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Monday, September 27, 2010

DOING BUSINESS IN CHINA: China Trade: Becoming a Good Chess Player

Doing Business In China with Dan Paulson

In recent months, the US has sought to pressure China to re-value the Yuan. By strengthening China’s currency, the US hopes to lessen the imbalance of trade by making US goods more competitive. Over the past several months, this pressure has been increasing. Watching this play out is a good study on how business between the US and China often differs.

In the United States, we are very used to our way of business. We can be demanding, willing to pressure others for price and service, and set expectations for immediate returns. Things here move at a pretty fast pace. In China however, the pace can be much different. Relationships take longer to build and the quality of these relationships can vary significantly. Also important is one’s ability to save face. Things we take for granted in business discussions here, can potentially be deemed offensive by a business connection in China. This is why the strength of the relationships are so important and one should treat business relationships in China more like a Chess match.

If you consider the re-valuation of the Yuan, China has taken a slow and methodical approach. This doesn’t work well with our occasional “shoot from the hip” style. Our habits of wanting action now could potentially cause the China administration to retaliate creating a negative impact on trade in the years to come.

Doing business in China is more of a chess game. It requires strategy, patience and a willingness to approach business from a different perspective. Setting political differences aside, there are tremendous opportunities for businesses to grow in China if they apply certain tactics and observe some of the mistakes others make.
  • Relationships first – Weak relationships produce poor results. Much like us, the Chinese look for short-term gains. Less like us, they are not as concerned about the “sale after the sale”. Unfortunately, this is where many businesses get burned. Focus on strong relationships first.

  • Saving Face – It’s hard for anyone to accept criticism. In some cultures it is even more difficult. So is true in China. Anything that could challenge or damage someone’s power (real or perceived) is frowned upon. This is where you may get commitments from business connections that cannot hold up.

  • Give respect as well as receive it – This is part of relationship building and saving face. The more respect you give to your business contact, the greater respect you will receive in return. Playing games or trying to force your hand will damage your business relationship and could cost you. Make sure you show that you intend to work with your partner.

  • Conduct face-to-face meetings. Again build relationships. Personal contact can make the difference. There is a lot that can be lost in translation (quite literally) by not getting together with the individuals you are trying to do business with. Especially if they are half way around the world. The money spend on travel could save you increased costs and headaches down the road.

  • Understand what moves your international connection is looking to make – Depending on your relationship, be ready for them to tell you what you want to hear. Make sure they are able to deliver on what you are looking for. You may receive assurances that they can deliver when they really are unable to. Pay attention to body language. Get clear about what you need and what they are offering.
The differences in your relationships will make all the difference in your business. While we may not have control over the value of currency, when it comes to negotiations, we can definitely learn what works and what doesn’t.

For more information, please visit Dan's TNNWC Bio.

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