Inside Chinese Business, A Guide for Managers Worldwide, by Ming-Jer Chen

Every now and again the real truth comes out. Once while I was in grad school (at the now infamous NIU) writing my thesis on Thai/Chinese Corporate Culture my thesis advisor broke her academic façade and turned to me and said, “It’s all just B.S. isn’t it? I mean, it’s all just bribery, no matter what we call it, right?” She then went back into her academic mode and continued talking about “gift giving” and we never talked about “bribery” again.

Now, without betraying my Anthropological roots, I have to say this: the truth is that business in China is just like business anywhere else. Yes there are some things about the system that make it different from anywhere else too, but those traits are not, I don’t think, non-existent in other business cultures.

This admission comes after years of fruitless searching for the “secrets” of Chinese business. Maybe I’m jaded, but I just don’t see anything that is uniquely Chinese in my daily business transactions. Sure, there are specific issues with face/pride, hierarchy, regionalism, language, underdeveloped infrastructure and over involved governments and IPR violations that are often highlighted in China, but how are those things unique to China?

The answer is, they’re not. Personal relationship networks and face are easily as or more important in the Middle East as they are in East Asia. The legal and political infrastructure in Central and South America is similarly underdeveloped and overly corrupt involved as it is in China. Regionalism and language issues are huge barriers in South and Southeast Asia too.

Recent research bears this fact out too. An article on Pysorg.com noted that while some adaptation is necessary, business is basically business wherever you go. If you’re good at business in other places you’ll most likely be good at it in China too. Compensating for risk, finding and relying on good people, investing in your people, extensive research and accurate market knowledge, on-the-ground experience and presence, good products/services, honesty and great timing are keys to success no matter where you work.

In the last few years I have read probably 50 books on doing business in China—looking for the “key” or the “secret” or the “whatever” it is that makes business in China seem so inscrutable to foreigners. There are a ton of books about big companies coming to China and either failing or succeeding. There are likewise a ton of books about life in China written by such and such expat either in this century or the last. There are a thousand books on Chinese history and culture. Most of these have value in helping you prepare to work here. But there isn’t some golden key to unlocking the inscrutable Chinese. Outside of the fact that most foreigners don’t take time to learn a Chinese language, I haven’t found any one thing that makes doing business in China so much more difficult doing business anywhere else—I think it’s just harder to understand what’s going on here because of the foreignness of the language and characters.

Now having said that I totally agree that Chinese culture is unique and should be studied. Chinese history is unique too. But the lessons learned from history and culture and the resulting business practices today are not some cryptic Chinese code based on Confucianism, Guanxi and bastardized Chinese Communism. The goal of commerce is to make money and the purpose of all organizations is to standardize the process in a changing and competitive external environment. In this sense the Chinese are no different than anyone else.

Which brings me to my latest book review: Inside Chinese Business, A Guide for Managers Worldwide, by Ming-Jer Chen. This is a great book—a great introduction into Chinese Culture. The goal of the book is to introduce Chinese management practices to the foreign audience, and it does that quite well. What I like most is that he is not sharing “secrets” to Chinese business but rather reflecting some culture patterns that affect the business environment. And, this is a book written by Chinese specifically for Westerners.

Mr. Chen takes business practices and couches them in terms of Chinese history and culture and he does a great job of contextualizing business from the Chinese perspective. The (somewhat idealized) Chinese business is presented with some real multi-cultural educational, business and life experiences. He knows what he’s talking about when he describes Chinese culture in the business setting. He doesn’t convince me that business in China is unique but he does effectively remind me that there are cultural forces in play that any successful businessperson should be aware of.

Chen’s book starts with a look at what he considers the most important roles and responsibilities; after the introduction, the first three chapters are about Family, Guanxi and Social Roles. I agree with Chen that these are probably the Chinese cultural traits that influence business the most and are probably the most uniquely “Chinese” concepts that are presented in the book.

Briefly: Business is family and family is business. Chinese would rather work with family or at least people from the same region than with strangers. And while this preference may still be theoretically true its practicality is quickly disappearing. Huge factories, multinational corporations, increasingly migrant labor and the need for more and better educated people are forcing the change to a much more fragmented workplace. But, ideally, blood is still thicker than water and family will always come first in China. Chen cites many examples of businesses, large and small, that are considered “families” and still maintain their genetic and/or emotional familial roots at a certain level. Certainly there are (hundreds of millions of) Chinese that just “go to work” every day, but this is the ideal and the preference if the choice is available.

One Chinese friend once said to me when talking about how insider trading in the US is illegal: “Insider-trading is just smart!” To me this is the essence of Guanxi, Chen’s second point. You maintain and use and pay back relationships precisely because there is a value, potential or immediate, to the relationship. That value can be both lost and accessed. And relationships are almost as real as tangible properties that must be cared for and cultivated. Is this some back door secret to Chinese business? No. It’s more like the concepts of professional networking and nepotism mixed together.

Finally, social roles are defined by Confucian philosophy. Confucianism focuses on hierarchy and relationships and I would say that Confucianism in China is as easily as influential over the last 2500 years as Jesus Christ has been in the West over the last 2000. Don’t underestimate the power of defined roles. Don’t get all philosophical about them either—just know that Chinese companies are vertical and decision-making authority is very limited.

Chen discusses a number of other influential “Chinese” concepts that deserve mention:

Time is not linear and experiences are not accumulative.

Businesses and individuals do not prioritize individual tasks but work simultaneously on many.

Chinese do not like transparency in business.

Distraction and misdirection are acceptable and effective ways of (avoiding) dealing with problems.

Chinese, especially on the Mainland, are “accustomed to rapid and unpredictable political and economic change.”

Westerners value efficient communication while Chinese value effective communications (meaning: westerners want information and Chinese seek face/relationship management).

Westerners need to hire trusted interpreters rather than educated translators.

Knowing exactly and specifically who you are working is of the utmost importance.

Without face-to-face communications the Chinese language (high context) is very limited in it’s ability to convey (project) details.

Chinese do not like to say no.

Negotiations are never ending regardless of if there is a signed contract.

Nationalism is alive and very close to the surface.

Other concepts from the book that I completely disagree are “Chinese” or are really part of business in China today. I disagree with these concepts specifically because of the personal experiences that I’ve had working in China over the last decade. The feedback that I get from associates working for much larger multinational companies also indicate that my experiences are not unique to my small business. Maybe these concepts are the unrealized ideal or maybe Chinese-Chinese business deals are different than Chinese-Foreigner business deals; but these concepts just don’t apply to anything I’ve ever seen.

Chinese salespeople want long-term relationship instead of quick profits.

Businesses will take loses to maintain long-term relationships with (foreign) customers/clients.

Chinese investors like property and not mass-market goods because it allows them to keep a low profile.

For Chinese the ultimate goal is win-win.

The goal of Chinese business is relationship-building (not making money).

As you can see all but one of these concepts is focused on the supposed long-term mindset and cooperative attitude of the Chinese. But I think that the current Chinese business attitude is actually just the opposite—because of the ever-changing nature of the Chinese environment short term rewards are prized much higher than long-term potential. And the infamous Chinese “cooperation” really means that foreign clients should accept shoddy work and still pay the full amount (on time) because foreigners are already rich and the Chinese have just come off a really bad century. Honestly, I’ve never seen “cooperation” ever used to achieve any semblance of win-win.

Now, a couple specific issues I have with Mr. Chen’s book. First is the generalization of what it means to be a Chinese Business. Throughout the book the terms “Chinese-Style,” “Chinese-Owned” and “Chinese Business are all used interchangeably. The problem I have with this lack of clarity is that Chen assumes that Lenovo, Haier, Alibaba and the small printer with 10 employees (all his own examples) are all both “Chinese Owned” and being managed “Chinese-Style” at the same time. This I highly doubt. While there is certainly significant Chinese influence in each one there is no way that the organizational structure of global giant Lenovo, which is just the renamed laptop arm of very American IBM, is organized, managed and understood the same way that the family run and owned print shop in China is being managed. Neither the structure of the organizations nor the motivations (family vs. investors) are the same. But the reader is continually asked to believe that the Chinese cultural models are the dominant influence in each and every example regardless of size, history or location.

A second issue is Chen’s willingness to, as many Chinese do, downplay the fact that some Chinese cultural traits, when applied in business, do indeed facilitate and may even promote dishonesty and illegal practices and relationships—I’m talking illegal and dishonest according to Chinese Law, not just my western-biased morality. Face, Guanxi and some family-style business practices, all priorities in Chinese culture, can and often do conflict with the tax, IPR, finance and other business laws of China, not to mention other countries. But Chen, if he comments at all, mentions these illegalities in passing as minor aberrations in an other wise “moral” system. I find this a gross over simplification as China is considered, according to the Corruption Perception Index, to be one of countries in the bottom third of the corruption rankings. Personal, I don’t know a single Chinese company that does not have multiple sets of financial records (one for taxes, one for shareholders, one for internal accounting, etc.) or who doesn’t pay substantial amounts of money each year to local officials for various (often undefined) reasons. Both of these practices are illegal in China (and every other developed country). This glossing-over of a very real problem is a common shortcoming in almost all books written by Chinese about China.

Finally, when talking about multinational business practices much of what is called “Chinese” is, I believe, actually just Western management theory with new names. China is popular and a Chinese gloss no doubt sales books. So I disagree that the multinational “Chinese” companies in Chen’s book, of which most are filled to the brim with western trained MBA’s, are as uniquely Chinese as Chen claims. For example, below is one of Chen’s illustrations of how Chinese management theory applies to business:

Winston Chen offers a comprehensive illustration of how balance and holism can be applied to practical corporate affairs. An overseas Chinese living in the United States, Chen is the owner of Solectron, rated by Business Week s the number three among global IT enterprises, with a market value of $24 billion in the year 2000 and $9.4 billion in sales in 1999. Chen attributes his success to his application of Sun Tzu’s philosophies of balance to the management of his own company. For Chen, tao (the right way) means emphasizing employee relationships and common objectives. T’ien (heaven or harmony) is equated with timely adaptation to the changing environment. Chen interprets di (surrounding) as strategic positioning, and jiang (leaders or leadership) and seeking the best possible managers. Finally, fa (law or method) points to the importance of implementing well-defined policies and managerial systems. Chen’s translation emphasizes the interrelationships of all parts of the business and the need for a dynamic balance among these parts. (p.87)

While I admire Chen’s desire to define his business “Chinese” I don’t think that any of these concepts or their application are uniquely Chinese. Maybe Sun Tzu’s Art of War was written earlier than Machiavelli’s The Prince so the Chinese can take credit for the stratagem there, but a business that focuses on human capital, flexibility, skilled (instead of family) managers, strategic positioning and well defined systems sounds incredibly Western and quite the antithesis of the family guanxi hierarchy that was described in the first half of Chen’s book. Indeed, most other current business literature about China would suggest that most if not all of these specific concepts are completely foreign to the Mainland Chinese business environment. While Chinese (and every other culture) will certainly identify their business structure with their own personal cultural reference points, identification as Chinese does not actually make the practices uniquely Chinese.

Overall, it’s quite a good book. Not as practical or specifically applicable as a book like Chinese Business Etiquette, but very insightful nonetheless. It’s worth reading because it’s a Chinese professional describing the Chinese business environment to foreigners—it’s written for people that want to understand what is going on in the minds of their Chinese counterparts.

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