The New Silk Road: Secrets of Business Success in China Today

But those speculations all beg the question: What should your company be doing today?

The New Silk Road is the first book I have read that reflects the views of my friends who have 20 plus years of experience doing business there. As such, it counters much of the overoptimism that makes American companies too anxious to expand there, and leads to mistakes that hurt short and long term results.

Any company that is considering its first stake in China, or re-evaluating the stakes it has today, should be sure that those involved read this book.

The key lessons are that company goals must be more carefully considered, partners chosen more thoughtfully, expectations of near-term profits lowered, a focus shifted to developing Chinese management and workers, and a longer-term perspective taken on developing and maintaining relationships. Perhaps the most fundamental point of the book is that things are very uncertain in China. With lots of effort you can reduce the uncertainty, but it will still be higher than in almost any other country. So there will be a premium placed on making decisions that will be good ones regardless of what happens in the Chinese business environment.

When you do your homework, you will find that China has more competition than almost any other country and lots of excess capacity. A small percentage of the people can afford to buy what you want to sell. Regulation and bureaucracy will keep you out of the best markets for what you want to do. The rules will change tomorrow. Everything will take a long time. Political tensions among your home nation and China will be used against you in business. Sounds challenging, doesn't it?

While China is underdeveloped economically and in entrepreneurial and business skills, the people are well educated and know a lot of things you do not. For one thing, they know the many different markets in China and how to do business there. They have local connections that you need. They also have skills in negotiation and strategy that you may not have. So seek out how to make the best of both worlds, rather than just plan to do business like you do in your home country. In fact, your product will probably have to be customized for the Chinese market.

Mr. Stuttard does an excellent job in his essay, "Reflections on China at the End of the Second Millennium," of summarizing the lessons from the case histories. Be sure to reread this essay after you finish the book. It will help put the case histories in perspective for you.

He has done well in choosing a variety of case histories, that reflect varying levels of success. The book is especially lucky to have the perspectives of comapnies with a great deal of Chinese experience like American International Group, John Swire, United Technologies, and Shell. In each case, either the company's CEO or the operating head in China is the person interviewed.

The people who run the business in China for you will be very vulnerable. When unpredictable shifts cause results to fall, their heads will be on the chopping block in some companies. That's not a good idea, because the set-backs will often not be due to any fault of their own.

You will also get helpful hints on the best ways to recruit talent, conduct training, and integrate expatriates.

After you have finished reading and enjoying this valuable book, I suggest that also consider where else the lessons of this book apply. I suspect that your success in many other parts of the world would be enhanced if you employed these lessons there, as well. Also, how else can you overcome communications stalls among your various operations and with your various stakeholders?

Focus on what needs to be done now to develop your short and long term potential!


A Slender but Solid Primer   May 17, 2000
Robert Morris (Dallas, Texas)
10 out of 10 found this review helpful

It is important to understand what this book is not. Specifically, it is not a history of China nor of that country's business history; nor is it a definitive guide to business protocol when doing business with the People's Republic of China (PRC); nor does it suggest specific strategies and tactics which ensure "business success" in that vast country. True, Stuttard discusses several "secrets" and they are well worth knowing. However, you should view this book as a primer. As such, it can be of substantial value.

Until recently serving as chairman of PricewaterhouseCoopers China, Stuttard was uniquely situated to accumulate the information and insights which he shares in this slender but solid book. He and his associates advised more than half of the global companies then operating in the PRC. With precision and concision, he explains the importance of issues such as these:

* Comprehensive research and due diligence prior to involvement in the PRC

* Criteria for the selection of a joint venture partner

* Flexibility of approach and willingness to adapt

* Criteria for selection of expatriate managers

* "Localization"

* Compatibility of cultural values

* The role of trust

* Cost management and accountability

* The importance (and significance) of a long-term commitment

For me, one of the book's greatest strengths (among many) is the inclusion of information Stuttard and his associates obtained from chairmen of 11 different multinational corporations now doing business in China. Their collective experiences reveal the most common misconceptions about the market, the competition (both internal and external), the regulatory environment, the role of government, and the concept of "partnership."

If you need a single-volume source of practical advice about doing business in the PRC today, look no further.


Sage Wisdom from Old Hands   October 31, 2000
Dr. Karen Gulliver (Minneapolis, Minnesota)
9 out of 9 found this review helpful

This short book consists of the reflections of John B. Stuttard, former Chairman and CEO of PricewaterhouseCoopers China (1994-1999), and summaries of his interviews with 11 top executives working in Western companies in China. Each interview runs 8-10 pages and includes a short bio of the exec along with a quick snapshot of the company's current Sino-standing. The first chapter is Stuttard's and is a fine read that perfectly sets the context and perspective of the 21st century business environment in the country destined to one day overtake America as the world's single largest consumer economy.

Everyone featured in the book, including the author, is an "Old China Hand". Several of the companies are legacy firms, those with pre-WWII and pre-Mao histories who returned after the country turned face forward once again. Others are case study JV's with relatively short, 10-20 year pasts. Each chapter is compelling.

There is some flag waving for the Chinese. These are people who have listened to countless stories at countless banquets about the Chinese fear of chaos and the cultural scar tissue of 150 years (roughly 1790-1940) of shameless behavior by colonial minded Westerners in China. These stories are, after all, Inculcation 101 for any Westerner attempting even superficial commerce or business in the Middle Kingdom. Let's not forget the Chinese did a pretty good job of creating 25+ years of chaos themselves during the Great Leap Forward and Cultural Revolution. The Japanese were several degrees beyond shameless during World War II. These events are much fresher in the Chinese consciousness than King George III, yet he and Emperor Qianlong still seem to dominate every conversation that explains and/or justifies Chinese desire to top down control all macro and micro aspects of their economy, firms and even routine business transactions.

Still, there is sage wisdom on every page. The book is best when the execs tell what they did in China to be successful. Some of the common themes are the need for good local managers and training programs, a corporate culture of equality with your Chinese partners regardless of equity division, the success of long term strategies versus short term. The deliberate love each exec feels for what they are doing and, in some ways, for China, is clear. The awesome change taking place in this country is also reflected in these interviews. A difference in attitude and tone can be seen between execs in consumer product industries versus sensitive and still restricted ones like oil.

Very little happens fast in China, except the neckbreaking pace at which Western funds are being spent to form infrastructure and modern physical assets. These are the people who have footed a noteworthy part of the bill. They have alot of value to say and this is a rare peak at thinking at their rung of the international corporate business ladder.


Managing expectations for senior managers on their way to China   October 10, 2006
Erik Eisel (Huntington Beach, CA)
Some readers will already be familiar with Tim Clissold's cautionary tale, "Mr. China," about the difficulty of doing business in China. But, "The New Silk Road," offers a very different perspective and different kind of cautionary tale about the "early" days of doing business in China in the mid-to-late Nineties.
Whereas Fishman focuses on his more "entrepreneurial" efforts to revamp factories and set up new industries in the Chinese countryside, Stuttard, as a consultant for PriceWaterhouse, offers a more "professional" perspective. Thus, each chapter is much less autobiographical than Clissold's book, being organized around individual case studies, focusing on the major companies (AIG, Unilever, Bayer, etc.) trying to create a foothold in a hot economy.
Stuttard's overriding theme and question is: Why do senior managers with 20 years of success in the States fail so badly in China?
The answers range from lack of support at the head office, political barriers, confusion about the nature of legal contracts in China, to overblown expectations on the part of the Type A manager.
For a complete perspective on doing business in China, I believe that "The New Silk Road" should be read in tandem with "Mr. China."
With this book, Stuttard has done hopeful managers in China an incredible service.


Timeless China Wisdom   June 20, 2008
Joshua Campbell (Shanghai, China)
It is important to note that this excellent book by John B. Stuttard, former Chairman and CEO of PricewaterhouseCoopers China, carries amazing wisdom within that remains as true today about China as when it was written, all the way back in 2000. The outlined principles and shared experiences about Mainland China are timeless. So readers concerned that books written even a few years ago about China will quickly become out-of-date, in this case absolutely need not worry. In fact, I have read this book several times over the years and it was the single biggest source of inspiration for the book I co-authored about China, Know China Business: The Insider's Guide to Doing Business Successfully in China.

There are a number of case studies shared in this book that are written by CEOs and other top-level executives from some of the most well reputed multinational companies (MNCs) active in China. The level of honestly about their personal China experiences expressed by these top executives is truly astounding and not to be found in any other book I have read about China, while the lessons learned can also be applied immediately by any Western business person operating in the Middle Kingdom, whether they are a novice or old China hand. I am eager to read the more recently written Operation China: From Strategy to Execution by top China executives from consulting competitor McKinsey. However, I would be extremely surprised if the information gleaned from within could match the wisdom shared by Stuttard in The New Silk Road.