One of the largest foreign investors in China, Asimco, raised $434m, invested it in a series of car-component factories and breweries-and watched almost all of it drain away within a decade. It made no difference that Asimco screened hundreds of factories before making its first investment; that it always insisted on majority control and put in its own managers and accountants; that CEO Tim Clissold spoke fluent Mandarin and spent much time and effort courting officials at every level. The Chinese, it seems, were always one step ahead. Any of the problems foreigners encounter reflect the fundamentally non-rational nature of China's business environment. Donald Lewis, a law professor at the University of Hong Kong, argues that if the great invention of European civilisation was a legal system, China's was bureaucracy. The communists simply took over the imperial civil service and added a further layer of complexity by superimposing a party organization on the government one. Chinese bureaucracy gets in the way in sensitive industries such as cars and technology, where a centrally directed industrial policy appears to be allocating a share of the market to domestic companies.he second problem for foreigners is a direct consequence of the bureaucratic system of government: China is subject to the "rule of man" rather than the "rule of law". Rights derive from political power, generally the power of an individual, which explains the importance of personal connections, or guanxi.Trackback: http://tb.donews.net/TrackBack.aspx?PostId=10629