China’s First World Problems – and the International Negotiator (Part 1)

Doing business with China as an emerged market

10 China Negotiating Mistakes - Buy the eBook on Kindle

This month China had to finally put aside its own closely held claims that it is an emerging market. Since Deng Xiaoping steered the country onto the road of “free market with Chinese Characteristics” in 1978, Chinese leaders and economists have characterized the PRC as a developing nation that deserved special treatment. Beijing’s “soft power” foreign policy hearkened back to the  non-aligned movement of the Cold War, always stressing that China was – at heart – still a peace-loving revolutionary “down with the struggle” of oppressed nations everywhere. The steady drumbeat of Chinese propagandists and negotiators alike was that China was big, poor, and struggling – and should not be judged by the pockets of wealth in a few coastal cities.

You Must Be Superpower, Cuz You Ain’t Emerging Anymore

May 2014 marks China’s uncomfortable debut into the grim world of grown-up superpowers – for all of the wrong reasons. “Leading Nation” status always looks better from the outside, particularly for international managers. While statesmen get photo-ops and glitzy summits in ski resorts, individual managers face higher prices, demands for concessions, and grabby counterparties.

Look at the facts of the past few weeks.

  1. China the bully on the block? Neighbors in SE Asia increasingly view China’s rise as a direct threat to their own well-being. Not only are there many territorial disputes with nations in the region, but social and cultural clashes as well. Pres. Obama’s recent trip to Asia saw his carefully prepared agenda hijacked by concerns of China’s growing military might.
    As any American businessman trying to work in South America can tell you – once your nation gets labeled the neighborhood bully, your business life gets more challenging.
  2. Old friends are starting to turn on them. While no one expected Japan and China to put aside past differences, it has been surprising to see how quickly relations with old friends like HK, Vietnam, and the Philippines have soured – and how ugly it got. Chinese businesses may have assumed that by injecting millions of rmb into these economies they may have bought them a little good-will, but it seems just the opposite is happening.
    “Rude Chinese” have edged out “Ugly Americans” as the least loved visitor in many places.
  3. Unwelcome foreign interference.   For the past decade, Beijing’s prime example of “soft power” success has been its burgeoning economic and cultural relationship with developing nations in Africa. Now, however, popular support for Chinese investment in Africa has evaporated amid complaints of economic exploitation have become grassroots rallying cries. Read Howard French’s excellent NYTimes Op-ed Into Africa: China’s Wild Rush. At the other end of the spectrum, Beijing’s controversial program to help spread Mandarin language training , the Confucius Institute, is running into more resistance in respected US universities.
    China is finding that it’s hard to be loved and feared at the same time.
  4. Security concerns. Chinese people are starting to hear a steady stream of truly chilling news. From terrorists in the western regions of their own country to Boko Harum kidnappers in Africa  to anti-Chinese riots in Hanoi, the Chinese are finding out that security concerns are not just for heads of state. Regular Chinese are increasingly paying the price for China Inc.’s spectacular rise, in terms of health, peace of mind, and now – physical safety.
    Big military budgets and powerful armies protect states – not individuals.
  5. Reputation for riches. China has long been famous as a consumer of luxury goods, but the official line has been that the sports cars and fancy wines are flashy exceptions to the general truth that China is a poor and struggling nation. This month the World Bank report indicating that China is set to become the world’s largest economy has been met with well-deserved skepticism everywhere from Beijing to Wall Street. However flawed the World Bank report may be, it is closer to the truth than classifications of China as backwards, developing nation. Chinese individuals have been showing off their wealth for decades, and the Chinese navy has been projecting power for several years.
    Pleading poverty Flaunting wealth while pleading poverty is a sure-fire way to alienate friends and make potential partners more aggressive.

Next: Negotiating with a Reluctant First World Chinese Managers

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