China Business

Win-Win Negotiating in China

China company negotiating

Every time I go to China, I come back planning to write an excoriating post on the place. I mean, let’s face it, it is one of the (if not the) most exasperating places on earth. I found it even more exasperating this last time because before hitting China, I spent two and a half weeks in Vietnam (mostly Ho Chi Minh and Hanoi) and once again was shocked at how a country like Vietnam (which is considerably poorer than the places I tend to go in China) can, at least on most levels, appear to have its act so much more together than China.

Let’s take service for example. I never cease to be amazed at the downright horrible service in China, and that includes at so-called five star hotels. Some examples from this last trip:

  • At breakfast one morning, I was waiting as an employee was loading massive amounts of French toast. I wondered to myself whether he had seen me and knew I was waiting or whether he simply did not know I was there. He then looked right at me and continued loading the French toast, forcing me — the paying guest — to continue to wait. This at a five star hotel in Shanghai.
  • Toward the end of my stay in Shanghai, I got sick and I needed to extend my stay two times. Both times I called down to the front desk in the morning and was told my stay would be extended at the same rate and both times at around 4:30 that same day I would receive a phone call pretty much giving me three minutes to get the hell out of the hotel or the police will be called. I should further note that for at least five years I have been the highest level frequent stay member at this particular Western hotel chain.
  • At a Beijing five star hotel, two days in a row for breakfast I was seated where someone else had already been seated. One of those days, I was re-seated, got my food, then got up for maybe 30 seconds to get my drink and by the time I returned all my food was gone. I probably could have gotten my food faster by going to the grocery store.
  • Then there are the cab drivers who have never made any effort whatsoever to learn anything about their city and who get mad at you when you are unable to give them street by street directions to where it is you are seeking to go (another, as far as I know, peculiarly China phenomenon).
  • Oh and the peddlers, who I am convinced are more aggressive and more irritating in China than anywhere else in the world. Most require either screaming or pushing to get them to go away and even those tactics are not always effective. In fact, this last trip, co-blogger Steve forced someone who had been on our tail into a light pole, at which point he twisted around and screamed down Nanjing Lu that he could get us “young girls.”

Now before anyone accuses me of nit-picking or of being a whiner, I will note that I recognize that none of the above really amount to much, but they are just one of many examples of the sort of day to day things that can grind people down in China and that really do not tend to happen nearly as much outside China (including in other developing countries). As an international lawyer friend of mine who goes to India likes to point out, “it is no accident that four of the top twenty-five hotels in the world are in India and not a single one is in China.

And none of this even gets to the heart of what makes business in China so tough. I used to claim China was not so bad when it comes to product and safety defects and that we just hear about China so much because China makes such a large share of our products. I said that until I met someone really high up in the United States Consumer Protection Agency who told me that every single year China does far worse than any other country on a percentage basis.  As he put it, “there is something very different about China.” I know someone who teaches at one of the better universities in China and he says he has given tests where every single one of his students cheat. I am guessing China has a big lead (again, on a percentage basis) in terms of poisoned food as well. I could go on and on, but what would be the point?

But why did I not write the blog post the last few times I planned to do so? Because after I get back to the United States I realize that people are people and I was not being fair to China by acting as though just about everyone there is incorrigible. In other words, common sense prevailed.

But I have written this now because I just saw something somewhat similar in the strangest of places. I was going through my old emails and I came across new issue of China Sourcer Magazine.

Then, I did something I virtually never do, which is read the Letter from the Editor. I read it because the Editor is my friend and fellow blogger, David Dayton, over at the Silk Road International blog.

The letter starts out with Dayton describing how he was almost trampled by a group of Chinese tourists in Hong Kong, which then, in a not all that roundabout way, caused him to ruminate about Chinese negotiating tactics and how one’s own attitude can shape how negotiations go:

And it got me thinking: probably one of the funniest things that I have ever read about working in China was a quote from some expat teachers living in Beijing who said: “To most Chinese, win-win is a panda bear in Sichuan.”

I know that in my years of working in China, more than once I’ve started negotiations with that attitude in mind–and you know what? It’s a self-fulfilling prophecy. When I think that it’s me against the world, that’s exactly how it all turns out. I’m sure that much of the not-getting-to-win-win in these situations was my fault. I went in spoiling for a fight, and no matter what was said, that’s just what I got.

While negative attitudes are surely unintentional, this probably happens a lot more than we’d like to admit. With the bad economic situation lingering on there are additional pressures and hard feelings. Combine the latter with the uncertainty and trust issues on both sides of the table and you have situations that make polite and effective negotiations almost impossible. Even when we go into things with a good attitude and desire to make thinks work out for everyone, there are so many other variables that can affect what we do; and what’s done to us.

The working environment in China today is tough. There are a lot of buyers and suppliers that are being “weeded out” of the mix. The low-hanging fruit is gone. So people on both sides of the negotiations are sharpening their wits and their pencils to make sure that they make it through to the other side (where the grass is greener).

That day in the airport I realized, probably for the thousandth time, that win-win is pretty much up to me. That even though foreigners are no longer trusted and treated like ten years ago, and while currency issues make even the simplest of transactions more difficult, if I want to get to win-win, I still can. It’s my choice.

I am not going to say your attitude towards China is everything, but I will say it matters. Among my law firm’s clients, there is definitely a correlation between those who actually like China and do well there on the one hand and those who hate it and fail on the other hand.

Whether it be something as truly trivial as having to wait a minute for French toast (of course I know that is trivial) or getting cheated on a business deal, China is not an easy place in which to conduct business. But in the end, I agree with Dayton. A lot of it depends on what you put into it.

I apologize for being so trite today, but I just could not help it.

What do you think?

18 responses to “Win-Win Negotiating in China”

  1. I was twittered here by a friend from Taiwan.
    Thanks for sharing your thoughts. I must say it definitely hit a nerve, and I’ll try to explain why here. I’d love to have your thoughts after reading my point-of-view.
    “When in rome…”
    Why not “when in china” ?
    As a very small minority of foreigners among a very large majority of chinese, wouldn’t it be logical that their way of life be more of the norm, and not ours?
    Of course, “when in china” would would mean that you would spit in public, you would not often say “thank you” or give anyone much “personal attention” like we’re used to in the West.
    Of course, and more importantly, it would also mean that you would have very little opportunities to succeed in any personal goals in life, and that you would most likely work 6 days a week, 10 hours a day and with little to no financial gain. This what they call 吃苦, or “eat bitter”. It ain’t easy to be chinese.
    It also means, as Paulo Coelho says, you would be part of a “well run company masquerading as a country” that is ruining its own land, and of course all lands are connected so, for the world’s consumption “needs”, they’re destroying the natural environment.
    I wouldn’t have been that surprised and would have even supported a negative reaction to any of these points. China is certainly not wonderland.
    However your issues were twofold, service and peddlers:
    I’ll give it to you on the service. And yet, I’d like to provide another perspective before completely conceding. 🙂
    Having lived in china for three years, I’ve met people who are truly wonderful and caring and for whom “service” at a restaurant or a hotel doesn’t have to “be powdered” and no one has to SERVE you like a servant… but simply fulfill their role which is to bring you food. No smile. No tip. I’m just a person working and you’re just a person eating. Why all the extra fluff? or as the chinese say 拍马屁, “pat your horse’s ass” (flattery).
    Now, because the “client isn’t always right”, all that extra fluff is gone, and accordingly their attention is turned down. From time to time issues like what you mentioned where the reception called you twice in the afternoon though you’d told someone that morning that you wouldn’t be leaving. Knowing that many people in the hotel industry work 12 hours shifts, some every day of the week… I personally give them a bit more leeway.
    As far as peddlers go, from my experience, China is the tamest country I’ve ever ever seen. Most of the time they’ll write characters on the sidewalk and kneel down with their head down hoping that you’ll help. For the rough peddler experience I would recommend India, or Africa, or Mexico or even some European countries.
    I’m surprised that you made a contrast between china and vietnam. Of the 30 some countries I’ve visited Vietnam would be probably 2nd for the more aggressive people I’ve met.
    Chinese act like you’re just another person in the crowd and don’t pay you any attention (unless you’re backwoods and then their jaws drop when seeing a foreigner). In contrast, in only 10 days a few vietnamese overtly aggressed me, would not serve me in a restaurant, or were simply unpleasant.
    That being said, these are ALL generalizations, and really personal experiences which reflect the observer and the observed.
    Speaking manadarin has helped me to break down barriers that otherwise could make my experience less pleasant in China. To be honest, I’ve come back for the third time this year and every time I’m here I get such a high because people are so wonderful towards me. Maybe it’s that “win-win” perspective you were talking about.
    With all this in mind, I was saddened to see you write “let’s face it, it is one of the (if not the) most exacerbating places on earth”.
    I would just have to rely on a chinese proverb which says:
    To each his own or “cabbage and radishes. each has its own lover”
    Sorry your experience wasn’t better. Maybe I can suggest a better hotel for you if you’re in Beijing or Shanghai.
    Best luck next time. And if you ever need an interpreter who blends in well, don’t hesitate to let me know. 🙂
    Cheers, brad

  2. “I mean, let’s face it, it is one of the (if not the) most exacerbating places on earth. I found it even more exacerbating….”
    I believe you mean “exasperating”.
    I don’t get “win-win is a panda bear in Sichuan”.

  3. Several issue at stake here, would take a long time to go into all of it, and I can just see the flames coming already of those who don’t agree. But anyways, some points IMHO:
    – Agree with Dan, service in China usually , but also agree with Brad that it is not uniformly .
    – There are some places I frequent that are just marvelous, at least compared to my expectations. For example, I do expect not to get the runs after I dine (check, fingers crossed), but say Intercontinental-Sydney type of service just creeps me out. Instead, I enjoy bouncing some of the waitresses’ snootiness right back at them, and I also appreciate them playing with my kids while I eat, and them not minding that my youngest occasionally on their floor. Saves me a fortune in diapers, saves my kid diaper-rash, and allows their cleaner to remain gainfully employed sweeping up the , jobs for the waitresses and cook(s), profit for the owner, and good food in my tummy. That sounds like a win-win situation if ever I heard one, but again, that does depend on your perspective. Some people seem to object to . Go figure….
    – I’m alluding that there are some cultural differences at play here. Dan expects to get what he pays for. Duh!
    – Trouble is, what Dan thinks he pays for is different from what the service providers think they’re getting paid for, or –quite likely– they really don’t give a , since they’ve already been paid. That’s definitely a China thing too, but not my point.
    – When Dan pays $200 to stay in a five star hotel, he not unreasonably expects five star service.
    – When Dan pays a cabby to drive him around town, he not unreasonably expects not to have to do the cabby’s job or the cabby’s GPS’ job.
    – The trouble is, Dan is wrong, especially where the five star hotel is concerned. In China, one does not pay $200 for a five star hotel with five star service. The sole purpose of paying $200 is to be (seen to be) able to pay $200 to stay at a five star hotel. Lodging, food, service, etc are completely inconsequential. You could be put up in the dumpster behind the Sheraton for all anyone cares, as long as it in fact is the Sheraton’s dumpster, and it costs $200, and you can still enter and exit through the front door which the snooty belhop does not hold open for you.
    – Same for the cab. The guy drives the santana not to get Dan from A to B, and does not see the value in knowing where B is, so why bother. The purpose is to get Dan’s cash transferred into his pocket. Not knowing where B is is an advantage, because driving back and forth trying to find the way from A to B legitimately drives up the price. This is already much better in most places like Shanghai, compared to say Beijing or Shipu or wherever, where they do know where B is, but purposefully drive you there via C, D, E, back to C, then F, C again, then finally to B, and of course stiff you with a fake fapiao, fake change, or ‘broken’ meter.
    – I don’t want to pay $200 for the privilege of (being seen to be) paying $200, so I don’t. I actually prefer to stay at Jinjang for $25, because I get exactly what I (want to) pay for, which is a consistently and widely available bed and clean sheets, not getting ripped-off, and leave me alone thankyouverymuch. Even the surprised look on their faces (Loawei at Jinjiang? Speaks Chinese? What’s next?) is a bonus I am very glad to (not) pay for.
    – Brad is right that there’s the “when in Rome” factor and that does play a big role in how you can or cannot cope with the (figurative and sometimes real) piles of that are so common in China. On the other hand, it would be much nicer if we could do away with the whole discussion on the basis of “when on earth…” and be treated more or less the same everywhere. Dream on, yeah, I know…
    – Having said that, I am rather proud having learned to spit in the street, although I am ashamed to admit that the preceding loud throaty snort just isn’t something I will ever master. But my kid in various public places, that has to count for something. I slurp my soup when I remember to, and it has taken years to un-learn being a courteous and safe driver, but I got there in the end. And I can tell you, when in Rome, there is no better way of coping with the stress of driving amongst complete and utter 250, than to skillfully box them in behind a smelly truck, whilst looking like you’re not doing it on purpose, especially when they drive obviously gongbao-financed black sedans and flash their lights like crazy because they (think they) are more important than you. Same thing for cutting in front, not saying thankyou, slamming the door in somebody’s face and so forth.
    – When in Rome. Give and you shall receive. When people treat me “well”, with cultural allowances for what may be considered “well”, I threat them “well” in return. When not, then not.
    – And yes, it is China, with all its delights, and with all its , so sometimes, you just have to write a snorty post on a blog, and then you move on.
    – And thanks for sharing Dan (and Brad), because it is always good to hear that I’m (we’re) not alone copping 🙂

  4. I am sympathetic w your frustrations. But you must be spectacularly unlucky. I stay at the same kinds of places in China, frequently, and rarely have the problems you have. If you want lousy service in a 5 start hotel, you can find it as bad in NYC. We need get more hardened as travelers, and realistic. If you can’t stand your trips to China–obviously on someone else’s nickel–you ought to stop going there. And they probably don’t need your business, or you.

  5. Freudian slip. Don’t know why I thought “beggars” when it read peddlers!
    I’m actually glad you brought it up because this is a result of tourism, and the high contrast of wealth between the tourists and the locals.
    Some people on the street can be a bit aggressive, be it to show you fake watches, art, handbags or to propose lewd services.
    Then, in many of the big tourists cities like Beijing and Shanghai there are “shopping centers” or “fake markets” for foreigners where the salespeople do tend to be aggressive and sometimes rude. So I hear you on this point now as well.
    I would just like to add that it’s a different picture from the inside. Two weeks ago I went to one of these areas where I’ve previously gone to buy presents for friends and family back home. I had met shop owners there before and they remembered me and were very warm. I spent the day chatting away, and it was a lot of fun. Watching tourists pass by with a haughtiness that made me unsettled to be “part of their group ie tourists”, I could see why the tourist-salesperson relationship can quickly become jaded and agressive.
    Cheers, brad

  6. I hear ya Mike. It is in the cabbies interest to get lost, and as far as waiters or hotel folk “they really don’t give a , since they’ve already been paid”. I do to enjoy the fact that they treat you like anyone else, and that they have their thing going on, and that if, in a chinese way, you yell across the room for them to bring a spoon, they don’t take it personally either. 🙂 Though I yell as nice as I can… otherwise, it just doesn’t get done. Haha.
    This are all benefits of knowing the way in china, which mean having lived there long enough to be surprised, and soon enough… no longer surprised.
    @ Mike Congrats on going “native” and spitting too. It’s an investment in becoming one of the mass. 🙂 The first time a grandma hacked literally a foot away from me, I said to myself “where have I landed?”
    To be honest, part of the fun of travelling for me is this disconnect with what I expect.
    I want difference. I want rudeness. I want to be taken out of my “boxed-in” way of thinking.
    Glad everyone can share their thoughts intelligently and without taking it personally, just like chinese waiters at whom you can yell and they know it’s not them… just that you need a spoon.

  7. In the past I have always stayed at scrappy 2 star hotels( 蓟门饭店, anyone?) and found that I got better service if I chatted people up. Generally speaking, most Chinese people are used to hustling and haggling to get what they want and therefore most people in the service industry wait to be addressed before providing service. Even at a 5-start hotel I’m not surprised that the French toast guy ignored you. That’s just the way it is. Next time, speak up! Building “mini guanxi” by being friendly with service people is the way to get better service.
    Yeah, the problem with Beijing cabbies is they’re all from the suburbs or from another province altogether!

  8. Dan:
    (I apologize in advance for the spelling errors. What can I say, other than I am a product of NC public schools)
    I’ve been living in rural China for the last 9 months, working for an American company on a large power plant project. I got the “China Bug” while I was in business school, studying for my MBA. I have experienced culture shock, but have so far survived. There is something different about China, and I am at a loss to put it into words. The best I have been able top come up with is the lack of a professional artisan/craftsman middle class. Growing up, my father was first a carpenter/homebuilder, and then worked as a construction super-intendant. All of my father’s friends were highly skilled tradesman, such as electricians, plumbers, carpenters, welders, etc…As I grew older, I would make friends who were also middle-class, whose parents, although generally only highschool graduates, took great pride in becoming experts at whatever they did to make a living. As I have dealt with construction workers and contractors in China, I have realized that many of these people were rural farmers only five years ago. There is a huge experience gap in China with what I am used to in the West. Here in China, anyone can hang out their shingle, call themselves whatever profession they want, show up with no tools, no knowledge to do a job, experiment around, and then demand payment.
    When this is combined with a different view of contractual agreements (in China, I have found that contracts are not iron-clad, but merely starting ppoints, to be ammended as circumstances change), and the Westerner is in for a rocky, frustrating ride.
    What is most frustrating, personally, is that now that I have experienced working in China, with all of its frustrating twists and turns, I cannot drop it. I get sucked into the culture and atmosphere more with each passing day; I cannot imagine gow hard it will be to repatriate.
    Xin Nian Kai Le!

  9. Mike…….spot one!!!!
    I think all of you are just talking about the symptoms here and not the disease.
    Most of us here come from meritocracies, where you are no body until you EARN the respect of others. To earn respect of others, you actually have to do something that grants you that merit. Our societies value systems are based on giving respect to people who have EARNED that respect. Earning that respects means showing care for others, doing things morally and ethically, acting in a fair minded way when a dispute arises. Starting with humility, and then moving up from there.
    When you go to a dinner party and you know only one or no one there, you do not demand respect when you walk into the door. You must work the room, assume humility, and earn the respect of the others in the room based on your behavior, manners and social skills in that room.
    I have lived in Asia for 18 years. 7 of that in Beijing (currently), and 6 more in Hong Kong. The biggest underlying cause of the differences we all talk about is the idea of meritocracy. China is not a meritocracy. Respect is demanded up front not based on merit, but based on other factors, such as age, region you come from, family, school you went to, car you drive, title on you business card, etc etc. Most of these are based on confusion relationship circles.
    Look at China on the world stage now. Look at how it behaves. It thinks it should demand world respect because it is old and big. It loathes to get involved in international affairs, but believes everyone else should just listen to it, because it is China and that alone should make people change. China lacks respect in the world, because it has not earned it (to be a top superpower, certainly its respect level has increased, but on the inside of China, many people believe it should now have super power respect granted to it, when simply, it has not earned that super power status).
    This can also be down to the hotel staff, waitress or taxi driver. You need to first respect me, and then I will give you what you want (especially since you are a foreigner and you are on the must distant rings of Confucians relationships circles).
    Win-Win doesn’t exist in China, and if it does, it is very rare, and nearly extinct (like the panda). Thus, win-win is like a panda in Sichuan, extremely rare and on the verge of extinction. Even if you think you have just made a win-win deal, your Chinese counterpart has conceded the battle of the day (or is lulling you into a false state of belief), but are scheming on how they can turn the minor defeat into a win-lose situation to their advantage later on down the road (by shipping you substandard product, cheating you out of profits, stealing your technology and then dissolving the JV). Dont worry, they are always looking for the angle to get and advantage over you, and their ultimate goal is never win-win.
    So at the end of the day, if you understand this about ther society and culture, you will be able to better understand how to succeed here. Dont go for win-win…….play chess and always be scheming for ultimate victory. Only when you do this, you will earn their respect.

  10. I believe the sentence, “To most Chinese, win-win is a panda bear in Sichuan”, is irony that reflects the idea that in a Chinese negotiation, that the win-win concept is unknown, and more likely to be an actual name of a panda, like “Wang Wang” or “Yang Yang”.

  11. Along that joke, To most expats, Windows is a PC operating system from Microsoft, and Win-Win is a business Operating System from Bernie Madoff that guarantees maintanence free overseas operation with 300% returns.
    I honestly don’t know what people expects from operating in China. Win-win? What universe has that?
    You might be more comfortable dealing with US companies in US business customs, certainly, but when you decided to go to China to set up that cheap labor shop for whatever reason, there is someone in US who didn’t get a Win-win out of you.
    And when you decide later to close shop in China and go to Vietnam/etc., do you still recall that Win-win speech you gave to your Chinese partners, even if they were faithful to you all these years?
    *Let’s be honest, business deals are based on mutual shared advantages. You have something they want, they have something you want.
    But those advantages don’t last. If they can’t keep up with your development, you have to find someone else. If you can’t keep up with your development, they have to find someone else.
    All the while, they learn from you. And if they figured out how to do the business without you, you are out as the extra middle man.
    That’s business.
    Cheap material cost cutting? US companies don’t do that? Try Firestone (tread separation), seven eleven (reduction of Big Gulp), Taco Bell’s Beef. (And I have worked in electronics, where subcontractors in Japan, Philippines, China regularly change material without telling US buyers).
    That’s also just business.
    *That said. Undoubtedly, doing business in China with starry eyed expectations is just crazy. You might as well hand your money to Madoff and trust him.
    Your business in China will be like a Panda, rare, and high maintenance, because it’s a new animal that you never had before, so don’t try to raise your Panda like that puppy you had in US. It just won’t work.
    And be realistic, Pandas are rare, survival rate is low.
    At the end of the day, it’s a business deal, not a happily ever after marriage, no matter how good Win-Win sounds. You might just kidding yourself.

  12. Yes, I agree, having a positive attitude to negotiating is half the battle. All successful negotiators feel and act like winners. If you feel you can win you bid more confidently, ask for more, give off no anxiety. Other people pick up these signals and start to treat your needs more seriously, so, as you say, the outcome then becomes self-fulfilling

  13. I understand the need to vent out those frustrations. We all do, whenever we move to another place, or travel there for whatever occasion, be it for business, pleasure, family, etc.
    Sometimes, I wonder if some of the attitudes of people in China is because there’s so many people. A relative of mine went there recently and experienced some (forgive me for saying this) pretty bad personal service at some places like the Salons and restaurants, however, the people got their job done. Food got served, the hair got styled, etc. Since there’s so many people, maybe for a lot of workers, they really don’t have the time and energy to deal with the pleasantries. Just do the work and nothing more.

  14. Hi Dan,
    Interesting post, and even more interesting attitudes revealed in the comments.
    After six years in China, then almost two years away (mainly in the UK and Taiwan), I’m on my way back. Where else can you find the challenge of going head-to-head with such clever, skilled and motivated adversaries so many times every day in the modern world? I’m kidding of course…
    I’d like to pick up two of your themes.
    Firstly, service. I totally agree with you, that service in so-called high-end places can be awful in China. I think Mike’s strategy is the one to follow, cheap and cheerful is the way to get satisfaction. Nothing bugs me as much as eating in supposedly high-end restaurants in China, where I feel looked down on because I didn’t arrive in a hummer or a Bentley, and because I still want value for money. Take me to a big, busy, dirty, noisy and cheap place any day. As Mike rightly says, expectations on both sides of the buyer-seller equation are very different to the west in a high-end consumer context in China.
    Secondly, considering win-win and attitude, I think it is important to consider the background to the attitude that seems to prevail in China. China has seen some very hard times and some heavy social upheaval in living memory, and the kind of trust in other people and social institutions that we have in (some?) western countries takes a long, long time to build. So, just as David Dayton realises that his attitude and expectations determines the range of possible outcomes, appreciate that the attitude of locals will likewise condition their outcomes. For me, being wary but optimistic has worked. In my experience, many people in China do find it a relief to deal with someone for whom frankness is a possibility, and you fairly soon know who those people are. Chinese people might not level with you the same way westerners do, but plenty of people in China will display integrity within their own constraints.
    I’ll give an example: a while ago, I was discussing a possible business venture with a Chinese friend who I have known well for over seven years. It was essentially his venture, but he wanted me to be a part of it. I was planning to be away from China for some time, and we were discussing possible structures, both informal based on trust, and solid legal structures. When discussing the informal approach, my friend said to me, ‘don’t worry, if we do things informally, you can trust me… unless of course it is a question of a large amount of money, in which case it is very hard to say what will happen’. I thought that was nice.

  15. It’s all about perspective. A Supplier once brought me and some of his Finnish clients to a night out watching a Chinese Comedy/Concert show. They left annoyed about 20 minutes in mumbling about how ‘this is a waste of time- I never do this in Finland’. I stayed the entire 2.5 hours, sucking up every moment of it thinking ‘this is great- I would never get to do this in Canada’.
    Every culture has it’s own peculiarities. You can observe them in frustration and refusal, or in intrigue and understanding.

  16. I really appreciate the comments to this post and I hope that it is still possible to get replies from some of the original commentators.
    Aretha Franklin, your talking my language. I think that you need to be someone who has lived in China for long enough and have faced some real make or break situations to see the real challenges of doing business in China. Casual business trips and “student” experiences don’t revel the underbelly of China.
    Aaron, your argument that businesses outside of China are also cut-throat shows that you probably are speaking more from considered logic then real personal experience. Let me contrast your examples to real world situations in China.
    “seven eleven (reduction of Big Gulp), Taco Bell’s Beef”. These are high level business decisions that at best run the risk of harming the company’s credibility with customers. I will give you a personal example of what you can face in China. As Dan commented, in China, the contract is just a starting point. Lets say you have a contract that stipulates a required delivery date and a cost. And you are unwise enough to let slip that the order is sole sourced and the shipment is needed urgently. When the factory in China has completed your product, and you have arranged a container for loading that product, they know you are at your weakest negotiating point and I have personally experienced the factory warehouse doors being locked and the factory demanding to receive a price increase. And it’s not because their costs have gone up, its because you confided your weakness and expected that your supplier, seeking a long term relationship, would take that into consideration and try to work to your schedule. However, what you really did was put yourself in a vulnerable position. At that point, many (I will go so far as to say my personal experience is most) will take full advantage of the situation, with-out showing any mercy.
    What’s worse, is that because as was stated by Aretha Franklin, in China, the further you are from being a local person, the more you are considered to be an outsider and looked down upon. Therefore, the factory who just aggressively manipulated more money out of you is considered to be a winner by the locals. They outsmarted the outsiders and even though it was dirty pool, it makes no matter. In China its not the means, its the ends that matters. As Dan points out, pride in personal excellence is not a goal in China. In China they are much more pragmatic, just get the job done, it does not have to be well done, just done. The goal is the payment, not the pride in creating something.
    Do I sound harsh? Well, for those who have really spent time doing business in China, I think you will largely agree. Are there similar circumstances elsewhere? Yes, but rarely are they celebrated as role models.
    I often struggle to understand how China got to this point and what it means. I think that there are a few obvious possibilities (though, they are just my observations).
    I think it is important to remember as Dan pointed out, most business men in China were subsistence farmers just a few short years ago. They are used to living from day to day. They don’t think about a long term business plan. They focus on maximizing each and ever deal today. I find that many lack confidence in the future and fear that any day, what they have today might not be there tomorrow. So the plan is get what you can today.
    China’s huge population makes competition extremely fierce… only the strong survive.
    Although China is often thought of by westerners as a police state, in fact the opposite is true. China’s government, like all governments, worries about losing power and takes steps to avoid that, but China’s commercial legal enforcement mechanism is almost non-existent. Police for the most part do not carry weapons in China. Police are rarely seen on the streets, and if they are they are probably ticketing a truck driver. Do people get executed in China, yes, but I have never spoken to someone who showed fear that they would be the next because of cut-throat business deals or even outright corruption.
    Next consider the cultural history. In China, people have been under the rule of an Emperor for thousands of years. Society was highly developed when the west was still beating Animals with a stone for a meal. But when the west burst with innovation in the 1800’s, China was stuck in a highly developed society were linguistic and political skills were considered far more important then tinkering with steam engines. The result is that China has not developed a culture of innovation and what is left for them in their post revolution, savage, Ayn Rand style capitalistic world, is survival by cut-throat tactics.
    Finally, the cultural revolution seems to have created a cultural void in China that unfortunately is being filled with pure unadulterated materialistic greed.
    Wow, that felt good… but seriously, don’t get me wrong. I’ve been in Asia for most of my adult life and China the majority of that time. I am hooked. I could never live in the west again. As difficult and challenging running a business in China is, I can’t image doing it anywhere else in the world. The opportunities and historical significance of being in China today are unlike anything the world has seen for several hundred years. The negatives listed above can all easily be offset with positives that I will leave for another time.
    Hope to receive some comments on my thoughts as I really would like to continue to improve my ability to survive and flourish in the most dynamic economic country in the world. And just so you know my post is not just sour grapes, despite all the challenges I manage to run a very successful (although exhausting) business here in China.

  17. Aretha ,you got that right. I have been doing business in China for the last 20 years and the climate has gone from bad to worse. With the VAT system, you can’t know what the true manufacturing costs are and there is endless means for corruption beween the export companies and the factories while the importer gets screwed. There seems to be no loyalty to long term relationships. I have been with some factories the entire 20 years and it just gets worse and worse. At least prior to the last 5 years tey pretended to like us and were somewhat polite. Now they are not even pretending. That alone is why I am now taking te steps to move my business from China to India. I have had enough.

  18. “That alone is why I am now taking the steps to move my business from China to India. I have had enough.”
    Don’t forget to check Vietnam

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