The Wu Way

Just this evening, I was chatting with my good friend Caroline, who is from Zhejiang Province in Yiwu, and she happened to mention that she knew an import-export broker from South America.

“He said that someday he would like to make me the manager of his Yiwu office,” she wrote, “because I’m the only person in China that he trusts.”

It’s not as though this is a new sentiment. Let’s face it, throughout China’s recent history of development, trust — or rather, lack thereof — has figured into business relations with the country. Now, however, with the increasing transparency of information coming out of the country, and in light of recent scandals involving tainted milk and, to a lesser extent, Siberian ginseng, it’s front and center yet again…well, at least in China.

If it weren’t for the financial crisis, believe me, more American families would probably be checking their pantries with a fine microscope in search of the lactic miscreants that may have polluted their foodstuffs. (Admittedly, even I have taken a second look at some “made in China” foods in my home that contain powdered milk, and wondered if they were fit for consumption — I gave them to my husband and decided to avoid purchasing them).

Especially when it comes to importing and exporting, how can we trust our suppliers? The answer is not simple. If you’ve visited more than a few suppliers in China, no doubt you’ve experienced the ultimate China cliche in trust betrayal — seeing knockoff brands sitting on the wall of the sample room, or featured in catalogs. The “Hello Kitty” purse. The “Coach” bag. The “Dior” clutch.

It’s not hard to understand why this phenomenon — the IP issue — remains. For the longest time, in Chinese culture, the whole concept of IP was a fuzzy matter. Copying functioned as a form of flattery in many instances. When foreigners pummeled China’s reputation beginning from the 1840′s (when Hong Kong was ceded to Britain) all the way to the Japanese occupation before and during World War II, during this time, the Chinese determined to learn from their aggressors, just as Confucianism encourages us to learn from others. Learning from others meant first understanding, and copying, the best practices and ideas. Also, from the beginning of China’s history, students were expected to learn primarily through memorization. Much of China’s education today rests on the regurgitation of facts and ideas, not independent, free thinking. This is an atmosphere that will tend to encourage more copying rather than developing novel concepts.

On the other hand, the IP issue plays out differently in Taiwan. Thanks to increasing regulation of goods, and crackdowns on pirated DVDs and IP violations, Taiwan has seen a decrease in these issues…though admittedly, you can still get your cheap Hello Kitty watches and mobile phone trinkets at the local night markets. Regulation, however, makes these instances much rarer than in the mainland.

With the milk scandal, regulation has been at the heart of the tragedy. Thanks to the country’s 免检产品 (inspection-free products) program, large companies considered to be pillars of corporate responsibility and quality were given the freedom to self-regulate. Well, given our recent financial crisis, I probably don’t need to explain why self-regulation doesn’t work. Before you knew it, the pillars fell and there was spilled milk all around. And, like the financial crisis, the biggest losers weren’t the corporations — who probably have enough connections with powerful Chinese such as officials and CEOs to, say, shift the direction of their business if needed. No, it’s the little guys — the dairy farmers — who lost out.

But keep in mind, the dairy farmers were never necessarily out to cheat the system — they were just trying to do their job. It was further down the food supply chain where melamine even entered the picture.

It will take time to trust China again, just as it will take us time to trust Wall Street and the financial system. But, as long as you do your due diligence — and don’t take things for face value, you may be pleasantly surprised. Just like this country, here are good people behind that label of “China” that don’t buy into the idea of gaming the system for more profits.

People like my good friend, Caroline.

Tags: foreigners