If you want to do a deal in China, then consider the following practical tips so that you don’t end up ruffling feathers, or worse, ending up with a dead deal.
- Don’t discuss business seriously until you know someone. If you rush business discussions you will walk away thinking you accomplished something, but in fact you have taken a few steps back.
- Plan for negotiations to be longer and slower than they are in the west (Europe or N America). You are building a relationship that will end up in a contract but the contract is not the goal.
- Ask someone out socially vs having them come to your office (except for lower ranking people w no decision power).
- Don’t criticize China or say anything negative about the country, the food or the culture. Chinese are very proud people and respect / trust people that make an effort to speak some Chinese, use chopsticks and understand their government.
- The most powerful person in an organization is NOT the one with the title. Focus on the person who may have the most influence on the decision maker vs the decision maker him/herself.
- Until you understand how a particular Chinese company operates (getting hints through social conversations vs directly) you will not know if the people you are talking to are decision makers or just communication tools.
- Don’t set timelines for discussions. Set some targets but never set a deadline to make a decision or finalize a deal. You will find the Chinese pushing you to the end to get you to make concessions based upon your looming deadline.
- The most senior person always sits facing the door of a restaurant. Never go into a dining room and take the seat directly opposite of the entry door!
- Never only fill your own glass at dinner and never split a dinner check!!
- Drinking is a way to bond and get to know people, so be prepared for this. If people on your team are not drinkers, then sideline them somewhat until a relationship is started.
- Long contracts can alienate a Chinese partner and engender non-trust (the opposite of your intentions). Therefore, don’t let your lawyers over document a deal simply as a type of dog and pony show for you (their client) at the expense of the entire relationship.
- Understand the personal motivations of the people involved in a deal. Rarely is money a motivating factor as we envision in the west. Consider empire building, control, face, respect, creation of a legacy, fear of being displaced, seizing market share etc….rarely is money a motivation in China contrary to popular belief in the west. How will you get clarity on this? Through the realrelationship you will be trying to forge!
- Keep in mind that Chinese companies think long term vs short term thinking of western companies (that focus on quarterly or annual dividends vs making decisions that create long term shareholder value 10 years from now). This is where business decisions diverge and you have problems with the Chinese.
- Many Chinese companies are still dominated by 1st generation older founders. They operate on gut feel vs a disciplined approach to business. Many founders run their companies unlike anything you have experienced. Their goal: Usually to grab market share vs a methodical disciplined expansion. They will worry about cash flow later.
- Understand the concept of “Face”. Basically, try to find a way to make someone look good or find a tactful way to get a desired result that does not make someone appear as if they have changed their idea or changed course. When trying to get an agreement from someone in a business setting, do it face to face vs allowing them to commit in writing in an email/letter. Once something is in writing it is difficult to get flexibility in another direction. Key take away, if you are aggressive and openly say what is on your mind, you may inadvertently kill a deal forever. How you get a message across is more important than the message itself. Make sure your deal team has people that understand this issue!
- [This new #16, was a reminder from someone insightful in a comment mentioned below, his name is Dirk WeiBflog] If a high ranking person from a Chinese company agrees to meet your company, make sure you send someone of equal or greater rank. If you send someone of a lower rank in your organization than the people you will meet, this is considered very rude and you may have a challenging time securing another meeting.
I hope you enjoyed this. If you did, please comment, like or forward as you please. Obviously, more tips can be added to this listing. This is just a starting point!