Preparing to Conduct Business in China
Conducting business in china requires a great deal of patience, respect, timing, humility, knowledge, cunning, and just the right amount of aggression. Knowing these are the tools that are to be employed for successful negotiating is completely worthless unless you know how and when to use each of them. Missing a cue for changing from being patient to aggressive, or being humble instead of cunning, will make or break a negotiation in an instant. As the article entitled, “Scaling the Great Wall: The Yin and Yang of Resolving Business Conflict in China” states, as Americans with aspirations of obtaining a piece of the Chinese-market pie, we must invest the time to understand the sources of Chinese culture and not just the culture itself. Because within the culture of today’s Chinese business tactics, are glimpses into the ancient history of a people that have not only survived, but flourished longer than any other civilization in the history of the world. Knowing only what we (Americans) want to achieve from a particular negotiation with a Chinese business person is extremely near-sided and will almost guarantee certain defeat. Instead, we must have a firm understanding of what our Chinese counterpart is also seeking from the negotiation and therefore be able to anticipate their strategy for succeeding. This “anticipation” tactic is vital because it is the very tactic that will be employed by our Chinese counterpart against us, and as history has proven many times, that is a very successful tactic.
The Chinese consumer market is like that of a massive mountain that contains the world’s highest concentrations of gold. However, there are some very difficult obstacles to be overcome before reaping anything short of gold dust. This “mountain” has been closed off to outsiders for centuries, and most prospectors are even unsure exactly where the mountain is located or where to even start climbing the mountain. This “mountain” is unmapped by anyone other than its inhabitants, is very difficult to reach and is made of solid granite. The gold is extremely deep in the mountain, and it will take many years of diligent, patient and backbreaking work to reach the gold. Even if the gold is ever reached, and mined, anything that is removed must be shared with the people that live on the mountain. As an added consideration, the inhabitants of the mountain do not necessarily have much use for the gold, have gotten along just fine with out it, and could continue to flourish if they never had it.
This article has the potential to impact and influence the manner in which a prospector would go about finding the mountain in question. It (the article) provides some very basic tools for conducting business in China. It not only reiterates the notion that as Americans we must put aside our ethnocentrism, and provides insight into why and how our Chinese counterparts approach and conduct business. If these guidelines are to be taken seriously, it requires us to not only abandon our own methods, but we must become our counterpart in our ideas, thought patterns, and adapt the same motivations for the outcome. The profit potential of the Chinese markets is widely known, but the manner in which to go about tapping those markets has been somewhat of a mystery. The mystery deepens with every failure incurred by what we in the west consider unstoppable giants in our own culture. Never before have companies needed to be more prepared for entering new markets as they must with China. Not being prepared, or being ill prepared to negotiate in China has swift and irreparable consequences. The successful companies are those that have implemented the guidelines (to some extent) outlined in the assigned article.
The author of the article is forthright in making his point that American managers must not expect to use the same techniques that work in the western world and apply them to business in China. Instead, there are some basic guidelines that every reader must understand before attempting to negotiate in China. The first being that American managers, to be successful in China, must first step out of their cultural comfort zone and be open to a new paradigm of thought processes. Eastern and western cultures are on opposite ends of the spectrum, and those culture differences create vast gaps in our belief systems, areas of value, and strange if not uncomfortable methods for obtaining our individual objectives. Successful American companies will accept these differences and learn to use them to their own advantage.
The second guideline is that a Western businessperson must have clear objectives before beginning a negotiation with the Chinese. Knowing their own objectives should not be confused with needing to dictate the course to be taken to obtain the objective. In fact, remaining flexible is an extremely important attribute that must be maintained at all times.
Thirdly, Conflict should not only be expected, but be used as a tool for encouraging and maintaining dialogue, hence the need to remain flexible. By remaining flexible, the inevitable conflict will not catch the American manager by surprise, but will instead be seen as a progression in the negotiation process. American managers should be comfortable in dealing with conflict and should not let emotion enter the negotiation.
The fourth guideline addresses the “art” of deception. Deception is another area that most western managers are not accustomed to dealing with on a regular basis, and yet it must be expected and used as yet another tool in negotiations with the Chinese. The Chinese negotiator will use this tactic in an attempt to unbalance its counterpart at critical times in the negotiation process. Deception shouldn’t be seen as flat out lying, instead, should be seen as simply feigning in an attempt to make the other side reveal weaknesses that might not otherwise be noticed.
The last technique from the article to be pointed out deals with honour. As with all eastern cultures, honour is an extremely important aspect of everyday life that must be maintained at all times. The most critical commodity to be respected in China is the dignity of your counterpart. If the eastern counterpart losses face, or is on the verge of losing face, the Chinese will cease negotiation and business will be stopped and not be resumed.
To gain additional insight into the Chinese business philosophy, one needs to simply look at the basic underlying influence of their culture, which are the martial arts. The term martial arts, which has become synonymous with self-defense and fighting styles such as Karate or Judo, among others, has its real meaning in the understanding of all forces present in any situation (military or business) and utilizing those forces to your own advantage. As an example, the martial art style of Judo was created by the Chinese thousands of years ago. Its purpose was to perfect the idea of using your opponents strengths (and subsequent weaknesses) against them, without ever yourself throwing a punch or kick. One way this is accomplished is by letting the opponent develop a false sense of superiority, then redirecting the energy of your opponent, contained in the form of a punch or kick, and letting the laws of inertia take over. The momentum of such an energy is increased because your opponent expects (now, more so than before) contact to be made, but by stepping aside or dodging the energy, the momentum of the misdirected energy will throw the opponent completely off balance, thereby making them, in turn, very vulnerable to a counterattack. This basic philosophy is played out in the form of deception when negotiating, as discussed earlier. The false sense of security made possible by means of deception leads to complacency and reduces ones guard against attack, or in this case, negotiation. When the anticipated outcome, brought about by complacency, is instead replaced with a completely unexpected counter-attack, the immediate reaction is based on emotional response, which leads to the downward spiraling ability to control emotion, which in turn reduces the ability to think clearly, which in turn leads to the complete collapse of good judgement and will certainly bring about (partial or complete) defeat.
An American manager must never allow complacency to take the place of caution and down right paranoia when dealing with a Chinese counterpart. The consequences can be devastating.
The Chinese people are that of an ancient culture. This ancient culture is full of philosophers whose philosophies are still widely practiced in every day life. One philosopher in particular I personally found to be interesting is Sun Tzu. Sun Tzu is the author of a book entitled “The Art of War.” This book, is literally a handbook for military strategies, but not the strategies we in the west would expect to find. Rather, Sun imparts wisdom to the reader on strategies to expose the weaknesses of your opponents then capitalize on those exposed weaknesses. For example, in the chapter entitled Laying Plans, Sun instructs the reader to “Hold out baits to entice the enemy. Feign disorder, and crush him.” This same strategy is echoed in the text of the assigned article when the authors guard against deceptive tactics utilized by the Chinese.
This article is an excellent tool for getting acquainted with the basic strategies used in the course of Chinese business. I would encourage any reader to use it solely as an outline and then encourage one to read Sun Tzu’s book and also study the military strategies of the Chinese over the centuries, because those same strategies used in victory on the battlefield against foreigners are the same ones being used on the new battlefield of today, called business.