The government often makes arbitrary decisions for political reasons, even if the decisions violate contracts or are detrimental to foreign businesses. As a result, China has lost some of the appeal it once held for foreign investors. A few years ago, it was the top country in terms of attracting foreign direct investment, but it has since slipped to fourth place. Accession to the WTO would solve some of its problems, but China needs to continue developing a more transparent, law-based environment for foreign businesses. Another problem, says Mr. Perkowski of Asimco, is a lack of managerial talent.
Most Chinese graduates are engineers, and almost none are management professionals.
The situation is improving, as some of China's top universities now offer management courses, while management schools like Insead have also opened schools in China. Despite the difficulties, China is still a powerful magnet for foreign companies. You have to be here, and you have to have the patience to make mistakes.