We’ve seen this before. A new CEO with limited China experience introduces himself to the international business community with tough
talk and big promises about China and the rest of Asia. Then reality rears its ugly head.
The new US administration is doing what new US senior managers in China do best – sending conflicting messages, missing opportunities, and making sweeping pronouncements that are just about impossible to implement.
What can we expect moving forward?
Expect to watch the needle swing back and forth between Partner and Competitor pretty sharply for a while yet as the new trade bosses find their footing. Here are the potential flashpoints you should be watching.
- South China Seas
- US navy patrols,
- New island building / militarization
- North Korea
- Cyber spying
- Intellectual property protection
- Tariffs or “border adjustments”
- Christianity in China
Yes, the Taiwan card has been played, but you can expect to see it massively overplayed at least once again in the near future. The present administration has probably forgotten the Taiwan call & tweet , and is hoping that the tough talk on North Korea will amount to little more than a photo-op. And that’s your problem(s).
What are your problems?
Western managers in China (or with China responsibility) are stuck in the middle between two massive, shifting forces – The Washington trade apparatus and Chinese business.
The locals are judging you against the whole emerging picture — but mostly the bad stuff.
Meanwhile, your own HQ is acting like they’ve solved everything (even the stuff you didn’t think needed fixing) and made a huge concession (by stepping back from a potential policy blunder – this time it was the One China Policy). So now it’s all on you if existing deals or new business go south.
Dealing with a new China CEO – even if he is the POTUS:
1 Just business – not politics. When a new administration comes in, there are two operational problems (for you, the front-line manager).
- The content of new policies and trade regulation
- The implementation and rollout of new policies.
The first one is political. For the vast majority of you, politics just doesn’t help you close the deal. They guy sitting across the table may agree, not care – or get very offended very fast. It’s not worth the risk. Part of the business is managing your relationship with your business counter-party in China.
The second is opportunity. The person who understands the mechanics and compliance procedures of new rules and policy is going to provide a valuable skill.
2 Don’t commit to anything. When things at the top are still shaking themselves out, you don’t win by being the big-pic speculator. You win by being the stable, steady, go-to guy.
Don’t make the rookie mistake of trying to calm your Chinese counter-party. You want to go the other way – tell them that it is a rapidly changing, unstable, and potentially dangerous situation. Chinese consultants and fixers made an industry out of navigating the Chinese bureaucracy for deep-pocketed westerners – now it’s your turn to get paid for your connections and insider knowledge of that crazy, inscrutable US of A.
3 Don’t be a cheerleader – or a dedicated detractor. Your policy? Break 2016 earnings results. The policy of the guys at the top – far away and out of the loop? Not clear yet. We’ll see.
It pays for you to be an expert at navigating or monetizing the policy shifts – not at explaining the ideology or reasoning behind it. When policy is shifting, you want to become a technical specialist in your area and familiar with the nuts & bolts of how any new policy may affect the deals you are working on.
4. It’s going to be bumpy. New CEOs get paid for biting off more than their organizations can chew – but they’re doing that across the board and around the world. In your China op, you’ll find that there will be too much attention one minute, then long stretches of neglect. Prepare for contradictory messages and policies. Stop and start. Two steps forward, one step back, 17 steps sideways. Be ready by prepping your Chinese counter-party-in advance for a confusing newsfeed and packaging your own offering as safe and stable.
5 Don’t accidentally switch sides. Throughout the 90s and 00s, MNCs with big financial interests in China were the most effective voices lobbying on China’s behalf in Washington and with NGOs. They knew what they were doing (or thought they did) – but a danger is that front-line managers and negotiators often end up doing the same thing by accident. If you are based in Asia or have interests in an existing China project, you are going to find yourself doing most of your negotiating INTERNALLY – with your own HQ. It’s easy to end up aligning with the Chinese side against people in your own organization. The danger here is that the Chinese side will forget quickly – your own people will not.
Written by an American for Westerners negotiating in China, “The Fragile Bridge” dispenses with politically correct euphemisms and ivory tower pseudo-psychology. Knowing which 1,500 year-old philosopher uttered what esoteric phrase won’t help you safeguard your assets or keep your JV operating, but learning from the lessons of dozens of successful Westerners who have survived the China challenge just might.