The Magical China

The People's Republic of China, getting a more important role in the world

China is a country that is always gaining more attention of the world, and everyone is waiting to see what’s coming next with them.

As a country with a millenary history and as the place where many developments have come from and shaped society, China is a country that is magical and has a lot to show and to teach the world.

However, the fact that China has become since 1949 a communist country has shaped its relations with the world in a very interesting way. At the beginning getting away from the capitalism and the western world, but with the years it is turning into what they call a socialist market economy. Those changes promoted by Deng Xiaoping have come slowly but really strong and those are the ones that are leaving the entire world impressed.

As Maria Alejandra Gonzalez-Perez said in her presentation China has had a huge economic growth for the past twenty years, and that is thanks to a market liberalization, development of an external labor market, high international trade activities, and increases in the private enterprises, among many others.

Then Ricardo Pelaez and Miguel Estrada talked about some positive facts that have helped China to succeed. Mentioning how many multinationals have decided to go and established subsidiaries in China, increasing like that the business partnerships and the foreign direct investment in the country, which brings know how and new technologies.

(Foto taken from Getty Images. "People in shopping center, Guangzhou, China" by Charles Bowman)


Many countries are looking for agreements in the country, since they are importing many Chinese products, but they are also aware that China represents a huge market for them, nothing less than a population of around 1300 million.
All this capitalism has definitely had a big influence, and as the boys mentioned, the country has been having an significant economic growth since it started its opening process in 1978. Their middle class is growing and they are important consumers and are the ones that attract many companies to produce there. And there is a rich class coming too.

Now there are stores as Ferrari, Lamborghini… which means luxury.
And other more common supermarkets as Carrefour are getting there.
Besides 60% of today’s GDP comes from private companies.

But not everything is so good and perfect and China still has lots of challenges in front of it.
As María Alejandra Gonzalez-Perez said, there are between the main problems environmental issues (it is said that from the 10 most contaminated cities in world 7 belong to China), there is a huge difference between the urban and the rural areas, and like that the development comes to some places but leaves others quite abandoned and that also increases the difference between the reach and the poor, there is also a bigger rate of unemployment in the rural areas, the employees of the private sector have lots of differences to the ones of the public sector, the fact that China is ruled by an unique working class political party has also limitations, and there is a huge control for communications, for example what google shows in all the other countries may be restricted in China, so the content is the one approved by the government.

On the other hand, the boys presented as difficulties the pressures from the USA and other countries, that want to slow China’s economic growth since it is becoming a threat for them and their home industries, there are questions on the quality of the products and the role of those cheap costs, how are they handling their workers considering lack of human rights protection, child labor, horrible salaries and the possibility of imposing quotas and taxes to Chinese exports.
So considering all these factors, the only thing remain is to be ready to respond to China and find a way to be partners and learn from them, making them a big opportunity instead of a threat.


Question: Which one are the keys to have successful negotiations in China and in order to have good quality products as well?

Some people who have undertook negotiations with China, come complaining or maybe they manage to get what they want, but then its clients are the ones unsatisfied because of the bad quality of the products and other things.

However, that happens because those negotiators haven’t done their homework and instead of looking for the keys to negotiate with the Chinese they go the opposite way and end messing it up.
So in order to come happy and be successful in the Chinese negotiations James Vincent Lord (2007) has 10 tips to follow and like that all the good opportunities will be there for you.

Those tips are:

Get familiar with the culture, the Chinese people are proud of their culture and it plays a significant role in their lives, they are also in a process of getting use to what may be obvious for us, so it is important to understand that there are special things in their culture, that we need to respect that and find a way to connect their culture with yours.
Some important things to remember are that they are a culture of processes not results, they take time in what they do, they look for consensus and they have a broader view.

Another important thing is to establish good relationships and networks, what is called in mandarin “Guanxi”. It is not what you can do, but who you know (Echavarria, 2009). People are the key to achieve you goals.
And if you have permanent business go t

o China, it is important to be there and get to know the people. When you negotiate it is between the people and not between companies!!


This picture was taken in Germany in 2007 at the University HHL and it is called "Building the Guaxi" and the photographer is unknown. Anyway, the idea is to show that the Chinese people are open and are willing to share their culture with you and can become great friends. So honestly the Guanxi is worth getting and keeping ;-).


You also have to pay attention to the concept of “Mianxi” which would be like the “face” meaning the dignity and pride of the people. So you got to be subtle, never offend them and learn how they manage that concept, since you can take the “Mianxi” from them but you can also give it to them by recognizing the ood things they have done.

It is essential to know what’s behind the façade of a company, and more in today’s business world with the internet, you may see many nice things but you gotta verify they are for real, and how is really their business culture. Do constant supervisions, be there, give courses for the people, check the technology they have… See that what they show is definitely what you are getting.

Learn to work in a changing environment. China is in a process so there are many changes in their laws, and sometimes there may even be contradictions. So be informed the whole time on the adaptations and changes that are happening.

There can’t be a room for misinterpretations. Be very precise on what you want, write it down, attach it with graphs, pictures… even samples. Explain every singles detail and never leave a thing on the air.

In China you need a strategic partner, don’t think just about a provider. It has to be set on partnerships. And evaluate it not only on the bases of the price, but do a complete analysis and have auditors. Check the licenses, because you gotta respect the law and see that your partner is following it too, if they don’t have for example an exporting license see how to handle it under the Chinese law. If there is any difficulty, highlight that it is important for both of you and the partnership and even friendship!!

When you have a manufacturing contract, supervise the whole process and check to see how they are doing with it, if they are respecting the schedules and all the details.

Another thing related to that, is that you should foresee everything going around, like that you’d be able to avoid problems and if they arise you can solve them easier and faster. Have schedules, plans… everything you can.

And finally be very precise in the introductions, presentations and communications. Try to have as many things as possible written. Have clear that “no problem” with the Chinese doesn’t mean it is ok, it is like they get what you’re saying, but there may be all the difficulties of the world behind, and consider that they are a culture that doesn’t say “no”. Be honest, don’t fool them, because they might fool you and be careful with all the closures of the negotiation.

Besides that another topic that the author mentions it the property rights protection, which is a concept that still is developing for them, but with the time when they see how it is for the rest of the world and the commercial implications it will improved. However, it is important to understand that in part it comes from it culture where they feel that everything should belong to everyone.

Following these advices and preparing yourself according to them China would represent lots of benefits for you.

References:

1. Estrada, M. & Pelaez, R. 2009. Presentation "Republic of China" part of the subject Organizations and Cultures at the University EAFIT
Note: There is a mistake in the title of the presentation, because the Republic of China is Taiwan, and China per se is the People’s Republic of China

2. Echavarria, P. 2009. Lecture Asia Pacific Studies, module of China at the University EAFIT


2. Gonzales-Perez, M. A. 2009. Presentation "China" part of the subject Organizations and Cultures at the University EAFIT


3. Lord, J.V. 2007. The essential guide for buying from China´s manufacturers: 10 steps to success. Guru Series