AIMEE K. WILES BEIJING * Gong Jianhao, at left, gives a demonstration of the Xerox 8830 copier to two customers, Wang Zan and Ma Jianying, in the demonstration center at Xerox's Beijing headquarters. China has become Xerox's top business investment.

By Richard Mullins
Democrat and Chronicle

(June 25, 2000) -- Imagine trying to sell a million-dollar printer to a bank for making monthly statements -- only to discover that the bank doesn't even send out monthly statements.

Why would they, when customers ''are happy to line up outside for half an hour to find out what they have in their accounts,'' moans Allan Lin, chief of operations for Xerox Corp. in China.

Such are the cultural struggles Xerox has faced in trying to sell its business products, which have been successful in the Western world, to China, potentially the world's largest marketplace.

Success in China could greatly benefit the roughly 13,000 employees in Rochester, many of which design and produce Xerox's most complex machines.

''We've got a way to go before they can utilize some of (our) solutions,'' Lin said during an interview with the Democrat and Chronicle in Beijing.

Despite the cultural challenges, China has become a major source of revenue for the company -- and a large manufacturing site. It has 1,000 employees in scores of places around the country.

Sales have been growing 50 percent a year and currently total $250 million annually. Lin expects Xerox's Chinese organization to jump to $1 billion in sales by 2006.

In fact, China has moved to the top of Xerox's ''developing markets.''

Along the way, however, Xerox has learned a few hard lessons:

Lesson No. 1: Don't try to transplant American ways of doing business into China. In fact, the fewer Americans running the show, the better.

''When I took the job here (in 1998), we had 35 expatriate (Americans),'' Lin said. Now, Xerox has about seven or eight Americans in the top ranks and will have even fewer soon. Lin says the Xerox's success now hinges on Chinese people running the organization.

AIMEE K. WILES BEIJING * Allan Lin, managing director of Xerox China, works out of the company's headquarters. He says he sees China as a potential ''gold mine.''

Lesson No. 2: U.S. products don't automatically sell in China. For example, inexpensive inkjet printers Xerox designs and manufactures in Rochester still don't print Chinese characters without adjustments, Lin says.

''This has been one of the struggles: getting the corporation to realize there are some very unique requirements to do business in China.''

Lesson No. 3: Things take time in China, more than American companies are accustomed to. The Chinese government requires licenses for virtually every business practice -- from manufacturing, to marketing, to calling on a customer for maintenance.

Xerox began learning those lessons in 1987, when Chinese President Jiang Zemin opened a Xerox factory in Shanghai Xerox started making low-end copiers there, taking the joint-venture approach in partnership with Chinese companies or the government.

Initially that worked well, so the company opened an engineering center in Shanghai in 1993, a facsimile manufacturing plant in Wuhan in 1994 and a low-end printer plant in Shenzhen in 1996.

''Then we went through a tough period here,'' Lin says. The company invested ''big time'' in new businesses and more manufacturing joint ventures.

''They were not paying off quickly. And if you interview people operating in China today, some 80 or 90 percent will tell you they have invested a lot of money but most of them are not making anything -- yet.''

A major reason -- China charges high tariffs, especially on high-tech equipment. This slows foreign companies' entrance into the market.

''Not unlike most companies, we were short-term oriented, we looked for short-term payback,'' Lin said. And after a few years of struggle, those who had invested with Xerox in China took their money elsewhere.

Then just over two years ago, Xerox re-approached the entire global market, promoting networked systems, instead of individual copiers.

The strategy worked especially well in China, where organizations were looking to ''leapfrog'' to cutting-edge technology. After almost a year of meetings, Xerox closed a $20 million deal in January with the Ministry of Postal Communications, shipping it 34 high-end printers. Unlike the U.S. Postal Service, also handles the printing and organizing of direct marketing packages.

Xerox has hired 120 direct sales employees to seek such deals, hired over the last three years to focus on four cities -- Beijing, Shanghai, Guangzhou and Tianjin. The company plans to expand to 15 or 20 cities in the next three years.

Xerox's rivals have similar plans for the region. Canon Inc., for one, already has $230 million in sales in China, a figure that could grow quickly because Canon holds much of the inkjet printer market.

Still, they face similar problems, including Chinese companies using small, desktop copiers that Americans would consider for use at home.

While Xerox primarily makes small desktop machines or low-tech parts in China, Lin says the company could do more high-end manufacturing there as the market develops. This has raised the ire of Rochester-area labor leaders, but Xerox expects to keep its momentum going.

''When this place opens up,'' Lin says, it ''is going to be a gold mine.''

Includes reporting by staff writer Ben Rand.