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.

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.

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.

Some years ago at a popular restaurant in Xinzhu in the north of Taiwan, I joined a gathering of twelve business owners, all local Rotarians, for a feast featuring the local Hakka fare. Shortly after the first bottle of whiskey was opened, the backslapping and the joshing began. “True, this is Mr. Gao. We call him “Hotel”. He’s the richest man in our Rotary Club.”Mr. Gao replied: “Nonsense! Chemical, you are the richest man in Rotary, and you know it!”

Over the course of the meal, the sequence repeated itself several times. By the end of the evening, it became clear that Car, Bank, Manpower, DM, Medicine, and Well—each man nicknamed according to his industry or, in the case of Well, legendary drinking ability—were all wealthy yet unwilling to admit it too openly.

What I also remember about that evening, and dozens of similar evenings over the years, are the frequent observations made by these Hakka businessmen about their cultural identity. Things like: “We all came from farms up in the mountains. Our parents had to go to the river and catch a fish if we wanted to eat meat” or “Hakka people are careful with their money,” or “We Hakkas tend to be more conservative than your average Taiwanese.” One the most memorable of these remarks came from a Hakka businessman who often trades with the Japanese. He told me: “A Taiwanese Hakka businessman can best three typical Taiwanese businessmen, and a typical Taiwanese businessman can best three Japanese businessmen. These poor Japanese don’t stand a chance!”

Ask a non-Hakka Taiwanese to describe Hakkas, and he’ll often cluck his tongue and say something like “Hakkas can be really generous, but only when they need something from you,” or “Hakka people tend to be very clannish,” or “Hakkas are really tight with a dollar.”

Some 15% of Taiwan’s population is Hakka. The Mandarin word for Hakka is 客家人 (kèjiārén), or “guest person”, though this appellation is fairly recent. It describes the traditionally migratory nature of the Hakka people, who originated in northern China around 2,700 years ago. After a series of resettlements aimed at escaping war and social unrest, most Hakkas settled in southern China, with large concentrations in Guangdong and southwestern Fujian Province. It was from these southern outposts that Taiwanese Hakkas departed in their last migration southward, across the Taiwan Strait.

Today, there are four major concentrations of Hakka people in Taiwan. Most people in Taiwan recognize the corridor stretching from Taoyuan to Miaoli County as the location of most of the Hakka population in Taiwan. About 50% of Zhongli City, and 80% of the residents of Taoyuan, Xinzhu, and Miaoli Counties are ethnically Hakka.

The settlement pattern of these areas has much to do with the earlier arrival in Taiwan of Hoklo immigrants from Fujian Province, starting from the period of Dutch occupation in the mid-17th century. By the time most Hakkas arrived in Taiwan, the most fertile of Taiwan’s farmland, particularly in the south, was already occupied by larger populations of well-established Hoklo people. The only option left for most Hakkas was the hills and mountains of northern and central Taiwan.

A number of my Hakka friends have narrated oral histories of long-ago battles between Hoklo and Hakka peoples, explaining that the Hakka preference for mountain and hill living was really the result of having been pushed, by force, out of the lowlands. Ironically, as the Hakkas moved further inland, they in turn displaced, and sometimes assimilated, the aboriginal peoples living the mountain areas they settled in.

There are also significant populations of Hakka peoples in Taidong and Hualian Counties. Most of the Hakka immigrants who settled there arrived too late to settle in the hills of north-central Taiwan, traveling to the East coast looking for other lands to settle.

In Pingdong County’s Liugui and Meinong, there are also high concentrations of Hakka people. These were among the first Hakkas in Taiwan, having arrived as soldiers with Koxinga in 1661.

Finally, there are large groups of ethnically Hakka Taiwanese in the Dongshi area in Taichung County, as well as in surrounding towns and villages.

Politically, Hakkas are known for their support of the nationalist (KMT) party in Taiwan. Most Hakkas will proudly tell you that Sun Yat Sen and Lee Teng-hui are part of a long list of prominent Hakka politicians, and many of today’s politicians, from both sides of the political fence, claim Hakka ethnicity.

In researching this article, I kept coming back to a fundamental question about Hakkas. That is, do they define themselves as Taiwanese or as Hakka? Certainly, there are distinctive cultural characteristics—preferred foods, religious practices, architectural styles, language dialects, social customs, etc.—that are identified with Hakka peoples. When I asked my Hakka friends this question, they invariably told me that they considered themselves both Taiwanese and Hakka. Perhaps one of them explained it best when he said: “I think of myself as Taiwanese, but I’m Hakka first. I grew up speaking Hakka, follow Hakka customs, and tend to think more like a Hakka than a typical Hoklo Taiwanese.”

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.