Janet Carmosky has been “doing China” since 1985 and she has lived in China for the bulk of the last twenty years, most of which time she was married to a Chinese businessperson. Her Chinese is incredible. She knows China.
To grossly summarize her talk, it went as follows:
- Americans think the Chinese lie and steal.
- China’s morality is not the same as ours. Ours is based on Judeo-Christian values. China’s is not.
- Key to dealing with China is to get into a network. Real Guanxi.
- Chinese mindset is the following:
- Tomorrow never comes. When it does, you can start all over anyway.
- Never tell anyone what you are doing unless you know what will be done with that information.
- Take the opportunity, even if that means breaking a contract.
- Nobody operates independently. Survival depends on a network.
- Do not trust anyone and respect only those in your network.
- Teamwork and transparency are a drain on the system.
Ms. Carmosky also spoke a bit on the foreign companies that first went into China: Coca Cola, Eastman Kodak, AIG and Johnson & Johnson and how they managed to achieve what they have in China.
Though Ms. Carmosky clearly knows her stuff, I am not convinced her speech contributes towards doing business in China. Assuming everything she says to be true, how does that impact your business? As a lawyer, I can say it should not.
As Ronald Reagan used to say,”trust, but verify.” This is as true in the United States as in China. No matter how much you trust the people with whom you are dealing, there will always be times when a contract is necessary. No matter what the tendencies of your Chinese employees may be to “lie and steal,” you must make clear that such actions by your employees (particularly if it comes to paying bribes and receiving kickbacks) simply will not be tolerated and will lead to immediate firing.
I also take issue with Ms. Carmosky calling for Westerners to get into a Chinese network as I think that is nearly impossible to achieve. I tend to think that Westerners who think they are in a Chinese network are, almost without exception, operating under a potentially dangerous illusion. Steve Dickinson, my law firm’s lead China lawyer, has been involved with China for around thirty years. His Mandarin is so good that Chinese often refuse to believe he is an American; they think he is from one of China’s more exotic provinces. Yet Steve will readily admit he is not in any networks and he will say he never will be. As he puts it: “How can I compete with people who are from the same hometown, have the same uncle, went to the same high school, the same college, have the same culture? I can’t.”
This is not to say that foreign companies doing business in China should not strive to achieve strong and long lasting relationships with those with whom they deal, because they most emphatically should do this. But at the same time, do not lose sight of the fact that you will always be an outsider.