Classic Communication Gap: China vs. the West

I cannot tell you how many times I have observed the following conversation between Chinese-speaking and English-speaking businesspeople:

English Speaker: “I need you to lower your price/produce a machine I need/accept a higher price/grant a concession.”

Chinese Speaker: “Hmmm. That will be difficult.”

English Speaker: “Difficult? Well, good then. That means you can do it. If business was easy, everyone would be doing it!”

Chinese Speaker: Baffled silence.

What has just occurred is a complete misunderstanding based both sides’ lack of understanding of context and meaning in communication patterns commonly used in greater China vs. the West.

Here is what each side really means:

English Speaker: “I’m not making enough money and I need your help by reducing the price to $X/buying at a higher price ($X).”

Chinese Speaker: “I’m sorry, that’s impossible. I just can’t do that.”

At this point, the English speaker should say something like: “I understand. So, how much can you do, because I can’t do business at this price?“

The Chinese speaker will likely come back and say: “I can give you 5% less/more, but not the 10% you asked for.”

Classic. Happens all of the time. If you can learn what Chinese-speaking people really mean when they say things like “That is very difficult,” you’ll be much better equipped to negotiate in greater China.

Doing Business in Greater China: What do Foreign Businesspeople Expect?

Earlier this year I taught a seminar at a business training camp for Taiwanese executives in the food commodities business. The trainees were an excellent group, full of energy and ideas. During the Q & A session, one of the attendees asked “What do foreign businesspeople expect from their local suppliers and customers?”

Wow, what an excellent question.

My answer? “If they are sourcing, they expect to find what they need at a price lower than they would have to pay at home and at the same or better quality. If they are on a sales trip, they hope to figure out the local distribution system and see if they can make a profit selling locally.“

But that wasn’t the most important thing the audience needed to know. I added something.

I told them that they need to educate their clients and customers, to help them understand how business is done locally, because there are such vast differences between West and East. I told them they should do this honestly, without selfish concern for their own position, but with the aim of creating a relationship that is beneficial to both sides (and no, nobody smirked–this was a great group of people who understand long-term partnerships). One example I gave was the current trend in the Taiwan consumer market toward unique and elegant packaging for products priced in the NT$100-200 range (about US$3-6). Many foreign businesspeople cannot understand how a finely packaged product could sell for US$10 in their home market, but must be priced at half of that in Taiwan, Hong Kong or China. They don’t understand that many white collar workers in these countries have only US$100-300 a month in disposable income (after housing, utilities, car, medical, and educational expenses) and so will travel an extra four bus stops to find something priced only US$0.50 cheaper at another store.

As far as sourcing goes, there are some honest suppliers out there who have chosen a long-term, relationship-building strategy over a short-term, screw the customer strategy, but they are still in the minority in China, less so in Hong Kong and Taiwan. That is why a company doing business in Greater China needs to do its research and have a number of checks and balances in place. Sourcing in Greater China can be a huge boon to a business, and can also be a minefield that results in lost limbs and profit. Plan on spending weeks overseas just to get all of the details worked out. Multiple trips, help from consultants, constant quality checks are a necessity for a prudent businessperson, but if you can get a steady supply of finished goods at half the price you’re paying now, it is well worth the effort.

Do the Chinese Lie? That Depends…

Out in my neck of the woods, it is not uncommon to hear a businessperson from a Western country, following a disappointing episode with a Chinese supplier, say something like: “They’re all a bunch of liars!” Some of my own clients talk about Chinese suppliers they’ve chosen to partner with using language I can’t repeat on a family site. Of course, they’re not all bad. Part of the problem is very different definitions of what constitutes ethical and honest behavior between the Chinese and the Western world (Note: I’d include the Japanese in the group of people who don’t understand Chinese “lying”).

In short, for most Chinese people, lying is not really lying. What we in the West would consider to be a bald-faced lie, a person in greater China might think of as a courtesy, a convenience, or a smart tactic, none of which are immoral. In fact, lying to achieve some business or social aim, and getting away with it, is considered to be a sign of intelligence and social skill among many Chinese.

Chinese values are rooted in concepts of duty to oneself, one’s family, one’s company, one’s friends and associates, but not to anyone else. There is no “Good Samaritan” ethic going on; kids are not really taught from a young age that they have a duty to help strangers. The teaching is more along the lines of “don’t make trouble,” “don’t do anything shameful,” or “be a good student.”

Also worth noting is the fact that many more things are covered up by the Chinese than they would be in the West. People don’t tell each other about things that would make someone lose face or cause social embarrassment, and once the “deception” is discovered, all is generally forgiven after a brief explanation along the lines of “it wasn’t convenient for me to tell you the truth.” Things like job loss, serious illness, legal trouble, or problems with children are seldom talked about, and often kept hidden, even among close friends and relatives.

In a business context, you might not hear about a shipment that was supposed to go out last week but will now likely never go out until it is too late. This occurs with great frequency in greater China, and there is very little concern or shame on the Chinese end, because it simply isn’t viewed as being wrong.

For the unprepared Western businessperson, these ethics can be quite unnerving. I’ve personally seen many a business deal, and many a friendship, fall apart because of these radically different values.

The Bottom Line: Don’t expect your Chinese suppliers to have the same set of ethics that you have. There are differences across the board in what constitutes ethical behavior when you’re talking about East and West. Tread carefully, and set up plenty of checks and balances.

Tip: If you can source in Taiwan, do it there. If you source in China, consider dealing with a Taiwanese-owned factory. The Taiwanese have been doing business with the modern West far longer than the Chinese have. They “get it” much better than China does.

One Night in Taipei: Business Entertainment, Chinese Style, Part Deux

I’ve decided to post the rest of my narrative of a typical evening of business entertainment in Greater China.

Mom, if you’re reading this, know that your boy has seen a bit of the world but has not done anything to disgrace the family name :).

Note: If you are a female executive doing business overseas, you will most likely be politely dropped off at your hotel after dinner. If you want to continue to have fun, there aren’t many options at this point. The local boys aren’t going to take you to a men’s club, but they might offer to take you to a disco pub somewhere to bring in midnight. It is a fact of modern society in Taiwan, China, and Hong Kong that women are still expected to behave according to society’s expectations of women. To wit, good girls go home to bed after dinner, rather than go out to party. The irony of the situation (i.e. that men in these societies seek out the company of women for their personal entertainment, but don’t want their own women anywhere near one of those places) is not lost on me.  You don’t have to like it, but it is a fact.

One more note. If you really aren’t interested in adult entertainment that falls somewhere between watching a rated R movie and visiting a house of prostitution, you’d better excuse yourself right away. Claim illness, fatigue, a bad case of heartburn, whatever.

If you are curious enough to proceed and not too burdened with inhibitions, keep your wedding ring on and your trousers tightly belted. Or don’t, as the case may be.

Back home, if you were having a boys’ (or girls’) night out, right about this time you’d repair to a comfortable bar, pub, or dance club, where you’d drink and dance the night away. In Greater China, this sort of activity is for college students, not for real businessmen. Real businessmen repair to a club where they will be pampered and cared for by young, attractive women. These ladies are often scantily glad. The first such club I ever visited was staffed by women in see-through lingerie and I was shocked, to say the least.

There are several types of club that you may be taken to, but they will all share one common feature: karaoke. There will be a big screen television, a remote control, and a songbook. You will spend the next few hours taking turns belting out popular songs in Mandarin, English, Japanese, Cantonese, and whatever other dialect the people in your party like to sing in. Yes, you will have to sing, or be looked upon as a malcontent. My signature English song is “Hotel California” by the Eagles, as it is available on nearly every karaoke machine I’ve seen here, and it can be sung in a key I can manage without murdering the ears of my friends. I am also able to sing a number of Mandopop favorites, which won me a great deal of prestige in years past.

Once the drinks are ordered and the karaoke machine has been fired up, it is highly likely that an array of young women will be presented before you and your party. You will be asked to choose a girl from among this group, and as the guest of honor, you’ll have first choice. This can be awkward if you’re the shy type. If you really don’t want to choose a girl, then ask the boss to choose for you.

Each member of your party will be attended to by one young lady. She will pour your drinks, feed you, light your cigar and, in many places, give you lap dances at certain intervals. She will sing with you, converse with you, try to cater to your every need.

The other members of your party will possibly engage in behavior that you are not accustomed to seeing, even at a strip club back home. Fondling, kissing, etc. You may be encouraged to place your hands on the body of your female companion, which is allowed in Taiwan and China. At this point, we’re on the brink of all sorts of issues, exploitation not the least among them. If you’re a happily married man along for the ride, then just be polite but somewhat reserved. You can keep your hands busy eating fruit and snacks and sipping your drink, and you’ll survive the evening with your marital integrity fully intact.

After a few hours of this sort of entertainment (the clubs sell their services in hour long increments, with two hours being the standard), it will be time to leave. The other men in your group will most likely not take one of the girls home, since you are present and because of the cost involved in buying a girl from one of these clubs for the evening. If the men in your group decide they need companionship of an even more intimate type, they’ll probably call a pimp and set things up or they’ll go to a sauna somewhere. You may receive an offer to arrange such services for you. If you are like most people and that isn’t something you’re interested in, you can very convincingly explain that you are exhausted and need to go back for a night’s sleep, alone.  Local men will feel pressure to participate in this sort of activity, even when they don’t want to, but you’ll always be eligible for the foreigner exemption. 

You will most likely be in a private room for Phase Two of the evening, though at some clubs (called “piano bars”), you will be in a booth that is attached to a larger room, full of other such groups.

There are several variants on this sort of entertainment, but what I’ve described is usually what happens. As I wrote earlier, if you’re not up for this sort of an evening, you’d better bow out early. If you are curious and want to have the full local experience, now you know what you’re in for.

US Consumer Concerns About Chinese Food Safety

This is too juicy to pass up writing about. Trader Joe’s, a very successful retail food chain based in California, has pulled all Chinese-made food products from its shelves.

Click here for a brief news item from AFP: US store chain cuts sales of food from China

From the article:

US grocery chain Trader Joe’s said Monday it would stop selling food imported from China due to customers’ concerns about the products’ safety.

“Our customers have voiced concerns about products from this region and we have listened,” Trader Joe’s spokeswoman Alison Mochizuki said in a statement.

“All single ingredient food items sourced from mainland China sre scheduled to be out of our stores by April 1,” she said.

What this means is that (1) if an ingredient for a food product is sourced from China, that food product may still be sold in Trader Joe’s and (2) Trader Joe’s may eventually sell foods that are made entirely in China sometime in the future.

This is the very definition of “growing pains,” folks. The same sort of process occurred in Taiwan, thirty or forty years ago. Here’s how it works:

Stage One: A developing country offers competitive advantages in labor costs and manufacturing speed. Many first world countries switch their manufacturing to this country.

Stage Two: The developing country’s factory owners achieve some success, and then through a combination of penny-pinching greed, lack of foresight and vision, and general lack of understanding of what the foreign market demands, start sending product with quality problems. In the case of products like foods, toys, and tires, this is downright dangerous. Consumers in the first world country react, the media plays up the problems, and the flow of orders starts to dry up as buyers look elsewhere, maybe paying a bit more.

Stage Three: The government of the developing country realizes that if something isn’t done to reign in these factory bosses, the country’s export manufacturing business is going to go to hell in a handbasket. They clamp down on dangerous practices, enforcing compliance with safety regulations.

Stage Four: The developing country recovers its export market, and continues to develop its technology and safety measures.

The interesting question here is, with enforcement in China so haphazard and hit-and-miss, will China successfully get through Stage Three to Stage Four? Several efforts have already been made to crack down on abusers, but in China, where the emperor is far away, the subjects basically do what they want.

Bottom Line: If you are sourcing your products from China, you’d damned well better be on the ground, or hire someone trustworthy to be on the ground, watching your suppliers like a hawk.

China Today: Angst, Emptiness

Some months ago, I read this interesting Reuters piece on Yahoo News:

Anxiety, emptiness fuel Confucius craze in China

The article describes a book on the writings of Confucius and their application to daily life, written by a Beijing Normal University professor.

From the article:

Her mass following tells of deep anxiety about morality and beliefs in a society that has gone through a disorienting transformation in recent decades, analysts said.

“We were taught Marxism and Leninism in schools,” said Tian Na, a 25-year-old teacher who bought the book on the Internet.

“But when I became independent and went to college, I saw professors take bribes and I felt the old slogans like ’serve the people’ were no longer relevant,” she said.

Basically, folks in China are looking for something beyond the clarion call of “money, money, and more money.”

An opportunity for Christian missionaries?

That is a subject for another post.

Two Chinas

For a long time now, I’ve been shaking my head at the naivety of those who think that China is nirvana for marketers of all sorts of consumer products. “Over 1 billion people, all of them potential customers!” is the clarion call of these excitable people.

In terms of personal income and buying power, what you’ve got in China is essentially two countries. About 200 million people, mainly living along the eastern seaboard, are enjoying many of the benefits of China’s rapid economic expansion. The flow of new wealth does trickle into inner China, but it only trickles. The “other” China, the one made up of 900 million people, is NOT enjoying the benefits of China’s economic expansion. In fact, many of them are seeing their purchasing power drop as China is wracked by unprecedented inflation.

If you want to get a bit of understanding of the real China, take a look at this excellent piece in Time Magazine from a few years ago: “Seeds of Fury”

Bottom Line: If you’re selling something that costs more than a dollar, most people in China can’t afford it. Besides, if there really is a market for what you’re selling in China, the Chinese are very likely going to figure out how to sell the same thing at a lower price than you sell it at, if they haven’t already.