Rating: 
Summary: A Superb Antidote to the China Hype
Review: There's an incredible amount of hype about China's economic market. Its huge population, high-skilled low-wage work force, and relative political stability for a developing country all act as a powerful lure to multinationals eager to set up shop and begin selling to one-quarter of the world's population. Under tough negotiations from Chinese officials, these companies tend to give away the kitchen sink to ensure they get access to the huge market. But what do they get in return?Joe Studwell does a service to the informed public by clearly demonstrating that almost all the businesses who have gone to China have gotten next to nothing for their technology transfers, special fees, and tremendous time and effort they've dedicated to the market. Almost uniformly, they have high-balled their expected sales and profits from the Middle Kingdom and found immense barriers such as unseen regulations and fees, corrupt officials, unenforced laws, local spin-offs to their products, etc., that should have sent them packing. Yet almost all of them push on, undeterred. As Studwell explains, the reason for this is an old phenomenon among Western businessmen he calls "The China Dream." Despite continual setbacks, these hard-headed businessmen are too attracted to the possibility that they have something to sell that even a small percentage of Chinese may want to buy. Those huge potential numbers are too much of an enticement to businesses to easily let go of their foothold in China. But Studwell's book is more than just about the experience of foreign businessmen in China. It also shows that the China market is becoming a trap for the Chinese people themselves. They work hard and save, and the government confiscates and then destroys their money by trapping it in state-owned banks that are insolvent because they lend to state-owned enterprises that are unproductive. "The China Dream" is well-written and informative. Its thesis is provocative, but well supported. Studwell argues there is no rational basis for much of China's economic success and that most of its market is as closed and overregulated as the Soviet Union's. This book should be required reading for every CEO of a multinational who dreams of selling in China.
Rating: 
Summary: A billion cokes a day!
Review: This book is an important because it busts some conventional wisdoms about China's economy that need busting, things few if any other people have been saying. Westerners seeing what they want to see in China rather than the reality is an old phenomena that goes back to 19th century Christian missionaries. US CEOs had starry-eyed dreams of selling a billion this or that. Many threw millions down the drain. Studwell's case studies of particular firms' experiences, both failures and successes, are illuminating. He also makes a good case that the Chinese economy is on a downward trajectory. The book is quite insightful and the following criticisms are on points of secondary importance, not at all undermining the books' significant contribution. An impression left in parts of the book is that everything the state does is bad for the economy, and the private sector is the sole engine of growth. This is an ahistorical perspective of development (see books by Ha-Joon Chang, Joseph Stiglitz, Karl Polanyi, Alice Amsden, Meredith Woo-Cumings), and a questionable assertion in Chinese context as well, at least through the mid-1990s (see Chris Bramall "Sources of Economic Growth in China 1978-96"). On page 158 he says that the US economy, not China's is the "real" 1990s miracle economy. Why China should be compared to the advanced US economy and not other developing countries, or the US in a more comparable period in its history is not explained. Studwell criticizes Stanford professor Jean Oi's conceptual tool, "local state corporatism" (see "Rural China Takes Off"), i.e. activist local governments promoting rural industrial growth in the reform period. But his refutation mostly discusses problems with urban "collectives", which have nothing to do with Oi's thesis. He correctly points out that the small scale rural industrial sector has reached a dead end. But he seems to imply the sector's whole run is thus a myth. These enterprises started growing around 1970, accelerated after 1984, and the run ended in the mid-1990s. That's 25 years of rapid growth. Does Japan's stalled economy in the 1990s prove that their post-war miracle was a myth? The pre-reform economy is described as "wrecked". Carl Riskin's "China's Political Economy" has a more balanced review. Agriculture, singled out for criticism by Studwell, actually did better than a large majority of developing countries in the 1963-79 period (see Ajit Kumar Ghose 'The People's Commune, Responsibility Systems and Rural Development in China 1965-84' in the book- The Re-emergence of the Chinese Peasantry). And Studwell could have shown a little skepticism towards the official line about decollectivization; see Jonathan Unger's "The Transformation of Rural China". On the question of state owned enterprises, Studwell shows how the attempts to reform them haven't worked very well, and he blames the lack of property rights. But he doesn't attempt to refute the many scholars of the Chinese economy (Peter Nolan, James Laurenceson, Dic Lo, Wang Xiaoqiang, Louis Putterman, Barry Naughton, Cui Zhiyuan, etc) who have argued that public ownership per se is likely not the core problem. On a couple of historical points, Studwell has his facts wrong. He says 1 million Chinese soldiers died in the Korean War. This UN figure is reporting both killed and wounded. The best guesses of Chinese KIA are 100,000-300,000. Studwell also puts forth a radical new theory of China's motives in the Korean War - territorial expansionism motivated by rabid nationalism. Actually, Zhou Enlai tried desperately to keep China out of the war, telling Truman that they'd not enter the war if the US didn't push to the Yalu River. Studwell says 20 million people were killed in the Mao years (above and beyond the 1959-61 famine). He does cite a CCP official's claim of 4 million early executions (more than double the US State Dept's estimate, and nearly 4 times the 2 main scholarly estimates), but no evidence is provided for the other 16 million, a rather large figure to treat so flippantly.
Rating:
Summary: Dense/ Well thought out and clearly understood.
Review: This lengthy document of some of the snafus of people that were managing HUNDREDS of millions of dollars of investors' money is a testament to exactly how rare knowledge really is. And how much of a role psychology plays in the market. And how true the adage "Those who do not learn history are doomed to repeat it" is. Currently, I am living here and find that the behavior of the people here is accurately represented by this work and could have been predicted based on some of the historical evidence that is given by Studwell. It is obvious that he has a good, sharp mind and has paid attention to his subject material. I've often heard phrases such as: "We Chinese have invented words for every thing because of our long history and we don't need to invent more." Or, "The American government lies to you too, and is just as afraid of a revolution as ours is." And on and on and on. The mentality of the people here is very stubbornly fixated in the 12th century and is not likely to change anytime soon. It is with this understanding that the author goes on to describe the Chinese customs that make this reality possible--even now, people here think that Beijing and Shanghai are the financial capitals of the world because of what the government tells them. The one weakness of the book is that he doesn't devote a whole chapter to describing the cultural aspects alone. And this was perhaps a conscious decision because the perception of a culture is not reproducible from person to person-- although I will admit that all that he has said has been consistent with my observation. It would be easy to predict what he observes if you could just understand the cultural context in which these things take place. It might also have been nice if he had drawm some parallels with the nervousness that the Soviet Union created in the USA. (It may be that I am going overboard with my "could've/should've"s, as just the documentation of this must have taken FOREVER. It is mind boggling that one person could find so much and keep SO abreast of what was happening.) It is prudent to underline several things of which he has a mature understanding: 1. The essence of Chinese culture is FORM OVER SUBSTANCE. So he correctly notes that the government has spent a lot of time on making people believe that they were going to get returns that they weren't. This explains why people will repeat things a large number of times to convince themselves (and others) that it is true. 2. The obsession of this place with control. The government here has to be in charge of EVERYTHING. And, as to the first observation, they will not reveal the full extent of their control. 3. The mechanism by which a lot of the "guan-xi" money is distributed. (The hiring of consultants that are children of government officials who have sway-- or at least seem to.) 4. That nasty little sense of superiority that makes the Chinese destructively delimit everything into a Chinese/ Non-Chinese (and therefore inferior) way of doing things. Effectively, this makes the number of transactions that would take place in a properly functioning market much lower. 5. The extremely poor understanding of basic economics and its confusion with the other "social theater games" that they like to play here. Everyone seems to think that if we just believe it hard enough, then it is true. And most importantly how these wildly inaccurate ideas have been implemented as public policy by a government that is NOT subject to feedback mechanisms. On the negative side: The documentation of the book was thorough, but it was just TOO MUCH and made the book rather heavy. Also lacking was a more detailed comparison of the parallels of this with Japan. They did some of the same things and went down the same roads that China is going down now--although with much more reliable enforcement of contracts/ transparency. And during the 1980s, the Americans bought right into the things published by Japanese think-tanks set up in the USA and created the same sense of hysteria. But when everything was revealed in time (as it usually is), then people understood the folly of their ways. But for all his clear writing, most people will probably never even hear of the book. They are going to have to waste investor's funds and learn the hard way.
Rating: 
Summary: A Nightmare of a Book
Review: This poorly written book suffers from many flaws, not the least of which is the author's lack of access to informed sources. One of the most important things one needs to do when writing a book of this sort is interviewing the CEOs of Fortune 500 companies, and this author has failed to do this, the most basic homework. For every anecdote one can easily find a hundred anecdotes making the opposite point. If you choose your anecdotes with care, you can prove almost anything. I don't find Studwell's conclusions very convincing. Studwell's choice of historical cases are misleading. When China was prosperous, it was a closed country. By the time Europeans were able to invest, China was in the midst of war and revolution. After the war China was closed again (except to Soviets). The last two decades of reform were also unsuitable for foreign investment, due to structural instability. If Studwell is right, then I have a hard time understanding why: (a) Henry Kissinger called China "the most ascendant" among all contemporary world powers (Europe included) ;
(b) Paul Wolfowitz (Deputy Sec. of Defense) said China will soon achieve superpower status within 50 years (by 2025 at the earliest), adding "and that's pretty fast by historical standards";
(c) Jack Welch (of GE) predicted China will be "very competitive" and advised managers doing pie charts to "leave half the pie" for the Chinese, who will "threaten your very existence";
(d) Margaret Thatcher described China as "undoubtedly on course to become an economic superpower", and had this to say about the Chinese people: "everywhere they go they show the same spirit of enterprise and self-reliance, and given the right economic framework, nothing is beyond them";
(e) Joseph Stiglitz, (Clinton's chief economics adviser, former chief economist at the World Bank & Nobel Laureate in Economics) is very bullish and optimistic about China's future, contrasting with his gloomy views of Russia;
(f) Arlen Specter (US Senator, Appropriations & Judiciary Committees) called China "the coming colossus";
(g) Joseph Nye and Sameul Huntington (Harvard dons) predicted China's swift rise to be a problem for the US;
(h) JM Roberts and Eric Hobsbawm (British historians) used "superpower" or "potential superpower" to describe China;
(i) Jeffrey Garten (Dean of Yale's School of Management) called China "the second most important country in the world";
(j) Gregory Chow (distinguished Princeton econometrist) calculated China's economy (gross GDP in purchasing power parity) to be bigger than that of the US by 2025 - even allowing for flawed statistics. Studwell also chose to ignore the very successful British firms operating in Hong Kong. The drug dealers who brought opium to China got fabulously rich - most were British, while a handful, like Warren Delano (FDR's grandfather), were Americans. Their wealth equalled that of the Vanderbilts. And their legacy persists to this day: the HSBC - the Hongkong and Shanghai Banking Corporation - is now the world's third most important bank. Let people be swayed by the naysayers and sensationalists: it's HARDER to make money when everybody is rushing in to invest.
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