Doing Business in Asia & China!

Myths 
There are numerous generalities concerning Asian traditions, culture, work ethic, respect for elders and family values. Asians and Westerners alike utter these clichés. Often, the clichés are expanded upon to include personal loyalty and trust, mathematical ability, patience and humility. When accumulated, these generalities create an impression that Asians are totally unlike the people of the west.

The Realities of the Clichés
Thirty five years of experience in more than a dozen Asian countries has produced two overriding truths concerning the above platitudes.
1st: These clichés tend to carry a bit sanctimonious smugness.
2nd: Not one of these clichés is true.
They are all myths; hogwash; old wives tales and/or fables. You can choose to believe them.
The reality is that they are not real.

Are you ready to start business in China?
Use prudence, due diligence and go slow. And as every Chinese mother tells her daughter,
as she heads off to a new life in the big city, "Be Careful."

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Hire a Loyal Assistant.
It is very wise to have a loyal assistant and translator wherever you go. Never visit a business without having a loyal, local national assistant with you. You are a fool to travel without one.
The primary reason is to translate what is said.
A secondary, and, equally important reason is to tell what was not said and what appeared to be said out of earshot. While you cannot buy loyalty, there are a series of interview questions that can be used to gauge future loyalty.
A third reason: Murphy's Law. It is always good to have someone on your side when circumstances go awry. They can and do in ways Murphy never dreamed of.
A fourth reason: Follow up issues. It is always good to have someone who understands what you want checking on what should be done.

Manufacturing
If you want to make things in China, Quality Control and Factory Cleanliness are two of the major concerns. When our team visits a factory, we first look to see if the factory can handle the volume of goods we want. We normally prefer factories that have experience with international customers. We try to determine whether a FIFO system is visually apparent. We also check the factory worker’s toilet room to determine the management attitude about cleanliness and employee respect.
China is now the manufacturing center of the world. If you are dealing in manufactured products and are not dealing with China, you should reassess and determine why you are in China.

What China is Not!
China is NOT a big market. (Repeat this three times and memorize this reality before you consider selling goods in China.) Yes, China has the most people. But, there are great economic disparities between the social groups and the majority of the population is peasants. There are uncountable language dialect differences and numerous geographic considerations. The whole logistics and distribution system is just in its infancy. More important than all these, the local governments have much greater autonomy than westerners realize. This means numerous provincial and city governments may shut you out, even though the national government has approved you. To say China is a Big Market is akin to and as meaningful as saying the World is a Big Market. Better to say, China has several large and diverse markets.

Joint Ventures
Sometimes they are Good! Often they are Bad! Frequently they are Ugly! It appears many Westerners check their brains and common sense at the airport when they depart for Asia. They often jump into deals quickly that they would never give consideration to back home. The often-repeated term, Due Diligence, applies again and again. Go slow and understand the socio-political and generational forces at work. Go slow at choosing a partner. Before going to China or Asia you should contact your country’s Embassy or Consulate to make an appointment with the commercial officer. During your meeting, you should ask specific questions concerning what can go wrong; what often goes; and what should be your realistic expectations concerning profit and government interference.

Long Term
When approaching Asia you should plan on a long Term relationship. However, be prepared and do your homework. Many firms invest heavily in factories and quickly learn they have created cash eating monster that will never turn a profit. Whenever execs start saying they are looking at long-term gains, you know they have lost in the short term. It may well be because their local government partners are continually skimming from the till.

Realizations
Many Chinese (as others in the world) have a Shadenfreudlichkeit* Attitude toward America. To understand this think how many people outside New York dislike the Yankees. You should learn why. The government newspaper editorial pages fuel and feed this mentality on a daily basis. Taiwan is only part of the story. (* A German term that can be translated as the enjoyment of seeing the misfortunes of others.)

No Trust. Most Asian nations, including China are not trusting societies. Westerners live in a more trusting environment in which you believe a person’s word to be true. Often, strangers are viewed with suspicion and paranoia.

There is often an Inferiority Complex when interrelating with Westerners. This is obvious in many circumstances. Look at how many Asian students attempt to go to Westerns schools.

The Western business Mentality of Openness and making information available to employees is new to Asia. Information is power and power is protected. Be prepared for your Corporate Culture to be totally flipped. Just because the manager was exposed to a western education, does mean he (normally) ahs changed his mentality. Be prepared to spend time and energy in Asia. Do not depend on local managers until you are 100% convinced that they have totally bought into your mentality.

Learn the Manners of Asia. Be polite and courteous. A smile and a 'Thank You' can go a long way. Often language and its use are the culprits when difficulties arrive. A good translator is very valuable.

Also,
Maslow is alive and well.
Transparency and Openness are yet to be.
Checks and Balances are rare.
Freedom of the Press is spotty.
Corruption is alive and well. People with experience have learned some imaginative ways to combat it.

Further Considerations
Each of the Asian countries is different. While some common treads unite them, the peoples, the lands, the work ethics and the attitudes toward each other are greatly different.

A Partial Myth and Partial Reality - Connections are Necessary
Do you need connections 'Guangxi' in China? Often. Do you need connections elsewhere in the world? Often. Connections can help anywhere; often they are necessary and can benefit you. Also, they can hurt; they often waste resources. Everyone will claim to know someone. Many local officials are merely looking for Cash Cows to pay for their new cars or kids overseas educations. In Asia, shopping for the right connection may create many unnecessary and expensive partners. China is changing. New technologies and products are needed. Through common sense, integrity, reliability, courtesy and sincerity you can develop your own 'Guangxi', just as you can anywhere else in the world.

Valuable quotes:
“If we are honest with ourselves, we have to admit that we all become part of the corruption problem. We have no other choice.” American VP of one of the two largest American soft drink firms, Shanghai, China, March 1995.
Is it possible to survive and not sleep with the mob? Difficult? Yes. Impossible. No. Wal-Mart tries to play it straight and pays a price for its ethics.
Most firms acquiesce. See the movie Goodfellas before giving in. Some firms win by playing ball; some end up crying to the embassies; some just bury their loses in embarrassment.

“Of course I lied to you. You would have never started to do business with me, if you knew the truth.” Hong Kong businessman, July 1999.

“You cannot believe what I told you before.” Guangzhou businessman, May 2002.

The Silver Lining
China and Asia are changing. Just as Wall street changed Las Vegas; trade with the west; foreign investments; the Internet are changing the Far East.
Also, many westerners are doing well in China and throughout Asia. It is not impossible.