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Reviews 87 Dong Shizhong, Danian Zhang, and Milton R. Larson. Trade andInvestment Opportunities in China: The Current Commercial and Legal Framework Westport and London: Quorum Books, 1992. xii, 265 pp. Hardcover $55.00. Like moths to a flame, foreign business people continue to be lured by the booming Chinese economy and its growing legions ofconsumers. Yet, the Tiananmen Incident singed the wings ofmany Westerners. To dispel any lingering doubts, the three authors have written a basic "how-to" guide, which Ambassador James Lilley appropriately describes in his Foreword as "a businessman's book." Lawyers also might be interested in the views of the two Chinese authors, who were legal researchers attached to the National People's Congress in Beijing and the Shanghai People's Congress. Unfortunately, academics will be disappointed by the lack ofin-depth analysis and new insights into China's foreign-trade system. One ofthe authors' stated purposes is to provide a "practical" guide for those businesspeople enticed by the China market. They succinctly describe the basic characteristics of the Chinese economic scene, including a discussion of the different forms ofChinese enterprises, the managerial responsibility system, and problems of material distribution. They also present a thumbnail sketch of the financial system, glance quickly at China's roller-coasting stock market, and ponder China's accession to the General Agreement on Tariffs and Trade (GATT). The book is especially strong in providing practical tips for establishing foreign -invested enterprises in China. Business people are reminded of the importance of finding the "right" Chinese partner, especially one who possesses the appropriate political, economic, and technological abilities. After briefly analyzing project approval procedures, the authors review various joint-venture laws regulating initial capitalization, foreign exchange balancing, land-use rights, and taxation . A more scholarly treatment on foreign-secured lending is included, based on a 1989 article published by the journal Law and Contemporary Problems. Potential investors furthermore are warned of dangers posed by the international environment such as the growing Chinese trade surplus and the renewal of most-favorednation (MFN) status with the U.S., as well as China's failure to protect intellectual property and its continued dumping on foreign markets. Two of their suggestions need further clarification. The authors recommend that foreign investors obtain local foreign-investment guidelines, which are based on Beijing's internal-investment regulations and policies. To their credit, the au-© 1995 by University ,J1015 cite as an exampie me 1990 Shanghai Investment Guidelines that prohibit oj awai ? ressforeign-invested projects harmful to the natural and "spiritual" environments. The latter category was especially sensitive in the early post-Tiananmen period. 88 China Review International: Vol. 2, No. 1, Spring 1995 The leadership was attempting to prohibit projects "involving news media, publishing , broadcasting and telecasting, telecommunications, foreign trade, domestic business, insurance, or projects that will have an adverse impact on national security . . . [the] national economy and social development" (p. 150). Yet, because the book is virtually devoid ofpolitical risk analysis, the political context of the investment prohibitions is not explained. With the increasing degree ofdecentralization , local governments now enjoy a greater flexibility (tanxing) when implementing State regulations. By investing in Star TV, CNN-Asia, HBO-Asia, and MTV, Western media moguls already have taken advantage of the lax enforcement of satellite receiver restrictions to add to China's "spiritual pollution." However, Chinese flexibility has its limits, as Rupert Murdoch understood when he eliminated BBC news programming from Star TV. To be successful in the China trade, Westerners must conduct themselves in a "politically correct" fashion. Their second suggestion is for potential investors to "sensitize" themselves to Chinese society and culture. The authors warn about the problems of Chinese bureaucracy and wisely advise the befriending of senior Beijing officials, who can expedite local negotiations (p. 201). They also describe the Chinese as extremely sensitive to the appearance of foreign exploitation, which motivates them to seek "equality" in all business ventures. The authors thus argue that any successful negotiation will be based on an understanding and toleration ofcultural differences. While the authors should be congratulated for including a discussion of Chinese negotiation behavior, their arguments would have been strengthened with the inclusion of Lucian Pye's works on political...


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