Doing business with China: expect the unexpected?


I’ve been very lucky to have worked a lot in the Far East and especially with people of Chinese origin, both there and in Europe. The scale of interest from Chinese businesses looking to work with firms abroad is huge. I’m especially interested in greater China and the Chinese diaspora, and especially enjoyed my time in Taiwan and Singapore  (Chinese Singaporeans are three-quarters of the population). Here in Britain, I volunteer as a trustee of True Heart, a charity which serves the Chinese community here.

China is still one of the riskiest places to do business. I’m sometimes asked: what are the first things you think business people need to know about doing business in Greater China? My answer is, and only half jokingly: expect the unexpected.

Almost the only thing I anticipated about working with Chinese managers is many problems cannot be anticipated. I was taught that at UCLA’s Center for International Business Education and Research by its founder. José de la Torre had researched the problems of larger global industrial businesses in China, Hong Kong and India (he served on the board of MphasiS, a global software company based in Mumbai, which is now owned by HP). In his international business course for our group from EDHEC (José is on that board too), José gave the example of the Norman Machine Tool Company, which decided that its best hopes lay in setting up less costly operations in China. With the help of a government trade mission to China, they found the leading Chinese producer in their industry. The joint venture they founded was soon at the point where it could produce more than the US ‘parent’ could handle. There were unexpected problems too: translation was a continual obstacle; it was also very hard to repatriate profits, partly because the powerful Chinese managers felt stronger when they had cash in the bank. Chinese managers also expected that the spirit of the joint venture was for the American partner to train the staff, when the Americans preferred to training the top managers and engineers in the US, and then have them train their colleagues on their return to China.

Although Jose’s work focussed on the needs of manufacturing companies (see his book here) some of his key points are true even for services firms, despite the many changes over the last decade. Chinese managers appetite is to have a partnership based on investment, both in capital and in relationships.

In fact, despite the teasing question at the start of this post, Many things can be anticipated. The British government has good guidance, especially on more tangible issues. Churinthorn Boontanapibul (in the Bangkok University executive journal) has a really excellent guide to Cultural Factors,  Start-up Concerns, and Professional Development, which summarises some of the best writing on Chinese business.

What lessons have you learned about doing business in China?


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