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SCMP Reporter

IF IT were possible to caricature Hong Kong with a single historical figure, then the wheeler-dealer compradore offering a bridge between East and West would probably be it.

  From silk trader and opium peddler to today's corporate fixers par excellence in China's brave new market economy, the compradore has smoothed the passage of commerce.

  Today, as international business camps at China's gateway demanding rite of passage to its booming economy, it would seem more than ever their services are in demand.

  And yet, despite an economy caught between the two stools of state socialism and a rabid free market which seems to cry out for his services, the halcyon days of the compradore may have passed.

  The compradore has adjusted to the ever-changing commercial landscape, evolving from the humble trader into today's new deal-making creature who delivers everything from a power station contract to a regional distribution network.

  In essence a middleman, the latter-day version is not unique to the China trade but that is where he reached his glorified status. Described variously as ''facilitator'', ''fixer'' or ''matchmaker'', he may just as easily be a lawyer or financier as a property developing tycoon.

  His currency is mutual favours and his value lies in guanxi, that all-embracing commodity approximating to ''connections'', that is the touchstone for all who want to do business in China.

  They come from all walks and professions, reveal little about their methods and are measured by an ability to overcome the impossible in China's twisted bureaucracy.

  They include names such as Peter Oei at China Strategic; Victor Fung, who heads the Hong Kong Trade Development Council; T. T. Tsui of New Hong Kong China; lawyer Victor Chu; Peter Woo at Wheelock; and the firm China Venturetech.

   The foreign firms that entered China in the early 1980s now have corporate structures in place which have ridden the learning curve and increasingly know China and, more importantly, know the right people.

  Carrying their own cadre of compradores, they, along with the army of professional consultants, business advisers and a growing body of case studies on the subject, have largely demystified the process of doing business in China.

  On the other side of the equation, the realisation by foreign companies of a growing band of charlatans promising the ear of senior officials and politicians is now causing scepticism with foreign companies.

  ''Before, you could sell them the guanxi story but now it's no longer good enough to negotiate a partnership on the grounds your boss knows the mayor of Shanghai,'' said one joint venture expert who seeks out foreign companies.

  In particular, US firms asked much tougher questions before entering partnerships and wanted to see the guanxi being offered and quantified in terms of the financial return it yielded, he said. THE roots of the modern compradore date back to the early 1980s when the first entrants to the newly opened Chinese market took on local partners as a matter of course. For many, these local partners were of little added value and made nebulous contributions in the domain of guanxi.

  US consumer product giant Procter and Gamble was said to be unhappy that big name Li Ka-shing added no value through his involvement with a joint venture in Guangzhou, and other cases of reported dissatisfaction abound.

  One major US company established a manufacturing plant in the home town of a particularly pliant mayor who was introduced in Hong Kong. Having failed to undertake due diligence for the project, distribution problems made the factory unworkable and the mayor proved politically weak, so bringing little relief from the tangle of local bureaucracy.

  If Hong Kong joint venture partners are to have value they must do more than merely open doors, according to Hu Fa-kuang, the chairman of Ryoden Holdings, which is Japanese giant Mitsubishi's Chinese partner.

  ''There are plenty of middlemen out there but value is added by bringing your own technical and management expertise,'' he said.

  ''We help the Japanese [partners], who are inherently conservative, to understand China and advise them on many other areas of investing in China unrelated to the work we do together.''   Foreign companies would no longer need the path-finding compradore because it represented a natural growth in the evolutionary cycle of companies, said American Chamber of Commerce vice-president Jeffery Muir.

  He said while the Hong Kong middleman still had value as foreign companies increased their knowledge, experience and breadth of relationships, the need for the local partner had diminished.

  Of course, new companies are seeking to enter the market all the time and, as the mystery over how to conduct business in China clears, a pattern emerges for others to follow.

  Nobody got it right first time round, said Bob Broadfoot, of the Political and Economic Risk Consultancy.

  However, many foreign firms with long-term plans were eschewing the path of ''buying instant guanxi '' through entering a joint venture with either a state entity or a Hong Kong company, in favour of establishing smaller projects and learning by a process of trial and error. WHILE this is a viable strategy for multinational corporations, the smaller operator attempting to sell his wares in China will, of course, need a more instant solution.

  ''The Hong Kong compradore still has a captive market with medium-sized foreign firms,'' said Mr Muir. The testimony is the willing line of ''facilitators'' offering their services at every trade show or conference held in Hong Kong or China.

   However, as business transparency in China slowly increases and the databases fill, so does the ability to pick a fraud.

  In information terms, China is shrinking. For a foreign firm seeking to establish whether factory X in Shandong province is a viable partner or is shortly to go belly-up, a visit to a few Hong Kong-based consultancies should yield the answer.

  The result of an ever-expanding pool of information, professional advisers and knowledge held by companies themselves is likely to curb the value of the compradore to the foreign company.

  Guanxi may not be dead but the premium attached to it would seem to be diminishing.



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