The most important thing that you need to know about Chinese is that Chinese are people and vast generalizations about groups people aren't usually accurate. I have no doubt that a lot of Chinese people (as do Americans) lie, cheat, and steal and have short term thinking, but I think it is absurd to make that a generalization.

Having said that there are sometimes a lot of advantages to *not* being part of a network. If you aren't part of the local network you are considered more unbiased and untainted and this isn't a small thing in some areas. Imperial China had a rule in which an official never served in his own home province, and curiously the Communist Party has the same sort of rule with provincial Party Secretaries and the People's Liberation Army.

Also, someone from another province or village can be as much a foreigner as someone from outside of China. This can be used to your advantage. The classic example of this is banking reform where Beijing and Western banks have formed a very powerful alliance against local networks.

For a better read into relationships and how they work I would recommend: "Gifts, Favors, and Banquets: The Art of Social Relationships in China".

On another note, I would not discount the cultural aspects of conducting business in China or in the United States for that matter. Once you get past the legal contracts the business models, forecasts and office policies, you have people actually conducting the work for you. The success of a company rides heavily on corporate culture and this cannot be forced by contract. I have watched too many companies fail or far more frustrating, never become as good as they could because of a corporate culture that did not encourage its people or worse discouraged its people.

The topic of culture is interesting because in my experience, professional cultures and local business cultures have as much impact on people's behavior than national/ethnic cultures.

I returned home late last night and wrote up a whole new post incorporating all of your comments. Then I pressed the wrong button and it was gone. Rather than start over, I went right to bed. I will be doing a new post on this today in which I discuss all of your comments. I see this discussion as too important/interesting to keep in the comments section.

I'm hoping she followed that up with a little clarification.

The truth is that *people* lie and steal. Anywhere we go in the world, we encounter people without integrity who are driven by greed. The secret to success is figuring out who those people are and avoiding them.

"...Westerners who actually believe they are in a Chinese network are...operating under a potentially dangerous illusion..."

An illusion that some Chinese are only too happy to nurture. When someone calls you "lao pengyou or zhongguo tong," proceed with caution.

The upshot of my speech was that if we want to be effective in China, we have to understand and respect where the Chinese are coming from. Rule of law, teamwork, and transparency have provided the conditions for much of our success as a nation- for much of the comfort and relative predictability of our lives. But these conditions are not inherently aligned with those that have prevailed for several millenia in China.

I will try to set the record straight here as to what I said and what I meant in my speech on The Chinese Mindset. And I will refrain from questioning the credentials of anyone who took shots at mine.

First of all, it is astonishing to me that the most of the kerfuffle revolves around one of the statements that Dan Harris wrote in his summary of my speech. Namely: "Americans think the Chinese lie and steal." In more than 20 years of living and doing business in China I have heard countless American tourists, students, academics, businesspersons, expats, members of Congress and Cabinet level officials of several administrations express the sentiment that Chinese individuals and organizations have led them to believe an untruth in one form or another, or had their property taken away without consent. In each of these countless incidences over the years, have I been hearing or reading incorrectly? If not, then why I am the one accused of insulting the Chinese? All I have done is recap this sentiment as a starting point for what I hoped would be a reflection on why that point of view is unfair.

Here is what I truly think: all people have a propensity to want something too much. That is, we put ourselves in a mode where without telling a lie or committing a theft, it seems difficult or impossible to get that thing we want. We are restrained from acting out by the fear of consequences, whether social, spiritual or legal. My point is that while China's government is working with great sincerity and effort to implement rule of law, it takes time and we should not put ourselves in situations where our counterparts in China lack the incentive to implement a contract, or have strong incentive to breach it, then rely on the legal system to force it through. Meanwhile, all of us with something at stake in China, whether codified or not in a contract, should realize that there is no greater deterrent to destructive conduct than respect for the presumptive victim. In other words, people won't mess with you if they respect you. My point is that any indulgence in contract-waving, table banging, or suit-filing is much less likely to earn you respect, than taking time to understand what pressures your Chinese counterpart is facing, what goals he has, what's really possible, and who he depends upon to survive - and align your business goals with that whole situation. My point is that when you become a force in that network, one recognized as deserving of respect, than your counterparts will face social as well as legal consequence for any breach of contract.

Gaining that position of respect within the network is not always a matter of speaking great Chinese - although it often helps I have seen business leaders who can barely say Ni hao attain that position. It comes from demonstrating that you are a realist rather than a moralist, a pragmatist rather than a dogmatist, someone able to digest and navigate conmplexity and fluidity while still getting things done, rather than someone who gets flustered or reacts when things aren't as simple as we all hoped. Someone who people feel comfortable sharing information with, because you will know what to do with that information.

As for Dan Harris' summary statement, "Key to operating in China is to get into a network." I need to clarify what I mean. What is really key is developing awareness of what you bring to the table, and respect for that asset, within your counterpart's survival and influence network. If no one that the people you are dealing with has heard of you or your company, or if they *have* but think you are misguided, dispensable, or inferior, over any considerable period of time you will face difficulties motivating these people to work with you. If we are purely mechanistic - business is only business, and a deal is a deal - we may think it doesn't matter what our partner's network thinks of us. But, if we are to succeed in China, we'll have a better chance if we know who in government, in the industry, and in the organizations stands to gain or lose from developments in our deal. If we are to have solid backing for our objectives, we need to sell through the whole network, not just the person who signs the contract.

Joseph Wang points out rightly that being an outsider puts you at an advantage, because you can operate without being coerced into local systems of patronage. Being a respected part of a network where your counterparts operate is not the same thing as being an insider.

I'm not saying that it's critical to try to be an insider in a culture not our own. That's ridiculous. I'm saying, best practice is to get yourself respected and here's how: Bring a valued asset to the table, make sure that the people who motivate your counterparts know and respect the value of that asset, institutionalize your company in the "network" by making clear that you are not going away, prove to multiple points within that network that you're a realistic and communicative leader who can be trusted, and facilitate the building out of the relationship between your two organizations at multiple levels.

To everyone who questions my credibility or methods, all I can say is that my experience is valid, and so is yours. If you think I'm **the source*** of an insulting generalization, when what I did was set out that generalization as proof of an undesirable condition of misunderstanding, then grind your axe all you want. It's a blog.

My objectives are also probably different from most of you who posted. Although I spent almost 20 years working in senior management China for American businesses, I find it more interesting now to work with Chinese organizations, who are discovering the need to understand and respect "where Americans are coming from."

In conclusion, if you have a different formula in China and it's working, then stick with it. Best regards to all,
Janet Carmosky

Thanks for checking in.

I agree with you that there is a very wide perception in the American business community (and I believe this to be the case in among EU, Japanese, and Korean as well) that the "Chinese lie and steal." We can argue all we like about how unfair that perception is, but that is the perception.