This is part II of a three part series of posts by Jason Patent, a China market access consultant with years of on the ground experience and all sorts of degrees from top schools (including a Ph.D from Berkeley)  that qualify him to discuss how Chinese culture is likely to impact your doing business with China. Jason’s first post is here. Here is his second:

A favorite critique by Westerners of China is that “the Chinese are unethical.” It is claimed that Chinese deceive, don’t stick to contracts, deliberately cheat. While few would deny that China can be a frustrating place for Westerners to do business, and while unethical behavior certainly occurs in China, claims of unethical behavior are often exaggerated, and result from Westerners’ own failure to understand the different background assumptions held by the Chinese. As such, claims of unethical behavior often amount to little more than excuses for poor business planning and practices on the part of the Westerners.

When it comes to doing business in China, the road to ethical harmony can be less than entirely clear. But that’s OK. In China as in business anywhere, understanding the terrain is critical to knowing where to place your next step. And with China, that first step is an understanding that we do view things differently. The “ethical roadmap” below — while brief and by no means a complete guide to potential conflicts — begins the process of helping you navigate terrain that may look unfriendly, but is in fact just different.

 

Humans throughout the world fall into a simple, yet immensely hard-to-avoid, trap: attributing ill intentions where there may be none. Each of us is the only one with access to our intentions. In the moment we might not always know exactly why we’re doing something, but when pressed to introspect we’ve still got an infinitely clearer picture than anyone else does. When we do something that upsets someone else, we can easily take refuge in our intentions: we didn’t mean to hurt anyone’s feelings. If the people involved in this kind of upset are willing, dialog can happen, misunderstood intentions can be clarified, and relationships can deepen.

The rub is that we have no access to anyone else’s intentions. All we have to go on is behavior. We observe a behavior, and attribute an intention, whether it’s accurate or not. The result: we make a lot of mistakes, often assuming evil intent where intent was either good or, at worst, indifferent. Whether we like it or not, we are wired to judge those around us based only on their behaviors, while at the same time judging ourselves based mostly on our intentions. That’s a cold, hard reality — but a good one to know about.

This finding is not my own, nor is it new. And it’s a profoundly useful finding for intercultural understanding. Think of the staggering amount of miscommunication that happens every day among members of (roughly) the same cultural group speaking the same language. Now imagine a “typical” Westerner and a “typical” Chinese person. Both behave in ways deeply conditioned by their very different cultures; neither is familiar with the other person’s cultural habits; neither speaks the other’s language. How could they not judge each other? And what hope have they got of working things out, given the cultural and linguistic barriers?

My own answer is that they’ve got plenty of hope. What it takes, though, is hard work, commitment, and the involvement of experts with the tools to build the necessary bridges. It just won’t happen reliably on its own. It may happen here or there, but for most organizations that’s hardly what you’d want to stake your future on.

The truth is, there are ethical problems in Chinese business. As there are unethical practices in any business, in every culture. Who would claim that there aren’t ethical problems in Western business? Just look at the world economic meltdown. Plenty of experts have claimed — and many Chinese believe — that it’s due in part to ethically shady practices, mostly in the West. So while it’s quite possible you will encounter problems that are indeed unethical, don’t be too quick to conclude that it’s because of anything “Chinese.”

At the end of the day both you and your Chinese counterparts care most about the bottom line. It’s easy to cry foul on ethical grounds when it looks like your business is taking an unexpected hit. But there’s much more to be gained for your business by understanding that the Chinese are operating, just as much as Westerners, inside of an ethical system. Complaining about the system will only set you back. Understanding the system will ensure that you’re ready for anything.

Just don’t expect business in China to be absolute. Remember, your degree of willingness to deal with nuances and shades of gray will help make your China venture boom or bust.

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Photo of Dan Harris Dan Harris

Dan is a founder of Harris Bricken, an international law firm with lawyers in Los Angeles, Portland, San Francisco, Seattle, China and Spain.

He primarily represents companies doing business in emerging market countries, having spent years building and maintaining a global, professional network.  His work has been as varied as securing the release of two improperly held helicopters in Papua New Guinea, setting up a legal framework to move slag from Canada to Poland’s interior, overseeing hundreds of litigation and arbitration matters in Korea, helping someone avoid terrorism charges in Japan, and seizing fish product in China to collect on a debt.

He was named as one of only three Washington State Amazing Lawyers in International Law, is AV rated by Martindale-Hubbell Law Directory (its highest rating), is rated 10.0 by AVVO.com (also its highest rating), and is a recognized SuperLawyer.

Dan is a frequent writer and public speaker on doing business in Asia and constantly travels between the United States and Asia. He most commonly speaks on China law issues and is the lead writer of the award winning China Law Blog. Forbes Magazine, Fortune Magazine, the Wall Street Journal, Investors Business Daily, Business Week, The National Law Journal, The Washington Post, The ABA Journal, The Economist, Newsweek, NPR, The New York Times and Inside Counsel have all interviewed Dan regarding various aspects of his international law practice.

Dan is licensed in Washington, Illinois, and Alaska.

In tandem with the international law team at his firm, Dan focuses on setting up/registering companies overseas (via WFOEs, Rep Offices or Joint Ventures), drafting international contracts (NDAs, OEM Agreements, licensing, distribution, etc.), protecting IP (trademarks, trade secrets, copyrights and patents), and overseeing M&A transactions.