A new Chinese adventure.
For whatever reason(s), we just went back to my wife’s family’s village for the first time this past week. We drove from SZ to Jingdezhen in Jiangxi, about a 12 hour trip each way. Along the way up and back I gained a new appreciation for driving in China. We drove up the off ramps since the truckers completely blocked the on ramp of every service station. We waited in gas lines (truckers waited for hours!), we saw fights in gas lines (and almost got in our ourselves). We saw at least 6 MAJOR accidents on the way and a couple of dead (or at least really bloody) bodies. The fact that freight ever even gets to port in this country is a miracle!
My wife had always told me her village was small, but I didn’t realize that “small” meant it was less than 100 people and no roads. It was the only village for about 10-15km’s in any direction; surround by mountains and tea fields. There was running water, electricity and satellite TV though.
They killed the fatted pig (literally), we passed out tins of cookies, smokes, drinks and red envelopes and took tons (500+) pictures over the two days. We hiked through the freshly planted rice paddies to the tombs of ancestors. We drove from the family village to the next valley where the village had a street and a restaurant. We fed 45 relatives from 4 generations a huge lunch. The little cousins got into a fight over a toy in the (open) kitchen of the neighbor next door to the restaurant and most of the other people on the street stood outside the door and watched the meal.
Over the course of two days my brother in law had to call a friend in the municipal government to get the police to let him go for driving our car (foreign plates, local driver), we had friends call the mayor of the largest area town and request permission for me and another brother in law (HK citizen) to go into some Chinese-only national park-like tourist areas. We had family call officials to get us lower prices for museums and other attractions and had a huge dinner courtesy of a local judge (friend of the family). Quite a weekend.
Now let me put that this little family adventure into context for you.
My wife not only built part of her village home with her parents when she was ten years old, but she has since lived in Shenzhen and worked for multiple MNC’s for almost 20 years now. She is not alone in this life changing move from village to high-rise living. Most middle class urban immigrants come from similar backgrounds.
The point is this: your average urban Chinese person older than 25 has probably had a similar life experience. These “average” urban Chinese are the middle and upper level managers of most to all of the companies that you’ll be working with in China. This generation has a deeply ingrained set of beliefs and ties. Here’s some of the concepts held by the people we met that were either told to me directly or presented themselves clearly in the course of the week’s events.
1. No one will take care of them but themselves. Working 24/7 for twenty years is not just justifiable but necessary.
2. Every opportunity is a one time shot that needs to be taken advantage of fully before it gets away (or is taken by someone else). This precludes creation of new long term guanxi (with foreign clients) which is supposed to be the hallmark of Chinese business culture.
3. Strong, binding relationships with family and a few close friends are the only lasting “valuables” that you can count on maintaining throughout your life.
4. Uncategorically, property and cash are the most important things you can have for your own future and for your children. EVERYTHING in business is done within this mental framework of stockpiling these assets for the future.
5. The economy was better a few years ago than it is today—more evidence in support of banking on items 1, 2 and 3.
6. Despite all the recent nationalist rhetoric, a “faith,” in or commitment to the current government is not nearly as strong as the desire to “just make life better” economically—an almost palpable practical-ism that precludes ideology in China.
7. The further you get out of the big cities the more personal connections matter in getting things done.
Do these beliefs affect negotiations and business? The real question should be how do they not. They affect everything.
First, when negotiating in China, the prevailing concept is probably “scarcity” rather than “abundance.” This means that when you negotiate, your Chinese partner is almost certainly NOT looking for win win. Don’t misread that as “your Chinese partner is looking to have you lose,” he’s just not equally concerned with your profit margin as he is his. Even in this age of factories being busier than they can handle, most don’t believe that this will continue forever—and the slowdown this last year confirms that. (The move by many factories to inland provinces and other SEA countries further confirms it.)
So to make the deal more palatable, it needs to be structured to benefit them in the short term and you later on, if at all possible. You can see this style of negotiation in lots of deals in Asia—the Olympics and North Korea being the biggest examples I can think of.
Secondly, you have to realize that if there are problems (and my experience says there ALWAYS will be) the “customer first” theory will NOT be practiced. You are not going to get anything banking on it’s “the right thing to do” or because it’s “good in the long run.” Again, don’t misread this as “you’ll get screwed by your supplier” as many people claim. It’s more a matter of immediate self-preservation in a very insecure system—and by nature, you look after yourself as your supplier looks after himself.
Third, never pay bribes, never take kickbacks and fire anyone who works for you that does. Draw a very clear line in the sand and make firings for this offense as public as possible. At the same time, never be afraid to pay more than you agreed to just to get what you want. The difference is the legality of the payments. Cash is king and if you have the cash you can run the show. For example, incentives (publicly and legally) paid to key engineers, managers and other individuals can make a big difference in the level of attention to detail that you’ll experience. Buying drinks for line workers in a factory without AC is another way to win point and get better results too.
Fourth, be very very careful about what you say about politics. Just because some Chinese (very rarely) criticize their own country in public doesn’t mean you can—even in personal, private company. Misplaced comments spoken in what you think is agreeable company can reinforce taught stereotypes and make partners less willing to cooperate and more intransigent on sensitive issues or requests for help. In the current environment, it’s just not smart to talk about politics or the 0lympics (unless you’re positively thrilled about each). The rule I was given by my first Chinese employer, a university in Chongqing, was: say nothing about Religion, T!bet, T!ananmen or Ta!wan. Some things have certainly changed, but it’s always better to be safe than sorry.
On a related note—it never hurts to know the right people. This isn’t an endorsement for pulling personal strings to get access to opportunities that otherwise would not be available to you. But it is an absolute acquiescence to the reality of the power of well placed political individuals in a relatively weak legal system.
Finally, let me say that I’m not trying to insinuate that Chinese are all about money and themselves. But I am trying to convey the notion that background experiences color the perceptions and positions of the Chinese partners that you work with. Understanding and emphasizing with that background will always be an asset in negotiation and working with your Chinese partners.