The Real Deal by Lloyd D. Ward
Business Insights Beyond the News
Jan. 29, 2019
Vol. 1, Issue 4
I first conducted business in China in 1997 when I was President of Maytag Appliance. Maytag entered into a Joint Venture (JV) with Hefei Rongshida, which at the time was the largest washing machine company in China.
In 2006, I decided to pursue opportunities in China as a private businessman and investor and requested a meeting with senior staff the United States Ambassador to China to announce my intentions and seek advice.
During the meeting, I asked the Ambassador’s representative to tell me about the experience of American businesses in China.
There was no hesitation in response. He said, “one-third of American companies fail in China; one-third succeed; and one-third just get by.” I asked him to explain the keys to success.
“The first key to success in China is choosing who you partner with,” he said.
I asked, “What’s the second key?”
The response was quick again: “The second key to success is who you partner with and the third key is who you partner with.”
He continued, “I am not aware of one successful American company that came to China and tried to go it alone.
“In addition, it is very important that you keep in mind that the Central Party is always important to consider in China. When you are aligned with their policies there is a much higher probability of success.” When not, success is highly unlikely.
That is why I partnered with Mr. Changquan Lu, founder of ZANBO Marketing Management Consulting Co., many years ago and continue to do so today as we work to build bridges between our two homelands. In addition, as we look at investment opportunities we remain cognizant of policies and practices that give us tail winds – and avoid head winds.
Mr. Lu invited me to join his business network as a senior International Consultant where I am mentoring and advising Chinese entrepreneurs how to expand their businesses into the United States. In exchange, Mr. Lu is helping me identify the best JV opportunities for me and my business associates in the United States.
We are great partners for each other, and I will not conduct business and invest in China without his counsel and guidance.
Many are concerned about the trade war between the USA and China. This is understandable. But, based on what I have learned from Mr. Lu and my partner network in China, I firmly believe that the stage is being set for the U.S.-China trade dispute to be resolved before March 31, President Trump’s timeline for another round of tariffs.
I base my belief on Mr. Lu’s assessment of the sweeping new economic policy and the impact it will have on his business and those in his network. The new policy was announced by President Xi in December and enacted on January 1, 2019. [The Real Deal by Lloyd D. Ward, Vol. 1, Issue #2, Jan. 24]
This new policy gives President Trump a “major win” beyond what anyone would have expected. Though U.S. pundits and media have expressed doubt about China’s sincerity, my business intel tells me differently.
I am not a politician. I am not a prognosticator. I can’t predict the future. But I do know that President Xi and the Central Party have put China in a position to be a more balanced trade partner with the U.S.
Also, the Chinese government is beginning to honor intellectual property rights as well as move China to a more balanced economy emphasizing consumption and production. All these factors will drive the Chinese market to continue to grow and to prosper at a world-leading pace.
Those that understand this fundamental shift will be positioned to be major beneficiaries of what is likely to me a renewed and sustainable upward trajectory in China.