Chinese Company Coming to America: A Mostly True Horror Story

Eight years ago, I wrote a post Top Ten Reasons Chinese Companies Fail In The U.S. A few weeks ago I got a fascinating email from someone in response to that post.

The below is that email. But before you read this email, let me make very clear that many Chinese companies do a very good job operating in the United States and my publishing this email is NOT intended to stand for the proposition that Chinese companies even tend to act as per the below.

Rather, I am publishing this email to show very starkly how operating in a foreign country without being mindful of the legal and cultural differences between your home country and the foreign country can lead to disastrous results. This is the theme or at least the sub-theme of many (most?) of the blog posts we write and in response to those we often get comments and emails expressing surprise at the disconnects. This post just goes to show that “what goes around comes around” and just as American and European companies so often stumble when doing business in China, so too do Chinese companies stumble when doing business overseas.

With all these provisos, here then is the email [substantially modified to protect both the person who sent it to me and those who still work at this company].

I am writing to you in response to the blog post from eight years ago, Top Ten Reasons Chinese Companies Fail In The United States. I wanted to relate my experience working for a Chinese company. I had a senior level position at this US company and after working there for 10+ years was purchased by a Chinese company. About a year later, the China home office brought in a a new plant manager from China to run things in the United States. This person’s English was very poor and this caused problems as the employees spoke only English or Spanish.

Almost immediately, he began to complain about the work ethic of the Hispanic workers, which I have to tell you had never ever been a problem.

Then the company began to enact draconian measures, such as firing workers for minor mistakes — like being a few minutes late or taking too long in the bathroom. They then moved to begin to replace the office staff with people who spoke Mandarin. This was done by hiring recent Chinese university graduates. This did not work out very well either because when one of the recent Chinese hires would ask too often about their vis sponsorships (which they usually did) they would be told that they would not be sponsored and either fired or left.

Production line employees were spied on and people from the HR department would walk the floor with cameras while telling the employees that any infraction would lead to termination. When any of us “management leftovers” would try to explain that they could not operate a company in the US like they did in China, we were glared out and ignored. Many times we were told that the workers “were lazy and ten times worse than those in China who knew their place.” They even took away the water coolers to save money by forcing the workers to get their water from the bathroom sinks. When one of us “management leftovers” said something bout this we were told not to “worry about it because ‘these people’ are used to drinking water like this from where they come from.”

Not surprisingly, production levels plummeted as skilled and unskilled workers alike either quit or were fired in an effort to intimidate the others into working faster. The blame for this began to fall on us “management leftovers.” Turnover by this point had reached triple digits among the production workers. People would show up and quit the next day complaining that they felt like they were working in a prison. By this point I was working 12 hours at the office and then coming home, eating dinner, and working another 4-6 hours on the computer doing reports and constantly having to explain to the home office why production goals were not being met. .

Management too by this point were dropping like flies and because word had already spread widely about our company, finding replacements was difficult/impossible. When I left the company after not being able to take it any more, I gave a full report to the HR people but that of course led nowhere.

The company is still spiraling down with turnover at an all time high. I have heard that the home office finally sent people from China to find out “the truth,” only to be told that all of the trouble had been caused by the “management leftovers” who did not know how to run the place. I even heard one manager was physically threatened not to reveal things to the home office. The lawsuits are coming next.

So yes, when I read your post I knew exactly what you were talking about.

We will be discussing the practical aspects of Chinese law and how it impacts business there. We will be telling you what works and what does not and what you as a businessperson can do to use the law to your advantage. Our aim is to assist businesses already in China or planning to go into China, not to break new ground in legal theory or policy.