Chinese Law Prof Blog

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George Washington University Law School

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Thursday, August 13, 2009

What is it about China that makes people do such dumb things?

I am prompted to ask this question by a post by Dan Harris on the China Law Blog, which we might call Item No. 547 (I haven't actually counted) in CLB's continuing series of reports on boneheaded things that foreign business people do in China. In this case, a US company "bought" a building in a deal whose legal foundations did not rise even to the level of dubious. Essentially, the company took the word of a government official that everything would be fine and did no legal or other due diligence. For cryin' out loud, consumers take more care making sure they have good title when they buy a car! I normally leave the China-business-related blogging to Dan, but really - surely the glamor has by now sufficiently worn off so that business people have no excuse for leaving common sense behind when dealing with China. (I count as "common sense" anything about business that an ivory-tower academic who has been out of active practice for over ten years knows.)

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It is the power of guanxi. When foreigners thought they have good relationship with some locals, they thought they can be safe in their good hands. It is misplaced trust.

Foreigners must learn the real guanxi. Chinese people won't trust anyone, no matter how good the guanxi is, unless he/she holds something that can make the other persons life extremely miserable. It is the threat of revenge that keeps guanxi alive.

Posted by: Bill | Aug 13, 2009 7:46:37 AM

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