resellers hiding the real customers from us by using front companies.  According to Angie, it was likely we would get an order from a supposedly legitimate harmless entity via one of our resellers, only to have the equipment ultimately passed on, or delivered to, the Chinese military without a paper trail.  In fact, on the last day of our trip, we encountered exactly this scenario being proudly described to us by one of our Indian resellers at a meeting in Bangalore. As this reseller described it, the issue was that while the U.S. companies were bound by U.S. technology export laws their Indian-based subsidiaries did not appear to care beans about such laws and were now expert at finding ways around them.   Apparently the same was true in China.

Angie was explaining all this as we drove back to the hotel by taxi from a restaurant one evening.  Perhaps the driver was listing with rapt attention as well.  In any event, the driver had trouble finding our hotel.  Angie began berating the driver for not knowing the way and when we arrived at the hotel she paid him off by giving him only half of what was shown on the meter.  Beijing taxi drivers have a hard life!

END