The Top 3 Things to Avoid When Doing Business in China

by Gene Wood

Wood_Top 3 Things To Avoid When Doing Business In China

Many years ago on a plane headed to Shanghai, a CFO shared with me three things which a foreigner must accept if they are to work effectively in China. First, anything is possible. Second, nothing will be easy; and third, everything is likely to be a little bit broke.

Anything is possible in China today. Don’t make the mistake of going in with small expectations. It’s an amazing country, but nothing is easy. Possible and easy are not synonyms. My default response when clients ask if something can be done is always to say, “Yes.” If it’s a good thing, then it’s always best to respond with a positive. However, with that said, that doesn’t mean it’s going to be uncomplicated. When doing business in China, success requires many visits, the right relationships and plain old-fashioned time.

Keep in mind that time is the most valuable commodity. One reason most non-profits have little to show regarding their work in China is that they would rather throw money at China than invest the time of their top tier leaders. One way to short circuit this necessity is to hire a quality China consulting firm with established guanxi for leverage into the market.

Anything is possible is a double edged sword. Several years back we were renovating a condo we had purchased in northern China. As we talked over construction options with our contractor, I asked about removing walls, extending balconies, things of that nature. Finally the contractor took me to one side and whispered: “We are in China. You can do anything you want!” This was somewhat disconcerting when I reflected I was on the 26th floor, and everyone under me had been told the same thing.

Here are the top three things to avoid when doing business in China:

1. Unrealistic Expectations and a Lack of Patience

The system in China is still ruled by men, not by law. There are many people that can say no, and far fewer that can say yes. In the West, we are used to answers coming quickly. When you’re working in China however, if the leader says “Yes”, he may get in trouble. Conversely, if he says “No”, he or she will seldom be faulted. One Chinese maxim admonishes “lead by doing nothing.” Often, at least in non-profit work, we never receive official permission. To push for that may be counter-productive. What we settle for is not being told no and for the decision makers to keep one eye shut.

There’s also a hidden factor in the culture of the “Wu”, where you’re ideally required to find the middle path. In many cases, the decision maker won’t tell you what he or she wants directly; you’re expected to be able guess. Subordinates in China are constantly trying to figure out what they should be doing. This is in direct contrast to the Western way, which is to simply ask for and receive clear direction.

2. Expecting Everything to Work

Don’t be surprised when the air conditioning unit fails, the car won’t start or the computer breaks down. As a rule of thumb, everything in China is a little bit broken. Why? We can lay much of this reality at the doorstep of rapid, unprecedented growth. The strides that have been taken in China since 1978 to the present day are unparalleled. It’s like going though the Industrial Revolution in 20 years as opposed to 150. We need to remember to give the Chinese kudos for their “I get it” attitude. It’s a big country. The journey to modernity and “catch up” in such a short span of time obviously contributes to some break down in support systems.

3. Small Margins

If you want to rush things, it probably won’t work and you need to be prepared for last minute changes. More importantly, expect these changes will always be in the favor of the Chinese. Recently, I worked on a contract that clearly delineated responsibilities on both sides. Yet less than one month before the project kicked off, we had many people requesting additional funds for participant expenses which the MOU clearly designated as theirs to bear. Westerners search for a win-win solution. Chinese often think in terms of “I win-you lose” as a symbol of a successful negotiation.

A journey of a thousand miles begins with one step and we need to recognize that by slowing down and taking it easy, we will have a better chance at achieving our business objectives. Deadlines bring urgency and often lead to a feeling of “no choice.”

One reality for non-profits is they must purchase international tickets for many persons involved in the work being done. Once the tickets are purchased it is often unreasonable to cancel the event or project. Therefore the Chinese partner is in a strong position to make last minute changes in their favor. This is true everywhere, but especially in Mainland China. The important thing is, the Chinese people know where you’re headed, and they’re prepared to go on the journey with you, but you can’t push a button and expect it will happen on the spot. This is another area where a good consulting firm will pay dividends. We do not do anything that nonprofits can’t do on their own — with millions of dollars, travel, a full-time bi-lingual staff and fifteen years of experience and relationships.

Gene Wood

Gene is president and founder of Word4Asia Consulting International, a group specializing in helping quality nonprofit organizations accomplish their objectives in mainland China.
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