Tips for Doing Business in China

Dear Friends,

My recent newsletter of Chinese Management Style and
characteristics received overwhelming response from all my readers,
prompting me to setup a discuss board on Chinese Culture with the
aim of helping foreigners doing business in China. This
week I have written a topic on Tips for doing business in China.

Because the Peoples Republic is a totalitarian, Communist state
perched on top of the world's oldest and largest bureaucracy, there
are certain considerations about doing business there that apply
nowhere else in Asia, or in the world for that matter. Persistence
and patience are absolutely necessary virtues for anyone conducting
business with the Chinese. It is a slow, grinding process.

Beware of middle management, especially those who are Communist Party
members. Quite often they are relics of the Cultural Revolution, old
Maoists whose sole purpose pose in life is to assert their own
importance and to keep anything useful from getting done. Don't get
bogged down in negotiations with these people. Get to the top men as
quickly and directly as you can. If there is no way to meet the top
man, hold back your money and let the matter rest for a while, do not
show your anxiety. In China, it is a mind games, you more you persist
the longer you have to wait. Take things lightly and they will work
in your favour.

It is easy to assume that the various bureaus and ministries have
roughly the same interests in relation to you. They are all on one
side of the negotiation and you are on the other. But that is often
not the case. Often you will find that you, as the foreignexpert,
will be used to support one side or another in a factional dispute.
The Chinese tend to place greater faith in the expertise of Foreign
businessmen than in Their own staffs. Anytime that you can enhance
your Chinese associate's position the eyes of his peers, you should
do so. He will be very likely to reciprocate by moving your business
forward. For example I have met many ladies college in China and
since I am still single, many of them treated me nicely, with the
hope that I will be their husband. I get free food, lodging and F***,
and in the eyes of the Chinese, having a foreign boyfriend enhance
their value.

In China, there is only one employer (or EMPEROR??), the government.
To fall out of favor by having some project that Is under your
authority go badly is a very serious matter. Fear always accompanies
responsibility. Anytime you can lessen your Chinese associate's
burden of fear by taking some of the responsibilities off his
shoulders, he will be in your debt. Never ask the Chinese people to
sign, as they never will, ask for a chop instead and they will be
proud to oblige, either way the job is done. In China, the people
will enjoy western food, western fun and western woman but never
western legal framework!

When the Chinese talk about joint venture, they don't mean it, What
they mean is that they want Western capital and expertise to build,
for example, a truck plant. Once it is built, they want the
Westerners to go home. Western firms assume, because the Chinese need
them to run the plant efficiently, that their interests are
protected. But it is an article of faith with the Chinese leadership
that an all-Chinese truck plant of questionable efficiency is
preferable to a joint-venture truck plant that builds trucks that
actually work, I once visited a Truck company in Sichuan where my
friend headed the Engineering section. I was invited for a tour of
the plant. After talking to the manager from JiangXi, who joined the
company after working with the Ford Company, I realize that the joint
venture will not work out well unless the top management is willing
to let go the decision making to their western counterpart. Decision
still has come from the very top government official. Remember the
Chinese Maxim "Sleeping in the same bed, but dreaming different
dreams"

A Western firm undertaking a joint venture in China must be very
careful that lie opportunity for success is there in the first place,
and that it is not later forfeited by giving over control of the
project to the Chinese.

Because of their acute lack of capital, the Chinese are very price
conscious. They are always looking for ways to defer expenditures.
Often they are willing to trade off price for favorable terms. A
Western enterprise list that is able to offer long-term financing for
its product or service can do very well in China.

In China, time is not money. Time is time; money is money. Shuen Xiao
Lieng, a Chinese-American filmmaker who recently returned to the
United States after filming in China, remarked that a film that took
three months to film in the States would take over a year in China.
Time is free, but film has to be paid for. Every scene must he
rehearsed until it is perfect, then It is filmed in one take.

In negotiating a project it is necessary to go to the top. In
executing a project, it is necessary to go to the bottom. You must
gain the confidence and cooperation of production personnel,
supervisors, and low-level management. Mutual respect and
understanding is the only key to success in China. People from
Taiwan, Indonesia, Malaysia and Thailand are highly successful in
China while their Asian counterparts like former British rule
Singapore and Hong Kong do not meet much success. Try looking for
people who have a strong Chinese background to increase your chance
of success.

China is a highly conformist society, but there are many who are
eager to be individualistic and creative. If you have an organization
employing Chinese in China, look for these kinds of people and
encourage them with the proper incentives. You will be amazed at the
eagerness and loyalty with which they respond.