Wooing China Business Often a Lengthy Affair : Executives in Anaheim Warned to Expect Hard Bargaining, Questions, Bureaucratic Quicksand : ORANGE : COUNTY
Entrepreneurial suitors eying the financially promising People’s Republic of China will find that doing business there is more of a drawn-out courtship than the quick sign-on-the-dotted-line affairs Americans are so accustomed to.
So warned a panel of experts who convened Wednesday in Anaheim to advise about 40 area business executives on the benefits and pitfalls of doing business in China.
“Chinese negotiations take a long time to consummate,” said Ching C. Chang, a marketing manager for an Anaheim computer company and one of the speakers at the International Marketing Assn. of Orange County forum.
“The first sale is the longest. There are endless negotiations, endless responses to endless questions.”
Taking the time and expense to develop a friendship with their Chinese counterparts will pay off for American businessmen in the end, Ching said. “Americans still don’t have a full understanding of the Chinese people. Americans are result oriented. They make a trip over to China at great expense and expect to come back with a contract.
He Won’t Sign
“But on the other side,” Ching added, “is a poor (Chinese) guy from a factory. He has been given the responsibility to buy a product he has never seen. If he doesn’t have all the information he needs, he won’t sign his name.”
Still, with the recent open-door trade policy of 1979 and country’s consumer revolution, opportunities for American business abound.
“They are a $1-billion customer,” said Dan Young, district director of the U.S. Commerce Department. With cheerleaderlike exuberance, Young said that in 1984 China and the United States did more than $6 billion in trade compared with just $1 billion in 1978.
But even Young offered a similar caveat about the importance of understanding cultural differences.
“The Chinese are pleasant but hard bargainers,” he said. “They’ll wait for the airplane engines to start running before they give you an answer.”
Some of the practical tips for making inroads in China included:
- Buy a Chinese telephone book; start writing letters and hope one day someone answers your mail.
- Contact a friendly U.S. bank already doing business in the PRC for an invitation and possible introduction to others who can help once there.
- Attend one of 130 major trade exhibitions that take place each year in China.
- Sign on with an established import-export firm in China to help navigate the country’s bureaucracy.
According to UCLA professor Richard Baum, governmental bureaucracy in China can sometimes sabotage the best-laid plans. Noting that there are fewer than 1,000 foreign firms permanently represented in China today, Baum said, “Many more would have liked to but were discouraged by the country’s ‘bureaucratic quicksand.’ ”
China’s present open-door policy is in marked contrast to the original open-door policy of the late 19th Century, when the term referred to equal access--some said equal exploitation--to China’s markets by Japan and the western powers.
In the contemporary version, it is the Chinese who are in the driver’s seat in the negotiating process. The memory of the earlier period of dictation rather than negotiation by western traders is still particularly strong.
For example, all joint ventures between Chinese and foreign countries include the provision that the Chinese retain 51% of the enterprise and name the chief executive officer.
“There is a residue of lingering ambivalence toward the West,” Baum said. “As much as China envies American affluence and technology, there is also an anger.”
In order to temper those sentiments, Ching, a Hong Kong born American citizen, suggested that Americans not flaunt their wealth.
“The Chinese ask, ‘If you are so rich why can’t you give me another 5% off?’ ” Ching said.
To hear one Orange County export manager tell it, such attitudes raise the issue of whether trading with China is worth the trouble.
“For a small businessman, the obstacles are formidable,” said Jerry Crossett of Huntington Beach. Although he has done business all over the world. Crossett said, he has avoided China.
“You can’t just drop in to talk to a few people and leave. It’s an expedition and an expensive one. They want gifts, free samples. You can spend a week and come back with absolutely nothing.”
But Chinese officials asked that Americans not be discouraged.
Wang Baozong of the Chinese Consulate in San Francisco said that in the past six years China’s new open-door policy has brought about “a fairly big expansion in foreign trade and economic relations” with other countries. Putting 1984 foreign investment in China at $17.3 billion, Baozong said, “It’s time for you to explore the vast Chinese market. Don’t wait and be hesitant.”