Western companies are flocking into Central China, running into new unchartered territory, writes Bill Dodson in the China Business Services, an excerpt from his book. Local government are just one of the unpredictable dangers, like in Chongqing.
Great hidden costs lay in store for potential investors like: government corruption; changeable policies; inflated costs of production inputs; a lack of skilled labor and experienced management; and affordable salary levels high enough to attract Chinese nationals from the east coast.
John, a friend with whom I’d worked on a project in Kunshan, near Shanghai, spent two years building an export factory in Chongqing for a mid-sized American company. John explained to me, “The township where the factory is located ran out of its allotment of natural gas half-way into the year. Cheap supplies of natural gas was the ONLY reason the company had put the operation there. It’s even in the contract that the company will receive supplies of natural gas without interruption. So when the local government told me, ‘So sorry, no more gas for you,’ I was angry. One of the Vice Mayors of the township offered that if my company gave him 2 million RMB the local government would look the other way while I hooked up to the gas supplies in the next town over.”