How to Avoid Business Bumbles in China

Jing Huang, Professor at Lee Kuan Yew School of Public Policy

Jing Huang, Professor at Lee Kuan Yew School of Public Policy

A slew of banks are jockeying for business with wealthy Chinese clients. A Chinese professor reveals to the most common mistakes in dealing with clients from the People's Republic.

With heady economic growth of well over 5 percent, the Chinese market remains a target for foreign businesses – including Swiss banks.

While most new entrants know the ins and outs of doing business in a Chinese market which isn't fully liberalized to outside investment, they tend to fall down on the soft factors, according to a well-known Chinese professor in Singapore.

Enjoy Chinese Life

«You have to really get yourself not just to understand but integrate in the Chinese environment and I think most of the failure experienced by foreign business is mainly that 'I just want to do business here, but I don’t really enjoy life here,» said Jing Huang, Professor at Lee Kuan Yew School of Public Policy and ad-hoc advisor to Swiss bank UBS.

«If you have that kind of attitude, you’re halfway to losing,» Huang told on the sidelines of «stars,» a leadership symposium run by an independent foundation in Stein am Rhein.

Wine, Dine, Karaoke

Visiting businesspeople often fail to adequately understand just how dramatically China's political system – largely intransparent, exclusive, and effectively closed from public participation – differs from western democracies, Huang said.

Foreigners also struggle to grasp local distinctions between rising urban metropolises such as Beijing and Shanghai, or to appreciate the importance of personal ties and bonds in doing business, he says. 

«You have to build up trust, you go wine and dine together, you enjoy karaoke together, basically go out and even do some naughty things together, in order to [be able to say] 'oh this guy, he’s my buddy,' then it’s a lifetime relationship,» Huang said.

No More Cash-Filled Favors

Gone are the days of red envelopes filled with cash or expensive gifts such as luxury Swiss watches, which has crimped local business deals. 

Even relatively modest favors like dinner invitations have become increasingly fraught after a top-to-bottom graft crackdown under President Xi Jingping.

The best way is the address the issue delicately, but firmly, Huang says, clearly explaining that an under-the-table cash deal is now banned in both China as well as the West.

«Can I Help You Out?»

«The best way is to say...'but I still want to be your friend, I still want to help you. For example, I know your kids study in my country, is there anything I can do to help?'»

Favors and perks haven't disappeared altogether: empathy and what Huang calls an «in the same-boat feeling» are key, he says.

«It’s very subtle I know, but you have to create that kind of situation that it 'I’m helping you'. So you also help me, but our relationship is clean and it should be good enough to stand any scrutiny from your boss,» according to Huang.

Shifting Money Out

Bankers frequently strike out in misjudging the priorities of their wealthy Chinese clientele, according to Huang, which is most often first and foremost to shift a portion of their wealth outside of China – not a particular deal's price.

«You don’t want to save money for the Chinese company, you want to help them get money out,» Huang says.

Different Rule of Law

China's wealthy and business elite remain deeply suspicious – paranoid, even — about doing business abroad because of the vast differences in rule of law between, for example, Europe and China.

«It's not that Chinese companies don’t follow the rule of law, they do, but their rule of law is different from ours,» says Huang, who has lived and studied extensively in the U.S. and now lectures in Singapore.

Despite an increasingly mobile wealthy class, Chinese clients tend to feel alien in western culture, which offers western businesspeople seeking personal ties an easy way in, Huang says.

Chinese Abroad

«To help Chinese understand how to make a living here given the political environment here is the best help he or she needs, it’s much better than helping him to buy a house or a club, just help him to deal.»

The line between friendliness and pretension is a fine one, he cautions. 

«Just treat him as your own friend. If you disagree with him, tell him and also tell him why you have to make him uncomfortable in this situation.»


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