East VS. West Business Practices

When I was in Japan doing business with Nomura Securities, a large conglomerate corporation, we were invited by senior executives to a late-night dinner at a sushi restaurant.  After a large meal and copious amounts of saki, I was shocked when Nomura's C.E.O.  picked up a Karaoke mike and serenaded us with a Japanese folk song.  Was this the same stodgy, formal, traditional gentleman we tried to negotiate a deal with in the afternoon?  As Dorothy said, we weren't in Kansas anymore and my imagined stereotype of the Japanese was broken forever.

International trade requires an understanding of cultural differences.  In my experience, the best way to learn about this is by listening to people of your culture who have lived somewhere else.  Take James McGregor, raised in Minnesota, transferred by the Wall Street Journal to Beijing, China in 1990 and lived there ever since.  Here is an excerpt from an interview in the Financial Post.


"In the west, we do business with the mentality of 'I trust you until I don't because I have a legal system where I can get you if you do something against what we agreed to.'  In China, you start off with complete distrust and then you build trust on top of that.  So, the person across the table is thinking the same way.  If you offer them a fair deal, they're going to think you're screwing them and that they have to dial back that deal.  You don't offer someone a fair deal.  You offer them an outrageous deal because then you can dial it back to be a fair deal.

State-owned enterprises are political entities.  Their leadership is appointed by the party organization;  the same people who appoint mayors and governors and party secretaries, etc.  These organizations also have monopolies or quasi-monopolies and control market situations.  When you're doing business with them, you've got to remember that that person across the table doesn't think like you do.  They have a political agenda and a political career;  they're not pure business.  Also, when they come overseas here, they're designated national champions to come out and grow global businesses for the party and for China."

When asked should western governments therefore resist doing deals with Chinese state-owned companies, Mr. McGregor replied:

"There's two ways to look at this.  One is Chinese have a lot of money to invest overseas;  the U.S.  and Canada could use some capital right now, so that's a good thing.  But when Chinese companies can come and buy a car company or a bank or establish their law firm but foeign companies can't do that in China, there's a reciprocity argument. But then again, if you stick to the reciprocity argument, nothing will happen because the deals can't take place.

If a Chinese company comes here and buys a company, they're in your jurisdiction, your laws, our courts, so what's wrong with that?  As long as what they're doing is going to help the economy of Canada, why not?  China is state-owned companies and that's going to remain the core of China, and some of them are pretty good. "

When it comes to learning how to be successful in business, you can study a book and the net or you can listen to experience.  In my view, you can't beat the latter.  That's why so many young entrepreneurs watch Dragons' Den and Shark Tank on television or their computers.