Starting a business is hard enough, but bringing a franchise to a foreign land — where languages, customs, laws and standard practices are completely different — poses a whole new set of problems.Wen-Szu Lin, the former the master franchisee for Auntie Anne’s Pretzels in China, experienced a whole host of problems when he and his partner started out. His latest book, The China Twist: An entrepreneur’s cautious tales of franchising in China, is a cautionary tale for anyone attempting to bring their business to east Asia.
A telling example is the problem of corruption. Corruption, by an American standard, is rampant in Chinese business and goes unchecked. Payoffs and bribes can be factored into the cost of business in a country where it is endemic, but China it is difficult to predict who is going to require a payment — or if what’s perceived as a ‘bribe’ by western standards is actually a display of respect in China.
Here’s an excerpt an article Lin wrote for Shanghaiist:
How does that translate to an entrepreneur getting shaken down by local government employees, all wanting some “favours?” How do you work with the local “government” if you are standing in a long line waiting to chat with the government employees who is sitting behind thick bullet proof windows and will only give you a few seconds before turning you away?
Certain markets are open about corruption, where officials come right out and ask for payment for approvals. These markets are actually easy to navigate as it is simply a matter of costs built into all interactions with officials. For markets like China where only certain officials want something yet do not ask or accept directly, the onus is on the businessman to find common friends or relatives to the official to make the deal happen. Add in a layer of cultural sensitivity where a gift is often seen as show of respect rather than the underlying value itself, each case becomes circumstantial on the situation. It is definitely not black and white and must be treated as individual cases.
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