by Andrew Hupert
Doing business in China is hard enough when you get everything right. Western managers often end up repeating the mistakes that others have made before. The bad news is that any one of these can undermine your efforts in China. The good news? They are relatively easy to eliminate through training and planning.
Management behaviors you need to eliminate.
1. Flying blind. If you do not have time to plan for China, you do not have time to succeed in China. You need to figure out how to build your own independent channels of business intelligence and market data. It is great to get expert opinion on how to plan your China business, but if you rely on others for your basic operating strategy you are starting off with a very high risk profile.
2. Building on a weak foundation. Your most important China negotiation takes place in your own HQ. If your board and bosses are not 100% committed to the China business, you will spend too much time explaining and reassuring your own people. Your Chinese negotiating counter-parties will sense it – and take advantage of your weakness.
3. Declaring “Mission Accomplished” too soon. Chinese negotiators focus on the relationship – not the contract. In the West we stop negotiating when the paperwork is signed. In China negotiations start at “hello” and end when your relationship is over.
4. Letting the tail wag the dog. Chinese partners, consultants and key hires will lead you around by the nose if you let them. It it great to work with well-connected professional, but deals should always driven by fundamentals – not guanxi relationships. You will get plenty of exciting offers, bolt-from-the-blue opportunities and suggestions for convenient work-arounds to bureaucratic bottlenecks – but if they do not fit with your business plan then they are just expensive distractions.
5. Training your competition. That Chinese businessmen are long-term planners does not mean that they intend to work with you forever. You may be a bit player in their grand epic story – and your role could be to supply them with technology, new products or business methodology. Know who your potential competitors are, and do not treat them like partners.
6. Coasting on past successes or good starts. There is no auto-pilot switch in China. The more successful you are, the more problems you will have. It never gets easy. This is particularly true of relationships with Chinese partners, key hires and suppliers. If you only pay attention to a Chinese partner or associate when you have a problem or a new set of requirements, then your relationships will wither and die.
7. Searching for common ground. Go into China with a plan to building bridges – not discovering common ground. Shanghai, Shenzhen and other business cities in China have become ultra-modern centers of international business, and it is easy to fool yourself into thinking that traditional Chinese business customs are fading into memory. That may in fact be true – while you are spending, hiring and planning your investment. But once the assets are transferred and you feel it is time for the locals to start performing, then China becomes a very traditional place.
8. Playing by US HR rules. HR is the key function in China, and you have to steer clear of two common Western blunders. Some managers try to run their China office just like it was in the US – with the same expectations, attitudes and benefit structures. Others go the opposite way, and end up outsourcing the entire HR function to local staff – inadvertently cutting themselves off from one of the most important managerial tasks in China.
9. Blind trust. Knowledge is a superpower in China – blind trust is kryptonite. I have known plenty of western managers who complained of being betrayed and undermined by their closest advisors — but have also spoken to Chinese who felt that their “so called bosses” were stealing all of their ideas. You are the one with ultimate responsibility for your own success or failure in China, so you have to develop your own ideas and plans.
10. It is only guanxi until you get caught. Countless western bosses have paid a high price for taking shortcuts and compromising on best practices. This usually includes paying bribes, cutting corners on compliance, engaging in informal partnership arrangements and neglecting to do even the most basic of due diligence. I would like to be able to say that these were usually green young grads who did not know any better — but I am talking about senior MNC managers with decades of experience. Chinese customs will never help you, but if you get them wrong they can hurt. A lot.