As b.creative Shanghai is approaching, KEA reveals 6 lessons from a 10-years experience in China.
As a cultural policy expert, I have been fortunate to experience China at the invitation of the Chinese Ministry of Commerce. Since 2007 I have been visiting the country frequently and observed its transformation initially from Beijing and then from Shenzhen, a city established by Deng Xiaoping to test market capitalism in mainland China 40 years ago (the so-called “Socialist Market Economy”).
I manage a multinational micro-enterprise (KEA European Affairs) known for advising public authorities on cultural policy and for its attempt to launch a fashion brand in the South of China. My position is as a practitioner of China, a country moving away from a manufacturing economy but where the cultural and creative industries are still largely undeveloped. My experience draws also on my professional journeys across cultural differences in Europe, rich of its diversity born from history, various educational systems and social values. Surprisingly I discovered a lot of Europe in China or rather a lot to inspire the future of Europe as a place to experiment and entrust younger generations. Sometimes it is good to take a bit of distance to assess the bigger picture at the time of scenario building for the future of Europe.
However, this article is about China rather than Europe. It reflects my own experiences. In China, it is important to understand what is meant rather than what is said. You have to learn to read the “no” between the lines or the value of a “yes”. Working in cultural policy, China gave me the opportunity to test my ability in comparing my extensive experience of “European” cultures (having lived in France, Germany, the UK and Belgium with work assignments all over Europe) with cultural norms from China. Educated in France with some German roots, business trained in a British environment I thought I would be well prepared to understand implicit communication. But I wasn’t. Nothing prepares a Westerner of my background for the cultural shock one experiences in Asia. China mixes many cultural differences that coexist in Europe. The Chinese are a bit French, Italian, British and German. Its communist history makes it close to Eastern European countries. It is another way at looking at Chinese cultural differences and demystify their importance. A citizen from Naples with large business experience in China whom I met in Hong Kong airport took the view that Chinese were merely Neapolitans – with, on balance, slightly worse drivers.
Because of language and major cultural differences, one is bound to be faced with numerous occasions for misunderstanding. This is true for anyone working somewhere with a sharply different cultural heritage. The jump may just be steeper in China. Here are my six maxims designed to guide those wishing to do business in China.
1.Be patient and diplomatic
- do not be fooled by the opportunities and the positive messages. The Chinese are legitimately interested in you and your project but initial contacts will take time to materialize. Business is a diplomatic game and a long process of attrition. You’d better be prepared for a long-distance run unless you are the owner or the representative of a well-known international brand. China will teach you patience. This helps explain why, when asked what he thought about the outcome of the 1789 French revolution; Zhou Enlai responded “it is too early to say.” Even if, as some maintain, he was talking about May ’68. Best be patient then.
- The concept of “win-win” is still foreign in China. The winner takes all. Value the moment to make any compromise; the compromise is likely to be cut in half and will rarely be taken as an effort to find the middle way. There are no shortcuts. A compromise is not a quick fix. Compromises are always a matter for negotiation.
- Do not be confrontational. I tried to forget hard that I am French. I come from a country where people like to disagree openly and who do not mind a good verbal fight. Avoid challenging ideas in a confrontational way in a public forum. Open disagreement leads to breakdown in relationships. Chinese are more like Brits or the Nordics – It is better not to show your emotions. Like the Brits, Chinese are masters in understatement, more British than British but with a twist, as haggling is deeply entrenched.
- Germans are not known diplomats. German companies are doing well in China on the strength of the quality of the product but also the ability to work for the long term. No quick gains are to be expected in China. This is not about the next quarterly earnings report for shareholders. Patience and organization inspire trust. Flamboyance and generous ideas are less inspiring to Chinese.
- It is imperative to develop trust with your Chinese partners. You have to spend time on building an emotional connection: empathy will determine the capacity to establish trust, friendship is more important than the deal. I concluded that, unless I was introduced by a high-level government official, it would take me an average 6 meetings and as many lunches or dinners, sometimes prolonged foot massage, before I could envisage dealings with my Chinese partner.
- In China trust is more important than competence or skills. Trust replaces contractual terms – which, sadly, are rarely enforceable.
- In China business relationships are personal relationships. The Chinese do not distinguish between private and professional life. Therefore, always be professional in your private affairs. You have to fit into the extended family. This is the Italian side of Chinese: family above all else.
- You can overcome the issue of trust by taking on all the elements of risk in a deal. The Chinese are risk-adverse.
- You are evolving in a context akin to Europe’s post-war mentality. Bear in mind that wealth is not even one generation old. Getting rich is recent, the “age of austerity” still a raw wound. Chinese people are struggling with this generation gap whereby parents went through a different life than their children. “Spoilt Europeans” are a bit tender for the older generation of Chinese raised on the uncomfortable and precarious.
- Play golf! This is the best way to connect with the movers and shakers even if the country’s leadership has recently decided to discourage golf playing.
- Harmony in a relationship is more important than truth. A little lie, on occasion, or diplomatic language is acceptable to save face and harmony.
- The Chinese do not yet pay for ideas. Ideas are exchanged as part of relationship. Do not give up too many valuable ideas and certainly do not express them in a business plan.
- And this is a corollary of the last point – the Chinese are very curious, they like ideas. Curiosity is a great motor of change.
- Smile: you will have a better chance to succeed if you have a positive soul. Smiling is important in China. I experienced great moments of happiness in China in smile exchanges with ordinary people. Human fraternity is heartening.
3. Be respectful of social codes and hierarchy
- Social life and behavioural codes are still widely prevalent influential in a society that remains very conservative. Fortunately, capitalism has not completely eroded a sense of community spirit.
- There is inequality in China but there is no class system. Everybody talks to each other and respects each other. Bosses will have no problem inviting assistants and drivers to business meals. This is not, frankly, the way of the French, British or Belgian business meal – but it should be.
- Most Chinese will be respectful of social norms, they will easily adopt international social norms when travelling abroad notably concerning women.
- Do not expect the Chinese to challenge their respective roles and tasks. Nobody will want to challenge the position of a colleague even if the latter is incompetent, nor show any frustration in relation to the hierarchy.
4. Be flexible
- No need to plan your appointments, nothing is decided one week in advance. Be prepared to change time of your meetings several times on the same day.
- China is more technologically-savvy than Europe. Get WeChat, the local instant-messaging service (that puts functionalities of Google, Twitter and Facebook – otherwise banned in the country – under one roof) and forget about emails: communication is instantaneous as it suits local flexibility (see point 4 above). The business card has become redundant and internet websites have lost relevance. Phones are payment terminals. Cash is out.
- The Chinese are the kings of flexibility, but do not arrive late at meetings.
- The first stage is all is about verbal exchanges, writing is for the later stage. Your network on the social network WeChat will determine your fate. The rule of the game is to get important people’s Wechat contact… it is like searching for something extremely elusive or a Pokemon.
- Nothing works according to plan. Until the last minute the project may be blocked by an anonymous but powerful decision maker or a sudden change of priority. Living in China is living on the edge. Remain diplomatic in all circumstances. Disorganization and lack of planning did not prevent China from becoming the fastest-growing economic power in the world.
- China is transforming fast under the influence of economic growth, technology, strong universities and the (subsidized) return of thousands of students living abroad and tourists as well as foreigners happy to share business secrets with the hope that they will discover El Dorado…
5. Chinese institutions are not yet adapted to a modern open economy
- Chinese bureaucracy is as well organized as if Napoleon had conquered the country. It plays a key role in the establishment of an open economy.
- The judicial system is still in its infancy. It is more about protecting social “harmony” than implementing rights. Personal relations are still prevalent over the legal system. Rights are not clearly spelt out anyway. You have to test the limit.
- Dealing with banks is not easy. Even worse than in the West. The proliferation of obscure rules linked to capital controls make it difficult to use your money as you wish. The system disadvantages small companies.
- The system remains bureaucratic and decisions are difficult to challenge. Commercial matters can still be resolved through physical violence with the blessing of the police more focused on civil cases. I have experienced it.
6. Other observations
- The Chinese population is slowly developing a taste for aesthetics, spirituality and introspection. I predict a great future for psychoanalysis in the country of one child system and such a wide generation/expectation gap. Etiquette courses (Italian and French way of life) and lectures on happiness “the American way” are very popular.
- The US are exercising a strong influence on behaviour. The young population is nourished with Hollywood movies. The Chinese way of life (and measure of social success) is driven by profit and material advantage. The accumulation of wealth is a dominant value. Many Chinese young people are rapidly becoming obese because of KFC, Mc Donald’s and Starbucks.
- Europe is seen as “passé” a great place to live and enjoy a lazy life but not a place where innovation takes place.
- China has built considerable self-esteem over the recent years. When it compares itself with other countries it is doing rather well. Foreigners, who are more and more present, are no longer a source of curiosity or knowledge.
- The professional media is not reporting on news so do not count on journalist to give you a hand for free. News is a commodity and if you want to make the news you had better invest for a good coverage.
- Good Chinese creative people are very expensive. There is probably not enough competition between talents. Therefore, it is often less expensive to do photoshoots or design work in Europe than in China (cheaper and much better quality). China is also very expensive for the production of small quantities of products.
- Foreigners make the mistake of taking Hong Kong as the entrance to the Chinese market. Hong Kong is a different continent. Do not necessarily trust advise from people in Hong Kong. They often have a poor knowledge of mainland China. Always prefer mainland Chinese employees to Hong Kong employees if you want to be effective in mainland China.
Philippe Kern, CEO KEA
More about KEA in China here.