Doing Business in China: Beijing’s Goal to Create Bull’s-Eyes Often Produces Moving Targets

Announcement of a new electric-car joint venture between Ford and an obscure Chinese automaker got me thinking about Chinas obsession with targets， and how that affects people doing business in certain areas. Targets are a fundamental tool for any business， and the concept of key performance indicators， or KPI， is a standard part of the management lexicon in the West.

But China often seems to take the concept to an extreme. Some might argue target-setting is a major factor behind the countrys phenomenal growth that has taken China from backwater status to the worlds second-largest economy in just three decades. But such target-setting just as often creates headaches for businesses， especially when numbers change with little or no warning. Whats more， such number-setting is almost an invitation to cook the books when people cant meet their targets.

Ive heard different theories about the origins of Chinas target obsession， including a cultural preference for quantifying everything. My personal favorite is that the practice is a legacy of Chinas recent past as a socialist economy where everything was planned.

Back in those days， people were told how much to produce based on central government targets， and the only thing that mattered was meeting those goals. Quality or logistical issues， such as how to get your products to market， were things for others to worry about. Obviously Im simplifying just a little， but its probably still fair to say that meeting your stateset targets was the most important thing in the minds of managers from that era.

The Ford story that got me driving down target lane is a great example of just how problematic this kind of goal-setting can be for running an efficient business. This particular case saw Ford announce a joint venture with an obscure company called Zotye， which just happens to be one of Chinas top five electric-car makers.

The news probably left most Westerners scratching their heads， trying to figure out why a company like Ford， which has its own electric-car program， would want to team with such an unknown Chinese brand. Industry insiders knew the move was completely driven by a new Chinese program requiring all carmakers to log about 8% of their sales as new-energy vehicles starting next year， which would have been impossible without the help of such a well-connected local partner. Sources said this week the program would be pushed back a year to start in 2019 after carmakers complained， though there was no official verification of that decision.endprint