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Goodman's Top 10 China Business Mistakes

Written by: Sam Goodman

Article Overview: Here is the outline for 90% of the lectures I give on doing business in China.

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.

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