Monday, October 26, 2015

How Do I Find A Chinese Partner?

A key success factor for doing business in China is having a local partner, someone who has a vested interest in your success.  But how do you find them? 

Here are 4 ways you can go about identifying and engaging someone in China who has your best interests at heart:

1.  Go through the chambers of commerce in China.  Either directly (via their own staff) or indirectly (via service providers they work with), the Australian and American chambers of commerce in China can help you identify an appropriate distributor, partner or agent.

2.  Access your local chamber of commerce.  The chamber of commerce in your home country has a program for helping local businesses break into China.  They often have relationships with Chinese government agencies that help connect Chinese buyers with Western sellers, and vice versa. 

3.  Ask the government.  The US Department of Commerce and the Australian Trade Commission provide services to assist American and Australian companies identify and vet prospective business partners in China. 

4.  Do it the Chinese way – access your OWN network.  If you live in an American or Australian city of any size, there is a roughly 100% chance that you’ve got a Chinese friend, acquaintance or colleague.  Introduce yourself, build a relationship, and ask for their help in finding a partner  This is EXACTLY how a Chinese person would do it. 

Two important caveats in following any of the steps outlined above. 

First, don’t rush into it.  You MUST take the time to talk to them, meet them if possible, understand who they are and where they come from and what their motivations are.  That’s just how China works.

Second, once you’ve identified a partner, you should do everything in your power to build a personal relationship with them.  Relationships figure much more prominently in Asian business culture than they do in the West.  Building a relationship now will save you a LOT of grief later!

Tuesday, September 1, 2015

ChAFTA And Union’s Misplaced Angst

The unions’ anxiety is based on the idea that Chinese companies will import armies of low paid Chinese workers to do the job of Australians.   Which is just crap.  That’s simply not going to happen for three reasons:

1.     Local Councils – Unions have been exercised by part of ChAFTA that says “Australia will remove the requirement for mandatory skills assessment” for a variety of construction-related trades.  Which is absolutely true, the agreement does say that.  But it doesn’t say anything about excusing Chinese companies from local building standards, or relieving them of local council oversight.  When I think about a Chinese electrician, with no English and no knowledge of Australian building standards, listening to a local inspector explaining why his work has failed to meet Title 5, Section III, Subparagraph A, Point 7 of the local building code, I just want to laugh. 
2.     Runners – I pity the poor idiot who brings low paid, moderately skilled workers to a place as beautiful as Australia and then has to keep them from doing a runner.  Large-scale importation of Chinese workers has been successful in African countries where the local skills are low and the local environment is uninviting.  But in Australia?  A country that many Chinese see as, literally, the nicest place on earth?  Be serious.  The workers would be applying with the local Australian firms like a shot.  Or simply disappearing into the country.  Unless ChAFTA also allows for indentured servitude and physical restraint (which it does not), the attrition rate among imported workers would be ruinous.
3.     Money – On average, workers in China make about 25% of what Australian’s make.  Which sounds like a good savings until you start adding on the extras.  Working overseas usually earns a 50% to 100% premium over domestic work, especially if the worker speaks any English.  Housing, food and transportation have to be provided.  Higher local health and safety standards have to be met.  The list goes on and, in the end the savings simply don’t justify the trouble of importing large numbers of workers. 
Will we see some dormitories in Perth, Brisbane and Sydney filled with Chinese construction workers?  Certainly.  Will it move the needle even slightly on employment for Australian tradies?  Not a chance.  If anything, ChAFTA will result in more development projects that require more Australian craftsmen, both to build and to maintain.

So, like me, appreciate the cleverness of exploding light bulbs and pictures of sad tradies being sold out by the Prime Minister.  But don’t mistake that for the actual loss of Australian jobs.  Because that’s simply not going to happen.

Wednesday, August 12, 2015

A Model For Explaining Chinese Business Culture 向外国人解释中国商业文化的模型


As a Westerner who’s spent some time in China, my Western friends and colleagues often ask me to explain something that has happened to them in their Chinese business.  Usually this is a question about something bad – they have a dispute with their Chinese partner; their sales pitch to a Chinese customer failed; they can’t find a reliable Chinese vendor. 


Given the huge differences between Chinese and Western culture, the answer is often complex.  Face, hierarchy, different views of time, China’s rapidly changing business landscape, massive urbanization, the growth of the Chinese middle class, and outdated views of China in the West all play a part.  But my friends don’t have time for a lecture about 5,000 years of Chinese history, or a complete overview of business practices in China – frequently they’re in the middle of the problem and are just looking for something that helps them understand what’s going on.


To make sense of these complex issues, and give my friends quick answers, I try to simplify and relate the problems to some of the most important cultural differences, facts of life in China, and trends in Chinese society.  So, for instance, when my friends ask why Chinese people often won’t say “yes” or “no” directly, but instead give softer, more nuanced answers, I explain this in terms of Face and Harmony: “The Chinese are very concerned about face, and about maintaining harmony in the group, so they communicate in an indirect way.  They don’t want you to be offended, so they don’t say things directly, they say them in a softer way.”


Face + Harmony = Indirect Communications

Or, when one of my colleagues asked why did a Chinese boss criticize an employee in public – wasn’t the boss worried about the employee’s face – I explain this in terms of Face and Hierarchy:  “No, face is hierarchical, so the Chinese boss doesn’t have the same obligation to protect the employee’s face as the employee has to protect the boss’ face.  The Chinese boss is relatively unconcerned about the face of his subordinates.”


Face + Hierarchy = Chinese people are relatively unconcerned about the face of people below them

My question to the LinkedIn community is which differences, facts and trends ARE the most important?  Which ones best help explain Chinese business to foreigners?  This is my initial list:
我对领英社区的问题是:哪些差异、事实和趋势是最重要的?哪些因素最能向外国人解释中国的商业? 下面是我草拟的一份列表:

Cultural Values Held By Most Chinese People

Relationships (guanxi) – Relationships are more important than rules

Hierarchy – All relationships are hierarchical and, thus, unequal

Face – Face is more important than facts; perception is more important than reality

Group Orientation – The group is more important than the individual

Long Term Orientation – The long term is more important than the short term

Incremental Improvement – Step by step improvements are better than revolutionary change

Pragmatism – It’s better to accomplish what you can without waiting around for the perfect answer; don’t let perfect be the enemy of good enough

Harmony – Things go better when everyone gets along, or at least don’t get too unhappy with others in the group

Important Facts Of Daily Life In China

Huge Number Of People – China is much bigger and has many more people than Western countries

Feudalism – You owe loyalty to your boss, who controls many things in your life (e.g. money and time).  This is sort of a combination of guanxi, hierarchy and group orientation

Cultural Revolution – The Cultural Revolution had a huge impact on Chinese society that is still being felt today.  For instance, the low level of trust Chinese people have in the government and in people they don’t know were made much worse by the Cultural Revolution

Rapidly Changing Environment – China is changing much faster than other countries, not only economically but socially, culturally, politically.  2005 was quite different than 2015; 1995 was almost like a different country

Niches – Chinese society and Chinese markets are not monolithic, they are made of many small niches

Age – China’s population is aging rapidly and this has many significant impacts on society and the economy

Gender – China has significant gender imbalances, both in the cities (where there tend to be more young women than young men) and in the countryside (where there are MANY more young men than young women)


Economic Development – China continues to develop economically, and at a very fast rate compared to other big economies

Quality and Luxury – Chinese consumers increasingly demand quality and luxury; they are not satisfied with low quality goods, even if they are very inexpensive

Urbanization – Over the past 30 years, a huge number of people have moved from the countryside to the city and this process is still going on

Infrastructure – China is building infrastructure at a rapid pace

Middle Class – The Chinese middle class is growing very fast

Technology – China is using technology to get ahead.  For instance, although it still lags in the “old” technology of making computer chips, it is far ahead in the “new” internet space

Are these the most significant cultural values, facts of life and trends in explaining China to foreigners?  If you had to relate every problem using only these elements, could you do it? 

Give me your thoughts.  I’m anxious to hear the experiences and perspectives of others.