Goodman's Top 10 China Business Mistakes

The chances are good that you or someone you know is doing (or trying to do) business in China.

Avoid making these China-rookie mistakes.

Here’s my attempt, in NO PARTICULAR order and all being important.

1.       Any variation of ‘doing things like you did back home’

m        Using success back home as proof-of-concept

m        Failing to adapt to the local market

m        Using internal procedures assuming they will seamlessly they will work the same

2.       Overestimating the mystic of Face and Guanxi

m        The best way I can explain it, to keep you on your toes, is Face is about appearance over substance. Acting like you respect the other side even when you may not. Political correctness²

m        Guanxi is merely connections² Nothing mystical there.

3.       Misunderstanding how (much) Face and Guanxi affects your business

m        The #1 motivation in China (and therefore the Chinese) is to NOT lose face. Followed closely behind by #2 motivation is how to gain face and then maybe #3, being not making someone else lose face.

m        If the core of business is about trust and there is a ingrained distrust of institutions in China, Guanxi uses connections with individuals as ‘insurance policy’ to make things happen.

4.       Seeing China as 1 market

m        The country IS bigger than all of Europe.

m        There are local peculiarities (ie. local power struggles) that need to be understood and which for example makes using a nation-wide distribution system (sales or logistics) difficult and unlikely.

5.       Miscommunication

m        High Context vs Low Context thinking.

m        Cultural bias - They were taught differently, they think differently.

m        You think you are being clear – they are ‘interpreting’ your meaning

m        You are thinking ‘direct/straight line logic’, they aren’t.

m        But they said they understood….

6.       Thinking a contract is binding

m        Think of the signing of the contract as your wedding day.  In so many respects it is just the beginning of your relationship. All relationships require hard work to maintain.

m        Beware the ‘getting you on the boat’ tactic (aka Stratagem #28). Once on board and the boat leaves the dock, you can’t leave so easily and that is when the renegotiations begin.

7.       Chasing Rainbows - Focusing on the long term goals

m        Focusing on method over results

m        Going for perfection instead of what works - This is a tough one for Westerners to accept. This tends to be an emotional issue because it is seen as a right or wrong issue

8.       Confusing language skills with management or business skills

m        Yes I know, but it makes it so much easier for YOU to talk with them. Sigh…(focus on measurable results)

9.       Assuming Price and Quality are connected

m        Face is what ‘it’ is all about. 

m        People will pay out the nose for something that gives them face and put very little faith in your idea of quality. 

m        So if your product or service is not related to face, most Chinese go for the cheapest option.

10.  Managing by remote control/ not being on the ground, hands on, in the trenches

m        I hope simply reading over the other 9 will be enough to convince you.

If you have been making one or more of the above mistakes, don't sweat it. Now you know.