Getting Things Done the Chinese Way

One thing’s for sure: Things really work differently in China. To be fair, the Chinese would say the same thing about doing business in the West, so everyone has to make a few adjustments. Recognizing the differences in how things work is important to your success in China. Get it right, and you may find the key to success in the Middle Kingdom.

Honoring face

Face, or mianzi (pronounced mee-en-zuh), is a key cultural concept to understand when doing business in China. Face is very similar to pride, but how others perceive you matters more. In other words, nice compliments from your boss in a one-on-one meeting are good, but you don’t get face until your boss singles you out in front of your coworkers as a model employee. Here are the three ways you deal with face in China:

✓	Give face: Giving someone face is easy: Treat him or her like a big shot, offer compliments in a group setting, or treat him or her to a big fancy meal at the trendiest new restaurant. Overall, make sure you’re courteous. Giving face is really all about showing respect.
✓	Save face: Many Chinese say saving face is the most important kind of face; it has a grand tradition in ancient Chinese history through legends and stories. Saving face is avoiding a loss of prestige — most often, you save someone else’s face rather than your own (hopefully somebody will do the same for you, too). For instance, perhaps you rescue a friend or contact who needs help in a business deal that’s going sour. Or when disagreeing, maybe you qualify what you say as much as possible by frequently using maybe, possibly, a little, might, and so on to soften any possible embarrassment.
✓	Lose face: Losing face is a serious offence to the Chinese. You cause somebody to lose face by embarrassing him or her or through a private insult. The insult may not even be that damaging as far as you can tell, but a person’s face is supersensitive to anything that someone maybe, possibly could perceive as an insult. You may accidentally cause someone to lose face in many ways. For example, perhaps you don’t send someone of high enough rank to pick up an important visitor at the airport, get really angry at someone in front of others, or write or speak too directly to someone.

The most important thing to remember about face is that losing it or causing someone else to lose it has consequences. If you cause somebody, even by accident, to lose face, you can expect never to receive his or her cooperation again. In fact, the consequences can be a lot more extreme than that: Even if doing a certain action (such as signing a settlement agreement) seems to make all the sense in the world for a Chinese person, he or she usually won’t carry it out if it benefits a person who has made him or her lose face. Also, other Chinese people may think less of you or your company if you cause someone to lose face. After all, word gets around.

Note: You know you’re making friends in China when your Chinese friends feel comfortable enough to joke around with you. The Chinese would never attempt to poke fun at you if they didn’t consider you a true friend. This would be a grave insult and loss of face.

Focusing on consensus

Decision making in China is largely done by consensus. Thus, the Chinese work together to make decisions instead of passing along responsibility to one group or worker. Not only may the need for agreement cause delay, but you sometimes feel powerless to understand what’s really going on.

Consulting Confucius for business advice Tradition has it that Confucius, a famous Chinese philosopher and writer, lived about 2,500 years ago. This legendary scholar has influenced the Chinese system ever since. Many of Confucius’s teachings can give you insight into the Chinese way of thinking and doing. Take a look at some of his most famous sayings: ✓ “Do not do to others what you do not want done to you.” ✓ “Before you embark on a journey of revenge, dig two graves.” ✓ “He who speaks without modesty will find it difficult to make his words good.” ✓ “The cautious seldom err.” Confucianism is not a religion but rather an ethical and philosophical system. The teachings have had a particularly strong influence over China’s politics and morals. You can see evidence of Confucianism in your business dealings as you witness the importance of reciprocity, patience, modesty, prudence, and hierarchy.

What foreign investors sometimes don’t appreciate is what takes place behind the scenes. Because the Chinese work to gain consensus, a lot of healthy debate and internal conflicts are going on among them. Sometimes the internal debate or discussion may have nothing to do with your firm. Often, the Chinese themselves simply don’t know how to proceed. This indecision can be the result of conflicts of interest, vague regulations or laws, or power struggles among certain officials.

While you’re waiting for the Chinese to gain consensus, not knowing where you stand can be quite frustrating. You shouldn’t expect the Chinese to voluntarily give you regular updates on the status of your project or deal. Your best approach is to stay in regular contact with them from time to time. Just check in every week or two.

Teamwork is a part of the cultural heritage that makes China what it is. It’s a rich tradition and belief system, largely influenced by the scholar Confucius. His teachings are about respect and responsibilities to key relationships, including those with superiors, family members, and friends.

Working together for mutual benefit

Many Chinese want to participate fully in the opportunities that international business relationships provide, and your Chinese business partners want a win-win relationship. Therefore, making sure your working arrangement is mutually beneficial is up to you. You can find lots of profitable opportunities in China, so share the pie with your business partners.

Corporate giving in China Corporate philanthropy has a long tradition in business, and the Chinese like to see that a company is committed to benefiting the nation. Therefore, if your company has the resources, you may want to consider giving back to China. Whether the giving is focused on health and welfare or humanitarian efforts or education, foreign companies are helping China in many ways. Often, companies directly sponsor specific programs. For example, some companies build schools in China’s rural areas. Others provide grant money or scholarships to students. Some companies even align their business activity to the effort. For instance, drug companies may provide healthcare, insurance companies may provide scholarship programs to actuaries, and wind-generating manufacturers may donate advanced products to rural farmers. And some companies provide direct monetary support to the growing number of nonprofit organizations now operating in China. For instance, many foreign companies have supported Golden Key Research Center (www.goldenkey.org.cn), one of the earliest nonprofit organizations in China. Golden Key, which has been a UNESCO partner since 1998, aims to provide education for children with visual impairment or blindness.

The Chinese tend to do business with people whom they know and trust, and as your friend and business partner, they expect to be treated fairly. However, the Chinese can be somewhat suspicious of foreign businesspeople because foreigners have had a history of exploiting the Chinese (see Chapter 3). If your company doesn’t have a lot of experience in cooperating with business partners, reconsider whether your company is ready to partner in China.

You may think the Chinese are too hands-on about the details of your business arrangements, but to them, they’re just making sure that all your ducks are in a row. Get used to this involvement and remind yourself that working with the Chinese may benefit your business. After all, they understand the business landscape there better than you do.

Working with a Chinese company doesn’t necessarily mean having a joint venture (JV). You can have contractual arrangements with the Chinese for things such as distribution, technology licensing, and so on. Of course, making a mutually beneficial deal with the Chinese can be tricky business. For details on negotiating with the Chinese, see Chapter 6.

As in anywhere in the world, plenty of untrustworthy businesspeople are out there. Some people may say all the right things about friendship and trust, but their intentions don’t line up. Be on your guard when dealing with people you don’t know. (For information on finding out more about whom you’re dealing with, go to Chapter 17.)

Although partnering or collaborating with the Chinese can deliver mutual benefit, many foreign companies prefer to control their own destiny. Some foreign companies go solo so they can understand how to build competitive advantage in the market. This may be a good alternative for your firm, but consider the risks and rewards before going it alone.

Developing patience

Make no mistake — the Chinese take a really, really long view. Before any business can really start, just getting to know and trust you takes time. After you’re in, you have to wade through layers of government bureaucracy. Negotiations with the Chinese seem to take forever when you’re dealing with the government, and getting approvals eats up even more time (for more on earning approvals, go to Chapters 7 and 8). The Chinese seem to have taken a page out of Confucius’s book: “It does not matter how slowly you go so long as you do not stop.”

The Chinese often discuss and consider issues internally for a while before making a decision. (However, their planning and decision-making processes are often far less sophisticated than what you’re used to — for instance, they lack detailed financial models and market data collection.) Where you’d likely make a business decision, the Chinese prefer to mull it over a few days and consult a few insiders before committing. The benefit to them is that they make fewer mistakes and probably won’t lose face.

Give full consideration to most propositions that the Chinese make. Because of the time involved in deliberating, failing to give full consideration to an important issue is almost an insult. (Of course, you don’t have to consider outrageous demands — see Chapter 6.)

Be careful about deadlines that you may need to commit to internally at your company. A good guideline is to double how long you think a task may normally take. Don’t necessarily look at this additional time as being all bad, though. Use the extra time to your advantage and research anything you’re unsure of. Remember that being tactful wins you more points than screaming at the Chinese because of delays.

Chinese entrepreneurs on fast forward Unlike the large and sluggish state-owned enterprises (SOEs), businesses in the private sector are used to getting things done at a breakneck pace. Chinese entrepreneurs need to get their products to market, build their company’s brand, and get their business to reach economies of scale. They’re trendsetters for the way business gets done today in China. Entrepreneurs in China are on the move — especially in China’s small- and medium-sized companies. Don’t be surprised to hear comments such as “we need to get this done quickly” when working with Chinese entrepreneurs. Your business dealings with most private sector firms will move forward at a faster pace than with the SOEs.

Sending consistent messages

Foreign businesspeople are sometimes thought to be inconsistent in their business dealings in China. Try explaining to the Chinese why your company decides to go in a different direction — why new senior management who have never been to China are now in charge of dealings in the country or why your profit center is being combined into another business unit within the company. Don’t be surprised if you get a lot of blank stares and silence from the Chinese when telling them about changes in your China plans.

The Chinese are usually consistent in their messaging with foreigners because of their consensus style of management, which requires them to work together internally to arrive at the right answer together. They all seem to be going in the same direction.

Make sure you’re consistent in your dealings with the Chinese. That means that everyone in your company who deals with the Chinese needs to have the same goals and objectives for China. Everyone has to follow the same plan.

You don’t want to show the Chinese that you have conflicting views within your company, which indicates disorganization. Be careful because the Chinese often try to take advantage of internal conflicting views and lack of harmony (see Chapter 6 for tips on negotiating). The Chinese will be watching every word you say that may be of advantage to them.

Being consistent means that you also need to get a good read on what the Chinese are saying to you. Take careful notes at all your meetings, and review them as a group afterward. It’s a good idea to provide the Chinese side with a summary of your meeting notes for review to reduce the number of misunderstandings.

Sharing information

The senior Chinese business leader in charge manages and controls most of the information you receive. The Chinese are careful about sharing information or asking questions because they don’t want to make a mistake that may cause them to lose face. The Chinese would rather hold their questions or comments for later and then sort things out internally before approaching you. They ask you to explain your view instead of asking specific questions.

Don’t brainstorm or try to share ideas with the Chinese. Instead, listen carefully for clues on how the Chinese want to proceed. Don’t be shy about asking the questions you need answered — just make sure you don’t ask them the first time you meet the Chinese side. You may find common ground or understand how far you are apart in your thinking.

Many things may be communicated to you through other means. Sometimes, single representatives of the firm or a trusted middleman who has a good relationship with the Chinese company may give you an important piece of information at another time.

Don’t give away important information about your firm’s products or services. You can share appropriate information after you’ve struck a deal with the Chinese.

Keeping the dialogue going despite bumps in the road

Sometimes you think you’re doing all the right things with the Chinese and then your discussion seems to fall apart. Perhaps internal approvals haven’t yet been secured, your business partners are talking to your biggest competitor, or things are stalled with the local government politician who needs to give it his blessing.

Much of the time, the reasons remain a complete mystery. You can’t expect the Chinese to tell you what you can do differently to improve your position. However, if the Chinese are committed to working with you, they’ll likely keep the dialogue going with more negotiations. And if you have friendly relations with some key people, they may confide in you. Or an intermediary may be able to assist you in getting to the bottom of things. For more on unblocking strategies and negotiating with the Chinese, please see Chapter 6.

By now, if you have a contingency plan, you’re likely looking at alternatives to your current plan. But if discussions look precarious, don’t give up just yet. Some firms wait to see whether they have a chance for a breakthrough. If you’re still waiting after a year or more to get approvals from the government, you probably want to make one last attempt at getting discussions going again before packing your bags and heading home.

Talking to the right authorities

Especially in state-owned enterprises (SOEs), the highest-ranked person you meet with may not have the decision-making power. A more junior Chinese businessperson may instead be a senior-ranking Party member, and the most senior Party official involved always trumps all other players. Be careful in your dealings with all business leaders you meet. Sometimes, you never find out which one is the senior Communist Party leader!

When dealing with privately-owned companies, the owner is often the decision maker. Although he or she may try to develop a consensus internally, the owner makes the final decision. You may be wasting your time speaking with somebody else when you’re dealing with a private company.

Getting to know who’s in charge isn’t usually too complicated. Because the Chinese are so focused on understanding the leadership structure of the delegation or group, they give you obvious clues about who’s in charge on their end. The senior person and key decision maker from the Chinese side generally leads the discussion at the meeting. And if you’re sitting across a meeting room table, the person opposite the leader of your delegation is the Chinese leader.