Is It Harder to Run a Business in China Than America?

By Liam Casey

The question I am asked most frequently is "How do you run a business in China?"

My answer is always the same--it's just as challenging as it is anywhere else in the world. No more, no less. The key to staying relevant is being flexible and adapting to change.

We have operated in China since 1996. In the West, when people think of doing business in China, the first thing that comes to mind is low-cost manufacturing. Back in 2003, we made a decision to invest in our own facilities in China. In doing so, we knew for sure that Shenzhen and the Pearl River Delta region had a lot more to offer than just cheap labour. We saw it as an innovative, creative and entrepreneurial place to operate, and the best location to run a global supply chain company.

When it comes to building a business, a successful way to manage this is to apply a "triple bottom line" concept, which can help companies achieve a successful and sustainable business model. The three bottom lines are social, environmental and economic--or to put it simply, People, Planet and Profit. Transparency and accountability for these three areas are critical for long-term success.

People are the most important aspect of any business. Without great people, a company has nothing. The most successful companies enforce fair and beneficial labour practices, do not tolerate exploitation of workers, and enrich the community in which they operate.   Respecting people, building personal relationships and treating people well is crucial in attracting and retaining top talent and inspiring the best performance. In our organization, we have a diverse range of people from 16 nationalities. Yet, we have only one culture; we are all connected by a shared set of values--passion, integrity and teamwork. These values and a clear purpose of developing partnerships delivering peace of mind helps drive the other two bottom lines.

Climate change and an organization's environmental impact is a hot topic for businesses right now. Setting high standards for environmental performance is critical, particularly in China where the majority of products are manufactured. At every stage of the supply chain, it is important to take a leadership approach in trying to mitigate harmful emissions, and adopt a "cradle to grave" life cycle analysis of the product's environmental impact. This includes everything from the selection of environmentally-friendly materials to minimal packaging, to transportation and storage of raw materials the finished product and the eventual disposal of the product. It is important that responsible companies also require best practices from their suppliers.

In today's world, the pace of global commerce has accelerated and transaction times are much shorter than in the past. Visibility to those transactions are available real-time over the web. This makes it possible to reduce the amount of inventory that needs to be put in place to meet demand for the product. Managed carefully, you can now greatly reduce the amount of excess and obsolescence of a product when it comes to end-of-life. This minimizes the entire life cycle carbon footprint of a product, providing a long-term emissions reduction solution, rather than looking at just one part of the cycle such as airfreight.

Focusing on excellent standards in the social and environmental sphere leads to economic benefit. In other words, taking care of your people and the planet ultimately translate into profit and the more tangible benefits of shareholder value, increased revenue, access to capital and market growth.

When you apply these best practices, and they are carried out by a team of people living the values within your organization, you have the recipe for a successful business--anywhere in the world.

Liam Casey (@liamcasey) is the Founder and CEO of PCH International, a global supply chain solutions company headquartered in Ireland with operations in Shenzhen, China.

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James Fallows is a national correspondent for The Atlantic and has written for the magazine since the late 1970s. He has reported extensively from outside the United States and once worked as President Carter's chief speechwriter. His latest book is China Airborne. More

James Fallows is based in Washington as a national correspondent for The Atlantic. He has worked for the magazine for nearly 30 years and in that time has also lived in Seattle, Berkeley, Austin, Tokyo, Kuala Lumpur, Shanghai, and Beijing. He was raised in Redlands, California, received his undergraduate degree in American history and literature from Harvard, and received a graduate degree in economics from Oxford as a Rhodes scholar. In addition to working for The Atlantic, he has spent two years as chief White House speechwriter for Jimmy Carter, two years as the editor of US News & World Report, and six months as a program designer at Microsoft. He is an instrument-rated private pilot. He is also now the chair in U.S. media at the U.S. Studies Centre at the University of Sydney, in Australia.

Fallows has been a finalist for the National Magazine Award five times and has won once; he has also won the American Book Award for nonfiction and a N.Y. Emmy award for the documentary series Doing Business in China. He was the founding chairman of the New America Foundation. His recent books Blind Into Baghdad (2006) and Postcards From Tomorrow Square (2009) are based on his writings for The Atlantic. His latest book is China Airborne. He is married to Deborah Fallows, author of the recent book Dreaming in Chinese. They have two married sons.

Fallows welcomes and frequently quotes from reader mail sent via the "Email" button below. Unless you specify otherwise, we consider any incoming mail available for possible quotation -- but not with the sender's real name unless you explicitly state that it may be used. If you are wondering why Fallows does not use a "Comments" field below his posts, please see previous explanations here and here.

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