Eugene Theroux is an authority in a field that didn’t even exist 10 years ago: U.S. trade with mainland China. Since he first opened an office at the Canton Trade Fair in 1973, Theroux has become a legal adviser in that country for such major corporations as Pepsi-co, GE and Del Monte. Born to a family of achievers—his younger brother, Paul, is a best-selling author (The Great Railway Bazaar,)—Eugene, 40, grew up in Medford, Mass., where clipper ships for the China trade were built in the 1800s. A graduate of Georgetown Law School, he was working in Washington for the firm of Baker and MacKenzie, specializing in international trade, when the late Congressman Hale Boggs invited him along on a visit to China in 1972. Since then Theroux has come to know the territory well, if not the language. After a year’s study, he speaks it haltingly. He has made 11 trips to China (for a total of nine months’ residence). Recently divorced, Theroux lives alone on a working farm in Lovettsville, Va., 50 miles from the capital. He talked about doing business Chinese-style with Judith Weinraub for PEOPLE.
What was the state of Chinese-American relations when you first went there?
It was just the beginning. Nixon had made his historic visit to China in February 1972. Then Senators Mike Mansfield and Hugh Scott went over in April. I was part of the third official visit in June.
What one experience stood out on that trip?
An unexpected dinner with Chou Enlai. It had been a busy day, and we came back to the hotel tired. By 8 o’clock I flopped on the bed and fell asleep. The next thing I knew some Chinese were pounding on the door, saying, “Get up, you have an important appointment!” We were driven up to the Great Hall of the People for a banquet, and were greeted by Chou himself at the top of the steps. We talked until 3 a.m.
What was your first impression of the People’s Republic?
If you look around the U.S., even people who live below the poverty line have TV sets and toasters. In China there is a common, heroic effort being made to bring about fundamental improvements for everybody at the same time. Yet it is clear this won’t come about in their lifetime. If a man from Mars were asked to identify the religious people on this earth, he would be forgiven if he picked the Chinese as models of a faith that believed in the prospect of a heavenly reward. We look like materialists who live our lives as if there were nothing after death.
Has China traditionally been interested in foreign trade?
It was always the West pushing trade on them, seeing China as an immense market. The Chinese had very little curiosity about the outside world. It’s ironic, in a way. The Chinese invented gunpowder, but didn’t use it for conquest. They invented a compass and never used it for exploration. They invented modern papermaking, but didn’t produce many writers.
Is China interested in foreign trade now?
They are much more pragmatic about it since smashing the “Gang of Four,” which disparaged foreign technology. Under the current leadership there is a great emphasis on learning from the West and from Japan.
How extensive is China’s foreign trade?
About $14 billion, which is less than a third the annual sales of GM. Its total exports are about $7 billion, less than the annual sales of Sears, Roebuck or J. C. Penney. The U.S. share is only about $700 million—but that’s double last year’s.
What do we sell to China?
Our major export so far has been foodstuffs like wheat, corn and soybeans. After that the main sales have been ammonia plants to make fertilizer, 10 Boeing 707s and mining equipment. They are also interested in high-technology products they so far can’t make themselves, like computers and oil field equipment for exploring their own immense reserves. The Chinese are not prepared to spend foreign exchange for things they don’t make but also don’t need—luxury items like recreational vehicles, panty hose and chewing gum.
Can just anyone do business with the Chinese?
First a product has to interest them and then they will extend an invitation. Almost anything can be sold, as long as it is not for military use. For example, certain computers or satellite technology would be ruled out by the U.S. government.
Are we loosening up?
Yes. President Carter, who just sent his senior science advisers to Peking, has said he wants a strong and secure China. Toward that end, the Administration has allowed the U.S. and its allies to sell jet engines, helicopters and infrared screening devices to China.
What does China export to us?
Ironically, they see us the way we used to see them—as a mass market. The main things we buy from China currently are antiques—after Great Britain, they’re our second largest supplier of antiques—plus fireworks and textile goods. They can also produce consumer goods—jewelry, toys, household items, shoes. But the Chinese are handicapped in selling to us by high tariffs.
How does that differ from the way other countries are treated?
There are essentially three tariff systems. One is for what are called “most favored nations,” like France, Belgium or Great Britain. Then there are some non-Communist developing countries, many of whose products come in duty-free. But China, like the Soviet Union, Bulgaria, East Germany and North Korea, doesn’t have either status, and duties on their products can be very high.
Could you give an example?
Let’s take kites. A kite from China comes here with a 70 percent duty. One from a most favored nation has a 17.5 percent duty, but one from Hong Kong comes in duty-free. This strikes China especially hard because places like Singapore or Taiwan, with similar low labor costs, can produce similar products and charge lower prices.
Do we have any product requirements that seem unusual to the Chinese?
Yes, our reliance on brand names. They have been adamant in their refusal to put American brand names on sporting goods or foodstuffs. The Chinese are very proud of the quality and style of their products. They make good basketballs, but there is just no way a Chinese basketball is going to sell as well as one with a recognizable American trade name. Last month Foreign Trade Minister Li Chiang finally agreed to allow the manufacture of Chinese goods bearing foreign trademarks. This means we could begin to see tennis rackets or radios made in China but with well-known American brand names.
Are their own brand names a problem?
In translation, their names can take on entirely different connotations. They introduced a new sewing machine at the Canton Trade Fair with the brand name “Typical.” I told them it was a bad name because it meant undistinguished. They replied that we had companies with similar names, like “Standard” Oil. Some of their own brand names just wouldn’t work here—like White Elephant Auto Parts, Pansy Men’s Clothing, Junk Chemicals, Fang Fang Lipstick or Fuking Pliers.
What about consumer safety standards?
They are willing to go along with them, but some of the requirements are baffling to the Chinese. They do have standards for canned foods, but they would never have such things as a label on a garment telling a grown person to wash it in lukewarm water with soap. It’s the same thing with toys. When you try to explain to the Chinese that they must sew the eyes tightly on a panda bear’s head so a child won’t eat them, they tell you the eyes are not for eating.
How are the Chinese as businessmen?
They are very tough. They pay cash and pay promptly and expect the same treatment. In fact, they don’t ship any orders until they get paid. They are like my parents, who thought a checkbook was one of Satan’s works.
Are they honest?
Extremely. There is no way in the world that a person can get a contract by bribing or by illegal payments. The baksheesh syndrome that seems to be all-pervasive in the rest of the world doesn’t exist there.
How do they settle differences?
The Chinese abhor litigation and controversy. It is a tradition in the Orient that disputes should be settled through discussion. The solution may be a discount on future orders, or some other Solomon-like decision.
What is life like for an American businessman in China?
The amenities some Americans have come to depend on—the bars, the women, the lavish entertaining—are unavailable. The government hotels are austere, but there is room service on every floor—generally for tea or light refreshment. Most of the time you eat in hotel dining rooms or in restaurants with separate sections for foreigners.
When did you feel like a China hand?
When I could finally handle my chopsticks.