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Doing business in China - When do you want it?

by Andrew Hupert

One of the exciting things about working with Chinese partners is the tight lead times. I am in talks with two groups right now about partnerships – an American and a Chinese. One conversation has been proceeding steadily for over a year, and will reach fruition in about 3 weeks. The other popped up out of the blue a week ago – and will go live in about 3 weeks. If you have experience doing business in China, you should have already guessed that the hyper-drive team is Chinese.  Jia You!

Who wants what?

When you want the Chinese side to do something for you – manufacture, market, source, or work – you have to come a-courting. There will be banquets, relationship-building  and the painstakingly slow mating ritual that is mainstream China deal-making. Even if what you want is for the Chinese side to take your money, you still have to dance the “Mao-tai Minuet”.

When the Chinese side wants something from you, however, inhibitions are cast aside and the tempo of deal-making is quicker, simpler – and unbelievably direct. Westerners who try to handle the quick-draw proposal with a chess-master strategy usually get left in the dust, scratching their heads and wondering what happened to their once-in-a-lifetime golden opportunity.

Working on China Time: Good News and Bad News

Good news: Execution is fast. You will not waste a whole lot of time discussing operational details. No drawn-out meetings with lawyers and tech teams. You have something the Chinese side wants. They know exactly what it is – and most of the time they will tell you in the first sentence of a brief email or IM. You can – and should – be prepared to match their pace and get right to the point. State your case, make your demands and prepare for action. Be polite and friendly – but it is ok to be as direct and aggressive as they are.

Bad news: You might be tempted to fork over too much information too fast – especially if the Chinese side is holding out the promise of a lucrative, long-term contract. Expat service-providers know that if the Chinese side is in a hurry to get information – even if it is in the name of performing a needs assessment or RFP – then they have to be on their guard. Western consultants have logged countless hours of unpaid labor for potential Chinese clients that simply wanted someone to scope out the business problem and outline an action plan. The actual contract is then awarded to a friend or family member.

Coin toss: Details will always be worked out later – and that means to their advantage. You have to be prepared and position yourself. If you understand what is going on and have the resources and network in place to capitalize on this kind of opportunity, you can still do great. If the assets in question are unique or can be pirated, counterfeited or distributed – take a pass. If you want to get paid but there is no time for a contract – run. If the deal involves the exchange of intangibles – your effort or brain-power in exchange for his network, connections or publicity – then you might be in great shape.

Prepare for failure

In Wall St. huckster terms – this kind of China deal is probably more sizzle than steak. It is market research, a press release, a test order. Treat it as such. Prepare for this to be a one-off – which means do not compromise your IP or significant assets. Have a plan for what happens if things fizzle. Position yourself to spin and leverage – make this seem like a complete victory and move quickly on to bigger and better things.

Prepare for success

On the other hand, things may work out great. No one likes to tell the story at their 10th Wedding Anniversary, but plenty of happy-hour hookups lead to real relationships.  Americans tend to be better at protecting themselves against downside risk than preparing for high-potential opportunities. What if your surprise China deal is a hit? How are you going to follow up? Hint: if your strategy involves asking your Chinese partner what happens next, you are going to end up with the short end of the stick. You need to be able to fill in the blanks and seize the agenda with a definite, actionable agenda that will benefit you. This is when you have the most power. If your first deal with a fast-moving Chinese counter-party is a success, he will be excited (and high-pressure) about the follow up. You have to be prepared.

Chinese Time Tactics

Regular readers of ChinaSolved and ChineseNegotiation.com know that we believe Chinese deal-makers use time as a strategic variable. They rush you when they want information and stall when it favors them. There is nothing wrong with this, as long as you understand what is happening and take an active role.


Andrew Hupert runs ChinaSolved.com, an online platform that helps the international business community achieve greater success when doing business in China. He also writes ChineseNegotiation.com. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..

Comments   

 
0#James Wilson2013-12-06 12:49
Hi,
Thanks for the share.China is an important sourcing destination.Therefore sharing the good news and bad news about china sourcing will be an added advantage for those who wants to set up their busi8ness in China.
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