Wednesday, June 29, 2011

When East and West meet for business - Bill Dodson

Bill Dodson
Chinese and Western business practices differ, quite a lot. Bill Dodson recalls on his weblog a due diligence trip into Zhejiang province, visiting a company that offered to their Western visitors two accounting books.  The Western visitors were shocked. A different modus operandi.
One of the brothers and an assistant, a young woman in a factory smock, brought out two great ledgers, hand-written. Two books? the Europeans queried.

“Oh, one book is for us and the other for the tax authorities,” one of the brothers answered blithely. “They don’t want us to report too much income, so we have to keep the records elsewhere.,” he explained. Apparently, the difference in actual vs. reported was negotiated and channeled to tax patrons. Neither of the brothers considered maintaining at least two sets of books or tax negotiations or contorted shareholding structures at all improper. It was just the way things ran in China. Visits to the remaining two targets revealed the same modus operandi.

It’s no wonder, then, that Chinese businesses seem genuinely aggrieved that Western shareholders and stock exchanges consider their business dealings improper at best, down-right illegal at their most dramatic. After all, what’s worked for a society for thousands of years must be good for the rest of the world.
More in Bill Dodson's weblog.

Bill Dodson is a speaker at the China Speakers Bureau. Do you need him at your meeting of conference? Do get in touch.
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