One of the major factors that have arisen with respect to performing well in the international business world is performing adequate research. Small details that are deemed insignificant can have overpowering effects on the native population of the land that one would like to directly invest in. However, one must also be careful not to "miss the forest for the trees", and put too much emphasis on what may, and can, be the insignificant details; all the while missing the whole picture. China is a vast, ever changing, traditional country, where the growth of business is expected to grow logarithmically. The amount of information that can be found about China is voluminous; I shall attempt to weed out the insignificant data, and present what may be the important data, in as brief a form as possible.

Geography and Climate

Russia and Canada are larger than China, which has a total area of 9,596,960 sq km, and is slightly larger than the US. It is bordered on the north by Mongolia and Russia, on the south by Nepal, Burma, the South China Sea, Vietnam, Laos, India, and Bhutan. Pakistan, Tajikistan, and Afghanistan lie to the west. The East China Sea and the Yellow sea are its eastern borders. Geographers describe China as the land of three steps, rising up out of the China Sea to the east. The lowest is the arc that faces the sea, a fertile crescent for the most part, where most of the people live. The second step is huge, rising up to the Mongolian steppes in the north, and the Loess highlands and inland ranges in the middle and south. The top step is the high, icy Tibetan Quinghai plateau and the very high mountain ranges that comprise the western half of the country.

The land is predominantly made up of rolling hills, mountains (which are predominantly in the west), mountainous plateaus, basins, and plains. China's plains surprisingly only make up 12% of the total land mass. Only 10% of China's land mass is arable, most of that is cultivated. Six geographical regions have been described, all with different climates. Knowledge of the various areas of China are important with respect to business location, especially in view of the fact that China's weather varies from dry deserts to snow capped mountains.

Northern China refers to that area between Mongolia and the Yellow river basin. (The Yellow River is called that because of all the silt, called loess, that the river carries from the north to the south; it gives it a very crud-like yellow appearance, and generally just looks extremely dirty. The Yellow River had much to do with the appearance and location of power centuries ago in the north, by Beijing). The Loess Plateau is in the northwest, and is made up predominantly of loess, a very fine, easily eroded, yellowish silt which gives the Yellow river it's name. The silt has a fine consistency, and does not adhere to itself. The Loess plateau is transected with many gullies from the constant effect of erosion. Loess is easily cultivated, there is much agriculture in this area. The coast in this region is rocky, and allows some good natural harbors.

To the south of this region lie the Central mountains, which form a fair barrier to movement in and out of this region from the south. These mountains also form the barrier for the cold winter air flows from Siberia. The northeast region contains the Gobi desert and the Manchurian plain, which, is a strong agricultural area. Good harbors also lie on its eastern coasts. Winter temperatures average 0 F, rainfall averages about 25 inches towards the coast, diminishing as one travels west. Summer temperatures lie in the mid 70's F.

The northwest region contains the driest desert in Asia, the Takla Makan. It has sand dunes which rise up to one hundred meters. This area is also unique for having the largest portion of China which lies below sea level, the Turpan Pendi. To the north of this region lies the Junggar Pendi, which has many areas of fertile steppes amenable to agriculture. Winter temperatures range in the low teens, summer temperatures are in the low 70's. Rainfall is below 4 inches on the average.

The northern border of China, which it shares with Mongolia, predominantly consists of sandy or stony lands. The eastern aspect of the border has fertile steppes, that can support agriculture.

South China has some unique geography. The Tibetan Plateau is in the remotest southwestern region of China; it has an average elevation of 4500 meters above sea level. The Himalayas lie to the south of this region, with Mount Everest, the highest peak in the world (some would debate that K2 is higher), at 8848 meters. Mt.Everest lies on the border of Nepal and Tibet. The Tibetan Plateau is a very bleak place, barren, dotted with marshes and salt lakes. Siberian cold air flows easily across the plains because of no real significant mountain ranges to buffer it. This area usually has a cold dry winter, with temperatures ranging from 14 F to 39 F. Summer temperatures reach well over 85 F; most of the annual rainfall occurs in the summer also.

The Yangtze Valley lies to the south of China. It consists of fertile basins, made up predominantly of soil carried down from the rest of China by rivers over the millennia. The rainstorms which caused these southern areas to flood centuries ago would wipe out villages and crops; the north was fairly well protected from these natural disasters. (This is one reason why the power base of China evolved in the north). Actually, at the present, the dikes that have been built up over the centuries in this area have caused the river bed to be higher than the surrounding lands. The constant flow and deposition of silt from a deterioration of flow in the south is the reason for this. (In 1949, when the communists took over, they appointed the Yellow River Conservation Commission; an organization made up of engineers, hydrologists, and the like to develop control of the previously poorly controlled Yellow River. The dikes were reinforced with 8 meter high concrete and steel dikes that can be separated apart up to 8 km from each other. Those flooding days are now long gone). Eastern Guizhou has some of the most scenic areas in the world. Large towering limestone peaks and mountains dot the landscape. There are many waterways traveling throughout the south, both natural and manmade, which are surrounded with fertile soil. Other areas in the south do not support agriculture. There are some good harbors on the southern coast.

Southeastern China has a subtropical climate, with a tropical climate in the extreme south. Temperatures range from an average of 79 F in the summer, to a range of 39?64 F in the south, depending upon the proximity of the Yangtze River. Rainfall can exceed 39 inches over the year. The Sichuan basin has an eleven month growing season, and is renown for its high humidity and cloudiness.

As you can see, China offers difficult to inhabit regions such as the mountainous region in the west, to the desert and rocky regions in the north. Climates range from sub arctic to tropical. Agriculture is widely dispersed; to large fertile basin areas in the south, to small, terraced loess steps throughout the north and central regions. The weather patterns are wide ranging also; the Asian monsoon controls much of China's climate. Cold wintry air blows in from Siberia, bringing low temperatures in the north and drought in the south (another reason why the power base located itself in the north centuries ago). Warm moist air flows into the country in the summers, giving rise to severe storms and cyclones. Rainfall diminishes as one moves west. Summers are generally hot throughout the country, winters are predominantly cold in the north.


China is blessed with 56 different ethnic groups; 93.3% being the Han Chinese. The other 6.6% consist of the other 55 ethnic groups. All populations of China are considered to be equal, as per their constitution. (The official Chinese language is Putongua, or Mandarin, which originated in the north. The south use Cantonese. All the different ethnic groups have their own language, and are compelled by the communist government to continue, in order to maintain their heritage. There are over twelve different, mutually unintelligible dialects; the writing is the same all over the country). The population as of July 1994 was 1,190,431. Compare this with the 1953 census (the first China performed) of 582,600,000; the second census in 1964 went to 694,580,000. The third, excluding Taiwan, and Hong Kong this time, in 1982 demonstrated 1,008,180,000, putting China on the map as the first country to hit one billion people. However, a dropping birth rate (45/1000 in 53 to 18/1000 in 94; a factor which has had governmental influence) led to a slowing of the population growth.

The government instituted some policies which had a dramatic effect on the growth of the country. Initially the government required late marriages of it's peoples. The average age for marriage was pushed back to 26-28. The Chinese need to get governmental permission to marry, after which a certificate is issued, and the family is allowed to have the appropriate celebrations. Another rule was to ensure that married couples completed their schooling prior to marriage. More recently, the government has gotten more aggressive; couples are only permitted to have one child, a permit can be obtained to conceive another, at a US $ price of $1000, abortion is legal and encouraged, and many health centers have been set up to educate and encouraged contraception. Social pressures encourage women to have abortions after the first child. These rules only apply to the Han peoples, the small percentage of all the other ethnic groups are encouraged to propagate. The general feeling of the Chinese is that they are an unselfish group, who are more concerned about the group's welfare than the individuals. The threat of starvation is a real one, as China is facing difficulties with respect to feeding their own people. These efforts to minimize growth have been exemplified by the governments proclamation to limit the population to 1.27 billion by the year 2000. The census is getting close to that limit; what the government will do to ultimately achieve this goal is unknown.

Major population shifts have occurred in the past. During the 1950s and 60s, there was much movement from the rural areas to the urban ones. Remember, China is predominantly an agricultural nation. There is much reliance upon the farmers to provide food for what used to be a rapidly growing nation. Because China was technologically behind, the amount of jobs available in the cities was minimal. China's urban areas were being clogged with non-productive people. China initially prohibited further migration from rural to urban areas; eventually, Chairman Mao, who felt that social inequality was the result of rural and urban class distinctions, moved on with his Cultural Revolution. During this period in the 60s and 70s, educated city personnel were transplanted to rural agricultural areas to bring with them urban ideas, in the hopes that inequality would diminish. Highly trained technical people were forced to become farmers. (The need for increased food production may have also been an issue). People in the upper echelon of society, those with the training to bring China forward as an international power, were transplanted or removed. The effects of this disastrous policy are felt even today. The Chinese at the present time live in 4-6 story buildings, built in the modular style that is so reminiscent of Soviet design. (A major reason why the buildings are only 4-6 stories high are the severe lack of elevator systems. This also contributes to the longevity of the Chinese; heart disease is at a minimum because of bike riding, walking, and stair climbing, on top of their rice diet). They require permission and job guarantees to move within the city. The apartments are tiny (about the size of a medium sized US bedroom) and filthy, and usually house not only the couple and child, but the parents of the male.

Shanghai is China's largest city, with Beijing, the capital, in second place. Remember, when performing population counts, the Chinese not only include the city itself, but all the provinces that surround it. Religious beliefs of the population had consisted of Buddhism, Taoism, and Confucianism (Christianity and Islam had minor followings). With the takeover of the communists in 1949, all organized religion was abolished. Little opposition erupted. Things changed in 1978 when a constitution was established; organized religion was again allowed to flourish. (It was at this time, or soon after, that the Shaolin Temple, which had been partially destroyed during the Cultural Revolution, was allowed, and encouraged to be rebuilt. The monks who had escaped and hid in the mountains, five of them actually, came back and continued to teach their skills to new, young monk trainees. I have met the four surviving monks in my travels there; for being in t their 70's and 80's, they are awesome martial artists).

China was interested in encouraging the propagation of it's heritage. Opening the door to religion was just one benefit. Another interesting side effect of Mao's Cultural Revolution was it's effect on education. Prior to the 1966, peasants were allowed to go to state run schools during the winter, non-agriculture producing months, in an effort to equalize the abilities of the rural and urban individuals. The Cultural Revolution changed that. Schools had closed, students were more interested in the almost fanatical pursuit of the elite in society, so that they could be "equalized" either through transplantation to agricultural fields, or just outright " disappearances". It took five years after the Cultural Revolution ended to re-open schools. Upper level facilities did not really go forth for a while after that. Colleges had restarted with minimal curriculums. Students who applied for college were required to work in the agriculture fields prior to getting into a much shorter college education. Mao's death in 1976 caused the new government to reevaluate their education policies; the initiation of the Four Modernizations, a program to advance rapidly in industry, defense, agriculture, and science. College was expanded, and made available to those who tested appropriately (as opposed to the pre-Cultural Revolution admission policies which were political in nature). China was hurt educational wise by Mao's policies; the evidence continues today as China struggles to educate it's peoples so that it may compete in the world markets.


China, for most of the past two thousand years, was carved up into many sectors, some of which were constantly battling with each other. Reading Chinese history is like a broken record; one sector conquers another, another dynasty is formed (I'll save you the details).. The economy functioned in almost the same way until the mid 1920's. The economy was feudal in nature, with peasants working for an owner of a set of lands. Imperial taxation took its toll. Inequality between land owners and peasant workers increased until the communist party intervened in the 1920's. China was not only influenced by it's land owners, but also by the multitude of countries that attempted to stake claim in this strange new world after the Opium Wars in the mid 1800's. All this influence caused misdirection of the country as a whole, with a resultant economic crisis. The communist party was ripe for influencing the country because of this. Over the next twenty years, the communist party expanded it's power base and caused the peasants to capture more control over the lands they worked via the formation of peasant associations. Mao declared the communist party as leader in 1949 after defeating the Nationalists, who subsequently moved to the Chinese island of Taiwan. Food shortages and inflation were rampant; Mao organized the peasants into communes whereby basic needs were met, and food production was organized (Mao has called this the Great Leap Forward, history refers to it as the Huge Plunge Backward. Foodstuffs became so unavailable because the peasants were told what to plant by a hierarchy that didn't know what they were doing. Famine led to cannibalism in some areas). Urban industries were state run. The Cultural Revolution caused much turmoil in the urban industries; any previous attempt by the various plans set forth by the government to increase productivity were hampered by Mao's decision to decimate the intellectual ranks to promote equality. China finally recovered in the mid 70's and over a period of time, decided to move forward towards a market oriented economy. Some state industries were privatized, market forces became the predominant factor towards setting prices. Efforts to attract Western technology and investment were increased.

The Chinese economy initially slowed down with all these changes; however, at the present time, it is growing at an estimated 13%.(Growth rate is related to increased efficiency: In the 70's, 838 million rural people had been organized into 52000 communes, each with their own government assigned goals. Each commune was broken down into brigades, which were all further broken down into teams, actually, over 6 million in all. Communal ownership was prevalent, each team was assigned a crop to plant based on scientific research as to what would do best, each team was also given a small plot of land to plant whatever they wanted on it. In the 80's, this system was abandoned and restructured to a household oriented system, each household had a plot of land, each had it's own quota, and each could sell any surplus in a capitalistic fashion once it's quota was met ).

Crops include rice, wheat, sorghum, potatoes, and various fruits and vegetables. Cotton, ramie and flax are the main fiber agricultural products. Livestock is also taken care of by the peasants, hogs (370 million, nearly half of the world's population) ,cattle, and horses reside in the eastern half of China, the western half is associated with the nomadic populations; sheep, goats, camels, and in Tibet, yak. They are a source of food and fuel: the dung is burned for heat! China is also the largest harvester of fish in the world, and they have extensive facilities for the cultivation of fresh water fish.

To sum up China's economy, just remember that it is a hybrid system composed of socialism and capitalism, that occasionally experiences the bad points of both: lassitude, corruption, bureaucracy, inflation, and windfall gains. Delays, permissions, permits, all brought about by a burdensome bureaucracy, is endemic. Environmental laws are used to hamper foreign investment, the same laws usually don't hold true for Chinese companies. One has to try to master the concepts of both systems in order not to be swallowed by them. Remember, China is moving towards a free market economy, western technology has entered the country, communication ability with the outside world is increasing, which is having a tremendous effect on the people's attitudes. Beijing, the center of power, wants to see China advance in the world's economy, but at the present time, will not allow itself to lose total control of the situation. Beijing wants a market economy, with all the benefits of western economies, all while remaining in enough control to have great influence over it. This is an important issue for companies wishing to invest in the country.

Another important issue is the fact that there is no real rule of commercial law. The tension between the evolving laws and the ever increasing market forces cause much turmoil for foreign direct investment. A brief aside, which demonstrates the above. McDonalds Corporation desired breaking into the Chinese market. The first, and actually world's largest, Chinese McDonalds opened just two blocks from Tiananmen Square. They spent millions, got a 99 year lease for the property from the government, and eventually developed a highly lucrative business. Initially, all the beef and condiments were imported from America. After a while, they taught farmers from the surrounding areas to feed the cattle with corn, and eventually slaughtered the cattle in China for their hamburger meat. Condiments to this day (1997) are still produced in the US and imported. As it turns out, a very wealthy and very "connected" Hong Kong businessman desired the very property that McDonalds captured a 99 year lease for, and placed their largest restaurant on. Beijing told McDonalds to vacate the premises. McDonalds took the Chinese government to Chinese court, and, of course, lost. The restaurant is being destroyed, McDonalds is looking for another location. So much for a free market economy.

When you do business in China, you do it with the understanding that the government owns all the land, and has ultimate say as to what is done with it. But there are good reasons to push foreign direct investment into China. Let's use Japan as an example. Japan has learned that the best way to enter China is via joint ventures with companies that are well established and also well connected (remember, you need to take advantage of two types of systems, capitalism and socialism). Japan found the following reasons to invest in China. Let's assign 100% to all factors of doing business in Japan, and see how it relates to similar business in Thailand and China/ The following are ratios, compared in 1997:
Thailand China
Wage costs 6 4
Short term interest rates 1188 1513
Plant site and land costs 1 10
Construction costs 45 ?
Overland transport costs 25 ?
Customs expense 33 130
Warehouse leasing 20 20
Power costs 45 28
Water costs 100 1
Office operating costs 70 20
Corporate tax costs 80 88

By the way, construction costs are fairly cheap in China, the average daily wage for workers is about three Yuan a day ( forty cents, another reason why the Chinese can't afford to leave their country). Just some statistics to complete our section: the gross domestic product was 544.6 US $ billion, per capita at $460. Agricultural output accounted for 24%, industrial output accounted for 42% (industries consist of iron, steel, shipbuilding, locomotives, mining machinery, and power generating equipment. The Chinese textile industry is the largest in the world). China's coal mining industry is also the worlds largest, it is also very competent with petroleum products. It has some very large, untapped oil fields. Other mining industries include graphite (the world's largest), salt, magnetite, phosphate, bauxite, manganese and sulfur. Electricity is also produced in great amounts, yet it is not sufficient for China's growing cities. Coal burning plants supply about 75% of China's electricity (and most of it's pollution), 20% is supplied by oil burning plants, the rest is supplied by hydroelectric plants. China has the largest hydroelectric potential in the world. Growth over the last few years averaged well over 10%, which is one of the largest growth rates in the world. The temptation to enter this market is immense, as are the risks. China's currency is the Yuan, about 8 Yuan is equal to one dollar. The government completely controls the currency, and for that matter, foreign trade. However, in 1995, Beijing announced that foreign banks would be allowed to open in ten cities in China, starting in Beijing.


Since the roadways of China range from fair to abysmal (17% of the roads are paved), and historically most Chinese did not own cars, and the airplane industry has been poor until recently, the railroad has almost by default become the most important form of transportation in China. It transports almost 50% of the human traffic, and more than 40% of the freight traffic. It's length presently exceeds 64000 km, and in the near future, will connect with all provinces and regions of China. As for the road system, most of the major cities, regions, and major transportation centers are connected by them, or some fashion thereof. Inland waterways account for the other half of freight transport. China's inland waterways consists of rivers, man made canals, and for the peasant population, irrigation canals. The Yangtze River, the fourth largest in the world, carries most of the traffic. The Grand Canal, which extends from Beijing to Hangzhou, also carries a large amount of water borne traffic. Airports and air travel increased significantly in 1980 with the opening of an international airport in Beijing, and the purchase of three foreign made jumbo jetliners. At this point, more than 90 cities are linked by air traffic, by carriers that have safety records that range from average to deadly. CAAC, the Civil Air Administration of China, (also known as China Aircraft Always Crash), is so bad, that it doesn't even deserve to rank as the world's worst.


Interesting enough, China's population was first exposed to radio when the communist party placed loudspeakers in the fields so that the workers could constantly be "influenced" in the 1950's. The reason for this was indoctrination, the effect ultimately caused a desire in the Chinese people to desire and eventually obtain communication devices, first in the form of radio, and finally in the form of television. (Television transmissions initially started in Beijing in 1958. It's effect was minimal, as the amount of televisions countrywide was minimal. In 1990, there were 38 million televisions for almost 1.2 billion people). At the present time, televisions are fairly widespread in the cities, but in the villages, it is not uncommon for an entire village to share but a few televisions. The effect of this on mass marketing needs to be considered. Commercial radio broadcasts commenced in 1986 in southern China. In 1978, China's radio was expanded to broadcast in 38 foreign languages. Radios are far more prevalent than televisions; 20 million are produced yearly. Radio transmissions are still under government control; for mass marketing however, they would offer a farther reach than television. Even more limited, is the telephone system; only about 15 million telephones are in use throughout China. The phone system within China is poor and not very modernized; communications between modern hotels and the outside world are far more advanced. Interestingly, the cellular phone network, in 1997, is far more advanced and far more available to the people than it is in the US; the reason for this is that the Chinese government felt that it would be easier to place multitudes of cellular phone towers, than it would to lay telephone lines throughout the country. The phone system is also controlled by the government. Of interest, is the unbelievable growth of fax machines. Telex services are extremely slow. Chinese needs to be converted into a format, usually numerical, so that it could be properly transmitted. Once received, the transmission needs to be converted back again into Chinese characters. Fax machines completely simplify this procedure; the usage of this equipment is increasing at a great rate.

Medical Systems

The government assures it's people of housing, employment, retirement, funeral services, and health care. Health care for the natives usually consists of traditional Chinese medicine: herbal medications, acupuncture, and traditional folk medicine. Some of their herbal medicines are actually effective as they contain the base products for some of the drugs that we research and invent. However, serious illness, such as trauma, and major illnesses, are not well treated by local hospitals, and usually result in long term disability or death. Westerners are treated by fair university medical systems in the larger cities, using western medical science. For safety, if you really get sick while in China, the first step is to book a flight to Hong Kong; that's where all the upper level Chinese politicos go for health care. It's western medicine at it's best. Any forays into the depths of China, like I take, should be accompanied by a comprehensive medical supply kit. (My medical kit that I take to the Shaolin Temple is bigger than my clothes bag; the illnesses that I have taken care of is just amazing. At the Temple, it's either me or the old Chinese medicine man? herbs, hot tea wraps, etc. No need to tell you who was busier....)


Small, but significant things you should know about China, it's peoples, laws, cultures, etc, all in an abbreviated fashion.

Names: The five most common surnames are Chang, Wang, Li, Chao, and Liu. There are 100 million Changs in China, remember that when you enter a large room full of people and call out asking for Mr.Chang. The Chinese use the surname first, followed by the given name. They like to have the opportunity to explain their name, and where it has descended from. A great introductory method! Also, the first day of school, when children are first taught English, ( a common thing nowadays), they are asked to pick a letter from our alphabet, and then are shown a list of names corresponding to that letter. They are asked to pick one, that becomes their English name. Many Chinese, especially those associated with foreigners, have an English name.

Qomolangma: Mount Everest, at 8848 meters, one of the 100 mountains in China that reach over 7000 meters in height.

Feng Shui: Basically means wind and water, a deeply inbred concept that refers to geomancy. This concept dates back to before the birth of Chinese civilization. Feng Shui is a complicated topic, it influences your bodily functions, your health, destiny, marriage, business, and daily life. It rules your existence, and dominates your life. Before taking on a project, opening a business, constructing a building, the local Feng Shui man is located and consulted. It is believed that spiritual forces inhabit every spot on earth; they influence the fate of all who pass by. All measures must be taken so as to not piss them off, so to speak. Some examples: hills represent the spiritual dragons. Building a house on a hill, is like stepping on the dragons eye. Not a good thing to do. Feng Shui men are called to evaluate the placement, direction, and so on of the house so as to provide the most benefits with respect to tranquility and harmony with the elements. Mirrors on the eaves of houses are used to divert bad spirits. Those little carvings on the corners of temples are basically used for the same reason. Doors in a house should never be placed in a straight line so that evil influences cannot flow easily through the house. Sturdy obstacles, such as doors, walls, and furniture need to be placed appropriately to diminish the evil flow. Good Feng Shui men are considered to be worth their compensation; they should be consulted appropriately.

Driving: Don't. Older people, who are much venerated in China, like to jump in front of passing cars, almost to the point of being hit. Why? To cut off the string of demons which are following them; they use your automobile to get rid of them. Remember, if you hit them, you'll have more than demons following you. In the countryside, leaving $500 with the remnants of the family will usually bring many thanks, and sometimes an invitation to the funeral. Some more driving tips: don't. The Chinese think that cars are meant to stay in the middle of the road, and drive fast. Problem is, cars in both directions do the same thing. Trucks and little tractors, which are motorized with a substandard lawn mower type engine, do not go very fast, and predominantly like to drive in the center of the road. The Chinese will try to pass on the left, hey, they're kind of well trained. This always leads to the situation whereby a car will try to pass a truck, which is straddling the yellow line, on the left. Usually ending up directly in front of a truck coming directly at them. What to do? Pass on left. The next thing you see are people and bicycles scurrying off the side of the road; some of those people, who tend to spend the nights sleeping there. (Nighttime driving is even more fun, headlights are not always used! Lights use up precious fuel). The far right lane is usually occupied by one of those tractors, sometimes with a trailer full of coal. Or, a motor scooter, with a family of four on it. A two lane pot hole filled road, with four, sometimes five vehicles side by side, all trying to pass each other, with frantically running pedestrians on either side. You gotta see it. Another thing, Chinese tend to have diminished peripheral vision; they also pay attention usually to whatever is directly in front of them. Especially bicyclists, of which there are millions (all ringing the same damn little bell). They never look side to side as they cross busy intersections. The hand of god must keep them from being road kill. If you are a foreign driver, and you get into an accident, don't worry, it's your fault. Pretty simple. So, don't.

History: "He who reads history, Knows the affairs of the ancients; As one sees a reflection in a polished mirror, So one can know the present by studying ancient times." So true. An understanding of China's history is important when getting involved with it's peoples, especially the turmoil of the last hundred years. I have refrained from discussing the history of china, because of it's depth; the last hundred years have been referenced according to the topic that was discussed. The interaction between history and current events is significant, a little knowledge of it is helpful.

Taxis: Most drivers charge foreigners way too much, do not use meters, and generally do not know where they are going. And don't bother reporting them, they act, and apparently are, above the law! Hire guides with cars instead, from reputable hotels, and not the China Travel Service (an incredible bureaucracy!).

Cities: Wander freely, they are incredibly safe. Carry a map, and a Chinese written description of your hotel; the cities are incredibly big and complicated. Getting lost will not get you killed, it will just offer you a wonderful night sleeping on the sidewalks with the natives.

Toilets: I knew you'd ask. Better strengthen those leg muscles before you go to China. Western style toilets are becoming more common in foreigner traveled sections of the cities. Elsewhere, in the more civilized areas, are porcelain holes in the ground with a flush mechanism. Just drop' em, squat, and hope for the best. Baggy pants can be a hazard. In the less civilized areas, and public toilets, the latrine consists of a concrete trench that you squat over. Aim is everything, as is balance. These things don't get cleaned too often; better hope that your allergies are acting up before you go into one.

Spitting: a socially acceptable form of clearing one's lungs (unbelievable chain smokers) and mouth, performed everywhere, including restaurants. Just keep your shoes on when having dinner, and hope that the guy next to you has good aim. (By the way, when you're in the restaurant, make sure to rinse your bowl and chopsticks with hot tea, washing of utensils between customers is a rare pleasure).

No: They don't like to say it. Chinese people tend to be terribly polite (and bored, don't be surprised if you're surrounded by them, especially in areas where foreigners are rarely seen. I could tell you stories of me in the village). Don't push them into a situation whereby they have to say no; they usually use more diplomatic means of trying to convey that message to you. Being undiplomatic is very embarrassing for them. Mei yo: They like to say this. When you ask for something, expect to hear it. It really means "don't have", but it is used to mean, "get lost", "don't bother me", or worse. Just another representation of the Iron Ricebowl (see below), and correlates well with the general pace of the people, slow and apathetic.

Water: Just like driving, don't. The tap water is a biology laboratory come to life. The Chinese will boil water for you, and put it into thermoses. Drinking warm water is better than having to use the toilets.

Language: Thinking of learning the written language? Don't. There are 230,000 characters in Pinyin, of which 5000 are most commonly used. How about speaking the language? Remember, there are about 400 syllables that the human voice can use to express the 5000 characters. So, various tones are used, high, low, rising, falling, you get the idea, for each character. One sound can be used for 100 different characters. So if you try to speak the language, don't be surprised if you try to call your Chinese friend's mother a cow.

Business: Remember the three P's: patience, patience, and patience. The bureaucracy can be overwhelming. The business people are not interested in moving too fast. They are incredibly polite however; a group of them will pick you up at the airport with a limousine, which will wait for you all day at your hotel, you'll be treated to a feast with your newfound Chinese associates, they will be readily available in a hotel suite nearby yours, and will of course delay all negotiations until you had a day of rest. And then when you leave, you'll get a bill for all of it. Hope you had a nice time. And, by the way, don't ever get the reputation for being a bad host; it will ruin you. Also remember to keep lots of business cards; the Chinese like to exchange them, soon into the introduction. Say hi ("Ni hao") and give them your card, preferably with Chinese translation on the back. They'll love you for it. Don't be surprised if they hold your hand, it's common for men to hold hands in China. And between the sexes, don't kiss. Bad move. Just shake hands. As for business deals, contracts will be more easily obtained if you get what we call in Las Vegas, juice. Influence, being in the loop, knowing the right people, etc. It's not what you know sometimes, it's who you know. Oh, and if you're going to try to get into the loop, presents help. Not cash, it offers too strong an element of bribery. We used cigarettes for the politicos in the China. Works great. And cameras are a no no for gifts, the Chinese government is very sensitive about cameras. (When you enter and leave the country, you will have to account for all camera equipment).

Business day: The day starts at 9, ends at 5, and is usually interrupted by a siesta of 3?4 hours in the middle of the day. The Chinese try not to work too hard before the siesta, so that they are not too tired for it. And don't expect them to work very hard after they have rested, can't be tired for dinner. Part of their day is spent studying the Word as printed in the newspaper, the Peoples Daily. The political study groups basically disappeared many years ago after Mao's death, but made an unwelcome reappearance after the Tiananmen Square demonstrations. Initiative is not something that they are bred for. All those years of communism has caused them to keep low and inconspicuous. You didn't make waves and you didn't try to make money. The habits stuck. (It's referred to as the Iron Ricebowl: lack of productivity, laziness, inefficiency, lack of quality, etc, all things that foreigners must take a serious look at when opening factories in China). After work, expect to find them in restaurants, and street side cooking areas. Dancing in the streets at night to music emanating from a cheap boom box is common. Discos seem to be a necessity in every town. Go to one if you want to see a bunch of Chinese standing around not knowing what to do. It's very entertaining. Business problems: If the Iron Ricebowl is getting you down, just threaten to bring your business out of the country; make sure that the international press knows. Does wonders....

Some more points; remember that incredible draw of a country with a billion possible consumers? Just also remember that for the most part, they all don't have any spending money. Another thing, Chinese business philosophy calls for all parties to make a profit. Chinese business philosophy also considers foreigners to think that they are blessed and fortunate to be able deal with China. Keep that in the back of your mind.

Smoking: Don't get in an enclosed space for any length of time if you desire to breathe and not subject yourselves to lung cancer as you get older. They are chain smokers, and the tobacco is brutal. And it is considered to be incredibly rude to ask them to stop.

Introductions: When introduced to a Chinese official or future business associate, you should expect a lengthy diatribe on the region's history, climate, geography, etc (much like this monstrosity). Problem is, every time you see this person again, you'll hear the diatribe all over again. I've noticed this with individual tour guides. I'm not sure if it's just a matter of politeness, but, one thing's for sure, don't try to tell them to stop.

Prostitution: I knew you were waiting for this. In the good old days, approximately one out of twelve houses in Shanghai housed whores. When the communists came to power, this became an undesirable practice. The prostitutes were rounded up and sent to re?education camps. The johns were often shot. Needless to say, certain practices ended. However, with more western standards invading the country, and most women making 100 Yuan a month in grueling 12 hour a day factories, sending the daughter off to "earn a living" for the family has become more "fashionable". The communists at present call the prostitutes "silver bullets", as they think that they will cause the downfall of the new state of affairs. And if you're in the mood for a silver bullet, you can find them usually around hotels. Don't think of bringing them up to your hotel room, the hotel personnel will have already called the police, only to catch you, so to speak, with your pants down. And if you're thinking of the local populace, to maybe "fall in love" with, don't. There cultures are different than ours, casual sex just doesn't happen. Hate to ruin your business plans.

Drugs: Don't. Just say no. Drug peddlers try to use China as a stopover, thinking that other country's customs won't expect it from there. Wrong. I was met by the cutest golden retriever when I returned. Thought he wanted to wet my bags; he was just sniffing for drugs. Getting found in the US would have been heaven compared to China. When they discover you, and you're non-American, expect to be in jail that afternoon, trial the next morning, and at the local football stadium that afternoon, with a sign around your neck, and many spectators watching. Bullets are cheap in China; they'll put one in your head. If you're American, expect at least ten years of hard labor. The communists are not tolerant of any level of drug abuse. As for other crimes, robbers, rapists, murderers, organized thievery, economic crimes against the state (which is just about everything), are all dealt with swiftly and certainly, all in a manner of days. You get shot. The Chinese are not sure that this is a deterrent to crime, but one thing's for sure, they don't have to deal with second offenders.

Food: The Chinese will cook and eat any mammal whose backbone points to the sun. Even scorpions. First washed in salt to devenomate them, then deep fried. Yummy! Dogs are not as common, but leave Rover home. Chinese in the south are especially fond of plump Zhou puppies, they are specially bred, and are expensive (They cost more than 15 times the cost of prime beef). They won't waste one on a foreigner with non-discriminating taste. Oh, and pandas are forbidden to eat, eating one leads to a one way visit to the football field.

Funerals: Usually occur after visits to the football field. If you see a group of people in white, they're not getting married; they're going to a funeral. The dead are buried with 1 million Yuan of fake money printed up from the bank of Hades, along with various representations of other objects (cars, bicycles, etc) so they'll be able to get around where they're going.

Divorce: Used to be impossible for the woman to get, the man could divorce at will. Some reasons he could use: she was disrespectful to his parents, she was talkative, she behaved poorly, she was jealous, or she stole, she had an incurable disease, or, she just couldn't bear a male child. Of late, reform laws changed what was perceived to be the good old days. Lists: Important stuff to know:

Eleven business rules, which are actually helpful in all sorts of relationships in China:

1. Patience
2. Perseverance
3. Persistence and Stamina
4. Sincerity
5. Firmness (stick to what you believe in)
6. Flexibility
7. Tact and Humor
8. Technical knowledge
9. Language, simple and clear
10. Honesty
11. Ability ( be able to sit through endless banquets, drink that killer alcohol drink mao?tai, tolerate lengthy discussions, etc.)

Chinese prejudices: How they view us; just see where you stand before you get there:

1. Non-Chinese Asians: barbarians who were kicked out of the country years ago
2. Americans: generous friendly people led by warmonging politicians. Females tend to chase, in a sexual fashion, young Chinese boys. Males tend to chase, in a sexual fashion, young Chinese females, and boys.
3. Germans: technically brilliant and hardworking people, who tend to be overweight and drunk.
4. French: flamboyant, artistic, anarchistic.
5. British: rough, brutal, and devious.
6. Australians: good business partners, a rowdy hard drinking people.
7. New Zealanders: same as the Australians, just get drunk faster.
8. Canadians: honest, easy to do business with. Hey...!
9. Indians: toadies of western liberalism who are terribly addicted to democracy. Not to be trusted.
10. Russians: brutal thugs just waiting to steal more of the northern territories.
11. Japanese: forget their attempts at trying to help China, they just want to take over the country again.
12. Blacks: sex-crazed drug addicts with AIDS who want to do nasty things to Chinese women.
13. Hong Kong businessmen: cunning Chinese who just want to make money off of their country. Just wait until 1997....
14. Singaporean Chinese: same as above.
15. Filipinos: brown Americans who just shouldn't be taken seriously
16. Italians: cultural thieves who stole the idea of the noodle from China and tried to present it as spaghetti. Too smooth, too romantic, drive too fast, not to be trusted.
17. Latin Americans: bad guys who flood the world with drugs.
18. Arabs: considered to be a great people. They are constant tormentors of the evil western empire, thus keeping the western barbarians busy from taking over China.

There are many concepts that one should understand prior to investing in China. It is hoped that this summary should present the highlights of certain topics that potential foreign direct investors should be aware of, in order to prevent certain blunder in this huge, complicated, all together similar but diverse, country called China.

References: Huang, Ray "China, A Macro History" 1990; Mackerras, Colin "Cambridge Handbook of Contemporary China" 1991; Sinclair, Kevin "Culture Shock China" 1995; Microsoft Encarta, 1995 Microsoft World Atlas, 1995; Song Shufan, "The Shaolin Kung Fu of China" 1994; sources too numerous to mention from the internet, and sources too numerous to mention from the electronic library.