In 2011, I planned to retire and spend time gardening, visiting grandchildren, and admiring antique cars. I had spent the prior decade as CEO of Silicon Valley Bank (SVB), a California-based bank that, at the time, was the single largest lender to innovative companies and the venture capital firms that backed them. (SVB collapsed in 2023, 12 years after my retirement as CEO, but that is not material to this story.)

That was not to be. Working on the assumption that innovation was a global phenomenon and that if SVB was to support innovation, it needed to do so around the world, we established operations in London, India, and Israel. In 2010, the board decided SVB needed a full-on banking presence in China, which was storming into the top ranks of global innovation centers. We had entered China in 2005 with a very small and specialized office. As our venture capital firm clients flocked to China, though, we needed to provide a full suite of services or, we feared, they would use other banks and eventually abandon us altogether.

As the board sought someone to lead the China venture, the most obvious candidate was me. I had the deepest knowledge of SVB’s operations and culture; I was ready for a new adventure; I had time; my wife was enthusiastic; and we were both learning Mandarin. My age was a bonus, as Chinese culture reveres its seniors. Thus, in April 2011, my wife and I arrived in Shanghai for a four-year stay and a lifelong immersion in a fascinating and entrancing culture and a puzzling and sometimes maddening business environment.

I describe my experiences and lessons in much greater length in my book, The China Business Conundrum: Ensure That “Win-Win” Doesn’t Mean Western Companies Lose Twice. Here, though, I focus on the three major lessons from those years on the ground and the four that followed when I visited China for quarterly board meetings in my capacity as vice chair of the bank, a 50/50 joint venture with the Chinese Communist Party (CCP)-owned Shanghai-Pudong Development Bank (SPDB), called SSVB.

1. Succeeding in China is very hard for Western companies. I might say “impossible,” because I am not sure I know of any Western company that has. Until about six months ago, I would have held up Tesla as the sole example, but the success of BYD has proved me wrong. Westerners stumbled because we have a preconceived set of mental models that are very hard to shake. We come in with plans that we have established and our board has approved, and we want to show progress against them. We are impatient; in part because entrancing as China is, it is truly different and we want to succeed quickly and then go home. All our Chinese counterparties (I use the word intentionally) know this, and they use it to their advantage. A Western company answers to many stakeholders including shareholders, who generally expect regular quarterly progress. A Chinese company is almost indistinguishable from the government—its executives often pop in and out of government jobs—so its timeframe is drastically longer and its definition of success much more fluid than ours.

2. The CCP is everywhere and operates on its own agenda. As I mentioned above, Chinese business executives and politicians are often identical. If your company is important enough to have been invited to China, the CCP is interested in it. It wants you there because it wants your knowledge, your technology or your business model, and it will get them. What they have promised is immaterial. The Chinese business community operates not with contracts that can be enforced but with memos of understanding (MOUs) that reflect the balance of power at a moment in time. Should that shift, the relative commitments of each party will change as well. The concept of “fairness” does not apply; The Art of War does.

3. The Chinese negotiating system is radically different from the West’s and unless you understand it, stay home. You will save a lot of money and heartache. The Chinese negotiate based on leverage—even tasks in a marriage are allocated based on each partner’s leverage at a given moment. Win-win means the Chinese entity wins twice. Westerners hear this phrase and assume it means what we have been trained to expect: each party benefits. In my case, for instance, win-win should have meant that SSVB made money in China while we bolstered China’s innovation economy. Instead, it meant that we bolstered China’s innovation economy and, to get a banking license, we had to share our entire business model and train Chinese banks to employ it. You need to understand China’s rules (my book has recommendations) and play by them. Do not expect China to play by Western rules.

These three points are not intended as “China bashing” but as the output of my mistakes and painful lessons working with the CCP to establish SSVB. The CCP plays a very long game and its goal is not helping you but staying in power in China and remaking the world order in its vision. This includes restoring China’s “beneficial hegemony” over South Asia, the adjacent sea lanes, Taiwan, and eventually (in my opinion) Japan.

Since it has become more apparent that the West’s original naïve approach to China—that China just wants to be like us if we give them enough developmental support—was completely misguided, the West needs to learn some clear-eyed lessons, fast. Decoupling our supply chains is impossible; but thinking hard about an industrial policy that supports our strategic advantages and strategic necessities while allowing other countries, including China, to do the same for theirs will move the entire world forward.

Sadly, considering the current trade tumult, I do not see this happening in the next four years. But when tempers subside and trade becomes possible again, perhaps these three lessons will help Western companies create a true “win-win” with China.