What's Wrong with China

Paul Midler

• Publisher: Wiley
• Year: 2017
• ISBN:
  9781119213734
• Edition: 1
• Topic: Business
• Subtopic: International Business
• Index: Business

What's Wrong with China is the most cogent, insightful and penetrating examination I have read on the paradoxes and self-deceptions of Modern China, written by someone who has lived in the country and dealt with it day to day for decades. This book will be hated by the commissars, because it is a triumph of analysis and good sense.
—PAUL THEROUX

I sure wish I'd read this book before heading to China—or Chinatown, for that matter. China runs on an entirely different operating system—both commercial and personal. Midler's clear, clever analysis and illuminating, often hilarious tales foster not only understanding but respect.
—MARY ROACH

From the Back Cover

What's Wrong with China is the widely anticipated follow-up to Paul Midler's Poorly Made in China, an exposé of China manufacturing practices. Applying a wider lens in this account, he reveals many of the deep problems affecting Chinese society as a whole. Once again, Midler delivers the goods by rejecting commonly held notions, breaking down old myths, and providing fresh explanations of lesser-understood cultural phenomena.

CHAPTER 1
The Pirate Ship

Two weeks before boarding my first flight to Asia, a friend of my mother's wished me well, letting me know she was jealous.

“You're so lucky,” she told me. “Wish I was going.”

She had never been to the Far East but was enamored by its ideas and traditions, especially medicine.

“Just think about it,” she said. “They've been practicing medicine for thousands of years. They know all kinds of things we don't.”

It was an unintended send‐off as I found her words echoing back to me two weeks later in Taipei. I had been invited to join a group of office workers on a day trip their company had planned, and on the return—at the drop‐off point—I managed to get my hand smashed in the door of their van.

“Duibuqi!” cried the woman who injured me.

I was frozen in pain. A colleague offered that she had something. “Chinese medicine,” she said enthusiastically, before bolting.

A glass jar was presented, upon which were some handwritten Chinese characters. The lid was removed, revealing a dark, viscous liniment. And as it was applied to my hand, I held out hope.

Three women stood around me now, concentrating fully on my paw and taking turns offering commentary.

“That's better,” one assured.

“Much better,” another confirmed.

While everyone stood around waiting for something to happen, my hand continued to throb and a strange thought entered my head: Was this Chinese traditional medicine? Was this how these people thought the human body worked? Broken bones healed in a jiffy with a magic salve?

I was in my twenties then and somewhat embarrassed to have such rude thoughts. But the scene struck me as comical, and I had to suppress the urge to laugh. Thanking everyone for an otherwise lovely afternoon, I lied and told them I was feeling better. I then made my way to an area hospital, where I received a set of X‐rays for the hand, which luckily had not suffered any fractures.

It was a strange beginning to a career in Asia, and perhaps an unproductive one. Westerners in it for the long haul were supposed to arrive mesmerized—enchanted at least—and that condition was meant to carry them through the several years it took to pick up the language. The bloom would come off the rose eventually, but it was meant to do so only after a fair amount of time had passed.

The effect of having my bubble burst almost upon arrival put me in an odd disposition: Chinoiserie and other Orientalia now struck me as daffy. I had little interest in studying anything Chinese in the traditional sense, and along with that ennui went any intention of taking my time in this part of the world seriously.

Thankfully I was young—this was twenty‐five years ago—and I didn't need much of an excuse to stick around. A reliable old motorcycle, a rooftop apartment in the mountains outside of the city, an assortment of colorful characters for friends, and the odd job would suffice. I spent no time on language training and managed to pick up a fair amount of Mandarin in spite of myself. Wrapping up three years in Taiwan, I returned to the United States and entered a graduate school program that began by sending me to Beijing for the summer.

And that was how I wound up in my first proper Chinese language course with a woman named Miss Zhang.

In our first one‐on‐one session, Miss Zhang tossed me what she must have thought was a softball question: “Why are you still in China?” She was taking the American government's dubious view (it was Beijing's as well) that the years I lived in Taiwan should be clocked as time spent in the People's Republic of China, and she asked because few nonnatives ever returned after a stint. Although foreigners were arriving in significant numbers, when they finally went home, they rarely boomeranged back.

Why had I returned?

In making my way to graduate school—it was a business program with an international component—I had to explain in an application why I had wanted to study such things as discounted cash flow and conjoint analysis. On this other motivation, I was drawing somewhat of a blank.

On the surface, Miss Zhang appeared a serious woman. She considered me for the briefest moment and then broke the silence between us by saying, “You know what you should tell people when they ask you that question?” Then she giggled. “You should tell them, ‘Wo shangle zeichuan.’ I'm on the pirate ship.”

It was a twist on an old idiom, one that suggested it is easier to jump on a tiger's back than to dismount. I got the reference but wondered: Was the ship meant to be China? Who were the pirates? In the back of my mind, a light bulb went off, one that would take me years to identify. Only later would I conclude that Miss Zhang had picked up on something—that I was lost—and what she ultimately offered me was not a conversation starter but a hint of where I ought to be looking for inspiration.

Not long after graduating from the University of Pennsylvania, I moved to Guangzhou, a sprawling metropolis located two hours north of Hong Kong, and from there I began a career representing American companies that had manufacturing interests in the region. The work put me in contact with Chinese factory bosses who were indeed pirate‐like in their approach to commerce. And I appreciated that they shared a similar brand of humor to Miss Zhang's.

In the middle of the boom in export manufacturing, I found myself riding a train in Guangdong, seated facing two questionable‐looking characters who were dressed head‐to‐toe in black. My reputation as a fixer was established by this time, and they easily appeared to be the sort who traded merchandise for a living.

Almost as soon as we pulled out of the station, the man seated by the window began eyeballing me, so I thought I would break the ice.

“Nimen cong nali laide?” I asked him.

“You wouldn't know the place,” he said.

“I've been around. Try me.”

“It's a small city,” he demurred.

“Ni shuo ba,” I insisted. “Where are you from?”

“Chaozhou,” he said, finally. “We are from Chaozhou.”

I had worked in Chaozhou, with a factory there that made majolica‐style pottery. It was an out‐of‐the‐way place, and though I had never experienced trouble there myself, I was familiar with its nasty reputation. Putting on an air of familiarity, I told him that I knew his fair city well—because I had once been swindled there.

“Wo zai nimen Chaozhou bei pianle,” I said, deadpan.

He caught the joke and laughed. That a foreigner would be cheated in his roughneck city was a given. That the laowai—outsider—should take such abuse as the normal course of events made it hilarious.

His partner, who wore a cap, was considerably less amused.

“Cheated in Chaozhou?” he said, sounding incredulous. “That is impossible. The people of my city would never cheat a fine foreigner such as yourself. Whatever the circumstances of your dealings, surely there must have been some misunderstanding.”

His partner, the fellow by the window, was no longer smiling. I couldn't quite catch the relationship between the two but knew at least which one could be trusted. China was a rough‐and‐tumble world all right, and there were those who were frank about the place and those who put on airs and graces. You appreciated the ones who gave it to you straight, because you knew that you could work with them. The other sort was nothing but trouble. Imagine standing under an awning in the middle of a downpour, commenting on the weather, only to have some stranger next to you respond: “Rain? What rain?”

China brought many meaningful lessons, but only in great retrospect. It takes time for the subconscious to process the unfamiliar. Patterns form only slowly, and then you have to wait as certain realizations bubble to the surface and become points of awareness. Along the way to enlightenment, it is also necessary to let go of preconceived cultural notions, which often impede understanding.

A few years ago, wandering around Hong Kong, I had the idea to buy a new pair of shoes. This was in Tsim Sha Tsui, in the days before they ripped down the Hyatt Regency Hotel on Nathan Road, replacing it with the popular commercial center iSquare. There used to be a small shop just behind the hotel right off Peking Road, and in the storefront window I spotted a sign saying that it was an official reseller of a popular American walking shoe. It sounded like the perfect replacement, and after trying on a pair and immediately paying for them, I asked the shopkeeper to throw away my old shoes, explaining that I would just walk out with the new ones.

I almost immediately regretted the move. Within an hour, my feet were feeling pinched, and by the time I got back to my apartment in Guangzhou I was in agony. This confused me, because the shoe brand had such a strong reputation, and I wondered if the shoes were not somehow counterfeit. Just over the border from Hong Kong was Guangdong province, where the vast majority of the world's shoes were being produced. It made bootlegging easy, but this was an internationally known brand that I had purchased and the vendor had been officially licensed. It seemed unlikely that the shop would sell a bootlegged product, yet I had the feeling I had purchased shoes that were illegitimate.

An acquaintance in Guangzhou who was in the shoe game lived not far from me, and as I had not seen him in a while, I offered to drop by his office and say hello.

Taking up one of the shoes, he removed the insole and showed me evidence of a bad glue job. He then pointed out poor stitching and some odd stamp marks. It was not the work of a big‐brand company.

“These are fake, for sure,” he said.

“But the shop is an official reseller,” I said. “How can they get away with selling knockoffs?”

The next few words out of his mouth would shift my perspective on the Chinese economy in a dramatic way.

“They probably sell both.”

“Both?” I asked, not quite wanting to understand.

“Well, to keep their license, they sell some real shoes. Then, on the side, they sell a few fakes.”

The scales fell from my eyes. Not only did I understand what he meant by such a hybrid business model, but I immediately also recognized that I had been seeing it for years—and that I had even run into a version of it during my first attempt at ...

Table of contents

• Cover
• Title Page
• Table of Contents
• CHAPTER 1: The Pirate Ship
• CHAPTER 2: A Mania for Money
• CHAPTER 3: Blush of Shame
• CHAPTER 4: Beating the System
• CHAPTER 5: Intermediaries
• CHAPTER 6: Dulled Senses
• CHAPTER 7: Emotional Negotiators
• CHAPTER 8: Oliver Wendell Holmes
• CHAPTER 9: Chemicals, Guns, and Gimcracks
• CHAPTER 10: Sinocentric Thinking
• CHAPTER 11: “That's My Hand”
• CHAPTER 12: Lack of Conscience
• CHAPTER 13: Tacit Collusion
• CHAPTER 14: Networked Behaviors
• CHAPTER 15: Partner on the Deal
• CHAPTER 16: Self‐Regulating Empire
• CHAPTER 17: Corps de Ballet
• CHAPTER 18: Informal Paradox
• CHAPTER 19: Brown Numbers
• CHAPTER 20: Reform, Reform, Reform
• CHAPTER 21: The Dynastic Cycle
• CHAPTER 22: Nibble, Nibble…
• CHAPTER 23: The Social Order
• CHAPTER 24: Cat's Paws and Telegraphed Punches
• CHAPTER 25: The Great Absorber
• CHAPTER 26: Kleptoparasitism
• CHAPTER 27: Cleaning the Slate
• CHAPTER 28: Massacred in Business
• CHAPTER 29: The China Watchers
• CHAPTER 30: Isolationist Past
• CHAPTER 31: The Benefit of the Doubt
• KEEPING IN TOUCH
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