Doing business in China requires more than selling a good product.

October 30, 2008
Chinese Flagship news.

Sometimes it’s not so much what you say but how you say it. It’s both, however, if you want to successfully deal with Chinese businesspeople. It’s saying the right things at the right time in the right order and with the right gifts. It’s about flexibility. Adaptability. From a Chinese perspective, it’s more about people than products. It’s culture.

That’s the advice Quanyu Huang was expected to deliver Nov. 13 at a seminar sponsored by the Ohio State University Chinese Flagship Program. The university brought Huang, director of the Confucious Institute at Miami University in Ohio and a specialist on Sino-American cultural and educational comparison, to campus to talk about doing business with China.

His appearance and subject came at a time when a faltering economy is working its way deeper into America’s fabric and many companies are looking for ways to survive.

Prior to the OSU event, Huang said Ohio companies do billions of dollars in trade with China annually, yet many of them and Western businesses are unsuccessful in China from a wholly Chinese perspective.

“Opening a hotdog stand in China is simple but not that simple,” Huang said. “In order to open a hotdog stand you must open the Great Wall’s gate. In order to do that, you must have a key to open in the wall of the Chinese people.”
People first

Why do so many Westerners fail at figuratively penetrating the Great Wall? Because only physically entering the Great Wall is not enough, Huang said. The key, he said, is cultivating relationships before transacting business.

“To be successful in China one must go through the cultural Great Wall that is located in people’s minds,” Huang said. “No matter how good your product is, you need to deal with the people first. You need to know the culture.”

For Ohio’s smaller businesses, learning such a vastly different culture might go a long way in bolstering the bottom line especially with the one country whose economic prowess continues.

The Chinese economy, for instance, grew 11.9 percent in 2007, despite the global slowdown that has stymied many markets.

“Certainly there are significant opportunities for small- to medium-size companies throughout the state,” said Scott Kuehn, assistant director of the Global Markets Division for the Ohio Department of Development. “China’s our fourth largest trading partner accounting for $1.5 billion worth of Ohio made products within China each year, and that continues to grow.”

Some of the most sought after products and services in China are green technology because the Chinese government is pushing for environmentally-friendly industry; anything in the education industry because Chinese culture holds that education is extremely important to create a stable family environment; things related to the power grid, railroads, highway building, airport building and management; and anything that can increase agricultural efficiency, said Patrick McAloon, the undergraduate program manager for the OSU flagship program.

“It really is probably more driven by the type of product than it is the size of the company,” said Matt McCollister, vice president of economic development for the ColumbusChamber. “A small to medium enterprise can really establish themselves in China now and have very productive sales.”

But it all revolves around learning the culture, which can be confusing by Western standards, Huang said.

“I’ve heard many American businesspeople say, ‘Well, we’re all in business and the goal in business is to make money, so I’m not worried about anything else,’ ” McAloon said. “But when it comes down to it, some people have other goals as well as making money, especially when you’re doing business in East Asia where personal relationships are so important.”
Gifting etiquette

Exchanging gifts, for example, is an important part of the process. The right gift shows respect.

President George H.W. Bush, for instance, went to China during his presidency, gave the premier a pair of boots with the Chinese flag on them, and only later learned it was an insult to use the Chinese flag in such a manner, Huang said.

“Here in America everybody can put the flag on T-shirts or anywhere,” he said. “But in China only the government buildings can hang the national flag. You cannot print the national flag on boots. It was an insult.”

Age is another factor. Americans generally don’t like to talk about it.

Expect the Chinese, however, to ask your age because to them it’s not just a number. It reveals your history, moral judgment and experience.

The Chinese also want to know where you come from because they feel they can tell a lot about your life’s experiences, whether you’re from Ohio or California.

“Many Americans don’t pay attention to how they’re perceived,” Huang said. “They try to look like, ‘I’m from America, and I’m very important, very powerful.’ The Chinese will not like that. The Chinese prefer equality.”

“Show them the facts of your product, don’t show them how powerful you are,” Huang continued. “They know American products very well so you need to skillfully show them the facts, the numbers. If someone asks them to try their product, they will not. They will know. Even without saying, they will know.”

If all this seems too confusing, there is a tried-and true-solution, Huang said.

“If you can find a reliable person there to represent you, that’s great,” he said. “But if you can find somebody here, it’s better than there. Somebody who knows both cultures. That’s the ideal. That’s the best.”

Mitch Yu is one such person.

Born in Hong Kong, he earned an architectural degree in Sydney, Australia before he moved to Dublin in 1984 to open Windchimes Chinese Restaurant.

Because he knows both cultures and both languages, Yu has served as the liaison in some large American-Chinese ventures.

In 1998, for example, he helped Extend Technologies with a $200 million joint venture with China Telecom.

“They hold trump,” he said. “They play by their rules. Chinese companies are more flexible, they adapt more quickly. You have to have the right relationship to get into the arena,” he said. “Otherwise you don’t know how to start. You don’t know where to start.”

Business First of Columbus - by Drew Bracken For Business First

Drew Bracken is a freelance writer.