The Wild, Wild East

Foreword China today is arguably the most exciting and rapidly changing country in the world – socially, culturally and of course, economically. As a result, life in modern China is often full of paradox, and it's becoming increasingly so in this era of unprecedented socioeconomic transformation. In cities throughout China, it still is not unusual to see old men piloting mule-driven carts laden with produce along side of brand-new BMW, Audi and Mercedes sedans. Relentless change – so palpably demonstrated by the recently completed Three Gorges Dam project and the resulting relocation of entire cities and their populations – has been an elemental part of China's modern character. China’s rice paddies may have sprouted metropolises and manufacturing centers, and its streets may be clogged with cars and pollution, but the people remain rooted in a resonant cultural heritage. Many Chinese still burn joss sticks and consult feng shui experts for good luck in a new enterprise – even as they negotiate the details of that business opportunity on a cell phone. Exploding economic prosperity brought about by increasing openness to the outside world during the past thirty years has made this transformation inevitable. China’s infrastructure and cities are being rebuilt and modernized – Beijing, Shanghai, and Shenzhen arguably are the most dynamic cities in the world today. China’s ascension as a member of the World Trade Organization (WTO) in 2001 underscored its economic emergence and helped to enhance its global political standing as an emerging superpower. The 2008 Olympic Games – China’s official “coming out” party – were recently held in Beijing. The globally recognized success and excellence of the Games proved to the world that China is a world power and truly has arrived. This incredible dynamism extends to evolution and development of China’s business landscape as well. Unfortunately, China’s rapid opening and expansion of trade has sometimes resulted in widely reported scandals such as the tainted pet food, dry milk, and the lead painted toy episodes. But drawing conclusions from a few (though serious) stories about the danger of a few Chinese products would be a mistake. The truth is that the vast majority of the billions of products imported from China and sold in the United States and in other countries around the world is safe and inexpensive and has helped average Americans improve their standard of living by reducing the amount of disposable income they have to spend on everything from clothing to electronics. There have been other, albeit less publicized stories about businesspeople who have ventured to China in search of their fortunes – not unlike the pioneers who headed west during the California gold rush to seek theirs. But like the many adventurers who failed to find the mother lode and strike it rich a century and a half ago, making a fortune in China is no easy task. Certainly there are opportunities in China – but there are significant risks in doing business in China as well. Although China is rapidly changing and modernizing, business practices are still deeply rooted in ancient cultural traditions. To be successful, Western businessmen who want to do business in China have to understand the Chinese way of doing business – and that’s what this book is about. This story is a chronicle of the life and times of an American financier in today’s capitalist China during the past five years. Financial consultant Alan Refkin specializes in helping growing Chinese firms arrange Western financing. The story centers on his first experience in taking a Chinese company through the process and preparation required for public listing on U.S. capital markets. Although the names of the firms and individuals discussed and described in the story have been disguised due to ongoing litigation – the story is entirely true. Throughout the story, Alan shares his cultural insights about doing business in China through what he has called his “Refkin’s Rules.” We hope you enjoy the story. Daniel J. Borgia, Ph.D. Associate Professor of Finance 2002-2003 China Fulbright Scholar University of Nottingham Ningbo China