Context not Contents
Jeff LoCastro, November 2, 2011
Founder & President, NCCREA
The Chinese are very nationalistic. They are also very insecure.
Historically, those two traits have always made for internationally
explosive bedfellows. Although the NCCREA doesn't exist to draw
politically historical conclusions, it would be the essence of ignorance if
we did not at least acknowledge that a mix of nationalism and insecurity
have typically played out in raucous international behavior. Regardless,
the future will determine how that plays out. But in the present the
nationalism and insecurity simply hold many potential stumbling blocks
for the foreign businessman in China; this national insecurity hosts
pitfalls that manifest themselves in profound ways when it comes to
communication. Understanding this concept and being able to work
past these issues is a competitive advantage for the foreign enterprise.
Certainly in any interpersonal exchange contextual elements must be
taken into account. But these elements in China, like so many things in
China are a testament to extremes. Every conversation, every
communication in China (relative to the foreigner) is filtered through
the scrim of national insecurity. Everything said must be evaluated
within that context and not the content of what is actually being said.
It is not what is being said, but rather the national insecurity
motivations that drives the answer. From the perspective of the
Chinese national, any question you ask will first run through the "how
will my answer make China look in the eyes of the foreigner" filter.
Understanding that, from the perspective of the foreigner, the question
becomes how could the answer that was just presented (by the Chinese
national) be skewed based on national insecurity?
Following are some examples of conversations.
Driving through a 2nd tier city:
Foreigner: It's just amazing. Two days ago I was here and there was a
10-story building right in that location.
National: Yes, they use explosives to bring down the building into one
neat pile, then using heavy equipment haul it away.
Desire: To make even 2nd tier cities appear to the foreigner, not as a
third-world economy with archaic labor intensive building practices, but
rather a completely modern, efficient society top to bottom.
Reality: Certainly at some point somewhere in China explosives where
used to raise a building. Even in a 1st tier cities such as Beijing,
explosives are as rare as being personally struck by lighting. As the
majority of new construction in Beijing was done to coincide with the
2008 Olympics (when the world came to Beijing) virtually all new
structures there (and in China) are replacing Mao-era shanty's or
low-story structures that don't require anything remotely resembling a
single continuous drop. Hydraulic machinery is also used, but labor is so
cheap in China that even a simple construction or deconstruction may
employ hundreds of laborers and the workers literally live on the job site.
Food is brought into them so they never have to leave their working
environment. Construction labor typically consists of poor, illiterate,
homeless, migrants. They work 7-days a week, 24 hours a day in 12 hour
shifts sometimes using hand drills and sledge hammers to topple the
structure. Then they toss the rubble, brick-by-brick into waiting trucks
to be hauled away.
Entering a 1st tier city:
Foreigner: I don't remember that highway and those on/off ramps when
we were here 2 weeks ago. Seems like these things just appear over
National: Yes, China has developed many advanced construction
processes that speed up development of such things.
Desire: To make every city in China appear to the foreigner as a
completely modern, fast-paced, efficient society that utilizes the latest
technology in everything, including the construction of roads.
Reality: See above. Labor is so cheap in China that a simple road
construction may employ hundreds and hundreds of laborers who also
may live on the job site or are housed in government quarters and
bused-in to work their shifts. They work 7-days a week, 24 hours a day
in 12 hour shifts sometimes using pitch-axe, shovel, hand tools and
make-shift quli-carts to haul materials.
Working in your office:
Foreigner: Hello, building manager? My Internet is not working. When
will it be operational again?
National: The fiber optics have maybe broken in half. They should be
repaired in a few hours, maybe.
Desire: To make the foreigner think that everywhere in China is using
high technology fiber optics and that their systems are advanced and
modern . . . just as they are in the US.
Reality: There are no fiber optics in your building. You can see the cable
romex coming through the hole drilled into the window frame. The
building is a 40 year old Chinese bricker, the heat is a radiator and you're
lucky you even have phone service, let alone an Internet signal. Fiber
optics? Please . . .
Looking at property with your Chinese real estate Guanxi.
Foreigner: I'm looking for a piece of dirt to locate my business.
National: Do you want to buy the land or lease it?
Foreigner: I'd rather buy. You can own land in China?
National: Yes, of course.
Desire: To make the foreigner think that Chinese have private property
rights (just as they do in the US) and give the impression that ownership
is a reality in the "new China" and it is just as modern and evolved as any
Reality: There are no private property rights in China, new or old.
Everything is rented on a long term lease with the Chinese Government
as the landlord. You may rent from the Chinese Government directly or
rent from a current property "owner", i.e., he who has already leased
the property from the government.
The danger to the businessman is when you buy-into the articulated
answer without understanding the contextual filter that was applied,
you will run head-on into the no-mans land of Chinese paradox. And
that is a very bad, frustrating place. For example, when you show-up at
your job-site expecting to see modern grading equipment able to scrape
level pads within 1/2" variances and all made true using the latest
Johnson laser levels and satellite image templates, but rather you find
500 shovel-bearing laborers lined up as if in a chain gang moving dirt
with their shovels made from cut-up oil drums and 2x4's. Although the
job seems to get done (there are still significant quality issues to be
addressed of course), your visual inspection didn't quite match-up with
what you had likely been told. Ultimately anger and frustration ensue
and you find yourself (and your enterprise) in a very bad place. You
can't quite figure out why nothing is ever as it seems (or supposed
So while other operations wallow in the perils of paradox, fail to
ascertain context from content and spend years trying to figure out
what's the heck is going on, here are 6 simple rules to keep you out of
1. Be direct, but not insulting. If you are American, the Chinese
understand that Americans are direct; they expect it. You'll not
surprising anyone by being who you are, culturally speaking. In terms of
insulting anyone this is where the nonsense contained in CNC
"handbooks" gets too much attention. The Chinese are not children.
They are sophisticated business professionals. They know who you are
and from where you came. They will not be insulted by the incorrect
placement of your chopsticks or using your index finger in a hand
gesture or other such absurdities. So in terms of insults, use my
formula: If you wouldn't say or do it to your mother-in-law, don't say or
do it in China.
2. Expect (demand) direct answers and ask lots of clarifying questions
until you get direct answers to your direct questions. Yes, it is true that
the Chinese do not like direct answers. They avoid them like a
conversation about the cultural revolution. As a matter of fact, the most
often used English word is: Maybe. Asked once why they use the word
so often, they will always reply, "because so many things can change."
True. So many things do change in China . . . constantly. But that is not
the concern of the foreign businessman. You are not Chinese. Let the
Chinese accept "maybe." The answer to "what time will your men be
here" is not "we have many things to do today" or the answer to "do you
personally have a business relationship with the head of the Land
Bureau" is not a broad smile and vigorous nod.
The expectation of direct answers will cause friction most of the time
and will be an exhausting endeavor all of the time. But it must be done.
They will try to dazzle you with a continuous whirlwind of extraneous
fluff and unrelated information. Not because they are bad people, on
the contrary. But because it is simply a part of their culture.
Of course it is a good idea even in the west to expect/demand direct
answers. But the point is in the west it is not a cultural phenomenon
to avoid them at all costs (this is where many of you bellow, "well you
have never met my GC!"). But in China, it is the culture to be vague and
non-committal constantly. It is a part of who they are.
3. Hold them to their answers and establish penalties for
non-compliance. This one is the most difficult of the rules because not
every situation allows one to do so directly. But a penalty can be more
than monetary, it can be simply the exclusion from a bidding process,
loss of opportunity, etc. If you let broken promises, assurances,
agreements, and deadlines go without consequence as soon as
infractions occur, you will have just declared open season for your
business to spiral into the world of "maybe."
Because vaguery and lack of commitment are so deeply embedded as an
accepted way of doing business, you must also be direct and clear in
your cause and effect response. "You have shown yourself to be
unreliable, therefore we have decided to find a more reliable
relationship." Then let them find a chance at redemption. "When you
have repaired your business practices, feel free to contact me and we'll
evaluate the changes you have made." Period.
4. Ask more than one person. Because different people may have
slightly different filters, you quite often get slightly different answers.
And more often than you would expect you'll get completely different
answers. It's a very strange phenomenon and one that is quite prevalent
in China. For questions that seemingly have only one possible
answer, e.g., 2 x 2 = 4, in China you may find a whole host of possibilities
. . . depending on the density of the national insecurity filter being
used. You'll always need to ask more than one person. For important
questions (or important answers) you'll need to ask many people.
5. Only do business with those with whom you can be direct (this of
course does not include government officials, *koolaid drinkers, and
your customers or tenants). Cultural over-sensitivity has major
repercussions in these direct business relationships. Just like doing
business in the west, you need partners, suppliers, vendors and close
professional relationships in which you can speak frankly, openly and
honestly. If you have to constantly tap dance around issues and find
yourself avoiding drilling into direct answers because you seem to be
insulting those with whom it is their job to provide answers . . . move
6. Let them know that you know that you are doing business together
because you offer something that China does not. Get it on the table.
End the dance early on in the relationship. Recently I had a meeting
with the largest real estate development group in China. Their projects
are a who's who of apartment luxury from Xi'an to Shanghai, from Beijing
to Guangzhou. Early in the meeting, they played the "we are also talking
a Chinese company" card. My response was direct and immediate.
"You can certainly do that, but we all know that they can not offer the
quality, the service, the efficiency, and the technology that we can.
We're here because you know we can do that; we are here because you
know we are better." The subject was never brought up again.
All of these can certainly be applicable to business relationships in the
west. However, they become of particular importance when in China as
so many businessmen who come here make the critical error of cultural
over compensation. That is, buying into the myths that: 1) I'm in China
and I must do business like a Chinese national, 2) Therefore, I must be
and act Chinese.
First, let's shatter Myth #1: They are doing business with you because
you offer something unique and they already understand that the
business practice, timing, and processes are different in the west and
more often than not that's why they are doing business with you.
Regarding Myth #2: Pssst (he says with a whisper) they know you are
not Chinese. You don't need to act like one and you will never be
one . . . no matter how hard you try. And frankly, they don't want you
to be. When an American businessman tries to act Chinese it is
perceived as pandering. When an American company tries to act
Chinese it is doomed to fail. If the Chinese wanted the foreign company
to be Chinese, they would just do business with a Chinese company.
For example, Kentucky Fried Chicken is successful fundamentally
because it is not Chinese. Today, America's KFC is one of the most
popular and successful businesses in China. It is an authentic 'how-to'
success story on what to do in China. But it didn't start out that way.
It is also a story on 'how-not-to-do'. When KFC entered the market in
1987 they were the first foreign food operation here. When they
stormed the proverbial consumer beaches of China, they came prepared
to wage a fast food battle based on perception, innuendo, and cultural
over-sensitivity. Their leaders where armed with the latest advice from
various CNC's on how to bow, how to shake hands, how to smile, how
to ask questionsand reams of other baseless and useless factoids from
people who have never actually done business in China. As a result,
KFC spent ten-years bumping around in the dark trying to find their
American voice. When they scrapped the bad advice, bad management,
stopped trying to be Chinese and began to operate like an American
company things started popping. The ten-years of learning were not
completely wasted as it did provide a framework for 'how-not-
to-do', however it could have been significantly more productive.
Doing business in China is a testament to extremes. The successful
businessman, developer, or company must understand the difference
between context and content or they will find themselves trapped in a
frustrating maze of constant paradox. If they can understand the
difference, follow 6 simple rules, stay true to the knowledge that what
they offer the Chinese economy is unique and avoid cultural
over-sensitivity, this competitive advantage will clear a path to not only
survive but to thrive.
COPYRIGHT 2011 JEFF LOCASTRO
DISTRIBUTED BY NCCREA
CHANGZHI, SHANXI, PRC
Contact the author at: Jeff@NCCREA.com or Jeff@CaliforniaSecured.com
*KoolAid drinkers are those with whom I refer to as the
foreigners who have been in China so long that they have
began to think they are actually Chinese. KoolAid
drinkers have lost all perspective and believe that
everything is "cultural" and must be accepted and used as
the only framework for operating in China. Although
sometimes you'll require the services of KoolAid
drinkers, they do not make the best partners.
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