Berkshire Hathaway
Re: OT: China

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By OtterPater
December 12, 2005

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This has been a fascinating thread to me...for lots of reasons. I was in the management of a Us law firm that was known as a "Pacific Rim" law firm from 1985-94. We had offices in Tokyo, Beijing and Hong Kong. On my watch, we added one in Taiwan. The firm's economic fate, unfortunately, was tied to the Japanese economy, and now no longer exists - its remnants were merged into Squire Sanders, which still runs the foreign offices.

I learned quickly to understand cultural differences - we had, at one time, 38 Japanese-speaking attorneys, and many multilingual folks who spoke two, sometimes three dialects of Chinese among languages.

My perspective is one of macro cultural shifts, and a step back from many comments in this thread, many of which have a great deal of validity. I also work with non-profits that are in China, and have spent a lot of energy understanding their culture as well as the Russian culture. A couple of comments in that regard:

1. Like the USSR (and actually the Middle East where we also had affiliate offices), Asia did not go through the Reformation. What that means is that none of these cultures ever adopted the rule of law as a cultural value. Their cultures have all been power based, and to a large extent, still are. I've worked on some projects with countries from the former USSR (Uzbekistan), and you have this curious mix of political culture. Most of the countries have gone the way of the west after the fall of the Iron Curtain by enacting corporate laws and laws regulating intellectual property modeled on western versions. China did a similar thing around 1990 - in fact, our Beijing office assisted in writing its corporate laws. But, the culture underneath these new laws is one that is accustomed to a completely different set of values...not the rule of law. In practice, what happens is that the laws get put on the books and then often get ignored by the beaurocrats that enforce them. I will leave out my anecdotal stories.

2. One also has to understand that the Asian cultures are, for the most part, homogeneous. Unlike the US, which has been described as a cultural "melting pot", foreign cultures have not flourished in most Asian contexts. We, in the west, live in an era of multi-culturalism. They do not. There are lots of implications of this, one of which is that their cultural heritage is a lot less divided.

3. My third, and last point (there are others, but I will not bore you with them) is that, from a macro standpoint, the Iron Curtain fell because there was political reform, but no economic reform. It has been a very interesting study of watching the effects of Glasnost in the former USSR. If you watch the trends, the economic mess created under communism has caused political heartburn in a country that has a culture that is accustomed to the rule of power, not the rule of law. The current president of Russia has exhibited a lot of retro tendencies to revert to a much less democratic society.

In China, on the other hand, you have had economic reform, but no political reform. The mirror image of the USSR. As we have seen, neither approach is perfect. But ultimately (perhaps not in my lifetime) the economic reform will result in political reform in China. There isn't much turning back economically at this point, and as China builds a larger middle class who are very western in their tastes, it will eventually influence the political repression that exists today. Just the existence of the Internet brings its own influence, and the ability of government to block what they consider to be inappropriate websites from being accessed in China. Security breaches are the norm in the US, and has brought a cottage industry of products like Norton anti-virus, etc. The bright minds that can crack Internet security in the western world will probably be one step ahead of the government censors.

How all this plays out in China remains to be seen. But change is underway even if not totally visible to the western eye. The world will be shocked when the Olympics are held in Shanghai in the near future. It is a very modern city. That's just one visible change, but the changes we don't see may be the most dramatic in the long run.

Just my $.02.

Regards, OtterPater

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