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February 24, 2014

Dan Harris: "Ten Keys For Doing Business in China. A New List".

There is no other online resource that can match Dan Harris's China Law Blog for timeliness, practicality or overall honesty about what Westerners will face in doing business in Greater China. In his Sunday post, "Ten Keys For Doing Business In China. A New List", Dan reviews a summary of China must-know cultural basics--similar in scope to primers Dan has been doing himself at CLB for almost ten years--by Asia Business professor Michael Witt appearing some time ago in Forbes. Here are two excerpts from Witt's piece, with Dan's comments in italics:

3. Take your time. Many companies want to get on the ground quickly. In one case, the CEO told his head of strategy to get China operations going within six months. Time pressure of this sort can create problems later on. It tends to result in sloppy planning and analysis. It shifts the attention from finding the right partner to finding any partner, regardless of partner fit. Moreover, it weakens your hand in negotiations. Your Chinese counterpart will know how to use your time constraints against you, and you will walk away with a worse deal. Completely agree. In my experience, there is a direct correlation between speed and quantity of mistakes. Again though, this fits into the overall need to prepare.

7. Notions of “out-of-bounds” behaviour do not necessarily match. Chinese negotiators occasionally push beyond what their Western counterparts consider appropriate bounds. For example, the representatives of a large Western firm were negotiating the distribution rights for one of their products. Their Chinese counterparts closed their initial pitch by threatening to use their political connections to prevent distribution of their products if they did not receive the rights. In another case, the Chinese party got their Western guests drunk to prevent them from being effective in negotiations the following morning (which, on the Chinese side, involved a completely different set of people). These sort of things do sometimes happen but smart companies generally have little problem in dealing with them.

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Photo: Pete Stewart

Posted by JD Hull at February 24, 2014 12:22 AM

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