Learning the Chinese waltz

November 29, 2010
| By Pete Daly |
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Americans who want to be successful doing business in China need to learn to waltz, and forget the two-fisted, high-pressure tactics.

That advice was offered recently at Inforum, the professional women’s alliance, in partnership with the World Affairs Council of West Michigan, at a luncheon in Grand Rapids featuring Eva Cheng, executive vice president of Amway Corp. and chairman of Amway (China) Co. Ltd.

Cheng, who began her career with Amway in Hong Kong in 1977, entitled her lively presentation, “Dancing Between the Dragon and the Eagle.”

“It’s never easy to do business in China,” said Cheng, even though Amway racked up $3 billion in sales there last year, making it far and away the company’s largest market throughout the world. She qualified that by adding that “it’s not easy at all” if one goes to China with a “narrow focus” solely on making money, and it’s easier “if you have an understanding of the cultural differences.”

The Chinese and Western cultures look at life and the universe around us quite differently, said Cheng. As an example, she noted that the American government uses the eagle on its seal because it represents freedom and power in both peace and war, whereas the Chinese have revered the dragon for thousands of years.

Cheng noted that in Western culture, the dragon has tended to be the embodiment of evil, but “don’t joke about this dragon when you go to China,” she said, because in China it is a benevolent symbol signifying long life, wisdom, agility and grace. In fact, the Chinese people traditionally say they are descended from the dragon.

Cheng got a good laugh from the audience when she added that “if you want to call me ‘Dragon Lady,’ I won’t be offended.”

In a business context, she said, the Americans are generally more innovative than the Chinese, but Americans like to spell out their proposals and objectives in precise terms, Cheng said, and then they want it documented so they go “find a lawyer” to get it in writing.

The Chinese value harmony and they are cautious, taking one small step at a time and thinking in multiple dimensions, she said, such as “Should we do this now or later? Here or there?”

“It takes a longer period of time to reach a conclusion” on the Chinese side of a business deal, she said.

And then, she said, because things change with time, it is not unreasonable, in the Chinese way of thinking, to change position on something previously agreed to.

Americans facing difficulties in dealing with the Chinese government should not use “high pressure tactics, like threatening to quit a market,” said Cheng.

Google tried throwing its weight around earlier this year in a dispute with the Chinese government over censorship and ended up embarrassing itself, according to Cheng. After threatening to pull out of China early in the year, Google backed down at the last minute in order to continue to operate there. Cheng pointed out that Google thought it wouldn’t be hurt by pulling out of China because its business there is a small portion of its total. However, China has the world’s largest single Internet market, with more Internet users than there are people in the United States.

Businesses that want to operate in China “should leave the fight over ideologies to the politicians,” said Cheng, adding that “right or wrong,” many Chinese people don’t like the idea of an American company fighting their government on principles.

Amway had its own problems with the Chinese government, which gave it permission to operate there in 1995 and then, three years later, banned all forms of direct sales in China — even by Amway.

What followed was a long, slow dance — a waltz, to be precise — between Amway and the Chinese government, said Cheng.

“We took one step backward, but two steps forward,” she said — along with sidesteps and 360 degree movements. Through the art of negotiation with the government, Amway repositioned itself in China five times by 2007, she said.

McDonald’s is another American corporation that knows how to dance in China, according to Cheng. A few years ago the government asked for the return of land it had previously agreed to sell McDonald’s, and the disappointed burger corporation ultimately allowed itself to be “persuaded” to return it. Today, there are 1,100 McDonald’s in China. McDonald’s “chose to lose a battle in order to win the war.”

Cheng said when Amway was having its protracted “dance” with China, she was spending from 70 to 80 percent of her time dealing with government officials.

When you go to China to do business, “you are dancing with the dragon,” said Cheng. Try to love and respect the dragon, she said, learn the waltz and “get the tempo right.” Eventually, she said, you may reach your goal, at which point you may “take a bow — and then get ready for the next dance.”

At the conclusion of Cheng’s talk, questions were taken from the audience. The Business Journal submitted a question asking how the Chinese government will react to pressure by Western nations to stop its alleged manipulation of its currency. While Cheng did not provide a direct answer, she indicated that whatever the government does in China is driven by its considerations of the potential impact on its own domestic economy.

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