China and California

china-californiaThis week,California’s Governor, Jerry Brown will be traveling China to sell the Chinese on investing in California.  The article I read (here), says that he will be traveling to major cities including Shanghai and Beijing in order to increase Chinese investments in California (currently, California gets only 1.6% of Chinese investments abroad). Gov. Brown will also be opening a state trade office in Shanghai to help facilitate these investments.

One of Gov. Brown’s objectives on this trip will be to sell China on lessening its environmental impact as air pollution is a major cause of death in China right now.  The Governor will be advocating Chinese investment in clean technology companies as well as electric car companies in order to “Reinforce his mantra that good environmental policy is good economics.”  He will also be looking for investors in California’s plan to build a bullet train similar to China’s.  There are 90 delegates from several companies including Disney and Sea World traveling with the Governor.

I don’t see a reason why China would turn down other companies’ coming in to help fix their environmental mess seeing as the general public is ready to riot about the pollution.  The Chinese Government has a multitude of issues to worry about along with their environment.  It seems like it would be much easier for them to simply sign a check and let the environmental companies start putting electric cars in the market and cleaning up the air.  While I think that China will be interested in investing in Californian companies, I believe the issues will come after the deals are made.  I mentioned this in my last blog post and I’ll mention it again: the way the U.S and China do business are different.  For example, if Chinese companies do come to the U.S to do business and build a bullet train, they will be subject to U.S laws.  U.S laws require that companies disclose everything to the government, something Chinese companies don’t have to do in China.  Also, American companies will have to listen to the Chinese Government, something that can be more than just a little bit of a hassle at times.  While I feel that trade would be beneficial for China and California, and while it is clear by the 90 delegates and grand receptions that both sides want to do business, I am not sure that either’s businesses will adapt well or at least quickly to each other’s cultures. This is just another reason why I feel it is important to know the cultures of the places you do business in.  If they can do this, both sides will profit.