For some extra credit in our GHS course, I interviewed my father on his experience doing business in primarily China and over the past 10 years. A brief background on my father: he graduated from Purdue University majoring in Aerospace and Aeronautical Engineering and then went on to work on ballistic missile rocket motor development in Salt Lake City Utah. He then worked for NASA at Marshall Space Flight center before moving to Tampa, FL where my brother and I were born. Here he worked on small aircraft modifications before working for LiveTV and JetBlue in Orlando. While in Indiana, he was the CEO of Comlux which is a VIP completion center (customization of VIP aircraft) where he was constantly out of the country for business.
I thought it was very fitting to interview my dad on some of his experiences while working specifically in China when it comes to cultural differences in business strategy. Unfortunately, my dad has taken a new job which causes him to be living in St. Louis while the rest of my family is here in Indiana so I could not interview him face to face. However, I spent a little over an hour on the phone with him discussing the subject to learn of his experiences. I would try to summarize all of the points he made, but I found it fitting to actually get that information first hand from him so I could share directly his experience with you guys. He sent me an email with the main points we discussed on the phone which I am going to attach below. I think it is very important to take note of some of what he says if you are considering working in the international business field because becoming accustomed to other cultures and countries is crucial to success. I hope you guys enjoy his thoughts and please comment if you have any questions! A big thanks to my dad for taking some time out of his day to share his experiences with me. Without further ado, below is his experience:
“Conducting business in China or any country outside of the US presents an obligation to the individual to become acquainted with local customs, beliefs, business practices, holidays and national interests as well as present national sentiments towards the US so that one can navigate successfully an international relationship. The worst start is a impression that is unintendedly negative that brings the need to reconcile before progressing the intended interests. The general feeling internationally is that the US is a self-centered, self-interested, introverted culture that has little genuine concern, care or knowledge for anything outside of the US…so more often than not the perception is negative from the beginning unless you are dealing with a very pro US region (Israel, UK, etc.) which today are truly very few. Though business is the universal language, the underlying true sentiments of your client will influence any opportunity for you to progress and be successful.
In China, the nation is very non aggressive, direct, and strong eye contact can be seen as threatening or intimidating and I have made this mistake and had clients leave the table. Further, there is a culture of politeness in a professional setting that is beyond US convention ensuring for the comfort of your client, how they are feeling, and getting acquainted by soft gestures is very beneficial before jumping right into the business at hand. You will lose the client if you get right to it. Further, there is a great deal of concern and risk by their conduct and how it will be viewed by the government who has firmly and relentlessly pursued business people for corrupt business practices or viewed as counter to national interests. Therefore no discussion of immediate transaction or transfer of monies is done formally. These are made under separate secure means and typically the contract is not adhered to and the Chinese do not feel a contract binding. Having leverage to ensure for payment is very difficult and payment terms and methods are very unconventional….trust and flexibility is key as well as patience since getting money out of the country is extremely challenging.
The key is to be tolerant and aware of this fact and not to over leverage you position of investment that will drive you to be more aggressive when it comes to collection of payment or recovery of your investment. Stay cash positive, establish the risk you can tolerate, and always build in assumptions that payment will be delayed, made in installments, or come from different entities at different times.
Sensitive communications will occur outside of normal formal means. I have negotiated full contracts exclusively using WeChat so that my client felt safe from governmental oversight.
US business practices are traditionally direct, concise, succinct, efficient and to the point with formal means of documentation and none of these are effective in working with your Chinese clientele. However, if you can overcome this and build a framework that works to their needs, the Chinese client is very reliable and loyal. The Chinese love exchanging gifts with sentiment, meaning or symbolism….these do not have to be expensive, but shows a level of thoughtfulness they find very appealing. I wish for anyone doing business in China to enjoy the journey and learning the culture, but to be prepared properly so you can stay the course they will dictate….the reward is often very strong if you can. Never over leverage yourself in pursuing business in the region…risk should only be taken as a strong track record of success with the client. On the front end, be ready to cut your losses.”
-Scott Meyer