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OC business people offer tips for dealing with China

The federal government could learn a thing or two from Orange County businesses on how to deal with the Chinese government.

Local companies say that doing business in China is a give-and-take proposition where effective lobbying of officials is key. The Chinese expect anyone who wants to get something done commercially to visit potential government partners and officials early on, local executives say.

But lobbying in China is different from lobbying in Washington, where getting down to business is usually first on the agenda.

“They like to talk about things like family and sit down for tea first,” said Gerald Hamilton, vice president of sales for Newport Beach-based Mindspeed Technologies, a unit of chip maker Conexant Systems Inc. “There’s this whole process of becoming informally acquainted that is interwoven into the culture.”

The Chinese government doesn’t handpick suppliers for projects, even for government-owned enterprises. But lobbying still plays a big role in getting the ball rolling.

“Although we have lobbied the Chinese government and still do so occasionally, it’s more for name recognition and tacit approval,” Hamilton said. “It’s wise to show respect for the central government and in effect ‘give face.'”

While social chitchat is a must, figuring out the real point of a meeting with Chinese officials sometimes can be elusive, executives say.

“Sometimes you have to sit down and ask the Chinese what they really want,” said Ed Ehrman, director of worldwide business planning for Beckman Coulter Inc., a Fullerton biomedical testing products maker. “But, if you ask them specific enough questions about what they want or what you need to do, they will spell it out.”

Wai Szeto, vice president of business development for Fountain Valley computer memory module maker Kingston Technology Co., said company officials should determine what the Chinese government wants to gain from a project or new business. Often, the benchmark for Chinese officials is economic development. Like in the U.S., they’ll want to know how a foreign venture will spur jobs and regional growth.

“As a prospective foreign partner, we can’t just think about ourselves,” said Szeto, who himself is Chinese and was born in Taiwan.

Beckman Coulter, which has a subsidiary in Suzhou south of Shanghai and offices in Shanghai, Beijing, Guangzhou and Fuzhou, relied on Singaporean as well as U.S. government contacts to make connections with Chinese officials, according to Ehrman.

And doing business in China can make getting a building permit in Irvine seem like a piece of cake. Ehrman said it comes down to time, patience and “favors.”

“These things don’t happen overnight, and the favor does not have to be something illegal,” Ehrman said. “It’s a bit like matchmaking,you do something for someone and they do something for you in return.”

Technology companies have the best odds of getting fast approval for projects, according to Kingston’s Szeto.

“China wants to modernize as quickly as possible,” he said.

Kingston is setting up an assembly plant near Shanghai, a project that took six months to gain approval,relatively quick by China standards, Szeto said.

“American companies need to spend more time and be more patient,” he said. “They will not get instant success there.”

While corruption is common in China, often being a good corporate citizen is enough to help get business done in the country.

Conexant, which has offices in Shanghai, Shenzen and Beijing, trains Chinese engineers in the U.S. That plays well with the Chinese government, according to Hamilton.

“In their mind, that’s a technology transfer, because we’ve taken Chinese citizens and transferred knowledge to them,” Hamilton said. “In turn, that government allowed us to import capital equipment into China duty free.”

The level of lobbying needed in China varies by industry.

“For chemical and manufacturing businesses, there is still quite a bit of bureaucracy there,” said Humphrey Chan, director of Asia-Pacific Rim operations for Irvine-based Rainbow Technologies Inc., a maker of e-commerce security software and devices that has a joint venture with Beijing-based Goldensoft Co. “But it hasn’t yet affected our business.” n

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