One Billion Customers | James McGregor

Summary of: One Billion Customers: Lessons from the Front Lines of Doing Business in China
By: James McGregor

Introduction

In ‘One Billion Customers: Lessons from the Front Lines of Doing Business in China’, James McGregor shares his insights on China’s tremendous growth and the challenges faced by Western businesses operating in the country. With over a billion potential customers, China has emerged as the prime focus for global corporations. The book takes you through the nation’s journey from imperial rule to embracing the tenets of capitalism, all while maintaining control through the Communist Party. Learn how cultural nuances and bureaucratic politics impact business negotiations and gain essential pointers to successfully navigate the Chinese business environment.

China’s Economic Transformation

China has recently been the focus of the world’s largest corporations in search of accessing its billion potential customers. While China was undergoing a modern awakening in the early 1990s, the Communist government remained in control. Nevertheless, James McGregor, a former executive of The Wall Street Journal, recognized the country’s potential for becoming the world’s largest financial market. McGregor saw that China was going through a corporate turnaround strategy, simultaneously empowering the local reformers and the Old Guard Communists. In the interim, China required foreign talent, technology, and capital as it raced through the economic period of urbanization, acquiring a rapidly developing middle-class. The Chinese government shifted its stance on privatization and loosened controls after facing worldwide condemnation for killing student reformers in Tiananmen Square in 1989. The Communist Party still controlled the reform process, but the country was poised to become the world’s largest turnaround.

Understanding Chinese Politics and Society

The book explores the political and social structure of China, which is based on a 2,000-year-old aristocracy. The Inner Court, led by top Party officials, provides social order, while the Outer Court is made up of high-level bureaucrats. China is a “shame-based society” where exposure and condemnation bring disgrace to the offender’s family. People do not base their actions on guilt or fear of God but on not getting caught. The government enforces social standards and catches violators, who face politically adjudicated courts. People try to resolve their differences out of court. According to the author, China is a vicious cycle of conquest and revenge, making it difficult for Westerners and overseas Chinese to do business there. Although some overseas Chinese were found to be corrupt, they helped modernize the country while Westerners are seen as a source of money, expertise, and technology. That explains why they find it difficult to do business in China.

China’s Complex Relationship with the West

In this book, the author explores the complex relationship between China and the West. Beginning with Lord George Macartney’s failed attempts to traverse China in 1793, the book details China’s suspicion and distrust towards the West as a result of foreign exploitation and domination. However, by the 1970s, China’s failed attempts to align with Russia opened the doors for American firms to enter the Chinese market. The book delves into the tactics employed by China in bargaining for favorable terms with Western companies. By 1983, the U.S. firms were complaining about restricted access to Chinese markets. Meanwhile, President George H.W. Bush believed that China needed to be guided towards being an economic powerhouse, despite the 1989 Tiananmen Square Massacre. The author explains how U.S. trade policy with China became linked to its human rights practices, but President Clinton eventually backed down, leading to China signing about 85,000 contracts with non-Chinese investors. The book concludes with China’s admission to the World Trade Organization in 2001 and the lucrative presence of foreign investments in China.

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