Leadership

It's Not All Bad News for Foreign Companies in China

By Jessica Stillman

Updated on: February 3, 2009 / 9:00 AM EST / MoneyWatch

The Find: While many are fretting about how the downturn will affect their business in China, one corporate lawyer working in the country actually asked how his clients were faring and found that on the ground things aren't all that bleak.
The Source: Dan Harris, a founding member of international law firm Harris & Moure, writing on The China Expert.

The Takeaway: Many have prognosticated that the Chinese economy is sure to be hard hit by the global downturn, and even more have worried about how this slow down in the world's most populous country will affect western companies doing business there, but one lawyer working in the country actually set out to investigate the reality on the ground â€" albeit very unscientifically. Harris questioned 15 corporate clients doing business with China, 11 of which were American, one Korean, one Spanish, one Mexican and one German. In reporting his findings on The China Expert this week, Harris does offer one further caveat: while half of these clients are in manufacturing, none are in very low-end manufacturing, which has been hardest hit, and none are based in Guangdong Province, the most badly affected area. Still, the companies' responses to Harris are somewhat heartening:

They said they were going to be very 'cautious' and 'careful' in 2009 with respect to expansion and hiring. Many of them... said they had an 'official' hiring freeze in place for the first six months of 2009 or the entire year. Two said they were going to expand faster than anticipated in China because they saw now as the best time to get a jump on their less well-funded rivals. All of them said they had no concrete plans to get out of China.... Many of them responded to my question about their leaving China by asking me 'and go where?'

Harris also received many comments to the effect that the economic turmoil actually aided companies in attracting and retaining skilled employees. Exemplary answers include: "We had been losing two to three good employees every month and that has stopped completely," and "I hated China's new labor law and I hated how employees were able to hold this over our heads. The power has shifted."

Many more quotes from the companies on a variety of topics are available in the full post. For those interested in more detailed coverage on how the downturn is affecting China, check out Harris's China Law Blog or the WSJ China Journal blog.

The Question: How is the downturn in China affecting your business?

(Image of Chinese factory by Robert Scobie, CC 2.0)