The key to ensuring that your first exploratory business trip to China is successful is to understand that there is a lot to understand.
- Overwhelming Stimulation
Unless you’ve traveled to places such as Mexico City or New Delhi, you will have never before experienced the excessive stimulation China has to offer. Unrelenting traffic (there was once a traffic jam north of Beijing that lasted almost three weeks (that is not a typo)), the noises of that traffic plus construction, plus the people (everywhere – lots of people). Shanghai, for example, is New York City on steroids. Keep this mind as you schedule appointments – it could take hours to just get across town. Consider that the US has only a handful of cities with a population exceeding one million. China has more than 100 cities with a population exceeding one million. Ever heard of Chongqing? Most Americans haven’t yet more than 30 million people live in that city in the heart of China. Although your hosts will steer you toward the shining glass and steel towers and away from the real China, know that it is there. In fact, despite China’s unprecedented and impressive growth rate over the last several decades, there are still more than 600 million people living under the poverty line; that’s almost twice the population of the US.
You will find that your Chinese hosts will be attentive and generous. Do you want to go back to your hotel room after a long day to order room service and watch a movie? It will rarely happen. The Chinese culture is such that your hosts would never dream of leaving you alone in a hotel room in a strange land. There will be an overabundance of food, visits to Karaoke lounges, and a never-ending flow of drink.
Given all the stimulation and hospitality, do whatever you can to get proper rest (it’s not easy). Make certain you pace yourself; this hospitality and stimulation, combined with jet lag, can lead to illness or bad decision making. If you need a night off, be assertive but courteous in insisting for time alone. I’ve often used excuses such as a need to reconnect with the office or dinner with a former colleague.
- Hierarchy of Contacts
There is a hierarchy of authority in Chinese organizations – it’s usually not as flat or informal as that in the US. Rank is very important so watch for making junior staff feel uncomfortable if you blur the distinctions between them and their boss. In the US, you may turn to a junior executive during a meeting to ask for an opinion. In China, you must direct all questions to the senior-most executive in attendance so as not to embarrass the boss or junior executive.
- Art of Guan Xi
Guan Xi, or the need to build relationships, is real. The Chinese like to do business with people they know and trust. In fact, there may be no decisions made during your first visit. Your hosts will take the opportunity to learn about you and determine a level of trust. I used to take long weekend vacations (mostly golf) with my Chinese colleagues to build and maintain our Guan Xi.
- Language – Chinglish
This is, in fact, how the Chinese describe their English-speaking skills. It is not judgmental or racist. The Chinese business community has worked long and hard to build their foreign language skills. At the beginning of their modern industrial revolution, when the Chinese wanted to become the “factory to the world”, they knew they would have to speak the language of their customers. They also realize that since English is their second (or third) language, it probably isn’t perfect. Therefore, they take this into account when communicating and are not embarrassed to ask for a translation or clarification. You will find it exhausting to have to concentrate on the accents and cadences of your hosts. Finally, avoid the use of local colloquialisms. We all use these every day but they will mean nothing to your Chinese colleagues. For example, if you use a sports or pop culture reference, it will cause confusion and misunderstanding.
- Language – Get Talked Over
Your hosts will often talk amongst themselves in their native tongue, sometimes at length. Don’t be offended. This is an advantage your hosts have over you (unless you’re fluent in Mandarin or Cantonese). I’ve always dreamed of sitting through a long meeting in which I was constantly talked-over and then eventually surprise my hosts by summarizing the meeting in perfect Mandarin. But, alas, I am in some ways a typical American and have not yet mastered their language (though they have mastered mine – it’s easy to know who is in the better position).
- Evasive Answers
During meetings, there will be unclear answers (despite your attempts at clarification). If you take a factory tour, there will often be that one door that remains locked, or that one part of the factory that can’t be toured because it is “under construction”. Again, on this first visit you will not get all the answers. But going forward, after establishing relationships, be certain to trust but verify.
- Sourcing Expectation
If you’re on a sourcing mission, go in with realistic expectations about savings. My businesses have struggled with the rising cost of labor (ironic given the population of China). Entry-level, mid-level and even senior executives are quick to take an offer that provides even just a small wage or salary increase. I, in turn, have to do the same to retain or recruit capable staff so the pay levels continue to rise, thus reducing China’s traditional competitive advantage. In fact, these rising labor costs, plus shipping and time expenses, have led some of the world to turn back toward re-shoring or near-shoring.
- Risk Management
There is an ambiguous rule of law in China. Sometimes the Central government will support anti-counterfeiting efforts, other times it will turn a blind eye. One company I have worked with built a factory in Ohio, proved-out all of the manufacturing processes, and then moved the entire factory into China. Then, in order to protect its intellectual property, ran the factory (including the computerized robots) from a home-base in the US. Therefore, barring a hacking of its system (a real risk), the company did not have to share with local Chinese staff its competitive advantage.
China’s business climate is dynamic and always changing. This is only a quick summary of what to expect on your first visit. There is much more to know as your begin to conduct business in China (choosing partners, protecting your intellectual property, etc.) Refer back to this e-magazine to keep up-to-date.
Remo Picchietti is a global trade executive and faculty member at DePaul University’s Kellstadt Graduate School of Business and Lake Forest Graduate School of Management. He has been conducting business in China since the 1980s. He can be reached at Picchietti@msn.com.