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China: Make friendships first, then profit

Because indeed, overcoming cultural differences can still be as formidable as scaling the Great Wall.
By Lee Gimpel |

 

Silas Deane, 42-year-old president of Baden Bath, a $1 million provider of luxury showers, tubs, sinks, vanities and the like, found himself in China for the same reason every company seems to find itself in the world's most populous country: manufacturing.

 

China is the world's second largest economy and one of the leading destinations for direct foreign investment. But just because China is the global go-to country does not mean that making it work for you is a piece of cake. Indeed, overcoming cultural differences can still be as formidable as scaling the Great Wall.

 

The Chinese wants to do business with individualsnot companiesso cultivating friendships is crucial. Rather than cutting to the chase, the Chinese prefers a courtship filled with get-to-know-you banter and big banquets full of mysterious delicacies.

 

Thus, like other Americans, Deane had to rein in his "get the deal done and move on to the next one" philosophy. To drive home the point, instead of talking turkey, the Nashville, Tennessee, entrepreneur once found himself getting a two-hour foot massage with one of his hosts so that they could chew the fat. And nearly every time he visits his manufacturers in Foshan, they insist on taking him on long drives in the countryside to build camaraderie, often recovering ground he's admired on previous trips. "They want to spend time with you," Deane explained. "They want to get to know you."



As a formula for success, Barry Tomalin, director of cultural training at International House, recommends you get a Chinese agent and treat your partners to "very nice meals in very expensive places...doing this for six months to a year."

 

Chinese society rests on a foundation of guanxi, your network of relationships that is supported by the favors you do and accrue. Deane, for instance, will be helping one of his manufacturerswho does not speak Englishattend an upcoming trade show in Chicago and hopefully win new business. In return, he is giving Deane the samples he is shipping over from China and offering to bring new products just for Baden Bath's benefit.

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But despite the relationship building, Mike Saxon, author of An American's Guide to Doing Business in China, warns that a seemingly solid rapport can still be trumped by yuan. "People who go over to China think it's the China of centuries ago: Confucius, everybody's honorable and whateverand it's not! It's a different culture today," explained Saxon, who adds that the 36 Stratagems, a collection of Chinese proverbs, is part of the basic Chinese gestalt. Indeed, Saxon said that it's not uncommon for Chinese companies to keep four sets of accounting books.



Saxon also said that the Chinese take a long-term view and are not risk-takers. The society is less individualistic than America's, so the Chinese aren't big on confrontation. To this end, Tomalin highlights the Chinese belief in the "middle way," a nuanced form of compromise, which means they may insist on working out an agreement rather than taking no for an answer. For an American, this translates into fostering respect, including stifling open criticism.



The challenges can be as big as China, but Deane said his relationship with the Chinese has been a valuable asset. "I would consider a lot of our manufacturing partners over there more than just business partners; they're friends," he said. "They advise me a lot. They're interested in seeing us succeed, too."

 

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Copyright © 2008 Entrepreneur Media, Inc. All rights reserved. 

This article originally appeared on Entrepreneur.com. Minor edits have been done by the Entrepreneur.com.ph editors. 

 

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