One Billion Customers - James McGregor [34]
Mutual respect and equality are extremely important. It is useful in negotiations to wrap your position in these principles.
Contracts are not a guarantee of anything. It is the relationship built in negotiating the contract that will give your business some hope.
Frame your China strategy as a roadmap. This will help keep your own company on track through the inevitable difficulties, and show your Chinese counterparts the value of maintaining a long-term partnership.
China has a survival culture with a “zero-sum” mentality. For somebody to win, somebody has to lose. The concept of “win-win” is new and not widespread, and will have to be constantly reiterated to be successful.
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Same Bed, Different
Dreams
Avoid joint ventures with Chinese government partners. The clash of civilizations in Morgan Stanley’s joint-venture investment bank shows why and offers hard-learned lessons on how to cope.
IF ANY TWO PEOPLE could be expected to work together to create China’s first true investment bank it was Jack Wadsworth and Wang Qishan. Wadsworth had parlayed his uncanny ability to spot the next big thing into an illustrious career with Morgan Stanley, one of the world’s most powerful and prestigious investment houses. Wang Qishan was the politically adept and influential adviser to China’s top leaders and president of the huge China Construction Bank. Yet here they were in the Construction Bank’s boardroom in Beijing in March 1997, raising their voices, arguing over who was really in charge of their two-year-old joint venture, China International Capital Corporation, or CICC.
“We have the expertise,” Wadsworth said, his voice steely. “We have the network. You can’t do this without me.” He was irritated that the translator might not convey his determination to Wang.
“Don’t give me that American big-power bully attitude,” Wang retorted. “You can do the technology, but for direction and strategy, you should listen to me.”
Frustrated, Wadsworth once again stated what he thought should be obvious: “We’re the experts and we know the business.”
“So does Goldman Sachs,” snapped Wang. “And I have the market.”
Overview
Like most marriages, joint ventures, even among companies that share a common language and heritage, have their tensions. When the partners come from vastly different cultures, the tensions can be exacerbated. China has always been mysterious to westerners. The language, the customs, the bizarre shifts in politics can be powerful barriers to feeling comfortable about doing business in China. Yet behind those barriers lies a market of more than one billion people, many of them ambitious and energetic, eager to seize opportunity, to learn, and to get ahead.
It’s only logical that many Western businesspeople look for a Chinese partner to help crack that huge market. They figure a joint venture with someone who knows the language and customs, who has contacts and customers, will ease the way. I’ll supply the technology or capital or products, they figure, while my Chinese partner maneuvers through the government red tape, acquires factory or office space, advises on marketing and distribution strategies, and engages Chinese suppliers. It will, they assume, be the perfect “win-win” situation for both players.
I’ve been watching and participating in the development of the Chinese economy and Western efforts to tap into the market for many years and I’ve followed the course of many joint ventures. Most early attempts to form joint ventures in the 1980s failed. Foreign companies were hooked up with government-assigned partners, and their partnerships almost always fell victim to the leftovers of rigid Communist thinking and the country’s lack of modern business practices. The business atmosphere in China changed significantly in the 1990s. China was still ruled by the Communist Party, but party leaders were determined to overcome decades of economic stagnation and to join the world economy, not as some bit player but as a major power. To get where