The top 10 rules for doing business in China
Jonathan Holslag’s keynote at Fusion Partners’ launch event ended by a snappy slide on the top 10 rules on doing business with China. The angle chosen was to present them as the most important things we could learn from China and they came across as an interesting mix of common sensical pieces of advice and cultural eye openers. I took the liberty of adding my personal view here and there. Here goes:
1. Power. Cherish your assets. Avoid dependency
Admittedly not the most typical Chinese business rule as it can be applied globally and across all sectors. Still it was listed as the first rule as Europe has gone through such a long period of continuous prosperity that we might take it for granted. As the Chinese clearly ‘come from the opposite direction’ in recent history, Realpolitik becomes an essential principle in our business behavior.
2. Cooperation is a means, not an end.
Constructing the right cooperation structure as a strong base for business development sounds Machiavellian and therefore quintessentially European. It is however one of the key principles for success for most transnational business and therefore a cornerstone for Fusion Partners’ investment decisions that have to include aligned interests with Chinese parties for a positive assessment.
3. Pride. Keep your dignity. Your respect.
Everybody doing business with Chinese or other North-Asian cultures will have witnessed the importance of ‘face’. The coin has clearly two sides: it is equally important to keep your own dignity intact as it is to preserve it on the Chinese side. The ultimate counter example of this phenomenon is radiating that your business goals are short term and quick-money oriented only.
4. Perseverance. Consider the long term.
Needless to state that the above is linked to the horizon you have in mind. The best example of how the Chinese look at long term impact is described in the Kissinger anecdote in Pascal Coppens’ most recent book ‘China’s New Normal’. When Kissinger asked the Chinese Prime Minister for his view on the French Revolution, his answer was: “It is too early to tell.”
My view on the French Revolution? “It is too early to tell.”
PM Zhou Enlai
5. Ownership. Do not sell, but stay in control and develop.
Probably a different aspect of the same phenomenon: be prepared to own the business and develop it for the long term as opposed to being in the market until the next IPO round has made you wealthy.
6. Understand.
How easy is it to take our logic for granted? To position our own line of thoughts as the one and only rational behavior? My answer: too easy! Looking at the different paths our societies have followed, our distinct political systems and the fundamentally different languages we use, the truth has to be more complicated than following your own internal compass. A piece of advice if you want to test this in China: try explaining the European GDPR regulation to your Chinese counterpart, especially if you feel it is a good thing!
Not sure China is that different? Try explaining the European GDPR regulation to your Chinese counterpart. And how it’s a good thing.
7. Build internal alliances.
One of the most influential differences between the Chinese market and ours, is the density of its business ecosystems. It is hardly exaggerated to state that the companies linked to the Big Three (Baidu-AliBaba-TenCent) control 90% of all consumer markets and set all standards. How is that not the ultimate example of the conviction that alliances can and must be built to be successful. At a lower level, the principle remains intact: gaining importance by forming clusters is a powerful and necessary tool.
8. Remember your roots, always.
‘A tree without roots doesn’t weather the storm’ was Jonathan’s hook when discussing this item. Our panelist Peter De Keyzer deepened this for Europeans by saying that we have to behave as Europeans in the global economy. We built the European Union (‘the world’s most successful free trade deal’) on our own principles, so let’s stick with them. This is probably too short of a summary, but there is more in my ‘Elephant article’ of two weeks ago.
9. Politics trumps business.
Going back to rule number 6 about understanding Chinese business mechanics, it is important to bear in mind that business is allowed, reinforced and stimulated under a political agenda steered by the government. Again, not a Chinese phenomenon as such, but omni-present in China.
10. Never be complacent.
Complacency is never good, because it’s a sign of arrogance. I personally always make the analogy with colonialism and the supremacy attached to it. If one thing is for sure: those days are over. It is therefore good to know your strengths as well as your weaknesses. It is even more important to do something about it.
