When Your China Project Gets Rough

Have you ever had one of those projects that starts off difficult and just gets harder from there? I was coaching a client who is managing a difficult project a week or two ago. Other players, who worked at a strategic partner, were slowing things down and it seemed like they were working against my client. To make matters worse, the strategic partners had more power and influence over this project so my client was feeling stuck. We identified 4 key areas for my client to work on: focus on the goal, develop and focus on short term objectives, not making unforced errors and address the interference through relationships.

Focus on the Goal

If the goal of the project is worthwhile (and this one was) then keeping the goal in mind can carry you past a large number of obstacles. Create a list of short term objectives and tasks which are in line with the end goal. Set deadlines for the objectives and then schedule the tasks to meet the deadline. Allow a little extra time to give yourself the opportunity to overcome the bogged down side.

When you are bogged down and losing momentum on a project, staying motivated is key. This can be particularly difficult if you are working internationally. Focusing on the goal may be enough to keep you motivated, but if not, then use other tactics. Set up rewards for yourself when you reach milestones in the project. Visualize yourself finishing the project successfully.

Quick Short Objectives

Break the project goals down into very short milestone objectives inline with your project strategy. Be sure that you can accomplish initial objectives quickly. You can then focus on putting bursts of energy into the objectives. These victories can serve as motivation on the overall project.

Don’t Blow It

When you are stressed and tired, being mindful of the project’s politics is even more difficult. Make sure you are getting enough rest. Working all day, drinking BaiJiu at night and adding stress is a perfect recipe for a meltdown. If you need to take a break, do so. Don’t make mistakes like losing your temper and thus losing face or causing a team member to lose face. You can easily end productive relationships and even place projects at risk.

Address the Interference

In the United States or west, we might address the interference directly by calling a meeting. In Chinese culture, this typically turns into denials that any concerns exist. We might then turn to a supervisor to apply pressure on the person in question. This tactic may win the battle but then place the war at risk.

Use Your Guanxi

Guanxi is often talked about in grand terms. Your relationships with key stakeholders and powerful partners does play a role in your success. On a more personal level, you need allies to support your goals. You already know that relationships are extremely important when doing business in China and that you should be spending at least 10% of your time building relationships. When you are working on a project, make sure that you are building appropriate relationships with potential partners. Use these relationships to reach out to the other party indirectly. You are far more likely to get useful information working through another colleague. You may even resolve a dispute without ever talking directly with the other party. You can both continue working together without ever actually admitting or discussing the project.

What do you think?

How to Manage Face in China

Face is a complicated subject in China and one that is extremely important for you to understand when doing business in China. There are three types of face in China: personal esteem, your reputation and your honor. In the west, we only think of face in terms of saving face. In China, you can lose face, give face, gain face and save face. How you manage face will impact your personal and business relationships. Being too direct in the wrong way could easily damage your working relationship beyond repair.

Losing Face

It’s relatively easy to lose face in China. You lose face when you lose your temper. You also lose face when you make a mistake or do something that makes you look foolish in front of others. Chinese culture is generally risk averse and you can lose face through poor judgement as well. It is useful to be even-tempered and cautious when working with Chinese people.

When working in China, you may see supervisors or managers lose their temper and yell. This is counter to Chinese business culture. If you are unhappy with an employee or colleague,  express yourself without getting angry or shouting.

Giving Face

Giving face is simply making someone look good. You can do this through compliments. To be effective, the compliments must be realistic. You can’t over do the compliments or it will seem false and backfire. Your efforts will be more successful if you give these realistic compliments in front of someone else.

You can also give someone face by treating people with respect that is above their level in the hierarchy. Again, if you overdo this, it will seem suspicious and backfire.

Gaining Face

You can gain face through your behavior and actions. If you do something remarkable, you gain face. If you manage your relationships in a way that creates harmony, you will gain face and prestige. Other tactics are similar to the west. Getting a promotion, dress nicely or even buying a nice car are also ways to gain face.

Saving Face

This is a familiar term in the west and it works in much the same way it does in China. You minimize the impact of something you did wrong and thus save face. In China, the things you do to save face can be more extreme. It’s considered okay to lie to save face. This is also an opportunity for you to build a relationship. If someone makes a mistake and you help them save face, you have a start on building a strong relationship.

It can be confusing to navigate these important business relationships. If you want to work in China or with Chinese people, you will be much better off if you take the time to understand how to manage face.

How Has Face Impacted Your Work in China?

China’s Shifting Business Landscape

The relationship between business and government in China is very different than what you are used to. It is worth your time to become familiar with some of the differences.

Change Comes Fast in China

In one week a major Chinese ministry disappeared and a new state owned company appeared. The process of change really started when the former head of the ministry was expelled from the Party about 4  months ago, but the transformation was completed at warp speed. This is quite different from the United States. The Patient Protection and Affordable Care Act was passed in March of 2010 after a year of discussion, debate and protests. The regulations are still being written and the new law is still rolling out. The government estimates that the law will be fully implemented in 2015, nearly 5 years after it was passed. There are advantages and disadvantages to both systems, but in the end these differences are reality.

Corporations wanting to do business in China need to be nimble and prepared to react quickly to changes not only in the marketplace but also in the regulatory environment. The Chinese government is far more involved in business than the United States’ government. The regulations affecting your company can change overnight. You want to respond quickly to avoid a possible government campaign against your company.

To do business in China, your company needs to streamline mechanisms for change and empower local managers to react quickly. You or your staff also need to stay on top of developments in the regulatory environment and build strong guanxi with regulatory agencies to minimize the impact of these changes.

Government Structure in China

While the US has a Federal and State system, China’s government is a hierarchy run by the Communist Party. The Party Politburo is at the top of this hierarchy.  The Party overseas the army, the State Council, the National People’s Congress (NPC) and the Chinese People’s Consultative Conference. The NPC is China’s legislature and, according to the Chinese constitution “the highest organ of state power”. In fact, the NPC typically rubber stamps laws formulated by the Party. The State Council implements the laws, like the US executive branch. The Chinese People’s Consultative Conference advises the government; it has no authority or power. The Chinese army is commanded by the Communist Party. For more information see this white paper put out by the Congressional Research Service.

Business Regulations in China

The structure of the government and Chinese culture both have an impact on how laws are written and regulations are implemented. Guanxi networks play a key role in Chinese culture. Local governments often favor local champions when enforcing laws or implementing regulations. China’s international relations or friction with trading partners like the US can also have a bearing on how regulations are implemented. As early as 2010, there were reports of a shift in regulation that benefited Chinese businesses.

In the United States, federal regulations trump state regulations and this results in a generally cohesive system. In China, the central government has direct control of all regulations; however, because the culture is so relational, how regulations are implemented can vary greatly from place to place. Your China business plans need to take this into account.

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China Planning 101: Take Off Those Rose-Tinted Glasses

American firms today cannot afford to ignore China. You know this and so does everybody else. So take the first step towards doing business in China and start planning. The question is how your company can do business in China and be successful. Most US companies are turning a profit with their China operations. You will need to do your China homework and plan carefully to join this group.

US companies have long looked at China as a low cost manufacturing platform or place to source goods. But increasingly China’s opportunity-rich domestic market is the focus of attention. This lesson will discuss planning for companies that want to sell in China.

Whatever your focus, base your planning on realistic assumptions. Don’t, for instance, get carried away with the overall size of the Chinese market when estimating sales potential in China. Consider instead how many of China’s 1.3 billion are realistically likely to buy your product or service.

The more you know about the market and your potential customers, the more likely you will be to make realistic assumptions about prices, sales potential, and operating costs. Determine how your customers break down in terms of age, income, and location. Are you targeting people concentrated in top tier cities like Beijing and Shanghai or are they more dispersed? Marketing strategies and selling costs can vary enormously depending on who and where your customers are.

You are likely to be competing against both foreign and domestic companies. In many sectors some of the toughest competitors are very savvy, very nimble Chinese companies that most Westerners have never heard of. Make sure the domestic competition in your industry is on your radar before you get your China start up underway.

The best way to determine your prospects in China is to base your planning assumptions on worst case scenarios. Take sales targets and pricing. To begin with forget about your US pricing scheme. While affluent consumers are increasingly attracted to value propositions, millions of Chinese still base purchasing decisions on price alone. You need to be prepared to compete on price.

Set target prices based on what you’ve learned about China’s domestic market. Use the demographics you gathered on your target customers and your experience from the US and elsewhere to estimate sales revenue and the costs of sales and distribution. Then add in “the China factor”. Knock ten points off the revenue projections and add ten to the cost estimates. Run the numbers again and see where you stand. Knock twenty point off and run the numbers again. In addition to knowing what it takes to succeed in China, you need to know the absolute minimum required to survive there.

China will throw unexpected changes your way. Yes, there are tremendous opportunities and many foreign companies do very well in China. But business in China can be very unforgiving to companies that are not well prepared. You need to plan for success, but also have a clear understanding of your China pain threshold. Instead of getting caught off balance, worst case projections based on realistic expectations will help you roll with realities on the ground.

It seems everybody has something to say about China these days. How do you filter out the noise and get to the reliable, targeted information you need to plan? Our next post offers some thoughts on doing your homework for China.

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