Coming to Jesus in Chongqing
January 22nd, 2008 | by This is China! |
An American friend of mine with whom I had worked on a project in Kunshan several years ago has been opening a factory in Chongqing. His new project - or rather, the local government - has been frustrating beyond words – which is unusual, since he is characteristically quite a vocal person. I asked Jim (not his real name) why the company chose to put its factory in Chongqing ; actually, in a township in the Chongqing municipality. He answered simply, “Natural gas”. He explained, “Natural gas in those parts is much less expensive than on the east coast.” That seemed to be the company’s primary concern during the site selection, which it conducted before Jim joined the company.
Now Jim is no shrinking violet when it comes to setting up operations in China. A towering six foot three inches, the chaw-chewing Texan cut his teeth in the Taiwanese jungle of Kunshan, doing battle with entrenched government interests that had been lulled by the gray zone of business dealings the Taiwanese Way. He took the Chongqing operation with another company when his first employer had all but abandoned support of the Kunshan factory, executives in Corporate preferring to bury their head in the sand to dealing with the complexities of starting a business in China.
Chongqing, though, is another animal altogether. Located in the center of China, the jump-off point for the Chinese government’s Go West program, Chongqing is relatively isolated in a mountainous region perpetually shrouded by fog and low-lying clouds. Business dealings there are typically conducted in an isolated manner as well, and are often as opaque as the fog that blankets the region.
Jim explained to me, “The township in which they chose to locate the factory actually ran out of its allotment of natural gas half-way into the year [2007]. That was the ONLY reason the company put the operation there. It’s even in the contract that the company will receive supplies of natural gas without interruption. So when the local government told me, ‘So sorry, no more gas,’ Jim was angry. One of the Vice Mayors of the township offered that if my company gave him 2 million RMB the local government could look the other way so I could hook up to the lines of the next town over, which still seemed to have supplies.
“So I wrote letters directly to the Chongqing provincial government complaining about the township government reneging on the agreement and asking for money. I told them we were going to have to ‘come to Jesus’ on this one, or I was going to advise the owner of the company to pull the investment out of Chongqing if they didn’t live up to their end of the bargain.” To “come to Jesus” in the States - especially the southern States - means to have an open and frank discussion, usually emotional, hopefully revealing.
“The meeting was pretty tense. I think these guys figured they could just mumble some apologies and I’d go away happy, since they’d given me the opportunity of an audience with ‘the grand poo-bahs’.” Jim always liked to call the government officials who put on airs “poobahs,” after the Flinstones characters that were chiefs of the local tradesmen’s society. “But sometimes there comes a point in time here in China when you have to jump up, kick the table over, and shout ‘$%#&*’! to get things moving.
“Just don’t do it very often!!” he laughed. It’s what we have come to call “The Nuclear Option.”
The religious fervor with which Jim stated the case to the Chongqing provincial fathers and the threat of pulling the investment out of Chongqing seemed to have been enough to get the hook-up and quota of natural gas the company had scripted in the contract with the government.
With just a couple weeks before he was to move to the newly-built facility at the end of December 2007, Jim sent me an email:
“One note: everyone needs to be aware that even the “go west” incentives are being reduced. The VAT on export reduction applies to all export products, no matter where you are. There are strong rumours that Natural Gas cost is fixing to be increased about 20% out here. In all honesty, what I’m seeing is that the go west initiatives are bullshit. My costs (other than labor) are no different here than in east China. If you want to save money out here, it is doable but you sacrifice your ethics and pay bribes which I will not do.”
Maybe Jesus needs a second coming in Chongqing.
Bill Dodson
SUZHOU, China
