Customer Reviews

Losing the New China: A Story of American Commerce, Desire, and Betrayal

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This is very sad book in its content and tone. Let me spoil the party by summarizing the main points of the book, and my comment in bracket:

1) Very few American companies really making money in China [True];
2) China is a bottomless hole for foreign investors, because China doesn't play by "normal" economic rules; instead its totally corrupted government and business practices decide the success or failure of a company [True];
3) The only way to make money, or "succeed" in China is to a) Following the Party; b)Bribery; c) cater to government desires [True];
4) China has a lot of prostitutes [True but irrelevant for the bigger topics we are discussing here].

This is a sad book for American companies aspiring to make it in China, but more sad for Chinese society. Right now in China, it's rotten from inside out, and bottom up. Money is everything - integrity, character, morality, honor don't mean a thing there. The only thing China can provide is cheap labor. But current Chinese economy growth is real, American companies CAN make money. The most important quality you need is to be blind and deaf to the things you are accustomed to based on the Western value. And if you like, you can certainly enjoy the money you will make there and many fine women there as well. Once again, it's more sad for China than for foreign countries.

I am a Chinese American who was born and raised in China, and have been going back to China very often. I lost a small fortune in China trying to do things the American way. Then made a small fortune doing things in Chinese ways. After every while working in China, I feel compelled to come back to the States to sanitize my soul. Some people call me successful, but deep in my heart, I know that's because I have sold my integrity, ruined my character. I feel no honor and powerless in following my own moral guidance in Chinese business world. But I have a couple of dollars in my packet and once in while sleep with some women who are not my wife. Make your own decison what kind of life is this? But that is what doing business in China is all about.

This book is a must read for naive China optimists who think that democracy there is inevitable, and that economic modernization will bring personal freedom. Gutmann went to China as a believer in this position. He thought that simply by being part of the American entrepreneurial community he would be bringing the New China into the community of free nations. His experience there was sobering. He saw that his colleagues among the American business community had no interest in implanting American ideals in China. In fact they routinely betray those ideals, encourage the growth of a virulently anti American nationalism, and compete to see who can transfer the most sensitive military technology to the Peoples' Liberation Army. The chapter on how American high tech companies helped the Chinese authorities create a totalitarian internet is must reading. So is the chapter on how American expatriates experience the sexual underground in the New China. Amazing!

If you've ever felt twinge of cognitive dissonance trying to reconcile glowing accounts of China's warm and fuzzy opening to the west with news of systematic and pervasive government tortures or crazed mobs burning a U.S. consulate, then you should read this book. In a genre dominated by cautious China hands in the know and anti-China hawks who understand little to nothing about the country, Ethan Gutmann's book is a refreshing change. And given the political reality that is China, another book of this sort is hardly likely to come around soon. Having lived in China for three years working and socializing with key expat and local figures, Gutmann witnessed first-hand both the fascinating attractions and the seedy underbelly of this intriguing country. Few journalists who concentrate on China would dare to make the accusations Gutmann does in this book for fear that their access to the country would forever after be blocked.

Beyond the singularity of the book's perspective, Losing the New China is simply a great read. Gutmann's entertaining prose and balanced combination of personal anecdotes with well documented arguments liven up subjects that might otherwise prove tedious, such as descriptions of the state's information firewall and high-tech military technology. Most of the book will appeal to intelligent, educated readers, but some of the technical topics might tempt non-specialists to skim at times. I read the book word for word, though, and always found points of interest regarding subjects that were obscure to me.

Make no mistake about it, Losing the New China is a damning account of the Chinese state and U.S. business collusion with this repressive government. While Gutmann does intimate an understanding of the Chinese government's often excessive behaviors, his negativity at times resembles a wholesale condemnation of modern Chinese society. And although I do think this might be the only weakness of the book, sometimes it takes a harsh critic to wake us up to harsh realities. For fear that visas might be denied, academics rarely teach this side of China in the classroom. (I was an East Asian studies major in university myself.) However, to balance the positive images that often come across in the press, I believe this book would make an excellent addition to university courses on contemporary Chinese society.

This is much, much more than a book about doing business in China. "Losing the New China" should be required reading for anyone planning to spend time in China. It shows exactly how Beijing is, as Gutmann says, his generation's "El Dorado," and asks if they should perhaps think about choosing another destination. The story of Gutmann's three years in Beijing is about managing expectations of what goes on in American businesses in China, and I am not just talking about market share and money-I mean what really goes on, every incredible and often deeply disturbing detail. This book is for anyone who thinks of China as the next big thing, the new thing, or just as anything period.

There is a conventional wisdom about China's modernization that covers a surprisingly wide range of American opinion. In U.S. business, government, and academic circles, the prevailing view is that China's current direction of market liberalization is the surest way to a more democratic future for the country. Chinese leaders might be nominally Communist, but their decision to open China up to the world will eventually undermine their authority. While challenges to this conventional wisdom have occasionally been broached -- particularly by some U.S. elected officials -- they have never gained the critical mass to effectively change the direction of U.S. policy.

An important reason for this stability in the Sino-American relationship has been due to the efforts of U.S. corporations. American businessmen have been the bedrock of American support for greater openness towards China. When crises between China and the U.S. have erupted - Tiananmen, the U.S. bombing of the Chinese embassy in Yugoslavia, the spy plane incident - it was usually U.S. corporations that were at the forefront of keeping the relationship stable. As Ethan Gutmann points out in his book "Losing the New China", businesses in China even evolved rote, but effective responses to concerns about China's human rights' problems - the most important of which is that "American business is the long-term catalyst for better human rights in China."

What makes Gutmann's book so effective in exposing the emptiness of this claim is that he was once a true believer in it. Only while living at the margins of the business world in Beijing for two years, and witnessing the cynical uses of this self-serving rhetoric by businesses in China, and how often it was a mere cover for business deals that actually strengthened the Communist party's hold over the country, did he begin to realize "China was moving in a strikingly different direction" than he earlier imagined.

Gutmann's two years in China were eventful. He arrived in time to witness the reaction to the U.S. bombing of China's embassy in Yugoslavia. He made connections easily, dealing with a wide range of people, including what appears to have been a Chinese intelligence agent. He met many of the most important ex-pats in Beijing. As a result, his book has more depth than a reader would expect from the limited time he spent in the country.

The centerpiece of the book is a long chapter on China's policies to control the internet. Gutmann details how the conventional wisdom that Beijing cannot control the forces of online is simply untrue. Not only can the Chinese government maintain a surprisingly effective control over the net, but it is showing an ability to increase that control over time. Search engines, online media sources, and even the computer code used by major multinationals are all manipulated to ensure the internet is sanitized for Chinese web-surfers. That China actively tries to control online content to its citizens is hardly surprising, but what will probably shock most readers is the degree to which U.S. and European corporations are complicit in Beijing's control. Gutmann is no wild-eyed anti-capitalist protestor. He went to China to make a movie and, with any luck, some money; he obviously enjoyed hanging out with businessmen in China - they seem to have been his preferred company; he worked closely with the American Chamber of Commerce for a spell. But even he is shocked at the degree to which Western companies have cooperated with the Chinese government to make the internet a state vehicle for oppression.

Gutmann also touches on other issues: China's military modernization, the surprising fact that almost all U.S. businesses in China lose money, and the way some Westerners sell out to China's government by accepting the party line. These are good write-ups, but with the exception of the chapter on the internet, Gutmann is at his best when talking about the people he meets. A young man who visits Beijing, looking for work, and discovers a sexual paradise, is one example of this. Never that successful with women in the states, the twenty-six year old posted on an internet dating service that he was a foreigner and was immediately deluged with e-mails from Chinese women as far away as Chongking. Thus he began a sexual odyssey - one-night stands, a ménage à trois, and even an orgy followed. In one particularly wild night, he was invited to participate along with three other men and ten Chinese women in group sex. The host was accustomed to such parties. Viagra and condoms were handed out like small treats. Despite all this, the young man remembers his time in Beijing as a period of loneliness.

Gutmann sees the young man's series of sexual escapades as a sort of metaphor for what China does to Americans: it seduces them into letting down their defenses. The young man agrees: "Rex [the young man] points to a Xinhua report from July 2002 that the owners, bouncers and call girls of Sanlitun Bar Street have set up a new branch of the Communist Party. The Party was already letting capitalists in, but the inclusion of sex workers who specifically cater to foreigners raises a question: Why does the Chinese government allow foreigners such freedom? The Chinese conceive of Americans as barbarians - oversexed, easily corrupted fools. Seduction softens them up. Sex is good for business, Rex says, and good for China."

To close followers of China, Gutmann's account will probably hold few surprises. But his book has an entertaining sass to it, including numerous self-deprecating comments, some of which closely border on the self-loathing. He finds it necessary to write about a few near-sexual encounters he had with Chinese women (some of which he initiated), after his wife returned to the states early. How this went down on the home front, he neglects to mention.

This is not a primer for the China novice nor is it meant to be. It is instead a thought-provoking and interesting book, and, in advancing an alternative view of American businesses in China it is an important contribution to the debate on US-China relations. Brilliantly-written it is collection of stories that advance the simple thesis: American business in China is compromising US interests.

Gutman is clear about his neo-con political views, clear about his (many) prejudices, and clear about his disaffection with Beijing and with the American business community there. This is not, as other reviewers have labeled it, simple realpolitik propoganda. Having laid out his prejudices for all to see Gutman dives into poking around Beijing, investigating his thesis.

Beijing is a complex, sprawling city in an even more complex country. As an ex-China expat I know that just about as well as anybody. Understanding China is like the blind man trying to comprehend the elephant by touch. What most expats lack is the humility to admit how little they understand no matter how much they know. What Gutman does through racy writing and personification of the issue is shine a little light on issues such as US tech companies selling tracking software to China's security services, or pharmaceuticals moving R&D and manufacturing to American's so-called strategic competitor. His conclusion: that American, European and Asian businesses bend over backwards to secure contracts. In the process American firms ignore the formal and informal rules that govern business domestically, while expats ignore the social norms that govern their lives at home.

I disagree with many of Gutman's conclusions, but that does not detract from it being a thought-provoking and engrossing piece of investigative writing on an important and always timely subject.

Gutman -- starring as the repentant sinner -- believes his moral compass is now sure. It should be up to each individual reader to decide where theirs lie.

Had been in China for more than 20 years, I am glad to see this book. It vividly disclosed many hiden aspects and plots behind the Chinese government's operation on western investment.


The American expatriate in China lives in a state of constant contradiction. The reality of China does not support dreams of democratic transformation, or dreams of climbing the gold mountain. But the expatriate has staked his life on those dreams, and in fact part of him still believes them. Moreover, when he speaks to the world outside China, he must wholeheartedly sell those dreams to others, in order to justify his own existence.

Only occasionally, in a private moment, with a like-minded fellow over drinks, can that expatriate businessman allow himself to see frankly how ridiculous is the illusion he believes and sells, and the ugliness of what in other moments he will not face.

The purveyors of transformation do not allow for the possibility of China transforming the U.S., but this seems to be one effect of the headlong plunge by American business into China.

A Chinese school teacher in Shenzhen speaks to Gutmann of "American companies with Chinese characteristics." That teacher is referring to companies for whom "the normalization of illegal activity" has become "an accepted part of doing business." They do so because without adopting corrupt practices they would lose the ability to compete at all. What these companies cannot now estimate is the long-term cost to them of abandoning the corporate culture of the United States, with its expectations of transparency, accountability, legality, and fair play. But corruption is perhaps the less worrisome competitive strategy adopted by American business.

Gutmann makes clear that the executives of Cisco Systems could have had no illusions as to the way in which their technological breakthroughs would be used to stamp out free speech on China's internet. It is a short path from a Cisco router to the hell of a Chinese labor camp.

Network Associates could also have had no illusions, when it provided China with stocks of computer viruses, that those viruses could be used to jump start China's ambitious cyber-war capabilities.

Similarly, Loral and other American high-tech companies have worked hard to gain opportunities to transfer dual-use technologies to China's military. If China begins an invasion of Taiwan by disabling America's satellites, and launching precision-guided munitions at its carrier groups, American business will have provided the know-how.

At work here is a different kind of transformation than what Gutmann used to sell gullible CEOs and Congressmen. The desire for profit, unmoored from other considerations, is leading some American businesses self-consciously to strengthen Chinese government.

I read this book and like it a lot.

I am a graduate student in social science and have been taught that business development will eventually bring in democracy to countries like China. Unfortunately, this theory failed in China. Gutmann's auguments might not convince all of the readers. But, many Chinese Ph.D.s trained in USA believe in this now that western business does NOT bring in any good to China, only bring in production centers at the cost of moral and environment disruptions. One example of these students is YC Liu who studied under Martin Lipset who is the father of the theory for econ dev to bring in democracy, and Liu was the founding president of IFCSS (the national association of all the Chinese Ph.D.s in USA ) that promoted democracy for China. Now, I was told that Mr. Liu does not believe in his advisor nor in western business development. Only God can save China!

The major claims of this book are:
1) The United States naively thought that economic liberalization and capitalistic prosperity would lead to democratic freedom in China Reality has proven very un -Fukuyama like in this regard and the Chinese totalitarian - state has been strengthened inadvertently by U.S. help.
2) US businesses cooperate with the Chinese government in suppressing the freedom of the Chinese people. These businesses include among others, the Internet giant Google.
3) It is difficult for an outside business person to make money in China unless he adopts the corrupt practices of the Chinese.
4) China is not an inward-looking Middle Kingdom but rather an aggressive potentially dangerous adversary to the free world, first in the economic realm but also increasingly in the military realm.
5) The corruption of Chinese society is also present in the thriving pay- for- play sex business.
6) China is thus not the model for a future world living in prosperity, democracy and freedom, and the personal dignity of the individual.

Although the author seems to have many an ax to grind with the Chinese, this book is an important contribution to the growing China-America literature. This book revolves as much around China as it does around its author. Personally, I enjoy these type of accounts because they are seldom boring. The author touches on many aspects of the Chinese society like, for example, current sexual mores, the highly censored Internet that most Chinese experience, Chinese military doctrine, lack of individual liberties, etc. The undertow seems to be "do not be fooled by the Chinese mirage, watch out!". If you do not mind a somewhat biased tone on a book, read this book by all means.