Lack of basic business intelligence is the #1 risk facing Western negotiators in China.
Alibaba is grabbing headlines again for breaking new ground – again. This week it’s a record setting IPO in NY (bigger than Facebook) — though it’s newly announced deal with ShopRunner may turn out to be even more significant in the medium-term.
Just to restate the obvious, Alibaba is already involved in a very large equity cross-holding deal with Yahoo and one of their major investors is Softbank. The company has been around for 15 years, and for most of that time their iconic founder Jack Ma has been shuttling around the world, raising funds, making deals, and speaking at international A-list conferences. Alibaba started out as an international B2B platform whose raison d’etre was to match Chinese sellers with international buyers. Nowadays it is China’s most distinctive brand, responsible for selling or moving roughly half of every online transaction in China (which the World Bank just ranked as the world’s largest economy).
It’s not OK to have never heard of Alibaba.
Reuters, the Huffington Post and other respectable, business-oriented media outlets reported on Alibaba’s decision to list its IPO in NY instead of HK (after a year-long front page drama) with the tag-line “the biggest company you’ve never heard of”. (Here, here, and here. Oh, and here.)
Sure, this was just a way for East Coast media elites to add a little color to a financial story for the benefit of mainstream readers, but the subtext is worrying. It’s still considered OK to have a China-sized blind spot in your business intelligence universe. China business continues to be a mysterious, quirky little specialty area that the big boys only have to worry about when it affects real markets.
Flying Blind is #1 on China Solved’s “Least Wanted List”
When I wrote “10 Common China Negotiating Mistakes” , I made “Flying Blind – negotiating with insufficient business intelligence” the number one blunder that Westerners commit in China. The 10 China Negotiating Mistakes online course even uses EBay’s disastrous initial into China in 2004 and drubbing at the hands of Alibaba’s TaoBao service as the case study of poor business intelligence. 10 years later, the bar for international business knowledge still hasn’t been raised.
What if a Chinese negotiator had never heard of Amazon or Facebook?
If a potential partner from China casually revealed that he had never heard of Amazon, Facebook or some other hi-tech titan, you would respond like a shark smelling blood in the water. Your negotiating position would harden, you would become more aggressive, and start taking steps to control his access to information and other counterparties. That is the natural reaction for savvy negotiators when encountering the rich and ignorant. Well, in China that scenario plays out every day – except Westerners often take on the role of deep-pocketed but unsophisticated yokel. Don’t be that guy.
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