Bob, a small businessman, was eager to tap into the big opportunities the huge Chinese market offered him, and to grow his business far more than he could in Australia.

But doing business in China doesn’t come with a how-to manual, other than the basics. The vast cultural differences between Australia and China have resulted in detentions and arrests in China, where business and government connections often collude.

According to the Department of Foreign Affairs and Trade, there were 101 cases involving Australians arrested on criminal charges or detained for immigration purposes in mainland China in 2016-17, up from 92 cases the previous year.

Rio Tinto’s Stern Hu, Sydney-based academic Professor Chongyi Feng and Crown Resorts’ employees were some of the notable detentions of Australians in China in recent years. But there were other small businesspeople who were also detained, such as Sydney-based Charlotte Chou, who was kept in detention without trial for six-and-a-half years.

Bob's developer partner was building apartment towers for expatriates. Having run into tax trouble, the developer couldn't sell the units so decided to lease them to expatriates instead, Joshua Butler

Bob was one of the lucky few. “I don’t think I will ever work in China again,” he says. “I don’t think anyone in my position as a small to medium enterprise should work there. I feel very sad. I knew the Chinese, they have always been in my life. I thought their thousands of years of culture meant they had a values system. I couldn’t have been more wrong.

“No one told me it was a one-way relationship. You are not their equal – it doesn’t matter who you are or what rank you hold.”

Attractive joint venture offer


Bob went to China in 2014 on a study tour where he met Shanghai developer Chen, who was building apartment towers for expatriates. Having run into tax trouble, Chen couldn’t sell the units, so decided to lease them to expatriates instead, Bob says.

The well-connected developer had come from rural China but had amassed a fortune through global property acquisitions. He proposed a joint venture with Bob. In it, Bob would design and roll out the leasing program and take a cut of the rental revenue.

According to the Department of Foreign Affairs and Trade, there were 101 cases involving Australians arrested on criminal charges or detained for immigration purposes in mainland China in 2016-17, up from 92 cases the previous year. Simon Letch

Bob saw an opportunity – the apartments were on a large, 10-hectare site and he expected to make a good return of about $20 million over five years.

He paid two lawyers, one in Shanghai and one in Melbourne, to draw up a contract with his new partner, whose part of the bargain was to pay instalments of $250,000 every two months to Bob’s company, up to $1 million, for the leasing program. The payments were due to start in mid-2015. The contract also included a clause stating Bob would get $500,000 if the developer dissolved the partnership without reason.

His Melbourne lawyer assured Bob the contract was ironclad. “If anything happens, you can sue this bloke,” he said.

Bob worked on the project, putting aside other work in Australia, between 2014 and mid-2015 until things hit a snag.

"Every time I got to a benchmark, he would want something more. And he kept wanting to see my plans ... He was trying to collect intelligence from me," Bob says. Louie Douvis


A strange turn

The week the first instalment was due, in June 2015, the developer flew to Sydney and, through an interpreter, offered Bob the whole $1 million upfront. All he wanted, he said, was a breakdown of how the money would be spent on marketing and leasing the apartments.

After Bob had an expenditure analysis translated for Chen, he responded: “That’s not good enough. I want more from you.”

Bob was perplexed but his smiling partner assured him it was standard procedure. Bob flew to Shanghai every two weeks to meet Chen and discuss the leasing program, but for months the same thing happened.

“Throughout the rest of 2015, every time I got to a benchmark, he would want something more. And he kept wanting to see my plans, who the potential tenants were, and so on. He was trying to collect intelligence from me.

The whole experience meant Bob's entrepreneurial dream was crushed. Alamy

“My advisers in Shanghai told me not to give anything away until he paid up.” It was nearly November 2015 – the scheduled start date of the leasing and marketing program rollout – but Bob still had not received a cent.

Each time he saw Chen in Shanghai, Bob raised the issue of payment but his partner would laugh it off insisting they share a meal, along with many bottles of fine wine.


“He was a great salesman. Whenever I got upset, he would manipulate me and say, ‘Let’s go to dinner,’” Bob says. “As soon as I signed the contract, I was his man.” Promised payments were never paid.

More delays ensued when Bob discovered the apartments were not fitted out for expat requirements. Unlike in Australia, apartments are built as empty shells in China. The developer rectified it but the changes were too small or inadequate for the prices he wanted.

Bob’s application for a registered company in China and a corresponding bank account was also delayed for five months, although such things usually take about six weeks. “Because you don’t have a bank account, I can’t pay you,” the developer said. So Bob hired a financial adviser in China to look into his company application, and together they visited the district government offices, or local council, that issues them.

“When I got there the clerk had all the documents in a clear plastic folder on his desk [which is unusual], so I demanded he hand it over,” Bob says. “To my astonishment, the council man ran out the doors with the papers! All hell broke loose that day and an angry Australian man was left in the council room.”

At this point, he heard another round of bad news. Project staff had confided to him that Chen wanted Bob out so had paid off the council to delay the approval for the company.

“I had gotten myself into it so deep, I wondered how I was going to get out,” Bob says. “Do I walk away and lose everything? A great dilemma for a small business. I kept digging my own grave. It was desperate times.”

Anger and a flashpoint

The project did not roll out in November 2015 as planned. Bob’s expat advisers in Shanghai started to warn him the deal had sunk. Each fortnight when he travelled to Shanghai he felt he was being watched. The same hire car driver turned up to pick him up at the airport or the hotel each time he called for one.


He set up a meeting to confront the developer in February 2016, this time with a new, experienced, Chinese lawyer based in Shanghai who could speak Shanghainese. They went to the developer’s office on the 28th floor of a sleek building he owned in the financial district of Pudong.

“In comes the developer’s ‘henchman’ and the company lawyer, who I’d met a number of times,” Bob says. “The developer was not there, which was a red flag.

“[The henchman] started yelling at me in Mandarin saying, ‘You haven’t done what you agreed to do, we are very angry with you. We don’t think you have any capability.’ ”

Each time Bob denied it through his lawyer, the man got more irate and violently thumped on the table. After 15 minutes of yelling, the henchman whispered to the company lawyer in Shanghainese. Suddenly, Bob’s lawyer said: “This meeting is finished.” They left, leaving the two Chinese men stunned.

In the lobby Bob protested and said he demanded to be paid. “It doesn’t matter, you will end up in the hole,” the lawyer said. “Anything can happen – think of your family. I have to get you out now.”

Bob’s lawyer explained what he’d heard: they wanted Bob to resign of his own accord so they wouldn’t have to pay him the fallout fee of $500,000. The police were going to detain Bob so the developer could get his computer with all the marketing plans. They raced back to the hotel, changed rooms and locked Bob’s computer in the hotel safe.

The next Qantas flight wasn’t until the morning – Bob didn’t want to risk a Chinese airline – and while he was out getting a meal, his new room was ransacked. “That scared me. I got the bureau and two chairs up against the door that night and slept very poorly,” he says.

He got to the airport the next morning at five o’clock without trouble and left, for the last time.


Mountain of debt

He arrived in Melbourne, however, to face a mountain of debt. In the next year, he and his family relied on their savings. They sold their house to keep afloat.

“My entrepreneurial dream was crushed,” he says. “I went through a short bout of depression. In the end, I got up and started knocking on doors to look for work.

“Thankfully, my network supported me and we have climbed out of a pit now.

“The man I went into business with had no education and grew up a pauper. Mao [Zedong] had stopped all education and he grew up with a hungry, swollen belly.

“He told me no matter what happened, he would never go without anything in his life. There is only one god [to him]: money. He is motivated purely by greed.

“He grew up making money by working out how to play the street and the [Communist] Party. It’s a big Ponzi scheme.”

But not everything is bad: working for the Chinese in Australia is safer, Bob says. Their culture of obedience to authority makes them respectful of Australia’s rules and regulations.

“Talking to the educated Chinese, they are a different beast,” Bob says. “They have been abroad, they understand the rule of law better.”

He says if someone in Australia has a unique product that could work in China, it could be worth exploring, but people who aspire to do business there need good connections and government protection. But beware that laws change quickly in China. And some entrepreneurs trying to export to China find their goods held up at Customs for spurious reasons or even mysteriously misplaced.

“These are the hidden stories you won’t see in the press,” Bob says. “I was the lucky one.”