The China syndrome: devilish detail

By Matt Cooney, July 20, 2006 @ 9:16 pm

Idealog July/August 2006, page 60. Picture by Tony Brownjohn

Jade Gray says he really learned about business in China when he was neatly hoodwinked by a joint venture partner. He still marvels today at the subtlety of the trick that suddenly pulled the rug from under his feet

Gray was managing a joint venture beef farm in northern China. The five on-site partners were constantly fighting for power, he says. “Everyone was trying to undermine everyone else.” Still, progress had been made, and the farm was almost ready for the visit of The Man: the chairman of a San Francisco venture capital firm that owned 51 percent of the venture.

“As the managing company, the results were reflecting on us—could we manage this project? And we’d done a lot of good stuff, the cattle were looking good and it seemed like it could go well. There were a lot of façades, but the façades were looking pretty strong.” 

One job remained: to paint the farm. Gray picked a terracotta colour and then left to attend a conference. “I came back two days later and about half the farm was painted canary yellow. I turn around and I have this friggin’ canary yellow farm, right? So I walk up and I’m like this better be a fucking undercoat. Those were my exact words in Chinese. Sure enough, it wasn’t, it’s ‘No, this is the colour you chose.’”

Gray found himself with $10,000 of canary yellow paint and a decision: does he buy more paint and suffer the loss? Or live with a canary yellow farm? He chooses “the New Zealand way”, saves the money and uses the yellow paint. “I discovered pretty quickly that was the wrong decision when the big entourage arrived and the chairman stepped out of his limo. The first thing he said is, ‘Who the hell chose this colour?’”

In the blink of an eye, Gray had lost. “We hadn’t even started the meeting and the impression was that the New Zealand outfit was incompetent. We could not manage the project. I noticed that right from the start—he was just sitting in his car, saying what the hell is this?

“And he was justified. It is blatantly, glaringly canary yellow and it’s obvious that we couldn’t manage the Chinese.”

At the following meeting the New Zealanders were stripped of the management role and told just to worry about the farming. The Chinese construction partner was given the purse strings. Game, set, match.

Gray still shakes his head at how neatly he was sidelined. “The objective was for [the construction partner] to get the books away from us. They went and managed the site and got a lot of money out of the account through bad management, a lot of paybacks. And the project suffered, but the top four guys, they were probably happy, they probably got a Mercedes out of it and might have bought a house. To them it was a total success.

“China is a very subtle place and when you first come here you don’t see that,” says Gray. “You just see this massive place, you know, everyone is driving crazily and it’s like they speak in a harsh, coarse tongue. But to get things done, it’s not about being the bravest and the strongest, and pushing and getting out there. It’s the guy in the background who is just moving the pieces around to suit his needs.”