Funerals in Taiwan

Check out this article in the Taiwan Journal for an interesting look at how the funeral business in Taiwan is changing, and how that is reflective of the changing beliefs in Taiwan society.

Doing Business with the Chinese: Communication Breakdown

Many people ask me what it’s like to do business in greater China. One of my favorite songs from the classic rock era, “Communication Breakdown” by Led Zeppelin, comes immediately to mind.

I speak, read, and write fluent Mandarin Chinese. I conduct the daily business of life, as I have done for the past twenty years, largely surrounded by Chinese people.

And still, I often have to probe, prod, and read between thousands of lines in order to figure out what the hell is going on. You see, in greater China, speaking directly is NOT a virtue as it is back home.

Consider a recent discussion I had with a contract manufacturer (OEM factory) in Taiwan. I was there on behalf of a client, a food manufacturer. When I called the factory, on the recommendation of a distributor, they assured me up and down that they take all sorts of OEM work from companies both domestic and overseas.

Here’s a condensed version of the conversation I had with the boss (he had an assistant at his side the whole time), translated from Mandarin into English:

Boss: (Examining my client’s product). “We can make this.”

Me: “Good. So you already have the necessary equipment in your factory?”

Boss: “We’ll need to study this a while before we can start producing it.”

Me: “Of course. So, you have the equipment and can do it then?”

Boss: (Munching on one of the samples I brought) “This doesn’t taste very good. Too hard. Try one of ours.” (Hands me a few samples of his product.)

Me: (Politely trying a few of his samples). “Yes, it tastes very good. Of course, my client will want you to recreate his product from a formula. He’ll want you to develop a product that is very similar in look, texture, and taste to the product his produces at his home factory.”

Boss: “Your product doesn’t taste very good. Consumers in Taiwan and China won’t like it.”

Me: “Thank you for your kind advice. So, are you interested in producing this product? Will you work up a quotation for me on X kg?”

Boss:“It would take a long time to get this right before we could start producing it.”

Me: “I know. I have experience with making other food products. We’ll go for as close a match as we can get. If it takes a few weeks or even a few months, that’s okay. So, are you interested in producing this product?”

Boss: “Can you just put our products into your packaging? That would be easier.”

Me: “I’m afraid not. The client wants to sell his product, not someone else’s product. Mr. X, forgive me, I’m an American and we tend to speak directly. Will you tell me if you are interested in working with my client?”

Boss: “I don’t know. Making your product wouldn’t be very convenient.”

Me: “Thank you for your time.”

This really happened. It has happened many times in my years in greater China. Do you see the vast differences in the way a Westerner might communicate and the way a Chinese person communicates? In China, a boss won’t say “no,” even if his life depends on it. He trains his people to tell all prospects that his factory can make anything and everything, on the off chance that either he can make it, or his friend/brother/old high school classmate can make it and he gets his cut of the deal. He won’t answer questions directly unless pressed, and even then, he won’t like it. He also very often won’t understand that you want him to do some work for you in the way you want it done, not the way he wants it done. He’ll tell you “yes” at the beginning of the conversation and then, two hours later, you’ll learn that it’s actually a “no.” And here’s the kicker–behaving and communicating this way is not only acceptable, but proper, a virtue even. Chalk it up to cultural differences, my friends.

I’ve gotten pretty good at figuring out the truth in a relatively short period of time, but I haven’t ever figured out a way to get a factory owner to speak plainly and directly. It just isn’t done here. So I continue to probe and read between the lines, and accept that this is the way it is done with 98% of the people I do business with in greater China.

Now, can you imagine dealing with a situation like this without knowing anything about Chinese culture?

The Bottom Line: You won’t get very far, operating in greater China, unless you are personally prepared to deal with communication challenges like these, or you are able to hire someone who knows local culture to deal with them for you. China and the West are a universe apart, culturally. That isn’t a gap that is easily bridged. (But it is an endless source of fascination for a few of us nutjobs!)

Culture Shock: American Managers in China

I found this well-written, concise article in the Salt Lake Tribune that highlights some of the cultural adaptation problems American managers who work in China encounter.

From the article:

The issue…is that the Chinese culture is so different from what Americans have experienced in life and in the workplace.

When people ask me if there are major cultural differences between Greater China and the United States, I usually reply with this: “They are two entirely different worlds. Humans need to eat, sleep, and work, but the similarities end there.” Managers heading for China would do well do keep a very open mind, and to avoid any major policy decisions until they get the lay of the land. They should also consider hiring a cross-cultural communications trainer with experience in Greater China to guide them through the mine fields.

This article is full of other gems that provide a brief overview of some of the major cultural differences between China and the West. I’d love to go through them but, as usual, I’m in the middle of 18 projects.

Culture Shock For Chinese Tourists And Taiwanese Hosts

I’ll borrow the title of the article for this post.

Basically, mainland Chinese tourists have begun to visit Taiwan, and are expected to do so in greater numbers in the months and years to come. Predictably, there are some biases and prejudices on both sides and like most biases and prejudices, they are largely without logical foundation.

The article doesn’t go into any kind of depth on the political, cultural, and socio-economic differences between the Chinese-speaking peoples living on either side of the Taiwan Strait, but it makes for a light, fun read.

It will be fascinating to see how things play out. I’ll be watching with interest.

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 to a group of Taiwanese executives. 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!”  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 until you really know what you are doing.

Hakka Dreams

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.”

Culture Shock: “Look at the foreigner!”

For those of you wondering what it might be like for an American to live in Taiwan, here’s a snapshot of a typical day:

After conducting a morning training seminar, I repaired to the wedding reception of a close friend. The reception was attended by nearly 400 people, and I was the only non-Taiwanese person in the banquet room. The groom is a professional educator and a graduate of both the #1 high school and the #1 university in Taiwan. His wife works for Cathay Life Insurance. So the crowd, comprised of educators and business people, was well-heeled and well-educated. I felt completely at home, not at all like a foreigner, because nobody treated me like a foreigner. I love to meet people like that, who view me as a person rather than an exotic breed of non-Taiwanese, and who don’t care enough about my nationality to make it an issue.

After the reception, I went to an afternoon meeting that ran until about 5pm. After 45 minutes on the subway, I got off and started walking toward home. Waiting at a stoplight, I heard a man standing behind me say, in Mandarin “The foreigner is going to cross the road,” followed by a woman’s response that was too soft to make out.

I was indeed planning to cross the road, but that was hardly worth commenting on, except for the fact that I am a tall white person in a land of people who don’t look much like me.

I turned to look at this pair and saw an older man, about 60, with a woman in her 20s. They were about two feet away from me.

The man made another comment: “Now he is looking right at you!”

I nodded my head and said, in Mandarin, “He can understand what you are saying.”

The woman then said. “I told you he could understand Mandarin.” I have no idea how she knew I could understand Mandarin, as I don’t wear a t-shirt proclaiming such, and most people who use the third person to discuss a foreigner standing directly in front of them, as if the foreigner is some kind of zoo animal, typically assume that the vagaries of the Mandarin language are beyond the comprehension of the descendants of hairy barbarians.

At this point, I just shook my head, turned back around, and waited for the light to change. They continued to discuss me in the third person, apparently still unable to grasp the concept that I fully understood what they were saying or, more likely, not caring. As much as I enjoy my relationships with well-educated, open-minded Taiwanese people, these sorts of encounters are discouraging. It is quite strange and discomfiting to be made out to be something not quite human by narrow-minded dolts.

Living in Taiwan, this sort of thing happens to me on a nearly daily basis. There is an incident or two per week on the MRT, where I either have to ask people to stop discussing me while I am standing next to them, or I have to change seats to get away from a group of idiots. When I go to China, it is the same, or worse. It actually happened again at the grocery store later today, when I caught a family by surprise, pushing my cart down the aisle they were parked in the middle of. I guess they haven’t seen too many foreigners, because there was a big, loud discussion about various aspects of my foreignness (including the very astute observation that “foreigners also go shopping at Carrefour!”) , and about foreigners in general, even after I had called across the central aisle to my wife, in Mandarin.

What can one do in such situations? Not much, actually. You aren’t going to be able to educate people like that, who are so lacking in any sort of understanding of the larger world that they simply couldn’t wrap their brains around the idea that I am actually just another human, rather than a bloody foreigner. At times like these, you remind yourself that if you lived in the US somewhere, you’d be just another American, which would be nice, but you wouldn’t get to deal with being an outsider, or a zoo monkey, all of the time. Comforting but boring in the end.

Sometimes living in Taiwan is an exercise in dealing with contrasts that can challenge the sanity of even the most easy-going person, but it is that challenge that makes life interesting.

The Future of Taiwan-Owned Factories in China

As a follow up to my last post, this article in the Taiwan Journal predicts a possible drop off in Taiwanese investment in China as a result of changes in labor laws that came into effect today. From the article:

Many Taiwanese businesses in the Pearl River Delta area of China may soon shut up shop, in order to dodge surging labor costs brought on by China’s new Employment Contract Law. The new law is widely believed to contain the world’s most complete regulations governing labor-related issues, and is scheduled to take effect on Jan. 1, 2008.

The situation will be miserable,” predicted a Taiwanese businessman on condition of anonymity. “Big firms will take the lead in calling it quits, followed by their suppliers of raw materials and other supporting factories,” he added Dec. 20.

An unofficial survey shows that one third of the Taiwanese firms in the area either have halted their operations or plan to do so in the near future. The area of the Pearl River Delta includes such regions as Dongguan, Shenzhen, Guangzhou and Zhuhai.

With the implementation of the new law on the horizon, businesses in the area are worried about the impact on their bottom lines. Taiwanese firms already have to bear various welfare costs, including pension allocation and medical insurance.

Industry insiders estimate the new law will boost manufacturers’ labor costs by an extra 20 percent. In addition, the new law stipulates that employers must offer open-ended labor contracts to employees with over 10 years of service. Employers must also provide severance pay in case of mass layoffs.

Others are not as concerned:

Wang Jeng-tang, president of the Taipei Computer Association, stated Dec. 19 that the notebook manufacturing industry is likely to be affected by the new law. “Maybe in the future notebook manufacturers will raise their prices a little,” he said, describing the impact of the Chinese action as “limited” and “not necessarily negative.”

As a Taiwan-based consultant, I was particularly interested in this little nugget:

The uncertain situation appears to have triggered a wave of Taiwanese businesses moving back to Taiwan, as reflected in the recent increase in demand for land in Taiwan’s industrial zones.

Taiwan’s Ministry of Economic Affairs reported that the US$1.54 billion subsidy for a preferential rental program for industrial-zone land is already close to depletion. Economic Minister Chen Ruey-long has instructed the Industrial Development Bureau, which oversees the program, to expand the scale of the program to accommodate the flood of applicants for industrial land in Taiwan.

I’d like some confirmation of the statements made in this piece. There are a few too many “unofficial surveys,” “estimates,” and “situations that appear to trigger (certain events)” for my comfort level. I’m not going to comment on whether this is good or bad news. My role has always been to advise individual companies about their businesses. I’ve tried to remain out of political issues, which suits both my role and my natural bent towards pragmatism.