Photo credit: Andy Best, Kungfuology

Guest article by Michael Hurwitz

China is home to an increasingly diverse array of foreign nationals. As it began opening up to the world in the 1970’s and 1980’s, business executives, students, and technical specialists were generally the only types of foreigners to be found here, but with globalization exerting an increasingly powerful effect on the Middle Kingdom, today you’ll run into everyone from teachers to writers to entrepreneurs.

Most recently, China’s burgeoning live music scene has welcomed legions of foreign musicians to the country, helping to foster growth among local bands in bigger cities and assisting venues with getting off the ground.

However, things turned ugly here last spring in Shanghai. Over the course of one weekend in May, a handful of music clubs and events were raided by the police, with foreign performers being hauled off in handcuffs for questioning, or, in a few cases, sent directly to jail. Curses were hurled, complaints were levied, and dozens of future performances were cancelled. But why?

As it turns out, the authorities in Shanghai had chosen to crack down on foreign musicians performing without the proper permits, using existing but almost-never-enforced laws to arrest and fine dozens of musicians. While this may seem like an unusual away to flex regulatory muscle, it’s nonetheless a classic and important example of a key element of doing business in China: ensuring that relevant authorities save face without hurting your business or bottom line.

Examples of Chinese authorities, at various levels, inserting themselves unnecessarily into the business world are everywhere. Perhaps the most famous case is Mark Kitto, a Briton who built a successful magazine publishing empire in China only to have it seized by the government based on trumped-up violations. But the government hand in business can also be more subtle: a sudden reduction in the number of visas allotted to a company, for instance, or a minor rule change dictating that all contractors must now obtain special, expensive certification from the same local government office issuing the rule.

The 2013 music raids were another example of this, and I can only speculate as to the cause. Perhaps an official wanted to impress his superiors, or there were complaints that Westerners playing music was corrupting local youth. In any event, I quickly realized that the motivations behind the raids were more superficial than substantive — after all, what real reason could they have to suddenly start enforcing these laws, which had been openly and unceasingly ignored for many, many years beforehand? My fellow musicians and I reasoned that if the purpose behind the raids was to gain or save face, then the solution, of course, was to help the police and authorities save face.

So, we became apologetic and deferential, agreeing to follow the rules and apologizing profusely for ever breaking them in the first place. Whatever the regulations were, no matter how bizarre (I heard rumors of 10,000rmb per-band-member permits for a single, one hour performance), we agreed to without hesitation. We felt comfortable doing this because of our confidence that the new regulations were toothless and had been enacted as a face-saving measure. By kowtowing and apologizing, we had granted the authorities that face.

After the initial raids, a lot of people in the Shanghai music community were afraid that it would grievously damage the city’s live music scene, making performances prohibitively expensive and troublesome to put on. This, as you might have been able to predict, did not happen. Threats and promises were made, but in the end, things returned to the way they were before once the relevant officials were granted the face they had been seeking — they had no real interest in going to the trouble of enforcing the regulations they had put into place.

This is where the lesson for doing business in China lies: you need to understand what laws and regulations are there for genuine enforcement and which ones are only there to earn some face for the officials in charge. Being aware of which rules matter and which ones don’t can be the difference between success and failure for a business in China.

The best microcosm of this that I can think of occurred just one month after the weekend of the raids, when my band performed at a live sporting event for which we were asked to submit our set list and full lyrics three months in advance. In what sort of world, we wondered, would an event hire someone to listen intently to the songs and lyrics to ensure they matched up with the documents submitted months prior, yet decline to pay the band itself?

Of course, we’d changed the setlist and some of the lyrics by the time the event rolled around, and of course, no one cared or paid attention.


1382177_10103145046668083_1390613260_nMichael Hurwitz is a five-year resident of Shanghai, where he works in the marketing industry and studies Chinese part-time, doing the little things to help bridge the cultural, linguistic and logistical gaps between China and his homeland. Michael is Jewish-American, originally from Washington, DC, and studied English and Music at the University of Michigan. He vehemently enjoys reggae music, his hometown Washington Wizards and has a handful of tattoos that he’d rather not explain.