Veteran China hand, David Dayton, of Silk Road International, did a post a while back on the effectiveness of international management practices in China. The post is based on an article on Phys.org, entitled, “Multinationals in emerging China should stick to their own ways of managing,” and subtitled, “When it comes to breaking into the lucrative Chinese market, foreign multinational retailers should keep largely to their own, time-tested management techniques, according to new research funded by the Economic and Social Research Council (ESRC).” Dayton’s post is called “China–not so inscrutable after all.
As you can probably tell by now, the gist of the article is that “whilst it may be necessary to adapt to some extent to local conditions, time-tested management practices actually translate well across cultures.”
Dayton concurs and says that he does not believe “there is a ‘Chinese way’ to do business,” though “there are characteristics about the Chinese business culture that are unique in their combination and influence.” I like and agree with that description.
Dayton goes on to note that this means that if you are “successful in your business at home you have a great chance of duplicating that success here in China” and there is no “secret to cracking the Chinese market”:

No magic bullet, no golden connection that will give you the country on a silver platter. If anything China just requires more of the same: more due diligence, more QC, more management on the ground, more training, more time invested into starting up, more patience, more “buy-in,” more cautions and legal protections.

He is absolutely dead on.
Dayton then lists out the following nine items (why nine? I always go with either eight — in deference to it being a lucky number in China — or with ten — in deference to our Western desire for roundness and symmetry) of which one should be aware to “adapt” to China:

1. Labor/people are more often the answer to problems than a tech or money solution.
2. Language is key–Learning Mandarin is a great advantage.
3. Regionalism–From differences in language and trust to manufacturing/industry to intra-province transport tariffs, China is more like a group of loosely federated states.
4. Scarcity mentality–there is not enough for everyone, there never has been and there are too many people. Throw in political turmoil and you’ve got the scarcity mentality that most business owners grew up in.
5. Change and irrationality–Local, Provincial and National government policies can be created, changed and/or (un)enforced for completely political motivations.
6. Nationalism–it’s very real and very active.
7. The personal nature of business and the converse lack of trust between strangers doing business.
8. The incredible numbers that are China.
9. Business is not M-F, 8-6. Its all day all night until the sun goes out.

Anything else?

  • Goes with 5 I suppose, but a lot of people seem to forget how politically unstable China is. Keep in mind that China is still essentially a communist country, and that communism is a political system which has had its day. The clock is ticking for the communist party and when, sooner or later, it reaches zero the results are unlikely to be pretty – think Bucharest in December 1989 or Hungary in 1956 but over a much larger area.
    Do not blithely assume that these problems have been solved by economic growth, do not think that these things are all in the past or that the Chinese population is as safely brainwashed or blinded by greed as they seem. There are many people who harbour bitterness towards the government and would love to see it fall.
    What should foreigners in China do about this? Try not to get too close to the government – western businessmen who tout their government connections are at best making fools of themselves and at worst just plain lieing. Otherwise stay away from politics – except in private of course – and keep a weather eye on the news.

  • Falen

    Dunno how politically unstable it is for you but it is more politically stable than, say, Thailand. PRC has never had a outright coup. Same can’t be said in a lot of emerging markets.

  • @Falen – “PRC has never had a outright coup”
    According to the CCP both Lin Biao and the gang of four attempted to depose Mao through a coup. Even if you don’t believe the pro-Mao CCP spin, the Gang of Four were themselves deposed from power by Hua Guo Feng, with running battles being fought between PLA soldiers and Jiang Qing’s bodyguard before her surrender. Hua was himself forced out of power, with rumours saying that he fled to North Korea, although recent photos have shown him sleeping through the a particularly yawn-inducing speech at the party congress. Pre-Cultural Revolution, Liu ShaoQi was CCP chairman until seized and forced out of office by the Red Guards. China spent much of the sixties in a state of controlled civil war – controlled of course by Mao for his own ends. The events of 1989 hardly need to be described again.
    My point is not to describe China as particularly more unstable than any other thrid-world country, but to dispell the myth of solid and unshifting continuity of governance that the CCP has created. Few of the above events were recognised as out-and-out coups because we in the west saw none of the classic elements that such events usually involve. There was no announcement of a new order made from a freshly captured radio station, there were no television pictures of soldiers clambering over palace gates, no dashes for the airport so the ex-president could spend his sunset years in Riyadh, and no tinpot colonels giving press conferences. Instead the CCP have managed to keep most of their struggles behind closed doors, and the army has, in the main, kept out of politics. It is, however, worth keeping in mind that the communist political system is one that, due to its unbending nature, will surely destroy itself in the end, either in an explosion or an implosion. You should not confuse the abscence of changes in government – or even the avoidance of coups – as a sign of political stability. Neither Burma nor North Korea have seen a change in governance in the last 15 years, but I doubt anyone would describe either of those countries as being particularly stable.

  • great advice

  • Replicating the business model of one country in another successfully is not always guaranteed. China is a booming country, therefore the challenges there are tremendous. Therefore the business practices applied there may not have the same success as your home country.

  • @ FOARP
    Don’t forget 6,4. The Beijing garrison refused to attack the students or even to mobilize. The soldiers we saw on TV were from provincial units.
    THAT is a coup.

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