Embracing the culture

Cultural differences can create significant hurdles to doing business in another country, and that’s as true of China as anywhere in the world — if not truer.

The cliche of the “inscrutable oriental”, and the fact that relatively few Kiwi businesspeople are fluent in Mandarin, makes trading with (and in) China a challenging mission.

But it needn’t be. Many of the apparent cultural traps can be resolved with a better understanding of what China and Chinese businesspeople are actually like, how they think and how they like to do business.

First off, you must accept there isn’t one single culture for China or Chinese. Aside from the differences between Hong Kong, Taiwan and the People’s Republic on the mainland, there are considerable differences between mainland cultures — north, east, west and south. That’s seen in mindsets, politics, geography, socio-economic structures, religion, education, food, and leisure. The norm in one region may be an alien way to do things in the region next to it.

Once you know the region you will be focusing on, go there to absorb the culture, or hire someone to work with you who does understand its subtleties.

The second thing to clarify is: Who are you dealing with? Government officials, professionals, merchants? They all operate in a different — possibly radically different — way, with a different take on the rules of the game. Their background may be equally important. They may be a survivor of the tumultuous periods of China’s modern history — a seasoned and tough negotiator, or the young scion of a wealthy family — offspring of the “one-child” policy, with a quite different outlook on doing business.

Thirdly, don’t fall into the trap of seeing them as unsophisticated (by Western standards) products of a communist system. The man opposite you at the negotiating table may have had a Western education and years of working with large Western companies out of Europe or the United States.

Finally, it’s relatively well-known but always worth repeating: Don’t rush your business dealings in China. The Chinese like to get to know their business partners before cementing the deals.

Build the relationship, share your thoughts and values honestly and openly, and read between the lines — know when “yes” really means “yes”. Be prepared to move on from a partner who does not share the same values.

Once you have successfully built this relationship, you will find that the deals will find you instead.

— Johnathan Chen

The contract can still be a useful document in setting down what both parties will do within the relationship and what they want out of it. It can capture, for example, the important IP ownership considerations around what happens if a distributor takes your trademark without your consent.

At the end of the day, both parties are trying to make money. Understand that the contract for your Chinese partners is about how you can help each other do that; so work with them rather than be offended by the cultural differences in their understanding of “contracts”.

The cross-border bonded warehouse is typical of the changeable nature of the Chinese economy. Regulations can be amended, withdrawn, or new ones introduced quite suddenly — with little notice.

You need to monitor that environment constantly, and in that we have willing allies in New Zealand Trade and Enterprise, the Ministry of Foreign Affairs and Trade, the Ministry of Primary Industries and Export NZ, along with the likes of the NZ China Trade Association and industry-specific organisations like Natural Products New Zealand.

The recurring theme here is to be diligent — do your homework and prepare well for your China foray (IP, documentation, market and channel knowledge), and be vigilant — monitor your market and the broader Chinese economy. The rewards of getting it right are definitely worth the venture.

Johnathan Chen heads the Asia Division of James & Wells, a nationwide law firm that specialises in Intellectual Property.