- Published on Wednesday, 17 October 2012 11:07
Came across a really good list of mistakes businesspeople make in China. The list, entitled, “Top Ten Mistakes Businessmen Make in China,” was compiled by Stanley Chao, of All In Consulting. It really is a nice collection of tips and I present them below, with my comments in italics.
Take the trust factor out. All actions must be confirmed with proof. Agreed. We said the same thing in our post, Your China Product Supplier. Trust All You Want, But Systematize.
Foreigners often complain that Chinese don’t understand their business intentions due to a lack of English. This is often wrong. The Chinese do understand your intentions, but wish not to follow or obey them. Not sure this is true and not sure this matters. I am not big on trying to figure out other people’s intent, preferring to focus more on their actions. If this is just another way of saying you need to verify, then I agree.
The Chinese will always want to rush you. Be patient, and make the Chinese understand your intentions. Agreed. We talked about this just a few weeks ago as a typical Chinese company negotiating tactic in our post, How To Handle Chinese Negotiating Tactics.
Don’t be too polite. It can sometimes be misunderstood. Be terse, direct and make your point in simple words or actions especially during negotiations. Business is Business! Sort of agree. I think it is fine to be polite, but at the same time, you should not be so polite as to not make sure that you make your point and do so loud and clear.
Don’t do incoming inspections after the goods have landed in the U.S. It’s too late at that point. It must be done in China, preferably at the factory. Agreed. You must do your inspections before you pay, not after.
If at all possible, have your own staff in China handling quality inspections. You don’t need many, just enough to handle the important issues. Sort of agree. Using an outside firm for your QC can work just fine.
You are never protected by a contract. The Chinese, because of cultural and historical reasons, treat contracts differently than foreigners. They consider it a temporal agreement, subject to change as market conditions fluctuate. Disagree. Contracts do protect you more than not having a contract. Our post, Chinese Contracts. Because They Really Do Make A Huge Difference, sets forth all the arguments why.
Don’t ever do a joint venture. This complicates matters by a factor of 3. Instead, seek distributors, licensing partners, or establish a WFOE-Wholly Foreign Owned Enterprise. Sort of disagree. If you can do a WFOE, do that and not a Joint Venture. But when you cannot do a WFOE because China does not allow it or because you cannot afford it or because you need assistance from a Chinese company for which a JV is required, then a Joint Venture can make sense. For our thoughts on China Joint Ventures, check out Chinese Joint Ventures — The Information The Chinese Government Does Not Want You To Know.
Have all important documents and contracts written in Chinese, with duplicates in English. Use the Chinese translations as the legal, binding document. This will eliminate misunderstandings, language problems, and disputes. Agreed and for our strong concurrence on this, check out China OEM Agreements. Why Ours Are In Chinese. Flat Out. Also, if contracts provide no protection, as implied in number 7 above, who cares in what language they are written?
You don’t think like the Chinese and vice versa. Understand what makes them different by observing them and learning the culture. You will know how to deal with them better. Agreed. It is always good to know as much as you can about anyone with whom you are dealing.
So what do you think?
Dan Harris is founder of the Harris & Moure law firm, a boutique international law firm focusing on small and medium sized businesses that operate internationally. China is the fastest growing area for the firm. Dan writes ChinaLawBlog.com as a source of China legal and business information.