Magazine article Management Review

Scaling the Wall of China: The 'Middle Kingdom' Has Been Locked to Outsiders for 5,000 Years, and Western Traders since the 18th Century Have Been Struggling in Search of the Keys

Magazine article Management Review

Scaling the Wall of China: The 'Middle Kingdom' Has Been Locked to Outsiders for 5,000 Years, and Western Traders since the 18th Century Have Been Struggling in Search of the Keys

Article excerpt

Lord George McCartney left Great Britain in 1793 heading east aboard the gunship Jackal. Under his command was an illustrious assembly of 700 British scholars, diplomats, scientists and aristocrats carrying a treasure of imperial gifts and scientific innovations.

McCartney's mission: open China to British trade. Leading the British team to negotiate concessions from the Chinese Emperor, McCartney had reason for optimism. England was at its peak of power, boasting awesome naval strength and trading prowess. China-- the final frontier of British mercantile expansion-was ready to be opened.

But shortly after reaching China in 1794, McCartney suffered a crushing defeat. Emperor Qianlong rejected all British requests, including one for a permanent British Embassy in Peking.

King George's precious gifts to the Chinese emperor, meantime, were also refused. "We Chinese have never valued ingenious articles and we have no need for your country's manufactures," thundered the defiant Qianlong.

What went wrong? McCartney ran into a wall. Though he won the immediate challenge (gaining an audience with the emperor), McCartney failed to understand and adapt to China's "territory."

China in 1793 saw itself as the supreme empire, the center of civilization, the "Middle Kingdom," "ruler of the four seas." A self-reliant kingdom built upon 5,000 years of tradition and ritual, China had no inclination to embrace anyone or anything that might disturb the Celestial Order.

Countries outside the Middle Kingdom were considered tributary states the envoys of which kowtowed before the Emperor in acknowledgment of China's superiority. (McCartney's first mistake was to refuse to kowtow to the Emperor.)

Qianlong later wrote to King George, advising him to "strengthen his allegiance and deepen his obedience to the Middle Kingdom in order to maintain a peaceful existence."

In the end, McCartney and the British left China bitterly disappointed. "We entered Peking like paupers, remained in Peking like prisoners and left Peking like vagrants," Thomas Anderson, McCartney's aide-de-camp, recorded in the trip diary.

In 1995--200 years later--some things in China have changed. Under the banner of Deng Xiaoping's "open door policy," China now engages in important economic and political exchanges with the West. Foreigners are apparently welcome in Beijing. And the country makes no secret of its hunger for foreign technology--at least until China learns how to develop its own.

But the smart money still recognizes that China at its foundation remains the same country McCartney collided with in 1794: a land of enormous potential, but still more dosed than open. Deng's reforms register but a tiny blip on China's 5,000 years of mostly dosed-door history.

Think of the path to business in China, then, like this: Before you streams a royal red carpet lined with alluring decorations and fanfare, leading to a magnificent gateway at the center of an enormous wall. Inside lies abundant treasures. When you reach the gates and try to enter, you find them locked shut-- and the doors can be opened only from the inside.

Once you see China from this perspective, you realize that it is no accident China is home to the Great Wall.

Yet, despite the intimidating barriers, China still draws more foreign direct investment than any developing country in the world--$60 billion in the 1993-1994 period.

Tracing where the investments come from tells us even more. Seventy-five hundred of every $10,000 invested in China originates from Chinese entrepreneurs in Hong Kong, Taiwan, Singapore and Thailand. Why is investment dominated by Chinese? Because they know China. Foreign companies from Japan, the United States and Europe want a piece of China, too, but have trouble finessing the walls.

Whatever the country of origin, investors find China too tantalizing, too potentially awesome, to ignore. …

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