20 March 2010

Doing business in China prt1

This video here is still relevant

China has a bad no a VERY bad reputation unless you are a big multinational company, that is not to say you can't make money as I used to do the accounts of somebody who made bathroom fittings in China and was considered a hero of a small northern town in China.

However you get more of this

The problem is the guy who went to China to build motorbikes walked right into it. He had a wad of money no experience, no business plan and couldn't speak the language and skimped on a translator too. Imagine if a Chinese business man who couldn't speak English went to somewhere like Newcastle and asked a bunch of chavs to design and manufacture your bike. It wouldn't exactly be successful would it?.

In fact you don't need to imagine in that in the 1970s the owner of Hong Kong Li Kar Shing did come to the UK to attempt to do business, he nearly lost his shirt under the same circumstances.

Acquaintances who have been there to do business also state that they have a bad reputation Chinese motorbikes for example are terrible quality, you state you must use THIS grade of steel, they say yes and use a cheaper kind of steel and then wonder why things buckle and break.

In fact if anybody remembers the CIA fact book in the 70s and 80s it did indeed depict Chinese business men as snakes.

This does not apply to Hong Kong, or Macau but to China (Hong Kong and Macau don't have such corruption the ICAC prevents this kind of corruption) that doesn't mean there are no shysters in Hong Kong. Have a walk down the golden mile in Kowloon and it is full of shysters.

However for business negotiations here are some personally attested to guidelines (TCG attempted to go to Zuhai a couple years back to get something plastic manufactured there but the prototypes were consistently shit quality so this was abandoned I lost a couple £100 but that was it).

Anyway for negotiations:

1. The Chinese like to tell you they look for a win win deal in business. Good for you good for them type things. But really they prefer win for them lose for you.

This is because in China, there is still a mind set of super short termism, make money now damn the future. This is kind of similar to Africa. I remember reading a quote somewhere about African women having sex with people with AIDS. Bah whats the point of worrying about AIDS? I could be dead from Malaria next week 8 years is a life time away.

Changes in China are so rapid a similar mentality has developed, a similar mentality existed in US car factories were car parts were so fragile they would break if you looked at them too hard. Best cheat them out of money now, who knows what the future will bring. This even happens to BIG international corporates.

Cars manufactured there are copied examples are here.

This is reflected in UK immigration.

The Hakka immigrants in the 1970s took the long term view possibly as most of them came from the Hong Kong area and had British influence. This might also have been lessons learnt from history where Liverpool Chinese community were forced out at gunpoint multiple times, once they started to get the local people on side it became harder to force them to leave. But this is history for another day.

They have run successful hot food places for decades, and build relationships with their customer base. Peter Li for example of Cornwall has managed this for 35 years, people will come from miles to go to his place to chat etc. He initially lost money for a few years but they found he was a sound guy and therefore over time he effectively carved himself a nice little business.

While over the last 10 years many of the migrants from China are from Mainland China generally from Fujian, you can tell by their dialects when you wander through China town where the language is changing. Their business failure rate is incredible, Fred an accountant who deals with their accounts states that they have over 97% failure rate, it gets sold on to other migrants who fail again and again. The local shops around here once the Hakka/Cantonese people sold and retired have been flipping owners every 6-18 months.

I mention this in my book, where in Azerbaijan everybody cheated me, petrol that was 12p a litre suddenly became £1.20 a litre, shops with clearly marked prices were jacked up for my appearance. Cops would harass me relentlessly, sure they make a quick buck, but on my return Azerbaijan has been slated incredibly in various articles and news papers. Azeris may wonder why they have so few tourists in the future. Although Azerbaijan is a shit hole anyway.

2. Contracts mean NOTHING in China. They can be changed, modified and ignored any time any place. How are you going to enforce it? go to court where they have bribed the judge?

Much to the chagrin of the Korean guy this also happens in Korea. In that people sign a contract to go to a Hagwon and on the first day the owner of the school will give them a long winded speech in a euphemism manner about how their contracts mean jack shit. Again how do you enforce the contract? Go to a Korean or Chinese court when you don't speak the language and even the CCP doesn't respect contracts.

3. The Chinese are very patient in the negotiation process. They wait to wear you out and then get the upper hand when you are most tired.

My English bosses perfected this, in that they would always get you at the end of a long day and put pay negotiations at the end of hectic weeks to catch you off guard.

4. The Chinese take time to find out more about you and your business and they never strike a deal with you right away. So if you’re imbued with western culture, and aim to get the deal sealed as soon as possible, do remember this cultural difference.

A case of know thy enemy

5. The Chinese will tell you that you cannot do this and do that because the regulations forbid it. Don’t trust them. Go and find out the truth yourself and use an independent translator to research the regulations and laws. They will use the language difference to extort advantage over you, in most of the cases you will find that your Chinese negotiation counterparts are lying.

#6 Face ,Oh man face you must not make them lose face, China and Asians in general must never lose face, in China people in 1954 great leap forward would rather starve to death than lose face.

#7 Copyright law, China not even the government respects copyright law, just look at the J-17 which is a copy of the Mig 21 and copied stolen military technology. You go and walk around any market in China and you see 100-1 game cartridges etc. You see this in Hong Kong too but it is kept out of sight, it still happens. So if you have a wonderful invention perhaps you may want to manufacture those parts elsewhere say Malaysia or Singapore where copyright laws are more respected.

I am a Chinese but I am pretty fucking dismayed with the Chinese culture exhibited in business negotiations. In that as I said before the CIA fact book once said Chinese are lower than snakes, I can protest and say this isn't true, yet other Chinese people seem to consistently prove me wrong.

The issue is, if something seems too good to be true, then often it is too good to be true, greed avarice etc all seems to make us lower our shields. This is why the 419 scams still perpetuate if they capture 1-20,000 emails they send out it is still profitable.

A recent trend in this is a nasty confidence trick. In that they will send westerners employed by such corrupt companies above to meet them somewhere like Hong Kong, Its Hong Kong its gotta be safe right? To lure the negotiator into a false sense of security. And therefore let their shields down and thus lose their shirt.


  1. I've worked with Chinese suppliers for 15 years. For the majority of that time, the relationships have been very good. Mutual respect. Etc. But this changed a couple of years ago when the business I was giving these people became significant. When they saw the potential to make allot of money in a way that could transform their lives...I'm talking in the millions of dollars here... This is when the relationships became universally hostile. At every turn our suppliers lied, obstructed, cheated, extorted, attempted to bribe us. All with this appalling short termism at our expense. Your list of guidelines make me laugh. All true. If you're not experiencing this, your business isn't that significant to them. When doing significant business with China, business is war.

  2. Basically, I’m in searching for this kind of post. Very Useful post, I hope, This Site may help my website to get more backlinks Thanks to niceblogger team.