Yup, the Great Firewall really does stop just about everything. I posted yesterday about a couple of books that are not available in China and visits to our website dropped by almost 90%!!
So, now it’s back the sanitary and safe.
Check out this report about a land owner in Chongqing. She is already quoting the newly past property laws (past just over a week ago) in her defense of her home. Can you believe that this ever even got this far in China? I can’t—I’d love to know the full story behind her ability to outlast development (in a SEZ no less). People usually are “disappeared” long before it ever gets to this point.
What does this mean for you, the foreign businessman in China? It means that yesterday is already gone and what you used to do no longer matters today. Keep up with your industry at home and the news in China, use well connected and knowledgeable partners in China and play by the rules at all time—because when they change if your ducks are not lined up and quacking in unison you’ll get caught with your pants down then you’re going to be in big trouble.
More “learning experiences” today as we negotiate with factories. So that means there’s more to share on working with factories.
1. Way too much trust from West to East. This comes back to me almost daily. I assume that everyone starts off on equal ground and that I can take anyone at their word until they prove me otherwise. In the West there certainly are crooks and cheats, but there is also a well functioning and easily accessible legal system to back you up if trust is violated. Business is based on a foundation of trust first, and a lawyer to back you up, if necessary.
2. No trust at all from East to anywhere. There is no historical or even recent precedent for trusting strangers in China. In negotiations here you are considered both a potential source for (big) profits and a stranger. That means factories start from the position of: we don’t know you and don’t trust you until you prove to me otherwise. This isn’t morally vacant as many critics like to complain; rather it’s necessary for survival in a system that does NOT have an effective legal system. If you have no (or are unfamiliar with options for) official/legal recourse your only options are to take care of yourself first. It’s not only smart, it’s absolutely mandatory for success. That’s the system here and you’re not going to change it.
3. Leverage is the key to any negotiations no matter where you are. If you have no chips to play you are out of the game. You’ve got to keep something from the factory to make sure that you have some control when (not if) problems arise. For large orders an LC is a great option. But for orders smaller than $100k LC’s are not typically used. So be sure that you have a contract that gives you clear options, outs and specifies penalties in detail.
4. Face is totally misunderstood, often to the Westerner’s demise. I’m constantly amazed at how Westerners are willing to be totally rude to Chinese—is it the language barrier that makes it OK? The dirty streets and bad toilets that make someone assume they are better than the locals? I’m not sure what it is, but it’s wrong. You need to give respect to them, if for no other reason than so they have no reason to screw you. As a Westerner you probably won’t appreciate (or even recognize) when face is given to you. You’ve probably thought more than once “I just wish they’d tell me directly when there is a problem.” (I think this daily.) I don’t think that Westerners will ever understand the all complexities of face. They key is be polite to others. Yes, just like mom taught you. Yes, even if they screw up. You wouldn’t stomp out of a supplier’s office, call him names and scream obscenities at factory workers in the US so don’t do it here either. One thing you can understand is that if you threaten or embarrass a Chinese factory owner you’ll not move negotiations forward. You can argue and even get angry. Everyone does at some point. But if you embarrass someone you’ll also never now the depth of the consequences. So be polite or script the arguments so there is always options/way out and so that fights are not personal. The goal is to fix your problem and allow them to maintain their dignity.
5. History is very important. Personal relationship history between you and your supplier will be the deciding factor if you hit a roadblock. The longer you’ve been working with someone the more “credit” you have with them—especially if you’ve always paid on time and never tried anything cheeky. Honestly is the best policy and your good standing in the past will go a long way to resolving current concerns.
6. The “higher ground’ means nothing in China. You will not successfully appeal to anyone’s (Western style) moral virtue or get product by trying to pull on heart strings or detail your current emergency. This is business, same as back home—money talks. You’re not going to get a supplier to “help you out just to be nice” in the West so don’t think that you can get it here either.
7. Verification is the key to success. This means everything, not just finished product!! This includes raw materials, money transfers, and specific production processes. If you can’t personally certify that it happened, it probably didn’t—it’s better to be safe than sorry, so check everything. The corollary to this is that you will need to allow a degree of transparency into your procedures too.
8. Scarcity vs. abundance—you need to have a totally different frame of mind to understand China. Historically Chinese have never had enough—not enough money, freedom, food, health care, good chocolate cake, legal recourse, etc. But in the West we all grew up with too much of all of these things. These different situations change dramatically how our different cultures think. You have to understand that your supplier may have built his factory from nothing in the last 30 years. Your supplier can probably tell you what it feels like to be hungry—really, honestly hungry. Your supplier probably has parents or other relatives that have died or been seriously injured because of “political problems.” This is not the land of plenty (except for plenty of people). This is probably the angle that your supplier will negotiate from when there are problems.
9. There is always another problem. Find your suppliers real problem and you will resolve many of your own issues. No Ancient Chinese Secret here—this is Covey’s 5th habit—Seek first to understand then to be understood. If you are willing to take the time to discover the real issues you will save time (and emotional energy) in the long run.
As I said before in my review of Peter Hessler’s other book, River Town, “Peter gets China.” He understands not only the language but the people. This book is his second portal into the world of his (Chinese) life and Chinese friends. Filled with personal stories and personal events that are really not detailed in any other books on China, Oracle Bones is an engaging ethnographic odyssey into personal lives and real stories.
As with River Town, this is not a business book. You won’t learn anything new about politics, business, law, or the working environments in China. But you will gain a greater appreciation for where most, if not all, of your Chinese employees are coming from.
While I like the personal perspective of Peter as a real person with real friends in China, I think that, overall, Oracle Bones is not as good as River Town. Some of the stories are extended for far too long and many are not concluded; this left me with the expectation of another book in a few years or simply wondering why he (and I) committed so much time to an unfinished manuscript. Granted, many of the lives he writes about are not yet over, but some of the unfinished stories made me doubt that there was ever a point to them beyond filling up a second book.
Don’t get me wrong. The insights into the personal conflict of adjusting to a rapidly and constantly changing China are certainly intriguing. The book is written well, if not too long. And the subjects almost become your own personal friends as you read. But when it’s all said and done, there really isn’t much substance that you can take away other than, “well, I’m finished. That was a nice distraction. Now what?”
If you’re a Sinophile, you’ll want read it. But if you’re just coming over on business, skip it.
If you’ve ever wondered where someone got their numbers about China then this book is for you. It’s just what it claims to be—a stat sheet of both good and bad that is Modern China. The book is divided into broad topics such as Domestic Economy, Chin in the World Economy, Foreign and Security Policy, and Domestic Transformation. The detail and bibliography are some of the most researched that I’ve see in my readings on China—a great resource for making broad political decisions or updating your research with current numbers.
As with all numbers, there is an agenda. The point of all these statistics is to improve US-Chinese relations based on more information and consequently more dialogs. The book was written for The Institute for International Economics, a part of The Center for Strategic ad International Studies. Their self proclaimed agenda/priority is: “China, globalization and the backlash against it, outsourcing, reform of the international financial architecture, and new trade negotiations at the multilateral, regional, and bilateral levels.” They also bill themselves as “the most influential think tank on the planet.”
One of the major conclusions is that “the interests of the United States and it’s global partners would be best service by policies that seek to engage rather than isolate the country, in order to moderate the potential devastating economic and security outcomes” of the continued rise of China. While this sounds nice, not everyone agrees. For a newly released view on why to not engage China you could read James Mann’s “The China Fantasy,” or the older but very good “The Coming Collapse of China” by Gordon Chang(review coming soon).
All in all a quick but detailed read, a great library resource, and definitely worth the time and money.