TRADE Bri­tish PM misses the con­nec­tion

Cameron tak­ing small busi­nesses to the heart of China but not to its cul­ture

China Daily (Hong Kong) - - BUSINESS VIEWS - MIKE BASTIN The au­thor is a vis­it­ing pro­fes­sor at the Univer­sity of In­ter­na­tional Busi­ness and Eco­nom­ics in Bei­jing and a se­nior lec­turer on mar­ket­ing at Southamp­ton So­lent Univer­sity’s School of Busi­ness. The views do not nec­es­sar­ily re­flect those of Chi

Bri­tish Prime Min­is­ter David Cameron re­marked dur­ing his re­cent and much pub­li­cized trip to China that if you are think­ing of in­vest­ing in Bri­tain, come and find us. You will get a warm wel­come”. But is a “warm” wel­come suf­fi­cient to in­sti­gate and ce­ment last­ing, sym­bi­otic trade re­la­tion­ships be­tween the UK and Euro­pean in­dus­try and China?

Cameron's trade mis­sion, with more than 100 UK busi­ness lead­ers, was one of the largest del­e­ga­tions to visit China in re­cent years. No ef­fort ap­pears to have been spared dur­ing this three-day charm of­fen­sive. The UK prime min­is­ter met Chi­nese Pres­i­dent Xi Jin­ping and Pre­mier Li Ke­qiang. He also trav­eled to South­west China's Chengdu, widely con­sid­ered to be one of the most im­por­tant ar­eas of fu­ture eco­nomic de­vel­op­ment.

But for any sud­den spurt in trade be­tween the UK, the EU and China to take place and for last­ing busi­ness re­la­tion­ships to de­velop, it be­hooves UK and Euro­pean in­dus­try to be­come far more un­der­stand­ing of China, Chi­nese cul­ture and par­tic­u­larly Chi­nese busi­ness cul­ture — some­thing that ap­pears miss­ing.

As part of my re­search work in the ar­eas of Chi­nese buy­ing be­hav­ior and or­ga­ni­za­tional be­hav­ior, I am set­ting up a China busi­ness center. Re­cently this has in­volved meet­ing more than 100 small and medi­um­sized UK en­ter­prises, pre­cisely the group of com­pa­nies tar­geted by the prime min­is­ter. In­cred­i­bly, those I met from th­ese com­pa­nies failed to pro­duce much if any knowl­edge of China, Chi­nese cul­ture and Chi­nese busi­ness cul­ture. All com­pa­nies made it very clear that China rep­re­sents the fu­ture and they all would like des­per­ately to be in this mar­ket — and soon.

My re­search also re­vealed that con­cepts that lie at the heart of Chi­nese cul­ture such as “face” and guanxi (loosely de­fined as con­nec­tions) are also widely mis­un­der­stood among the ma­jor­ity of UK and Euro­pean com­pa­nies. This mis­un­der­stand­ing is most acute among the army of Europe's SMEs.

Train­ing and staff de­vel­op­ment gen­er­ally gets rel­e­gated to the back burner much more within smaller firms, which prob­a­bly ex­plains this rel­a­tive lack of knowl­edge.

It is, there­fore, not suf­fi­cient for the UK prime min­is­ter to of­fer a “warm” wel­come to China's vast army of ever in­ter­na­tion­ally ex­pand­ing com­pa­nies. Rather, UK and Euro­pean SMEs re­quire a very warm wel­come to an in­ten­sive ed­u­ca­tion and train­ing pro­gram on China.

To gain suf­fi­cient re­spect from any po­ten­tial Chi­nese busi­ness part­ner, such a pro­gram has to go be­yond busi­ness cul­ture and also fo­cus on Chi­nese his­tory and cul­ture gen­er­ally. It is also im­per­a­tive, given the vast size of the Chi­nese main­land, that any pro­gram fo­cuses on one or just a few ge­o­graph­i­cal re­gions.

Not sur­pris­ingly, my re­search high­lights the fact that UK and Euro­pean busi­nesses re­main un­aware of op­por­tu­ni­ties out­side China's first-tier cities such as Bei­jing and Shang­hai. How­ever, it is the op­por­tu­ni­ties in sec­ond- and third-tier cities, such as Chongqing and Chengdu in South­west China and Shenyang in North­east China, that now of­fer great re­wards.

Sec­ond- and third-tier cities in China rep­re­sent the fu­ture where eco­nomic growth and mar­ket op­por­tu­nity have to ac­cel­er­ate if China's eco­nomic mir­a­cle is to con­tinue. But th­ese cities and re­gions are even less well known and, there­fore, pose even greater chal­lenges, es­pe­cially with re­gard to lo­cal part­ner se­lec­tion and mar­ket in­for­ma­tion.

UK and Euro­pean busi­nesses should con­sider mul­ti­ple part­ners, not just search for one per­fect part­ner who prob­a­bly can never be found. Se­condly, they should not only search for and screen part­ners in China but in­vite likely can­di­dates over to the UK and Europe to en­gage them fur­ther.

The im­por­tance of in­dus­try clus­ters, first pop­u­lar­ized by Michael Porter in 1990, con­tin­ues to at­tract at­ten­tion. This is now ex­tremely per­ti­nent in the case of China where in­ter­na­tional ex­pan­sion of the Chi­nese small and medium- sized en­ter­prise ( SME) sec­tor is cru­cial to fur­ther eco­nomic growth.

Ap­proach­ing clus­ters of Chi­nese SMEs with the “go­ing global” car­rot should there­fore lead to greater like­li­hood of suc­cess — even greater if po­ten­tial Chi­nese busi­ness part­ners are in­vited to Europe. Such an in­vi­ta­tion will rarely be re­fused and will, in an in­stant, iden­tify the Chi­nese busi­ness' key de­ci­sion-mak­ers. Only the most pow­er­ful and in­flu­en­tial will ac­cept this in­vi­ta­tion.

Any vis­it­ing Chi­nese busi­ness del­e­ga­tion will be very in­ter­ested in Western cul­ture and will highly value in­for­ma­tion and trips that al­low them to fur­ther their un­der­stand­ing. But an even greater value will be placed on any ev­i­dence of the host busi­ness' un­der­stand­ing of China and Chi­nese cul­ture.

Cameron's re­cent visit very much at­tempted to high­light busi­ness op­por­tu­ni­ties for UK and Euro­pean SMEs with their Chi­nese coun­ter­parts, where the iden­ti­fi­ca­tion of key de­ci­sion-mak­ers is of­ten far eas­ier than it is within China's many sprawl­ing State-owned en­ter­prises.

The de­vel­op­ment of guanxi within smaller Chi­nese com­pa­nies should there­fore be eas­ier and quicker. Once es­tab­lished, it will then lead to the un­rav­el­ing and un­der­stand­ing of any rel­e­vant trade rules and reg­u­la­tions. It will also lead to a deeper un­der­stand­ing of China's na­tional and lo­cal busi­ness cul­ture and all as­pects of the lo­cal en­vi­ron­ment.

The key then to a bet­ter un­der­stand­ing of mar­ket in­for­ma­tion is not a de­tailed study of rules and reg­u­la­tions but the de­vel­op­ment of good re­la­tions and con­nec­tions with key mem­bers of the Chi­nese busi­ness com­mu­nity.

ZHANG CHENGLIANG / CHINA DAILY

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