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

By James Fallows

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.

This article available online at:

http://www.theatlantic.com/business/archive/2011/03/is-it-harder-to-run-a-business-in-china-than-america/72390/