china law

Chinese problems, Chinese solutions

To begin to understand how to operate in China, it helps to understand the differences between Chinese society and its people and the society and people you know back home. There is a Chinese way of looking at things and a Chinese way of doing things. However, this does not mean that the way you do business in China has to be entirely different from elsewhere. Every country is different, yet there are similarities. One has to understand where China is the same and where it differs and what impact these differences have, if any, on how one does business. You must think from a Chinese perspective.

As mentioned throughout the various articles on keys to achieving business success in China, relationships play an import role in business life in China. However, relationships play a role in every business in every society. What is different about China is the intensity of preoccupation with relationship building, which goes on continually, it is almost an all-consuming aspect of Chinese life. Foreign managers fail to realize how pervasive it is, and that at every meeting, social or business, the Chinese participants are working on some aspect of the relationship.

Another issue is the Chinese language, which is very difficult to understand and learn for many foreigners. You can get by using English but you may be missing a major portion of what's going on. And that cannot help but have an impact on productivity and the bottom line.

Another important issue is the absence of intermediary organizations in Chinese society. Unlike in Western countries, there are no business or social organizations such as Rotary, Lions Clubs or Masonic lodges. Alumni associations and cultural groups are only just beginning to be established. The Chinese still predominately use family, and family acquaintances. Because of this, there are no intervening institutions between the state and the individual. Traditionally, the work unit has provided everything and the Chinese have come to expect paternalistic treatment from their factory in terms of housing, medical care, schooling - this is what is known as the "iron rice bowl", although this attitude is slowly changing.

In many instances, employees continue to turn to their Chinese manager for many things because they receive emotional comfort. So you need to understand what the social dynamics are in the minds of Chinese employees. And we cannot easily change the expectations of the employees about their relationships with their Chinese managers.

The way you train employees in China is also important to achieving success in China, because the implicit logic, often culturally based, isn't always apparent and understood. You will need to go back to basics and question your own assumptions about what is self-evident and keep training and retraining.

One of the things people wanting to do business in China have to be conscious of is the need to successfully integrate Chinese culture and western technology. Our clients have found success in changing ideas and work habits by using the idea 'the message is the medium,' a method of communication whereby you take the message and wrap it in a Chinese medium.

Another key to success is the need to do your homework and to ask the right questions. This issue of companies' not undertaking comprehensive due diligence before committing to a relationship and to expenditure in China is a significant factor in the failure of many international corporations in China. China is more complicated than others and is not one market, but many.

A further key to success is localization. What drives localization, of course, is the cost of employing expatriates in China, and that's an important consideration. But you don't just want a lower cost employee, you want a competent local employee. The Chinese are interested in localization for a reason of their own: career progress for Chinese employees. The priority is clear and shared, but the process does not lend itself to a rigid timetable.

An additional key to success is maintaining product quality. For years, China was regarded as low-cost, low quality environment, but this is changing. If you have a properly run factory, you can manufacture parts in China just as well as you can in the United States or Europe. The difference in the quality of the products is not that great in many cases.

Finally, to be successful in a Chinese factory, you have to acquire the skill of looking at production problems through Chinese eyes to discover how to make imported technologies and processes work.