Negotiating with a Jittery Chinese Expat

Making Global Insecurity and Suspicion Work for You (Western Edition)

Memes like “expats fleeing China” and “China & Japan sparring over rocks in the South China Sea” are obscuring a trend that may be extremely important to Western negotiators working with Chinese counterparties. Western media has been fanning the flames of anti-Chinese sentiment and making the PRC the pre-election fall-guy for everything from unemployment to global warming to “why Johnny can’t add.”

The left accuses China of stealing jobs through exploitative practices; the right sees China as the new hegemon attacking US free trade in Asia and the clash of cultures is being treated as an inexorable rule of nature. I’ve posted a few links below, but they just represent a much broader trend. Is the new anti-Chinese rhetoric flooding into Western media justified to any degree? Don’t know and don’t care – at least from a business negotiation point of view.

All you need to know is that middle class & entrepreneurial Chinese are caught between two conflicting trends that Western negotiators can capitalize on if they know how to play them. On the one hand, Mainlanders with money are leaving China in droves as the system that helped them grow wealthy now begins to look threatening, and they are heading to the US, Canada and other stable, established Western destinations.  On the other hand, mainstream media outlets and political pundits are singling out the PRC as a major source of global instability and domestic economic woes.  So while the typical Chinese negotiating counterparty has never needed the US more, he also has never had more reason to fear America. That’s where you come in.

The West Can be a Scary Place.  Good Thing You’re Here.

Trying to argue that America is a warm & welcoming place is a sucker’s bet. Sizzle sells steak – but fear of tragedy and personal disaster will convince people who have already decided they want steak to pay more for premium brands and reserved tables. Take a card from the Chinese deck, circa 2002 and turn potential weakness into competitive advantage.

  1.  Play up the danger — and the potential. Sure, the US can be scary place with armed mobs and immigrant hating officials, but it is the only place to be for wealthy Chinese expatriate trying to make a new start and get their princeling into an Ivy League school. Our top-flight education system, our safe food & clean air, our stable legal code and reliable protection of private property could all be theirs – if they have a trustworthy guide.
  2. Think of the children. Chinese expats may actually be motivated by fears that their wealth will be expropriated, but the story they tell themselves is that they are doing it for their child. Better food, cleaner air and access to education. They can live like an emperor if they know how and have the right friends – and YOU are that right friend. Mainlanders still have a bias that good parenting is an inner-city activity and that only peasants and bumpkins live in the suburbs. While this makes them super-parents in Beijing and Shanghai, it’s akin to child abuse in the US – and they need to know this. Chinese expats may eventually reject Western methods and customs, but they are going to try them out – and that’s your opening.
  3. TIA – This Is America, with its own weird rules, laws, and customs. They’ll need a real friend. A real American friend, that is. Once they are in the US they’ll be nervous and alone – the support system they relied on so heavily in China is now neutralized at best, and likely counterproductive. From the late 1990s until 2008, an entire industry sprung up in China built around helping clueless Westerners get businesses set up in China. Now the tide has turned and you are the clued-in, guanxi-rich local and they are the confused, nervous foreigner. No need to go into too much detail when explaining about taxes, tipping, zoning rules or bank holidays. A simple TIA – This Is America – says it all.
  4. Westerners know the West the Best. You’ve got two classes of competition for expat Chinese business –Westerners and other expat Chinese. Take another page from the Chinese play-book and make weakness your strength. Chinese negotiators tend to think of Americans and Europeans as semi-civilized dolts who were lucky enough to be born in the right place at the right time – but offer little serious competition in the long term. Emphasize that all they really need to prosper in their new home is a REAL American/Canadian/ Brit/etc. to teach them the tricks of fitting in with the locals. And since you are a real Westerner, you won’t be able to compete with them once they have established their business.
  5. Special connections. Guanxi is universal in general but specialized in its application. In the US the secret handshake isn’t party membership or connections to powerful officials; it’s the Rotary Club and the JCs. Trade unions, zoning boards, school admissions, the dreaded IRS – you already have systems in place for managing all the local bureaucracies, and while you think of them as minor annoyances they can be major obstacles to newcomers. Emphasize the difficulty and danger in setting up a network of trusted professionals – and the risk of using the wrong lawyer, accountant or pool cleaning service.

When I first went to Shanghai in the 1990s, I was a street-smart MBA with a high-powered international banking job – but I still couldn’t find my way from the airport to the hotel without several layers of local support. Your new Chinese clients face many of the same challenges. Your job is to recognize the obstacles they face and turn them into opportunities. The world of the newly arrived Chinese is a scary one – and you can enhance your negotiating position by presenting yourself as their guide and protector. The tactic worked well in Shanghai and Beijing in the 2000s, and there’s no reason it can’t work in NY and Chicago now.

Additional Reading:

How China Sees America
China-US Focus, By Andrew J. Nathan and Andrew Scobell August 25, 2012
http://www.chinausfocus.com/foreign-policy/how-china-sees-america/

Beijing views this seemingly contradictory set of American actions through three reinforcing perspectives. First, Chinese analysts see their country as heir to an agrarian, eastern strategic tradition that is pacifistic, defense-minded, nonexpansionist, and ethical. In contrast, they see Western strategic culture — especially that of the United States — as militaristic, offense-minded, expansionist, and selfish.


Second, although China has embraced state capitalism with vigor, the Chinese view of the United States is still informed by Marxist political thought, which posits that capitalist powers seek to exploit the rest of the world. China expects Western powers to resist Chinese competition for resources and higher-value-added markets. And although China runs trade surpluses with the United States and holds a large amount of U.S. debt, China’s leading political analysts believe the Americans get the better end of the deal by using cheap Chinese labor and credit to live beyond their means.


Third, American theories of international relations have become popular among younger Chinese policy analysts, many of whom have earned advanced degrees in the United States. The most influential body of international relations theory in China is so-called offensive realism, which holds that a country will try to control its security environment to the full extent that its capabilities permit. According to this theory, the United States cannot be satisfied with the existence of a powerful China and therefore seeks to make the ruling regime there weaker and more pro-American. Chinese analysts see evidence of this intent in Washington’s calls for democracy and its support for what China sees as separatist movements in Taiwan, Tibet, and Xinjiang.

 

Economic Policy Institute – The China toll
By Robert E. Scott | August 23, 2012
http://www.epi.org/publication/bp345-china-growing-trade-deficit-cost/

Growing U.S. trade deficit with China cost more than 2.7 million jobs between 2001 and 2011, with job losses in every state    By Robert E. Scott | August 23, 2012

Since China entered the World Trade Organization in 2001, the extraordinary growth of trade between China and the United States has had a dramatic effect on U.S. workers and the domestic economy, though in neither case has this effect been beneficial. The United States is piling up foreign debt and losing export capacity, and the growing trade deficit with China has been a prime contributor to the crisis in U.S. manufacturing employment. Between 2001 and 2011, the trade deficit with China eliminated or displaced more than 2.7 million U.S. jobs, over 2.1 million of which (76.9 percent) were in manufacturing. These lost manufacturing jobs account for more than half of all U.S. manufacturing jobs lost or displaced between 2001 and 2011.

Gov. Mitt Romney’s official campaign site
http://www.mittromney.com/issues/china-east-asia

If the present Chinese regime is permitted to establish itself as the preponderant power in the Western Pacific it could close off large parts of the region to cooperative relations with the United States and the West and dim hope that economic opportunity and democratic freedom will continue to flourish across East Asia. Mitt Romney will implement a strategy that makes the path of regional hegemony for China far more costly than the alternative path of becoming a responsible partner in the international system.

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