Forget your MBA: Think Chinese Editor's Note: China's
rapidly-growing economy abounds with great business potential, but doing
business in China can be an adventure for Western executives, offering new
possibilities, discoveries and amazement. Yet, what constitutes a challenging
road may be a surprisingly fulfilling educational journey for the daring Western
executive. Marcene Marcoux PhD, a cultural anthropologist, president and senior
consultant of Great Wall Consultants Ltd, views the keys to business success in
China, and describes how they may be different from any executives had imagined
when they depart for the Middle Kingdom. In a series of articles, Marcoux offers
her opinions, and provides her explanations about the daunting challenges
Western executives face within China's diversified economic sectors.
By Marcene Marcoux (China Business Weekly)
Updated: 2004-03-17 14:18
There is a pressing call for advice, strategies, and
leading-edge thinking about China for Western executives wanting to master
Chinese markets. As the world's fourth largest economy and with a 1.3-billion
consumer market, China remains today's major economic challenge.
With its more than 5,000 years of civilization, 4,000 years
of written history, powerful dynasties like the Han, Tang, Song, Ming, and
finally the Qing, and with cities like the imperial Beijing and financial
powerhouse Shanghai, China is now poised to dominate the world economy.
Western executives and firms setting up businesses in China
and those leading international business divisions urgently need to acquire the
know-how, winning style, and breakthrough thinking appropriate for the Middle
Kingdom. To do that, adopting new thinking, innovative strategies, and a more
adventuresome attitude is required. It is part of what I call "the New China
Paradigm." At the same time, Western executives must abandon old, outdated,
though still used, traditional business practices.
We'll examine four major obstacles international
executives face in China as they hamhandedly cling to old business rules and
rely on yesterday's practices.
The first problem
occurs when Western companies even today send managers into China based on
horse-and-buggy ideas of how they should work. Too often China-based training of
executives is dated, unrealistic, and ethnocentric. Far too many executives
arrive not even knowing a thing about the language, customs, or history - each
aspect central for success in the Middle Kingdom.
Too many executives speak only one language and know how to
deal well within their own culture. Executives from Maine to California, from
Washington D. C. to the state of Oregon, Americans, for example, choose to
travel, socialize and work within the contours of their own culture. That
magnifies their ethnocentricity, and their profound lack of understanding of the
diversity and differences within other cultures.
Mastering one currency, one
language, and one history is not enough. Being satisfied knowing only American
culture and conversing only in English, for example, will never do in China.
often, Western ideals are emphasized and over-valued, leading to the false
belief in a universal standard, even if the so-called universal criteria stem
from only one culture. When the Western way is heralded as the best and only
way, arrogance too often replaces perspective. As a consequence, Western
companies can be tone-deaf to the challenges that exist in global communication,
cross-cultural negotiations, and Chinese business styles.
Clearly, China is neither simple nor uniform, but a
kaleidoscope of different markets. It is geographically, linguistically and
regionally diverse. It is neither one seamless, integrated market, nor one
unified business world.
daunting challenge Western executives face with China's thirteen diverse
There is the formal northern Beijing and Tianjin, its more savvy
east coast Shanghai, the risk-taking, rule-breaking east Fujian coast, and
adventuresome southern Guangzhou and Hainan provinces. Then there is also Inner
Mongolia, Xinjiang Uygur, and Tibet autonomous regions.
In other words, China is vast and complex, and Western
executives must know enough about all these diverse regions: the various
histories, 205 living languages, 56 different ethnic minorities, contrasting
customs, and different business styles. This is crucial, given the regional
requirements essential to most large infrastructure and joint ventures projects.
Indeed, Western business success depends on mastering China's diversity.
Contracts in rail, locomotives, subways, buses
and airports must meet local guidelines, as well as national standards. This
requires major Western contractors to work co-operatively with local Chinese
executives, provincial and municipal political leaders, and ministers. Twenty of
China's 34 cities with populations exceeding 1 million have either begun
planning or building new metro lines. China's State investment in urban rail
systems for the 10th Five-Year-Plan period (2001-05) involves a remarkable 800
billion yuan or US$96.6 billion proposed budget.
Yet without regional
partners and suppliers, Western attempts to gain major Chinese contracts will
fail. For Western managers to succeed, regional knowledge of Chinese business is
A second problem involves the issue of time. The
long-standing business model is driven by quarterly analysis and quarterly
reports. Under that mode, there is little room or tolerance for Chinese
infrastructure projects that require years of relationship-building before they
can be successfully bid and awarded. Tellingly, this even applies to major new
subway lines in Guangzhou, Shenzhen, Shanghai, Chengdu, Beijing, Tianjin and
Beijing's urban rail transit lines are
expected to be extended at an average yearly rate of 40 per cent during the next
20 years, with financial commitments of 10 billion yuan or US$1.2 billion each
year. In Southern China, Guangzhou plans to extend its mass transit lines by
constructing another 15 lines, while Shenzhen has designs for eight additional
cities alone involve an investment market of US$38 billion and an export market
of US$4 billion. In the same southern area, the mammoth Pearl River Delta
regional light rail network project will connect Guangzhou, Shenzhen and Hong
Kong with a potential investment of US$24 billion. While in the West, we see the
Western Development Campaign with new infrastructure projects for a 5-year
projection of US$45 billion. Judged from the formulaic model, however, this much
expenditure of time, effort and manpower without a rapid return on investment
will typically be labeled a failure and thus derailed. After four or five
quarters, we can expect corporate accountants to demand results from China that
realistically cannot be met. The time frame is too short and unrealistic for
success in China.
(To be continued in the next issue)