Jim came out of the meeting shaky. It had not gone well. It was a sweet little piece of custom software that he himself had engineered. The deal was only for $2 million, and since he was dealing in China for the first time, he had entered with two lawyers at his side — a native of Beijing, and his own firm’s attorney, both very knowledgeable in international negotiations. But for some reason on this initial encounter, his potential Chinese partners were just having none of it.
Deceptively, the world of impersonal communication continues to increase exponentially. Yet the real culture shock of establishing business abroad has changed little since America’s ship “Empress of China” sailed into the Pearl River Delta to trade cloth for silk and spice in 1784. To help bridge this gap, Rutgers University’s Confucius Institute offers an eight-session course, “Doing Business With China,” instructed by retired Rutgers professor Yun Fang Qi , who now heads his own China trading business. The course will be held every Wednesday, beginning on October 21 at 7:30 p.m. at the New Brunswick campus. Cost: $240. Visit www.ciru.rutgers.edu.
Those seeking to improve their negotiations by learning the Chinese language may register for Conversational Chinese 1, or Conversational Chinese 1B. These eight-week courses meet twice a week beginning on Monday, October 19, at 6:30 p.m. Cost: $240.
It is undeniable that the nation of China plays an increasing role in our lives. In 2008 the U.S. Census Bureau recorded nearly $70 billion in exports to and more than $337 billion in imports from China. Recession prices have made U.S. goods even more desired by foreign nations, and more profitable for U.S. companies.
At-home resources. There is no reason why a central New Jersey business person, however sharp, should have even the vaguest knowledge of the Chinese commercial realm. Fortunately, before you ever board a plane, there lie ample local resources that provide not only information, but can actually help business achieve Chinese partnerships.
1). The World Trade Center of Greater Philadelphia, www.wtc phila.org. Probably the best and most thorough advisors for dealing abroad, the center links thousands of partnerships every year and hosts lectures from those experienced in world trade.
2). World Trade Center New York, 212-432-2700; trade specialist Vivian Williams, 212-432-2604. Smaller than Philadelphia’s center but very well-connected in China.
3). China-Window.com. For those who prefer their information served online, this site gets right to the specifics of Chinese/U.S. business.
4). Newark Public Library Reference Center, www.npl.org. The library houses one of the best business libraries anywhere.
5). New Jersey Chinese-American Chamber of Commerce, Somerset, www.njcacc.org. The chamber promotes business among members, helps Chinese-American businesses acclimate to life in the United States, and facilitates trade between U.S. and China companies.
6). The Consulate-General of the People’s Republic of China in New York, www.nyconsulate.prchina.org. Consulates are established primarily to aid in trade. While not an easy bureaucratic nut to crack, many of the official regulations may be learned here, as well as discovering ways to work through them.
Achieving mind meld. Yes, people everywhere are people, but the courtship of business in every nation holds its own unique and mysterious code. Probably the main reason for Jim’s failed meeting with his potential partners was his failure to observe the Chinese “Guanxi” (relationship building process).
For many Americans, time is money. Once revenues start streaming in there will be time for social niceties. A codicil to this frequent American method is the belief that it’s better to deal with the devil himself if he delivers widgets five cents cheaper. Jim bustled in with two lawyers whose presence instantly established an aura of confrontational mistrust.
Conversely, the Chinese may spend weeks, even months wining, dining, and exhibiting their culture to a visitor. Disguised in this process is an attempt to determine the content of the candidate’s character. Once this trust of character is satisfactorily achieved, the lawyers may be dismissed and the 30-page contract may dwindle to a 10th that size.
Partner assessing. Chinese governmental regulations of what companies may do what with whom are many and Byzantine. Before even beginning to discuss suitability, find out from the consulate and other sources what is legally allowed. Then examine the Chinese partner’s personal connections with officials who matter. In China, as in most cultures, all bureaucracy is personal.
With 1.3 billion inhabitants on 3.7 million square miles, China is vast. Unlike the U.S., almost no Chinese companies claim nationwide distribution. Trade regions, often as not, are based on fluvial segments, such as the Yangtse or Pearl River deltas. These are more indicative of commercial networks than cities or provinces.
Visit. Be sure to find each partner’s distribution limits. An actual visit to the outlying areas and chat with the involved sales force increases your knowledge, and builds Guanxi.
All the standard partnering factors apply and demand due diligence. Is the sales force knowledgeable and enthusiastic about your product? Can they describe it in English and Chinese? Does the firm’s financial track record show it as stable and growing?
After yielding to the Guanxi process, you might find that the simple logistics of who holds the funds, how are goods shipped, and how cash is transferred proceed with surprising rapidity. To keep this pleasurable partnership lubricated, it’s wise to develop a schedule of personal visits back and forth.
Just don’t forget that the Chinese etiquette of pre-negotiation gift giving is amazingly more lavish than the standard American pen and pencil set.
Finally, remember that building overseas demands blocks of both personality and commercial skills. As Marco Polo said of his Sino trading experience, “Without stones, there is no arch.”