“Develop good goals” is the hard answer to a simple question about China business.
What’s one piece of actionable advice you would give to someone just like yourself – your intellect, your experience,
your education and your risk profile – who has never set foot in China before?
Some readers of this site may remember that we used to run a feature called the “321Profile” that asked unsuspecting expat managers in China to name:
- 3 mistakes they made while building their business in China
- 2 successes or things they did right
- 1 piece of advice for someone just like themself who was planning on starting a China business in 6 months.
The mistakes were easy – most rattled off a comprehensive list. Couldn’t stop them – many asked if they could use 5 or more. Successes weren’t too hard either – everyone had some hard-won knowledge that they were quite generous about sharing. But that last one – a single piece of actionable advice – took some thought. That was the “gun to your head” question. Reduce a lifetime of struggle to a single sentence. What would you tell an innocent version of yourself about doing business in China? It is interesting to me that no one ever said “stay home” as their one piece of advice.
I stopped using that format in 2009. It was too much work and all the answers started running together. I rolled up all the responses to the Successes question in a training handbook called, “Guanxi for the Busy American” and all the mistakes into a longer book, “The Fragile Bridge – Managing Chinese Business Conflict”
Gun To My Head – the one piece of China business advice?
But now that I’ve returned to New York, it’s my turn to have the gun pointed at my head (figuratively). The US has become a grim, fearful place where shell-shocked leaders huddle in the bunkers. China isn’t on anyone’s front burner these days – many don’t even have it on their list of strategic options. Despite what Xinhua would have you believe, almost no one is plotting to contain or undermine the PRC. China just doesn’t come up much. When I sit down with potential clients or when reporters call, they don’t want a dialectic or thinky argument. I don’t get to weigh options or explore subtleties. In NYC they want the sound bite – they want you to pull the trigger. The louder the report, the bigger the mess, the better they like it.
Start at the End of the Story – Good Goals Matter
Good goals. That’s my big answer to the question — “what advice would I give to someone entering China now?” Have a business goal that makes sense. Don’t rely on your partners to provide you with a strategy, don’t try to figure China out as you go along, don’t plan for failure (i.e.: thick contracts) and pray for success. For newcomers to China, lack of good goals is one of the leading causes of catastrophic failure, lost investment and IP theft.
If you don’t have a good answer to the question – Why China? – then you are best off staying at home. And if your answer is “to make a lot of money”, then you can save a lot of time by just turning your social and bank account number over to that friendly Nigerian prince who has been emailing. China has to fit in with your overall, long term business strategy. It’s not a tactical opportunity – it is a commitment.
Setting good goals for China requires you to k now what your operation will look like in 3 – 5 years if you are successful. Westerners in general and Americans in particular tend to equate “business planning” with risk management – we all know exactly what will happen in the event that something goes wrong. In China, your real risks are the result of success. A bad Chinese partner will flee the scene of a business failure with resolve and haste. Once your business shows signs of success, however, you become prey. If you have been relying on local Chinese partners for basic strategic guidance, then your adversary is already within the gates. Hell, he has designed the gates, found you a corrupt sub-contractor to build them and gotten kick-backs on the deal.
China used to be cheap enough to blunder and bluff for the first six months or so, but now cheap China is a thing of the past. It’s not low cost, productivity stinks and the penalties for failing to comply with regulations are high. The race to the bottom is over. Everybody lost.
With China’s economy bottoming , it’s only a matter of NY minutes before Western small & medium sized businesses start testing the waters again. This is a great time to get China right – an absolute disaster if you make the same mistakes that characterized pre-crash deal making.
The Fragile Bridge – Managing Conflict in Chinese Business
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