In the US, people used to say, “never trust anyone over 40”. In China, no one over 40 trusts you.
The world changed for China in 1978. That’s 30 years ago. People who were 25 year old graduates in 1978 (with degrees in ‘Mao Thought’ or ‘Advanced Correct Thinking’), just starting careers in Shanghai would now be 55 years old – running China’s businesses, ministries and SOEs. They were born and raised under the old system. They had to learn capitalism and market economics very late in life – if they ever really internalized the message. They probably figured out what they were supposed to say to SOUND liberalized, but were still working off the old playbook. Shortage, scarcity and deprivation characterized their negotiating positions.
The New Traditional Chinese Counter-Party – 40s & 50s
This generation produced the Traditional Chinese negotiating counter-party that most of the new “how to make big money in China” best-sellers are talking about. Raised and educated in a centrally-directed economy that shunned profit, these guys spent most of their formative years learning about life from the ‘correct thinking’ pre-reform generation. Managers in 1975 China were judged on their ability to find raw materials, supplies and scarce technology for their factory or operating unit. Their responsibility ended at the factory gate. Shortage and lack of credit meant they had to develop sophisticated barter agreements and strong but informal social networks. These people were charged with modernizing and elevating a China brought low by foreign guile, and they were taught to distrust outsiders and foreigners. They believed in Win-Lose negotiation, short-term gain, no visible profit – and that time and Mao were both on their side. Traditional Chinese negotiators tended to be punished for bad deals, but not rewarded for good ones. (Ie: you would be penalized for giving outsiders unnecessarily favorable terms – but would not benefit from successful negotiations). The result is that traditional Chinese negotiators tend to be extremely patient and avoiding when it comes to considering your offers.
The MNC negotiator – 30s & 40s
Behind them came a whole other group that is only partially indoctrinated. The people were raised, taught and mentored by this old-school generation – who spread their beliefs to the next generation. If you were born just as Deng Xiaoping was going to Guangdong and kicking off the big reform move, you’d be 30 right now. Everyone in their 30s and 40s has had some mix of old and new. School & family were still working off the traditional Party–guy model for the first half of your life, but you were listening to an iPod and watching Disney and Hollywood. These are the MNC people. They are doing the heavy lifting in staff and management positions in Shanghai, Beijing and down the coast to Shenzhen. They know both systems, and know how to make them work to greatest advantage. They have taken the classes in Mao Thought in high school and college, and have attended the same company workshops in Value Added Sales and 3D Negotiation that you have. They tended to view MNC jobs as learning experiences, and were hungry for training and knowledge about international business standards – particularly American style. The Achilles heel for this group is lack of experience and lack of power. The western MNC is training them and running them around a lot, but they have no real power and aren’t making strategic decisions. They have little access to capital, and tend to be more operational than strategic.
China’s New Entrepreneur – Twenty-somethings
The new set is the entrepreneurial class. The entrepreneurs of the previous generation (pre 2005) were factories or freaks or e-shopkeepers. The kids coming up are the first true post-reform Chinese negotiators. They can’t tell the difference between Chinese and international. They live in a blurry, speedy world of localized global brands, hyphenated nationalities (American-Chinese, Sinaporean-Chinese, Hong Kong Chinese, Canadian-, Indonesion-) and 24-7 connectivity to their own global networks. These people are the first Chinese population in over a century to grow up in times of surplus and prosperity. They don’t necessarily look up to the US or Western ways, and if anything tend to have an inflated view of what China is capable of on its own. Whereas the previous generation yearned for international travel and postings, the younger set of counter-parties are actually more inward-looking, and set out to exploit their insider advantages where-ever they can. These are the guys who learned to say “China premium” before they knew what it really meant. Their advantage? They have the chops to turn the domestic Chinese economy into a serious, integrated market that doesn’t depend on the manufacturing OEM model. Their disadvantage? Completely starved for cash and serious experience. No matter what industry the new group is in, they tend to sound like dot.com kids from the late 90s. But they’ll also create the first private Chinese MNC that develops breakthrough IP and collects licensing fees in NY and London and Tokyo.