Welcome to the EU SME Centre Webinar series
Welcome to the EU SME Centre Webinar series
www.eusmecentre.org.cn
Please continue to submit your text questions and comments using the Questions Panel
Purpose
• The EU SME Centre in Beijing is a project funded by the European Union
• To assist European SMEs to export to China and establish, develop and maintain commercial activities in the Chinese market
• Free, confidential information and advice, and practical support services
BD
S&C
HR & Training
Legal
Information and advice • Enquiries
• Publications
• Training
• Webinars
• Databases
Support services • Hot desks
• Briefings
• Matchmaking and networking
Services
Diagnostic kit Are you ready for China?
• Includes four reports and an
online quiz
• Covers all aspects of early market entry in China
• Includes lists of national and European support organisations
• Includes a multitude of links to further sources of information
• Freely available on our website www.eusmecentre.org.cn
Online portal
Register for free on our
website and access our:
• Ask-the-expert service
• Knowledge Centre
• Events and webinar
calendar
• Hot-desking service
www.eusmecentre.org.cn
7
How to Deal with Chinese Partners and Build Lasting
Trust/Relationships? Jinxuan (Ann) Zhang July 9th, 2013
A project funded by the European Union
Our speaker
8
• Co-author of “Doing Business with China: Avoiding the Pitfalls”
(Palgrave Macmillan 2012) • Experienced business developer, manager, consultant, trainer
and writer with 18 years of experience spanning executive education, consumer goods, infrastructure and banking industries in China and Europe
• Consultant and guest speaker at top international business schools, trainer for global corporations and contributor to Thomson Reuters Westlaw Journal
• Bachelor’s degree in economics from Wuhan University in China and MBA degree from IMD in Switzerland
Jinxuan (Ann) Zhang www.doing-business-with-China.com Email: [email protected] Mobile: +86 139 1771 3666 (Chinese) Mobile: +41 79 320 0461 (Swiss) Skype: ann_jxzhang LinkedIn: JinxuanAnnZhang
Bio
Agenda
• How to find a Chinese business partner and verify her/his trustworthiness?
• Who are you dealing with? • Common challenges faced by EU SMEs
in China • Understand the broad context of Chinese
business culture • Tips on how to deal with it • Some best practices and other
practicalities
9 9
1. How to find a Chinese business partner and verify her/his trustworthiness?
How to find the right partner?
• The importance of finding the right partners in China? • How to find them?
11
2. Who are you dealing with?
Types of key business partners
EU SMEs
Public authorities
Agent
Service providers /
intermediaries
Landlord
Employee Others
Manufacturer
Distributor / potential
buyer
Joint venture partner
13
3. Common challenges faced by EU SMEs in China
Common challenges faced by EU SMEs in China
Common challenges faced by EU SMEs
Style & Dynamics
Technology & Time Zones
Culture
Trust & Relationships Communication
Legal / Regulatory
Language
15
Why Cultural Differences are important?
Challenges... A source of uncertainty Cause of tensions and
misunderstandings Tendency to stereotype Cultural superiority: e.g.
“win-lose” and “us-and-them” mentality
Different answers to key
questions, e.g.: What is important? What is worthwhile? What is urgent? What is reasonable?
16
Cultural is hidden
17
Cultural values and assumptions.
Personal values and attitudes.
Norms, behavior and artifacts.
Cultural differences may impact business interactions
18
Time Process Communication Hierarchy Relationships
• Meeting • Project vs. Plan
• Decision making
• Negotiation • Predictability • Deadline • Priority
• Personal vs. professional
• Preparation / planning styles
• Work/life balance
• Attitudes to risk taking
• Level of detail • Monitoring
• Face • Contributions / communication style in a hieratical structure
• Ability to read between the lines
• Levels of speaking / listening
• Status • Deference to Superiors
• Titles and formalities
• Connections • Questioning / challenging authority
• Trust building • Feelings • Connections with ‘key individuals’
• Judged on who you are
• Holistic approach
19
The roots of Chinese culture
Different set of basic cultural values and ways of thinking
20
European Chinese Individualist
Egalitarian (equality) Information oriented
Reductionist Sequential
Seeks the truth The argument culture
Collectivist Hierarchical Relationship (Guanxi) oriented Holistic Circular Seeks the way The haggling (bargaining) culture
Source: Adapted from Harvard Business Review 2003
Different approaches to the negotiation process
21
European Chinese
Nontask sounding
Quick meetings Informal
Make cold calls
Long courting process Formal Draw on intermediaries
Information exchange
Full authority Direct
Proposals first
Limited authority Indirect Explanations first
Means of persuasion
Aggressive Impatient
Questioning Enduring
Terms of agreement
Forging a “good deal” Forging a long-term relationship
Source: Adapted from Harvard Business Review 2003
4. How to gain a Chinese business partner’s trust, manage expectations and avoid misunderstandings
Adjust the mind-set
• Don’t be ignorant • Go there if you can • Be open-minded • Acknowledge that the differences do exist • Why are they important to your company and your
business success in China? • What are the major impact?
23
Lay a solid legal foundation
• Regulatory challenges • Bureaucracy • Transparency • IPR • Contractual arrangements
24
Turning challenges into opportunities
5. How to maintain a business relationship and handle conflict situations
Maintain a business relationship
Relationship (Guanxi) and trust are essential Understand motivations beneath the waterline Focus on ‘what’s in there’ for your partner Put yourself in your partner’s shoes Communicate clearly Set realistic timescale – don’t rush
26
Saying ‘Yes’ vs. Saying ‘No’
Remember – in the Chinese business environment, ‘Yes’ doesn’t always mean..., yes. ‘No’ doesn’t always mean…, no.
27
Manage conflicts
Dealing with unfamiliar experiences can cause intercultural contact and tension
Understanding motivation beneath the waterline
Communication style and choices Face considerations or ‘tell it as it is’ Be aware of the dangers of stereotyping
cultures Ways to decrease stress: Accept the ambiguity Work to reduce other intercultural barriers Be forgiving – the benefit of doubt
28
6. Some best practices
Some best practices
Relationships (Guanxi) are important, but don’t overrate it Reciprocity is essential, though may not be immediate Intermediary helps, but make sure that you find the right ones Get the ‘matching’ game right Don’t attempt to do business without first establishing
relationship/harmony Means more than ends, processes more than the goals Nothing settles until everything is – whole package over details Concessions from both sides are expected Broken promises, display of anger/aggression cause mutual loss
of face – disastrous to any form of business relations Demonstrate endurance as hard work and long bargaining
sessions are often expected
30
7. Other practicalities
Other practicalities
Time zones and holidays Awareness of time difference Finding timing convenient to your Chinese partners Work expectations during time away from the office,
including early mornings, evenings and weekends
Rhythm of business Holidays, religious dates, family time Work expectations during annual leave
32
Other practicalities (cont’d)
Cultural adaptation When, where, with whom External vs. internal relationships How to deliver the message Formal vs. informal What you hear vs. the real message
Trust Earned, assumed, let’s see how it goes
Etiquettes Language: Don’t get lost in translation
Gifts and hospitality Non business topics for discussions (what to avoid)
33
8. Summary – Key takeaways from the webinar
Key takeaways
• Adjust the mindset • Lay a solid legal foundation • Understanding the context that would impact
your business • When in doubt, use your common sense • Compromise is a fact of life • Do the right thing • Turn risks/challenges into opportunities • Having learning & building capabilities as your
objectives, not the financial gains
35