China Iceberg

Seeing China for what it really is...

Most consultants and advisers you come across when you dabble in doing business in China will tell you to forget everything you know and not expect that China will be anything like doing business back home. Now there is a half truth that needs some explanation before one can say that this is a correct statement…

Firstly, check the credentials of the “adviser”. Has this person EVER done business back home? If no, then how can the claim that China is nothing like “back home” hold true? Well, it cannot from that point of view and to be quite honest, many of these consultants don’t know the first thing about doing business in “China” either… Again, check their credentials… If they were language students at Ren Min Da Xue, who after graduation set up “one man” consulting firms, they do not know what they are talking about. Full stop. There are of course seasoned business people that have long experience in doing business all over China and in many other parts of the world as well, and these are the ones you should be listening to.

When you do, they will tell you that China is unique, but not more unique than any other country in the world… So, if you think that China is anything special in that sense, think again… It is just more of the same, over again… Same, same, but different, as the saying goes… Certain idiosyncrasies exists, and these are important to understand, but for God sake, do not forget what you have done before in other markets, because if it worked in a comparable market, they will work in China too.

So, when people tell you to forget about what you did back home because “this is China”, ask them what they mean by that. Do they mean that there are certain things that might work well and get handled smoothly by the bureaucracy in your home country and that in China you have to go through three months of paperwork in an increasing number of duplicates to get things done, then yes, they are right… Do not expect that things will work in the same way as back home in most instances… China is a fairly young society when it comes to market forces and individual thinking, and mostly everything is processized in a very strict framework of actions and responsibility matrices… There is also rampant corruption and a “black” economy that is not witnessed many other places, especially outside of the major cities. A failure to recognize that can be quite disastrous.

However when they are not right is when things get screwed up badly…

I have witnessed the most brilliant business people throw everything they ever learned out the window, see their business in China fail miserably and then blame China for it afterward… Often enough, this happened because they were not “doing-things-like-they-did-back-home” and instead trusted people that told them that “this is China and this is how things are done here.”

Guess what, if that statement held true, everyone around the world should follow it to the last letter… If you go to Norway to do business, forget everything you ever knew about doing business, because this is Norway and in Norway we do it this way. I have a great business deal for you, all you need to do is to give me 1 million USD. Of course the contract I hand you will be in Sami and you sign it blindly or you trust the translation I provided to you on a non-specific sheet of paper that is only for reference and is not a legal document what-so-ever because Norway is a trusting non-corrupt society and all Norwegians are honorable and even suggesting that we should have a contract in a language that you could actually understand and that your lawyers should go over it with a fine toothed comb before you sign anything would be a great insult to me, my family and the country. In fact to all Norwegians who ever died in a war defending our unique ways… How dare you suggest we do it in English and with lawyers presence?

I guess it was the Japaneses’ unwillingness to change and learn from the west that propelled them from a nuclear wasteland after WWII to one of the richest nations in the world in less than three decades with a level of innovation that was astonishing… Oh, that’s right, the Japanese took western business methodologies, improved on them and made them their own… Just-in-time manufacturing philosophies as just one example of many… Actually looking at it now, the Japanese got a little too big for their own breeches by the mid-80ies, had a complete reversal in many aspects of their society where “being uniquely Japanese” was favored, many stopped learning English and their society went into a spiraling decay that they are still struggling to get out of… Yes, the fall of the Japanese economy is more complex than that, but thinking that they could do better and forget about looking to the rest of the world because “this is Japan and this is how we do things here” was definitely a contributing factor.

So, do not be stupid, do not forget about the rules of business transactions that you have learned back home and finely adjusted over years of experience. If someone wants to do it differently, then look at their suggestion with open eyes. If it does not make sense to you say no and tell them why you need to do it in a different way. If they come back to you with “that will not work, this is China and this is how we do it here”, then you have two options in my opinion:

1. If your adviser says this to you – slap him/her across the face and fire the person on the spot.
2. If the client/suppliers says that to you, you say no, and again suggest how to do it in a more sensible manner… If they accept (after some lengthy negotiations that you should not give in during) it means they believe in the business case and that they want to do business. If they keep insisting on a nonsensical way, they are intent on screwing you…

Of course there is the third option to come out of this: Accept that this is China and that things are different… Sign whatever document they put in front of you without actually understanding what you are actually signing… Prepared to lose all your money and waste months, if not years, fighting a losing battle in the 5th district court of hick-ville town, backwater province, China.