Events

China Forum — Janet Carmosky On The Chinese Mindset

Learning Chinese

Janet Carmosky has been “doing China” since 1985 and she has lived in China for the bulk of the last twenty years, most of which time she was married to a Chinese businessperson. Her Chinese is incredible. She knows China.

To grossly summarize her talk, it went as follows:

  1. Americans think the Chinese lie and steal.
  2. China’s morality is not the same as ours. Ours is based on Judeo-Christian values. China’s is not.
  3. Key to dealing with China is to get into a network. Real guanxi.
  4. Chinese mindset is the following:
    • Tomorrow never comes. When it does, you can start all over anyway.
    • Never tell anyone what you are doing unless you know what will be done with that information.
    • Take the opportunity, even if that means breaking a contract.
    • Nobody operates independently. Survival depends on a network.
    • Do not trust anyone and respect only those in your network.
    • Teamwork and transparency are a drain on the system.

Ms. Carmosky also spoke a bit on the foreign companies that first went into China: Coca Cola, Eastman Kodak, AIG and Johnson & Johnson and how they managed to achieve what they have in China.

Though Ms. Carmosky clearly knows her stuff, I am not convinced her speech contributes towards doing business in China. Assuming everything she says to be true, how does that impact your business? As a China lawyer, I can say it mostly should not.

As Ronald Reagan used to say,”trust, but verify.” This advice generally makes sense everywhere, not just in China. No matter how much you trust the people with whom you are dealing, there will always be times when a contract is necessary. No matter what the tendencies of your Chinese employees may be to “lie and steal,” you must make clear that such actions by your employees (particularly if it comes to paying bribes and receiving kickbacks) simply will not be tolerated and will lead to immediate firing.

I also take issue with Ms. Carmosky calling for Westerners to get into a Chinese network as I think that is nearly impossible to achieve. I tend to believe Westerners who think they are in a Chinese network are — almost without exception — operating under a potentially dangerous illusion. Steve Dickinson, our law firm’s lead China lawyer, has been involved with China for nearly thirty years and his Chinese is so good that Chinese people in China often refuse to believe he is an American; they think he is from one of China’s more exotic provinces. Yet Steve will readily admit he is not in any networks and he will say he never will be. As he puts it: “How can I compete with people who are from the same hometown, have the same uncle, went to the same high school, the same college, have the same culture? I can’t.”

This is not to say that foreign companies doing business in China should not strive to achieve strong and long lasting relationships with those with whom they deal, because they most emphatically should. But at the same time, do not lose sight of the fact that you will always be an outsider.

What do you think?

17 responses to “China Forum — Janet Carmosky On The Chinese Mindset”

  1. I actually found the points that Mr. Carmosky made somewhat insulting, which may pose a problem if you are trying to do business.
    The most important thing that you need to know about Chinese is that Chinese are people and vast generalizations about groups people aren’t usually accurate. I have no doubt that a lot of Chinese people (as do Americans) lie, cheat, and steal and have short term thinking, but I think it is absurd to make that a generalization.
    Having said that there are sometimes a lot of advantages to *not* being part of a network. If you aren’t part of the local network you are considered more unbiased and untainted and this isn’t a small thing in some areas. Imperial China had a rule in which an official never served in his own home province, and curiously the Communist Party has the same sort of rule with provincial Party Secretaries and the People’s Liberation Army.
    Also, someone from another province or village can be as much a foreigner as someone from outside of China. This can be used to your advantage. The classic example of this is banking reform where Beijing and Western banks have formed a very powerful alliance against local networks.

  2. Also the line between a “Chinese” and “non-Chinese” network is very murky. For example, a lot of the strongest Chinese networks are school or workplace based, but this a lot of those networks have large numbers of non-Chinese or are mostly non-Chinese (such as people who went to Harvard or the people that worked at Goldman-Sachs).

  3. I understand the comment that Mr. Wang has made, but I feel compelled to clarify an apparent misunderstanding. I organized the China Forum in question and I attended Ms. Carmosky’s presentation. Ms. Carmosky did not offer the sweeping generalization that Mr. Wang finds insulting as her own personal view. Rather, she simply was summarizing what she believes a number of Westerners (inaccurately) believe about Chinese ethics. She went on to point out other generalizations that Westerners often make that only serve to undermine their success in the Chinese market.

  4. This is such a fantastic post that it can replace half the posts on this blog. OK, I’m exaggerating a bit, but still. 🙂 Thanks.

  5. Learning from others….
    I have been a funk for the past month about the lack of progress in our Vietnam business. Hence the lack of postings here. But the break to this funk might just lie in writing some posts about business, which

  6. Not sure I agree with Ms. Carmosky either. Understanding a culture is more than looking at how it is expressed by those who practice it. To truly understand a culture you have to go past the behavior and look at what forms that behavior. It is similar to describing genotypes by only studying phenotypes.
    For a better read into relationships and how they work I would recommend: “Gifts, Favors, and Banquets: The Art of Social Relationships in China”.
    On another note, I would not discount the cultural aspects of conducting business in China or in the United States for that matter. Once you get past the legal contracts the business models, forecasts and office policies, you have people actually conducting the work for you. The success of a company rides heavily on corporate culture and this cannot be forced by contract. I have watched too many companies fail or far more frustrating, never become as good as they could because of a corporate culture that did not encourage its people or worse discouraged its people.

  7. Thanks for the clarification. One of the things that I’ve learned reading the internet is that in ninety-five percent of the cases I see a statement that I consider totally outrageous, it’s probably because I’ve read it incorrectly.
    The topic of culture is interesting because in my experience, professional cultures and local business cultures have as much impact on people’s behavior than national/ethnic cultures.

  8. Everyone —
    I returned home late last night and wrote up a whole new post incorporating all of your comments. Then I pressed the wrong button and it was gone. Rather than start over, I went right to bed. I will be doing a new post on this today in which I discuss all of your comments. I see this discussion as too important/interesting to keep in the comments section.

  9. “1. Americans think the Chinese lie and steal.”
    I’m hoping she followed that up with a little clarification.
    The truth is that *people* lie and steal. Anywhere we go in the world, we encounter people without integrity who are driven by greed. The secret to success is figuring out who those people are and avoiding them.
    “…Westerners who actually believe they are in a Chinese network are…operating under a potentially dangerous illusion…”
    An illusion that some Chinese are only too happy to nurture. When someone calls you “lao pengyou or zhongguo tong,” proceed with caution.

  10. Whether to get into the Chinese networks or not, it’s a strategic decision any westerner has to make. There are pros and cons associated with either way. But of course you can also stay in between. I think Janet Carmosky is doing a great job with her approach, while the other approach seems to serve Steve Dickison well. Btw, Mandarin is not widely spoken in “exotic” provinces in China like Xinjiang.

  11. Is There A Chinese Mindset, And So What If There Is?
    Yesterday, I did a post on Janet Carmosky’s speech at the recently completed China Forum in Chicago. I just returned home from Chicago to a whole slew of thoughtful comments on that post, that are simply too good to leave

  12. My goal in life is to be of service, most particularly to create greater recognition of how complex and how interconnected all of us on this planet are. At this point in my career, after 20 years of working with American businesses in China, I now work mainly with Chinese organizations – government as well as private and publicly held – to help them function and communicate more effectively in the larger world. I embrace the values of transparency, accountability, adherence to commitment, openness, and rule of law. In fact I passionately advocate in every way that I see as effective, for these standards to take hold in Chinese organizations.
    The upshot of my speech was that if we want to be effective in China, we have to understand and respect where the Chinese are coming from. Rule of law, teamwork, and transparency have provided the conditions for much of our success as a nation- for much of the comfort and relative predictability of our lives. But these conditions are not inherently aligned with those that have prevailed for several millenia in China.
    I will try to set the record straight here as to what I said and what I meant in my speech on The Chinese Mindset. And I will refrain from questioning the credentials of anyone who took shots at mine.
    First of all, it is astonishing to me that the most of the kerfuffle revolves around one of the statements that Dan Harris wrote in his summary of my speech. Namely: “Americans think the Chinese lie and steal.” In more than 20 years of living and doing business in China I have heard countless American tourists, students, academics, businesspersons, expats, members of Congress and Cabinet level officials of several administrations express the sentiment that Chinese individuals and organizations have led them to believe an untruth in one form or another, or had their property taken away without consent. In each of these countless incidences over the years, have I been hearing or reading incorrectly? If not, then why I am the one accused of insulting the Chinese? All I have done is recap this sentiment as a starting point for what I hoped would be a reflection on why that point of view is unfair.
    Here is what I truly think: all people have a propensity to want something too much. That is, we put ourselves in a mode where without telling a lie or committing a theft, it seems difficult or impossible to get that thing we want. We are restrained from acting out by the fear of consequences, whether social, spiritual or legal. My point is that while China’s government is working with great sincerity and effort to implement rule of law, it takes time and we should not put ourselves in situations where our counterparts in China lack the incentive to implement a contract, or have strong incentive to breach it, then rely on the legal system to force it through. Meanwhile, all of us with something at stake in China, whether codified or not in a contract, should realize that there is no greater deterrent to destructive conduct than respect for the presumptive victim. In other words, people won’t mess with you if they respect you. My point is that any indulgence in contract-waving, table banging, or suit-filing is much less likely to earn you respect, than taking time to understand what pressures your Chinese counterpart is facing, what goals he has, what’s really possible, and who he depends upon to survive – and align your business goals with that whole situation. My point is that when you become a force in that network, one recognized as deserving of respect, than your counterparts will face social as well as legal consequence for any breach of contract.
    Gaining that position of respect within the network is not always a matter of speaking great Chinese – although it often helps I have seen business leaders who can barely say Ni hao attain that position. It comes from demonstrating that you are a realist rather than a moralist, a pragmatist rather than a dogmatist, someone able to digest and navigate conmplexity and fluidity while still getting things done, rather than someone who gets flustered or reacts when things aren’t as simple as we all hoped. Someone who people feel comfortable sharing information with, because you will know what to do with that information.
    As for Dan Harris’ summary statement, “Key to operating in China is to get into a network.” I need to clarify what I mean. What is really key is developing awareness of what you bring to the table, and respect for that asset, within your counterpart’s survival and influence network. If no one that the people you are dealing with has heard of you or your company, or if they *have* but think you are misguided, dispensable, or inferior, over any considerable period of time you will face difficulties motivating these people to work with you. If we are purely mechanistic – business is only business, and a deal is a deal – we may think it doesn’t matter what our partner’s network thinks of us. But, if we are to succeed in China, we’ll have a better chance if we know who in government, in the industry, and in the organizations stands to gain or lose from developments in our deal. If we are to have solid backing for our objectives, we need to sell through the whole network, not just the person who signs the contract.
    Joseph Wang points out rightly that being an outsider puts you at an advantage, because you can operate without being coerced into local systems of patronage. Being a respected part of a network where your counterparts operate is not the same thing as being an insider.
    I’m not saying that it’s critical to try to be an insider in a culture not our own. That’s ridiculous. I’m saying, best practice is to get yourself respected and here’s how: Bring a valued asset to the table, make sure that the people who motivate your counterparts know and respect the value of that asset, institutionalize your company in the “network” by making clear that you are not going away, prove to multiple points within that network that you’re a realistic and communicative leader who can be trusted, and facilitate the building out of the relationship between your two organizations at multiple levels.
    To everyone who questions my credibility or methods, all I can say is that my experience is valid, and so is yours. If you think I’m **the source*** of an insulting generalization, when what I did was set out that generalization as proof of an undesirable condition of misunderstanding, then grind your axe all you want. It’s a blog.
    My objectives are also probably different from most of you who posted. Although I spent almost 20 years working in senior management China for American businesses, I find it more interesting now to work with Chinese organizations, who are discovering the need to understand and respect “where Americans are coming from.”
    In conclusion, if you have a different formula in China and it’s working, then stick with it. Best regards to all,
    Janet Carmosky

  13. Janet —
    Thanks for checking in.
    I agree with you that there is a very wide perception in the American business community (and I believe this to be the case in among EU, Japanese, and Korean as well) that the “Chinese lie and steal.” We can argue all we like about how unfair that perception is, but that is the perception.

  14. The Chinese Mindset — Judge For Yourself
    I have written a few posts (here, here, and here) on Janet Carmosky’s speech on the "Chinese Mindset" at the recently completed China Forum.  These posts generated a slew of comments and interest in the blogosphere: The Useless  Tre…

  15. I grew up in China and I have to say Janet Carmosky’s comment about the Chinese is accurate except the Chinese actually do not lie out-rightly. If you do that, they’ll quick use that against you. The game is being clever with words. Of course contracts are effective again that, that’s why the rule of law and justice is slow to be established in China. Slow as in since Emperor Qin first united China 2000 years ago.
    The approach advocated by Janet Carmosky is trying to beat the Chinese by their own game. It that wise for humanity? Real victory is to change your opponents, not just to one up them. The real victim in cut throat politics is innovation and opportunity for the next generation. Who can innovate under the pressure of survival? Who can be kind to the young when whey see the young as prey?
    The Chinese government has been maintaining such a system for 2000 years and now westerners are joining the game. I hope westerners will not sacrifice principles for profits. But what did westerners come to China for in the first place?
     

Leave a Reply

Your email address will not be published. Required fields are marked *