Silk Road International Blog

As if the death of up to 400,000 Chinese in 6 weeks was not enough to turn your stomach the details of the grisly murders of women and children and the horrors of thousands of rapes certainly will. Like a watching train wreak, I couldn’t stop reading even though I was constantly suppressing the gag reflex. To say Iris Chang’s “The Rape of Nanking” is an enjoyable read is just wrong; but it is a great book. A must read if you want to understand a conscious part of the current Chinese psyche.

Well written and researched, The Rape of Nanking details the Japanese invasion of the ancient Chinese capital of Nanjing from three distinct perspectives—the Japanese preparation, the Chinese victims and the foreign observers. These three perspectives are then further divided into the war crimes committed and the global “cover up” in the aftermath of WWII.

Even after reading all of the gory details of the attack, probably the most revolting part of the book is the depth and breadth of the Japanese denial and the complicity of the world’s powers. Unlike the Germans who admitted, paid for and now teach about the holocaust to make sure it’s not forgotten, the Japanese have never even officially admitted that anything happened in Nanking. The rise of communism in the 40’s and 50’s made support of a stable Japan more important than the punishment of war-crimes against the Chinese. Since then it’s been conveniently forgotten by all but the Chinese.

While hate is never excusable, reading this book will certainly help you understand much of the current feelings of the Chinese toward the Japanese.

Tags: Culture by david
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I had an interesting experience (interesting, as in: I learned a lot and didn’t get screwed) today with a factory that is working with us on a couple of projects. Basically the owners and the manager came to talk with me about the fact that we are “too strict” on our quality standards and the high number of rejected products is costing the factory more than what they originally budgeted for. Of course there were lots of issues that they, as owners and not project managers, didn’t know about like their late delivery, dirty product, incorrect product, etc. Once we got rid of the self-serving manager and listed out all the details we were able to have a relative straightforward discussion. Of course there are still many little twists, turns and subtleties that are sometimes hard to pick up (in Cantonese/Mandarin). After it was over I made a list of things that I was able to take away from the experience.

1. If you don’t know that your negotiations, factory visits and dinners are planned and scripted then you don’t know what you’re doing in China. Roles are defined, what can and can’t be offered is clear before negotiations start and who you will meet and what you will see is typically controlled to a large degree (as it is in the US and anywhere else—think about it). Learn to play the game and play your role—just like in the West, you have a job description and a specific responsibility. The difference is that that in China you are expected to know and play your part in the CHINESE script whether you speak Chinese or know their culture or not. The obvious problem is that Western and Chinese scripts are radically different. As one China hand put it, this is their sandbox and if you want to play in it, you’d better know the rules.

2. Talk with the people that have the authority to do something about the problem. Just like anywhere else, the higher up the food chain you can climb the easier the resolution will be. If the owner of the factory will attend than you know you have both a serious issue and the opportunity to get the real story and a real answer.

3. There is often both a cover story and the real story. The only way to get to the real story is to ask tons of questions and take copious notes. The stories will come out in the end. As important as finding the real issues are, this is often where Westerners most often fall short—we take too many things at face value. McGregor, in his One Billion Customers, states clearly that foreigners come to China with way too much trust—we transfer our legal system and cultural baggage to China because the suites, office buildings and computers put us at ease that all is the same. The latest news about the absolutely NON-independent judiciary should leave you with no doubt that things are different here.

4. Don’t openly push the inconsistencies too hard—i.e. don’t cut off your (or some one else’s) nose to spite your face. There are stories and white lies (and big black ugly lies sometimes too) you’ll find and when you put the puzzle pieces together. Once you figure out the real situation you’ll have the upper hand—remember, if you can name the game you no longer have to play it. The trick it is to find out what’s really going one and then deal with it in way that allows the most people the most face as possible. If your goal is to get someone fired or make someone so angry that they spit on your burger before they serve it too you, you certainly can do this. But the really goal ought to be getting production done on spec and as close to on-time as possible—keep this in mind even if you feel that you have been totally wronged.

5. White face, dark face. This is a very common and very conscious strategy employed by many negotiators, both Chinese and foreign. A.k.a. good cop, bad cop, in this scenario one guy will be the instigator and a partner will be calming voice of reason. This both raises the stakes and gives the instigator the ability to be the peacemaker at the same time. Threaten to cancel or not deliver with one hand and offer a (advantageous to you) solution with the other. Typically Chinese like to have the boss be the white face (good cop) and the manager be the black face (bad cop). I usually see foreigners doing the opposite. But since face is more “expensive” for the boss than the manager it most often works this way in Chinese culture.

6. The sacrificial lamb. Like the black face, white face, this strategy allows the instigator to cut someone loose or give in on a specific issue without losing the war. This is another fairly common strategy in China where labor is (over) abundant and replacing people is easy. For example, it’s often much easier to fire a QC manager and blame the issues on him than to accept the face losing issues that could be the real concerns. The use of this strategy is not just convenient for the instigator but often a sign that the factory is willing to make some significant concessions, if they don’t publicly lose face or privately lose money. Often times a manager will be both the black face and the sacrificial lamb—he gets angry forces issues and then will be sent off or just leave the negotiations thus allowing cooler heads to continue. I even fired myself once to make a point over a ½ million dollar project (I told them that their mistakes had cost us so much that my boss fired me). I’ve never worked with that factory again since then.

7. The closing offer. Once everyone is friends again and all the issues are worked out there will invariably be a last issue that’s just thrown in at the very end. Often literally on the way out the door—“Oh, by the way, this material is going to cost more on the next order. We’ll eat it this time, but the price is now this much more.” My theory is that this happens because meetings between Chinese usually end with dinner or Karaoke so there is still time to work out issues. But foreigners usually have work meetings during the day and then go home. Whatever the reason, it’s almost comical to me—it’s something they have to bring up, but don’t want to so they wait until there is no possible way to procrastinate it any longer and then, just off the cuff, throw it out.

8. The way out. When ever I’ve been asked to pay more, I always come back with “I can’t ask my client to pay more after the order has been placed. Where do you expect this extra money is going to come from?” The truth, of course, that the supplier won’t say is: “you’ll just have to lose some of your margin because of our mistakes.” But what they usually do, after some hemming and hawing is to offer me a way out—just not in so many words. It typically goes like this: The supplier will offer an improvement to the product that will cost very little but could be added to existing production and then used to cover the costs of the price increase so the end client doesn’t realize that they’re paying for both the (unnecessary, but perhaps useful) alteration and the other cost increase. I personally don’t ever add costs that cannot be specifically account for—it’s not worth the potential fall out with a longtime client. The offer actually is helpful because you can always procrastinate making a decision (if necessary) by saying you’ll talk with the client about the “improvement.” In addition, these options, if you remember them, can give you leverage for future negotiations as well as inside pricing information directly from a factory that’s trying to cut a deal.

9. A show of anger vs. a loss of face. For me this one of the hardest things to understand—at what point is a Chinese conversation (argument) too personal and offensive? As a foreigner, I see/hear Chinese people shopping and yelling like a beating is immediately forthcoming. But two minutes later the transaction is done and both parties walk away as if nothing happened. Just so you know that it’ not just foreigners that think this, Thai’s say about the Chinese “Chinese talk like Thais fight.” It’s quite amazing if you’ve never experienced it before. If you have then you know that it’s not totally inscrutable. There are a couple of general rules that will keep you within the lines of acceptability. First, don’t make it personal—don’t be rude, condescending or insulting. This is a give in any culture and especially true in face conscious China. Second, try not to throw any one specific person under the bus. The factory boss may disrespect his own manager, but you can’t. Likewise, you can chew out your own QC manager, but they can’t. Detail issues that are specific to one person without pointing fingers at him directly. Third, try to resolve specific concerns with general solutions. I know that sound’s crazy, but if, for example, you can both agree that your QC is the final say in the production process you then don’t need to bust their chops over all the minutia that got the product rejected in the first place.

10. Know the numbers better than your counter parts. This is straight from Sunzi’s art of war and the Chinese know it well and will beat you with it every time—unless you’re prepared. Know the costs, the production times, the delivery schedules, who’s in charge of what, where the break downs occurred and what are the specific options to fix things. If you know the numbers you can’t be taken advantage of—no mystical Chinese wisdom in that. It’s just good business sense. Now the catch is balancing this overwhelming knowledge of minutia with the ability to play “non-specific” games. You can always counter price with price and times with times—abstract details about processes and products aren’t as offensive as or don’t cost as much face or good will as personal accusations.

11. Chinese don’t know the concept of win/win. True, this may be sweeping generality, but everything I’ve experienced and read agrees. Why? Two reasons. First, most of the upper level people you’re dealing with in China are products of China tumultuous past. Second, the lack of an effective legal culture means that change is the only constant. Under these circumstances wining is still a zero sum game. If you can win the money game and they can win the face game without losing money, that’s probably about as close as you can get to win/win. The guys as Sinocidal said it best: As far as most Chinese are concerned “Win Win is a panda bear in Sichuan Province.”

12. No one, not anyone ever makes product for a loss. Don’t ever believe this line. Regardless of the negotiations, every factory I’ve ever talked in China, Vietnam, Thailand or India with has brought this excuse up at one time or another. In my book, it’s the dumbest line ever. No one agrees to make product for a loss and usually the price increase are so minuscule that there is no way that the factory’s margin is that small. The answer to this excuse is simple, call the bluff. “Ok, let’s call this deal off and I’ll move on to another supplier.” In 10 plus years in Asia I’ve only ever had one factory take me up on this offer—they were so busy they didn’t want my business. In China is common to find factories that think that they have their Western counter parts by the nether regions. Sometimes it’s true, but usually only if you’ve not been careful or on-site. In most situations if you’re committed to a project financially, unless you’ve been seriously lied too, so is your supplier. At that point no one really wants out—and if you’ve planned ahead, you can counter the temptation to raise the prices in your initial PO’s. Additionally, in today’s China if push does come to shove, there is always someone else how can make your product. If you’ve got the time and patience to find someone else, they are certainly out there. Now there are times that I’ve later agreed to pay more to just get what I initially contracted for—and felt good about it. Sometimes factories make honest mistakes and miscalculations. The RMB strengthens, oil prices rise, etc. There are legitimate reasons for price increases just make sure it’s not just a rouse to get you to pay more.

13. Time is on their side. Sometimes called the “iron ass” strategy, this is definitely something that China has learned that the West has not. The longer they wait, the more desperate we typically become. We are an instant gratification society. The classic Chinese tactic is to have meaningless meeting after meaningless meeting to overwhelm you with nothing. The solution? First, arrange a meeting with someone that is important and has other business to do—e.g. a factory owner or high level manager, like you, has little time to waste doing nothing. Second, a couple of days is not a long time—learn to wait. Third, if you need to, sit them out. They can’t put you off forever and they will be increasingly uncomfortable the longer you hold them to their promises of “the boss will be here soon.” This strategy then extends to meetings as well—they may be long, but keep on your points and get what you came for. I’ve see many foreigners leave China with less than they wanted on a project worth hundreds of thousands of dollars because they had a two thousand dollar flight to catch to get back home.

Organization, details, politeness, a strong will and a healthy does of patience will help your negotiations in China. Good luck!

DD

Tags: Business, Culture by david
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I was quite excited to find a book about doing business in China written by a Chinese for foreigners. But I was soon disappointed. Mr. Chee’s explanation of “Westerners” doing business in China is an apt description of his own book—- culturally arrogant and simplistic.

This book was a total waste of money unless the unstated goal of Mr. Chee was to use this book to convince “Westerners” (whoever they are) that “the Chinese” (again, whoever they are) are all culturally duplicitous and base all their stereotypical opinions on undocumented personal experiences. On the other hand, if this is an example of Mr. Chee’s stated goal of teaching Westerners “what to really expect in China’ then there is some value—it’s taught me that Chinese “academia” is not quite to the level of the West yet. No matter what the goal, it wasn’t worth the $35 or the time it took to read it.

While I admit that I shared some of the same cultural experiences, the author’s lack of research, sweeping generalizations of both “Chinese” and “Westerners,” double standards for analysis and constant willingness to defend questionable Chinese cultural practices with “I’ve seen this in the West too” invalidates any truths that might be found.

The most blatant example of double standards is Chee’s discussion on honesty. On page 55 he claims that Chinese tell “white lies” to preserve harmony and that this is not only acceptable, but seen as honorable to all Chinese (all 1.3 billion of them?). Yet, just 50 pages later he bemoans the fact that Westerners see the Chinese as dishonest. Later in Chapter 9 he justifies the wholesale theft of IP with the excuse “it happens in other countries too,” specifically, and I’m not making this up, in the “Chinese countries” of Taiwan and Hong Kong.

Lack of real research is equally troubling. For a 150 page “academic” or “professional” work the bibliography is woefully small; only 29 sources total—20 of which are from the same Western experts that he chastises for being “arrogant and ignorant.” Basically that’s one dubious and self-discredited reference for every 3 pages.

Sweeping generalizations and stereotypes of Westerners and Chinese with no documentation is also glaringly pompous. Examples include:
• Women coming to China “need not fear…” “You will be treated with respect and find that China is a safe country to travel in (p.47);” No stats or attempts to measure respect or quantify safety.
• “Chinese families are more extended than Western ones (p.);” First, how is this even possible?! Second, with no stats, how do we even know? Third, personally I have 84 first cousins, 16 aunts and uncles and can document at least four different households with 4 generations living together in America.
• “All Chinese people are justifiably proud of their long history…” (p.71); Sounds suspiciously like the Chinese government’s famous “All Chinese on both sides of the Taiwan straight…”
• “Americans, I am sad to say, are often the worst offenders here.” (p.75); Stat? Studies? Examples? Anything more than one biased, limited opinion?
• “The Chinese perception of this was… (p.76); As if there is only one perception for all 1.3 billion people—a common assumption made my Mr. Chee and the Chinese Govt.
• Mr. Chee claims that any Chinese giving background information rather than answering a question directly is always doing so from innate Chinese altruism and a desire “to ensure that all points of view are taken into account.” (p.87); Again, how is this even possible that “all Chinese” are this aware of the source of their opinions and social environment let alone this generous, this educated or this unconcerned about the time it takes to explain all this history?! I have a simpler answer “all Chinese have trouble saying “no.”
• “The Chinese are certainly among the toughest negotiators in the world. (p.94); Maybe so, but how about some proof?
• “There are, or course, occasions when Chinese can be aggressive and rude. This is uncommon…” (p.101); How could he possible know the frequency of aggressive or rude behavior? How would he measure it? Any support studies? Who decides if the Chinese are rude or aggressive? The Chinese themselves? The foreigners? How about the new laws in Shanghai this month (Feb 2007) that attempt to crack down on the frequency of cursing and uncooth language to curb aggressive behavior and stop fights before they start?
• “The Chinese may not look sophisticated or slick when compared to their Armani-suited Western counterparts. But let me assure you they know your company and Western practices much better than you know China and its ways of doing things.” (p.98); I don’t know about the rest of “you” (all 3+ billion non-Chinese) but personally, I’ve never met Mr. Chee. And I work in an industry that is relatively new to China and in which most if not all of my factory associations are first time participants. Not only that, but I’ve been in Asia for 11 years—not much by “Chinese” standards I know, but I’ve done a bit of study, more than my factory sales reps, I dare say. Further, the only “Armani Suited” people I’ve ever worked with are the Chinese trying to put on Western aires—unfortunately with white socks, labels still on the sleeves and more cigarettes than money in their pockets.

Finally he extrapolates his own experiences to all the other 1.3 billion Chinese with no other research or qualifications. For example he uses his own personal observations of the decreasing number of times he had been offered an illegal DVD in Shanghai as proof that piracy is decreasing—could it be that marketing has just gotten better, enforcement more lax and/or that previously underground street vendors now have their own stores and don’t need to street contact any more? My personal experience with street CD/DVD vendors in Shenzen is that there are hundreds of times more today than in when I was in Shenzhen in 1995.

His extrapolations reach the ridiculous when he concludes his 3 page justification of Chinese IP theft with these three comments (page 106):
• “There is a genuine sense that IP is really no big deal.” How/when did he take a “general” survey of 1.3 billion people?! I doubt that Haier, Lenovo, and other Chinese multinationals would agree. Maybe an alternative explanation could be that the education and government enforcement is so poor in China that people don’t know what a big deal it really is.
• “A large proportion of Chinese behavior (IP theft) can be described as driven by expediency, by the need to get by in an often harsh world.” The obvious extension being that the country with the most poverty is allowed the most IP violations. Yet China leads the world in piracy, not Bangladesh, Lao or even North Korea.
• “And, of course, faking goods happens in the West too.” I don’t recall “you do it too” ever being an acceptable professional, academic or legal justification for anything—in China or in the West.

The book is not academic, professional, well researched or well written. While Mr. Chee’s experience is certainly extensive his analysis and supporting research is not. His cultural understanding may actually be spot on, but how much of this book is “real” verses exaggerated? How much is written out of defense against the foreign “China bashers?” How much is derived from a noticeable sense of wounded national pride? How much is just off the cuff stories strung together to meet a publishing date? There are simply too many stereotypes and generalizations and not enough research to recommend this book to anyone. There is a reason why the best anthropology is done by outsiders looking in and not people looking at themselves.

Tags: Book Reviews by david
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Better than Freidman’s “The World is Flat” because it has more research and less left-leaning political solutions. Clyde Prestowitz’s “3 Billion New Capitalists” is a more complex read and of more value since it looks at both the causes of America’s decline/Asia’s rise and the numbers behind the trends. While Freidman regales us with anecdotes, Prestowitz tries to overwhelm with statistics.

The two general themes make up the case for the potential fall of the US from world dominance and the rise of Asia, and to a lesser extent the EU and Brazil in it’s place. While Prestowitz groups these issues together, I think that there are really two different issues:

One is the fall of America and the Dollar from the top spot in the world economic-political hierarchy and the rise of Asia, and the Euro, in it’s place. The decline in the quality of American education, the lack of government support/encouragement for both economically strategic industries and maths and sciences gets most of the blame. Conversely, the willingness of other countries to see specific types of education and industries as keys to national security has made the “free trade” playing field anything but level.

The second issue is the environmental degradation that is changing the balance of economic powers—global warming, water pollution, over use of natural gas, oil and other natural minerals and metals. While this is certainly tied to the industrial revolution and the consumer culture of capitalism (e.g. the US) it seems to me to be a second, but parallel issue rather than part of a larger international financial shift to the East. Further, while the consumption doctrine must be laid at the feet of the US, there is no evidence that a Communists Russia or China would have been any more environmentally friendly. Indeed, I would argue that the great workers’ paradises have been and are more of an environmental disaster than the US.

Despite the organization, I agree with the doom for the US scenario. Education outside of University level is atrocious and I don’t want my kids in anything resembling public schools in the US. Also, long term planning in the US also seems to equate to a two term president rather than a view of decades that is more common in Asia. Finally, the rate of personal savings (oxymoron?) in the US and the national debt must be brought under control immediately. Regardless of the rise or fall of the rest of the world, these three issues must be resolved or the US as we know it will end for ever.

I have three specific problems with the conclusions. Prestowitz spends 250 pages convincing us that the world as we, American’s, know it is coming to a speeding and disastrous end. Yet he glosses over the one statistic that makes the American Dream still viable. In his chapter on Indian growth he lauds the fact that India has something that neither China, Brazil, Russia nor the EU have—a young population and a relatively high birth rate. This is one of the saving graces for the slower-than-the-Chinese-on-the-world-scene Indians. Yet this same demographic, when identified for the US has little or no potential value at all and warrants only a mention in passing. Indeed, by 2025 only India and the US will have median population ages under 50! The US at 40 and India at 37. If this is a long term saving grace for India, why not for the US as well?

Problem number two is the complete hopelessness of his solutions. He offers a number of things that should happen to reverse the trends, not just for the US but for the rest of the world as well—but almost every one has the caveat: “this probably won’t happen, but it should.” Well, how about realistic solutions? If there is no way that the US or other countries has the political appetite to change, proposing such solutions is of little or no value.

Finally, my question to Mr. Prestowitz and all the other US doomsayers (not that I disagree with their conclusions) is: so what if we’re not number 1 anymore?! I’m not sure that China, India, Brazil and EU with more power, more money and more education relative to the US is a bad thing. Sure we probably couldn’t invade Iraq unilaterally again, but if the Dollar is too strong, and the US needs more export markets, and competition for markets is really a good thing (like we’ve been preaching for the last 50 years), why is the rise of these other powers wholly bad? I live in China now—a stronger, more educated China with more money and more responsibility to the world community would not just be a good thing, it would be fantastic!

Certainly the US needs to save more and get out of personal and collective debt. We must, as global citizens, address the environmental problems that do not recognize political boundaries. US education needs to improve. But 3 billion new capitalists are going to play a role in shaping the decisions and actions of more than just the US government in the next 25-50 years. Great book, weak ending.

Tags: Book Reviews by david
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Good grief. You’d think that if your history was 2000 year’s old, you were the fastest growing economy every in the history of the world and you were coming into your own as a world power you’d not be threatened by a cup of coffee and a green logo. Well, think again.

China has once again has displayed it’s national insecurities with the admission that it’s considering a request to remove a Starbucks from the Forbidden City. Apparently, the fact that Starbucks is inside the walls of the Forbidden City (akin to say, a Panda Express in the Smithsonian) is an “an insult to Chinese civilization.” I thought China was still “working to build a civilized society.”

Now, to be fair, not everyone in China agrees that a Starbucks in the Forbidden City is an insult. Indeed, Starbucks is so popular that they’ve had to file numerous trademark lawsuits in China—apparently no Chinese are offended by the color of money. But enough are offended at this cultural outrage that the proposed removal is being considered. Aren’t there bigger issues than a coffee shop that are threatening the cultural purity of the Chinese? Are some Chinese really so threatened by a latte that it has to be eliminated from the presence? If Chinese culture is so great, won’t “all Chinese people on both sides of the straight” overcome this insult by just naturally boycotting the café out of sheer national pride?

My theory is that the café is doing well—probably very well. And some official is bugged that tourists aren’t drinking the particular brand of tea from his hometown or cousin’s tea plantation.

Other theories claim that it’s really a bit more offensive than us American Capitalist Pigs may think. More akin to a McDonald’s in the Louver.

Either way, China needs to step beyond it’s past and into the future–insults, real or imagined, to dead emperors should be taken with a grain of salt. Or coffee, as the case may be.

Tags: Culture by david
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