Smolker Letter No. 15 “Should You Expect to be Cheated When You Do Business in Mainland China?” by Gary S. Smolker (March 28, 2013)
A March 26, 2013 Wall Street Journal Article
I read an article on March 26, 2013 in the WSJ that left me with the impression that people doing business in China should expect to be cheated.
That article indicated to me that it is taken for granted in China that the entire structure of government in China is corrupt and that is one of the reasons young people in China want to work for the government.
A World Traveler’s Point of View
A friend told me that is a fair summary of what you generally hear in Hong Kong, Singapore and China. It is not an exaggeration.
Another Point of View
Another friend, who is doing business in China, told me of that friend’s quite different experience.
This friend told me the Chinese view the rules of the world very differently than Americans.
This friend suggested that I try seeing the world their way, the way the Chinese people in Mainland China see the world, and provided me with the following rules for doing business in Mainland China.
- If you can be taught by a successful person in your desired field how to conduct business with the Chinese, it can be very lucrative and you will not get cheated, or at least, cheating will be greatly minimalized.
- Seek to be open to adapting.
- Always get paid up front.
- Avoid investments and lump sums that have no tangible unit of measurement. Get paid, and pay per unit.
- Make sure (before trusting) whoever is introducing you to your business connection is someone who knows what they are talking about. Introductions are vital. They can make or break you.
- Business in China is more like friendship. If you are strictly business, they will enjoy cheating you. Learn balance.
- Try to understand Chinese culture. They notice this and it impresses them.
- Contracts are suggestions to Chinese. Make an agreement that has simple terms. Many Americans think they are “cheated” because the Chinese didn’t follow the contract. That is because they never take contracts seriously in the first place. Breaking contracts to them is generally not a form of “cheating”. It is to be expected.
- Always expect the terms of an agreement to shift or change at random and without notice. Do not show surprise or complain about the changes. Instead, show that you are as adaptable as them. This shows respect.
- Make your focus more on the friendship than the money. This builds trust.
- After a deal is made, always try to go eat and have a drink with them. This consummates friendship, further develops friendship, and will give you a feel if they are weasels or not.
- When making a deal, talk about money last. This will foster friendship.
- Know when to ask for payment and when to do favors. Don’t try to get paid every step of the way. Trying to get paid every step of the way breeds distrust.
- Don’t trust the Chinese government. The Chinese don’t trust their own government or each other. Learn how to discern who to trust.
- Have an open mind. Be open to shifting your state of mind to interpreting situations in new ways.
- There is something about the way the Chinese do business that keeps priorities straight, clear and simple. This helps businesses move faster and establishes a certain kind of trust that is uncommon in working with Americans. Americans want contracts. Chinese want long-lasting friendship.
- Guanxi. Guanxi. Guanxi. Wikipedia it.
My Point of View
I don’t respond well to people who are pushy or arrogant with me. I believe most other people feel the same way.
My rules for doing business anywhere in the world are:
- Having productive effective relationships is a key to getting things done everywhere in the world.
- You can’t roll up your sleeves while you’re wringing your hands.
- Friendships make the world go round.
- What is in people’s minds is what will ultimately determine success.
- Building anything takes time, personal relationships, leadership and money.
- Traditional calculations have to be balanced with the psychological and emotional effects of every decision.
- What appears to be a logical move can also be politically sensitive and deeply emotional.
Identify things that have special psychological, cultural and political significance to you and to your audience.
Be a good guest.
Posted on March 28, 2013, in Uncategorized and tagged business philosophy, Chinese rules of business conduct in China, friendship, introductions, relationships, rules of business conduct in Mainland China, trust. Bookmark the permalink. Leave a comment.