Speaking at The France China Foundation, Paris 30/1/2018

Speaking at The France China Foundation, Paris 30/1/2018

A few days ago I wrote on the cultural gaps I encountered at Davos; on my way back to Singapore, I stopped by Paris and spoke at the The France China Foundation about the cultural gaps in doing business in China.

I am a freestyle speaker at such talks, and don’t have a script to share but I thought I would share my main points as I remember them.

My fellow speaker Olivier Chouvet is a French entrepreneur and one of the rare few Western entrepreneurs who had success in China. He co-founded Glamour Sales which was sold to Alibaba. He started off by talking about contracts in China and Guanxi and I piped in:

1) Contracts

Westerners and even Singaporeans often assert that the Chinese do not respect contracts. This in my view is false: rather, contracts and the role of legal agreements play a different role in Chinese relationships.

The best way to understand this is the Chinese axiom 情理法 – relationships, reason, law. In Chinese culture, relationships come first, on which reasoning and facts are built, and law is the last resort. If things cannot be solved through the relationship and reasoning, and one has to resort to the law, then the relationship is beyond salvage. It is the last resort. In the West however, and even in Singapore which is closer in many ways to the West in the way we think and do business, it is reversed. The law comes first, which is built on facts, and relationships and sentiment are ancillary. In my years of doing business, the Americans are archetypical in this: they are very legalistic and will resort to communicating through their lawyers very quickly when things don’t go right. In fact, almost all business relationships start with lawyers on both sides going back and forth – the contract comes first and is almost sacrosanct.

From my experience, the contract in China, although important, is also the start of a relationship. If something goes wrong, the solution is to meet up and talk about it, if one still values the relationship, rather than calling on lawyers at first instance. The contract thus is symbolic of the underlying relationship, and as the relationship changes, the contract is also negotiable.

There is no superior way. I find the American legalistic approach to business sometimes a bit cold-hearted – but it is transparent and clean. If things go wrong, refer to the law. The Chinese way is warmer, but it is also very tiring to keep having to maintain the relationships and accept that based on that, signed contracts are still negotiable.

2) Guanxi

Many foreigners think that Guanxi is just exchanging name cards and emails. In the West, I find that many relationships start this way and I am more likely to get a response sending an email to someone I met at a cocktail. In China, Guanxi and relationships are cultivated over months, years even decades. Again, it can be emotionally draining, but once established, last a life time. Webs of political Guanxi cultivated over decades are also what underlies Chinese politics.

3) Communication

A French participant asked me about the impression amongst foreigners that the Chinese lie a lot.

There are of course liars and braggarts in every culture: in business however, I think much of this impression comes from differences in communication.

Generally, Westerners are more direct and to the point; Singaporeans are like that too. Chinese people, and even Japanese and Koreans however tend to be indirect communicators; in fact it is often seen to be rude to get to the point immediately. Instead, they tend to talk around the topic and only get to the point over several discussions. Often, not only does one talk around the discussion, one may say the opposite of what one means but very clearly drop hints about the true meaning – what Chinese say 话中有话. There are words within the words. It is not lying – it’s just not being direct. Again, personally, I find this very tiring because of my own personality: I am impatient and very direct, and really had to learn how to communicate in the right way, as well as to decipher meanings within words.

CONCLUSION

Of course, as in all generalisations, one should not exaggerate the differences. As China becomes more open and international, some differences will lessen or disappear. However, some cultural differences will always be there due to thousands of years of deeply-rooted cultural DNA. It is always useful to bear these in mind.

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