Recent reports from three lobbies for foreign businesses, the American Chamber of Commerce in Shanghai, the European Chamber of Commerce in China and the US-China Business Council, bear out this gloomy view.

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It has long been my view that China is a nation of small business people, farmers and engineers.

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"I think domestically it's very difficult for them to make that type of commitment from a political point of view, " John Quelch, dean of the China Europe International Business School in Shanghai, told CNN.

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Franchising, an approach central to the U.S. hotel industry and Cendant's way in China as well (see " The Bed Business"), is for another day, in Liang's view.

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