Tag Archives: Cross-cultural communication

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!)

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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.

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Negotiating with the Chinese: Lesson One

You’re sitting across the negotiating table with your Chinese supplier. Your agenda? (1) Lower your cost per unit by 8%, (2) Speed up production time per 40′ container by one week and (3) Get them to accept more favorable payment terms (e.g. 30% down, Net 90 on the balance).

His agenda? To make as much money as possible and (this is very important), to gain as much face as possible. Hence, your request for lower cost per unit, despite quantity increases, isn’t going to go over very well if you ask for it directly. Secondly, your request for increased production speed will reduce his flexibility in scheduling his jobs. Finally, your request for better payment terms means he’s got to pay more in interest on his operating capital.

Note: If you’re Nike, GM, or Wal-mart, none of this applies. If you’re a medium or small enterprise, read on.

If you say something like “We’ve increased our quantity to nearly three times what it was last year, so we’ll need you to cut your costs by 8% per unit,” you’re going to get this response: The boss will furrow his brow, scratch his chin, and say “That will be very difficult” or alternatively, “That is very inconvenient for us.” What that means, in plain English, is…..NO!

The boss will then explain the fact that his own costs have increased over time. Labor, materials, equipment, rent. Everything has gone up. He was thinking about asking you for a price increase! Also, you don’t do things very efficiently. You send POs, then make changes to them. Some of your preferred suppliers are difficult to work with. Etcetera.

Why did you get this response? Perhaps the more cogent question is, how do you get the response you want?

If you’re a typical American, you won’t really like the answer.

You’re going to have to throw yourself at his mercy, and in doing so, appeal to his social obligation to save your face and to his desire to increase his face.

This is why saying to a Chinese supplier “You know, there are several other factories we could work with here?” will only stall and complicate negotiations. You’ll just irritate them by saying this.

So what do you say? You give him the opportunity to help your business as a bona fide partner by saying something like this: “I’m facing serious competitive pressure in my market. You are my partner–without you, I couldn’t get anything done. If I don’t find a way to decrease my costs by 8%, I don’t see how I can stay in business long-term. Please, Mr. Wang, can you take a closer look at your production costs and find a way to lower my cost per unit?” If you can manage to tear up and let your voice shake a bit, even better.

I know it seems counterintuitive for a Westerner to talk like this (it seems like butt-kissing to most of us), but this is what works in China. You aren’t butt-kissing. You are appealing to a very powerful sociological force: The obligation to give face to a customer who has humbled himself before you, and the desire to increase one’s own face by playing the traditional role of the hero. In this case, the damsel in distress is your company.

One of my consulting clients was a company whose boss refused to adapt to local communication styles. He comes from an aristocratic family, and could never understand or countenance the need to humble oneself and ask for help. He treated his Asian suppliers the way he treated his American suppliers: You work for me, so get in line, or else. His Chinese suppliers felt insulted and unappreciated, and after a time, did everything they could to rip him off. I had all ten fingers and all ten toes in the dam, trying to keep the relationship from breaking, but after a few years, it did indeed break. The relationship ended messily, with threats of lawsuits back and forth.

Do you want to do your manufacturing work in China? Then you’d better learn to communicate with the Chinese. You’ll be leaps and bounds ahead of your competition, who are thinking “Culture? Schmulture! A supplier who won’t do what I ask can kiss my red, white, and blue butt!” Meanwhile, you’re getting the unit pricing, delivery schedule, and payment terms you want.

Now, do you want to sell your products in China? I’ll write about that in Lesson Two.

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