Mr. China: A Memoir
Clissold gets the China bug when he first travels to Hong Kong as a young man. What others describe as utter chaos becomes instead a fascinating challenge and paradigm of living:
I’d go into a restaurant and they’d tell me that there was no rice or I’d go to a bar and they’d pretend to be out of beer. I even found a restaurant in Xi’an that closed for lunch. But after a while, I learned to probe and question, cajole and persuade — and never to give in! So I barged into kitchens in restaurants to find something to eat and went upstairs in hotels in search of an empty room….Even going to buy vegetables was a challenge but I sensed a rapport with the people I met; it was almost as if they enjoyed the game of wits and they often gave me a laugh or a smile once they finally gave in. I never felt any malice from them; it was more like a bad habit that no one seemed able to break.
Clissold was, in essence, spellbound by the country, as most aspiring “Old China Hands” usually are. So much so that he found himself bored with his stomping grounds of London. In a desperate attempt to re-engage with China, he tries to persuade his managers to set up an investment office there, but ends up being all but written off as a nutcase. There was only one thing for him to do: quit his job and go to China to study Mandarin.
As the saying goes, be careful what you ask for. Just after the Tiananmen Square massacre, China warns against “spiritual pollution” making those few brave foreign souls on Chinese campuses — such as Clissold — largely ignored by the student population. Clissold’s foray into a life of Mandarin study is also short on creature comforts, from monotonous meals of cabbage and rice to a grubby winter existence of few hot showers, little heat and just-washed jeans that freeze instantly.
After a year of studying, shrinking finances force him to find work. As luck would have it, his former employer in London — Arthur Andersen — is hiring: they need someone to help investors find worthwhile projects in China. And so begins Clissold’s journey into the unchartered territory of financing the new economy.
He assembles a team to help him along the way: Pat and Ai Jian. Pat is a larger-than-life career banker who made a name in investment in Hong Kong and sees opportunity knocking in the great frontier of China. Ai Jian is an “ex-Red Guard and forced-peasant-turned-bureaucrat” relegated to a desk job at a hotel after getting into some trouble at Tiananmen, but he’s hungry to make a difference and has the contacts to prove it.
Working through Ai Jian’s contacts and beyond, the team travels across China, from the rivers of Sichuan to the frozen oil fields of the Northeast border with Russia, in search of investment opportunities, and discovers a hidden and sometimes perplexing world. There are mountaintop military factories looking to transition to civilian goods with unexplained colossal explosions in the background, and elaborate drunken banquets with high-ranking government officials where animal genitalia is a delicacy.
After over three months of traveling to visit factories across China — and days that “ended at one or two in the morning in the upstairs room of some awful karaoke bar with cracked mirrors and faded Christmas-tree decorations Scotch-taped to the walls” — then it was a matter of getting the investors on board. Pat introduced a number of interested Wall Street money managers to the team and, following several tense meetings in China, they eventually agreed to a deal: $158 million to be invested in manufacturing plants throughout China as joint ventures. Contracts were signed and money was wired to their chosen partners in China.
This is where the fun begins — not for Clissold, but for us — when every imaginable thing that can go wrong does. The businesses start falling behind budget, and closer investigation reveals more problems than the team bargained for. Millions of dollars disappear overnight, unaccounted for (in one case secretly laundered to unknown offshore locations). New unauthorized factories spring up, some as direct competition to the joint venture, and others manufacturing products that investors didn’t approve. Reckless managers infest the factories, threatening complete shutdowns or utter chaos, and resist any extermination attempts. And then there are the grossly unqualified products, such as where a beer factory churns out a bottle with brown liquid inside and the words “soy sauce” scratched out on an old label.
But it isn’t the situations that make this book fascinating — it’s how Clissold and his team responds. In doing so, Clissold ends up making every mistake imaginable and, from our retrospective viewpoint, the results are quite often nothing short of hilarious. It all comes down to assumptions:
Wall Street’s theory of “private equity investment,” investing in private companies like we had done in China, was based on two principles. First, that the system of law and other controls are reasonably effective in dissuading business managers from helping themselves to the cash, and second, that a management team will work hard over long periods for clear incentives. Under these conditions, the theory goes, the management team can be left reasonably free to run the business and report to a board of directors that sets budgets and reviews progress. We had applied this model in China — and it was obviously not working.
His egregious mistakes become lessons for the rest of us as he and his team scramble to bring order back to their nascent investment projects. Clissold battles with bankers, the legal system, the anticorruption bureau (which famously asks for a car and money before providing assistance), complicated personalities, misplaced employee loyalty, and hidden assets. If we pay close attention (after wiping our eyes from laughing so hard) we’ll be the wiser next time we set foot in China.
Even while we have a good time at his expense, Clissold teaches us a wealth of knowledge about China. Clissold has a passion for Chinese culture — a passion so deep that, at the nadir of his misadventures in China (just as he is about to turn his back on the Middle Kingdom) it beckons him once again to this rich country. He graciously shares cultural anecdotes, a primer on the beauty of the Chinese language and delightful insights into what makes China so fascinating for outsiders. With Clissold as your guide, you come to peel back the layers of this country, seeing beyond the grueling banquets and puzzling bureaucracy, and are left with a sense of respect and admiration for a country that we can only hope to understand and appreciate, not conquer.
Full disclosure: yes, the links in this article are affiliate links to Amazon — but I’d still be linking to this book even if I wasn’t an affiliate because it’s a terrific read. </em></p>