Below is the transcript from an interview which I recently gave regarding the upcoming publication of Managing the Dragon. Since it provides answers to many questions which I am frequently asked, I thought that I would put it in a post:

What motivated you to move to China in 1991?

After spending close to 20 very enjoyable years in the investment banking business in New York, I decided that I wanted to do something completely different for my second career—something where I could create a “franchise.” My experience on Wall Street told me that if could identify a long-term trend, and then put together an organization to get ahead of that trend, I could be first at something and develop a franchise which would have lasting value. The trend that I got interested in, of course, was China.

What has been the biggest evolution that you’ve noticed in the Chinese economy since you’ve been living there?

By far, the biggest evolution in the Chinese economy since I’ve been here is the enormous amount of capital that is now available. As recently as 1994, China had less than $25 billion of foreign currency reserves and capital was very scarce. Since then, China has become the largest recipient of foreign direct investment in the world and the country has become an export machine. Every year, increasingly larger amounts of capital have flowed into China to the point where the country now has over $1.5 trillion of foreign currency reserves, the largest in the world. Capital is now plentiful in China.

What do you hope readers will take away from reading Managing the Dragon?

There are many lessons to be learned from the book. Above all, though, I hope that the book will demystify China for the readers. It is true– there is a shroud of mystery that surrounds China, and there is much about the country that is difficult to understand. A central theme of the book, however, is that China does have its own logic, and that if you take the time and use your experience, knowledge and common sense, you can figure it out. Once you do, doing business in China, or just making sense of the country, becomes a whole lot easier.

Why did you feel that now was the best time to write Managing the Dragon?

First of all, ASIMCO, the company that I founded, has now matured to the point where the principal issues that we face in doing business on a daily basis are not that much different than issues faced by any company in any part of the world. Over the course of the last 15 years, we have learned how to deal with and overcome most of the uniquely Chinese issues that have perplexed and frustrated foreign companies and investors trying to do business here. I believe that the lessons we have learned can be useful to individuals trying to understand how they fit into a new global order which includes a large and fast growing China, and to companies trying to establish or expand their operations here.

Secondly, China has now transitioned from being an interesting, developing economy to one that every individual and company in the world must come to grips with. It has never been more important to understand and become engaged with China. Today, if you’re not in China, you’re not in the game.

What do you think the biggest areas of growth in China will be in the future?

China’s development as the “workshop to the world” has been the principal driver of the country’s tremendous growth over the past 30 years. While there will continue to be opportunities in manufacturing, the development of China’s service sector will present some of the most interesting areas for growth in the coming years. Health care and education are two areas where Chinese will be spending more and more of their money. Also, the consolidation of wholesale and retail distribution, and the development of better logistics capabilities, to more efficiently get goods into the hands of consumers will be very attractive sectors in which to invest.

What piece of advice do you wish someone had given you before you started building your company in China?

As I reflect on my time in China, it is clear to me that every mistake I have made, I have made because I acted too quickly and did not listen hard enough and long enough. More often than not, I should have just slowed down and taken a deep breath, rather than giving in to my gut reactions and desire for short term results. Patience is definitely a virtue in China.

What was the single biggest challenge you faced when starting the company in China?

The biggest challenge I faced when starting ASIMCO was figuring out how to manage operations in China. After much trial and error, and near death for our company in 1997, we developed our “New China” management strategy. Essentially, we decided in that year that we were going to build our business around the new generation of Chinese managers who are open minded, have received some form of management training and education and who realize that China, and companies in China, must learn how to operate in a global world.

What are the biggest challenges today faced by people who wish to start a company in China?

The biggest challenge for anyone who wants to start a company in China is developing and empowering a strong local management team. Although there is a long list of problems that must be overcome when operating in China, dealing with them becomes a great deal easier if a good local management team is in place. Because China does not have the same legacy of treating management as a science that exists in more developed countries, there is a management gap in China. Filling that management gap will continue to be the major challenge in China for some years to come. That is why the book devotes so much time to this important issue.