A Guide To Doing Business in China

Author: David McMillin       

When Leonie McKeon and a friend left Australia in 1984 to backpack around the world, they eventually encountered a problem that created serious hurdles for globetrotting: They ran out of money. “We were in pure survival mode,” McKeon told Convene in a recent interview. “So we went to Taiwan and got jobs teaching English as a second language.” 

Leonie McKeon

McKeon stayed in Taiwan for five years, living in Taipei and Kaohsiung, where she taught Chinese students English, imported clothes from Katmandu, edited children’s books, and immersed herself in the local culture. When she eventually returned to Adelaide, in South Australia, to pursue a university degree, she brought home a valuable lesson from her time learning Mandarin and understanding the nuances of Chinese culture. “I learned that everything is negotiable,” McKeon said. “From buying fruit in a market to figuring out proper payment for a roadside accident, the culture is built on the belief that anything can be bargained.” (The roadside accident isn’t a hypothetical — a driver in a car hit her while she was riding a Vespa scooter.)

More than two decades later, McKeon has dedicated her professional life to studying that belief in bargaining and helping companies navigate the complexities of doing business in China. A frequent traveler to the giant East Asian country, McKeon has presented negotiating- strategy workshops for organizations such as the Australian Institute of Company Directors, Metcalf Group (SA), and Kmart to introduce them to one of the world’s fastest-growing economies. Her new book, Tame the Tiger: Negotiating From a Position of Power, helps readers understand the Thirty-Six Strategies, a set of ancient Chinese proverbs that McKeon calls “the core of the culture.”

Those strategies initially shaped military tactics in the fifth century B.C., but McKeon told Convene that they’re far from outdated. In fact, they’re the guiding principles of successful negotiations in today’s Chinese business culture. And everywhere else. McKeon is convinced that the strategies can help those who use them to get what they want no matter where their negotiations are taking place.

The Thirty-Six Strategies are ancient pieces of wisdom. Has the modern world of technology transformed the way they’re used?

The strategies are like idioms. Idioms wire our brains to the culture that we live in. For example, a Westerner will recognize the meaning of “Don’t cry over spilled milk.” We pass down idioms through generations, and their meanings remain the same. So, regardless of technological advances, these do not need to be updated or adjusted to fit new needs. They continue to guide our behaviors and attitudes.

Obviously, big changes have impacted China since the strategies were first used long ago. The country is now home to bullet trains and skyscrapers. You can go to Shanghai and see architecture that is light-years ahead of the rest of the world. However, these changes are physical. They are not emotional. China still does business in a very traditional way. You can find all these advances in design or fashion, but when you walk into a meeting, people still do business the way they did many, many years ago. I have never met a Chinese person who is not familiar with the Thirty-Six Strategies. These are incredibly fundamental to the culture and the way that Chinese business professionals conduct themselves. And they are very, very confident and good at negotiating.

What contributes to the average Westerner’s anxieties about negotiation? And what makes a Chinese businessperson so much better at it?

Life in China is seen on the street. When you go to Beijing, Shanghai, or any big city in the country, you will find markets everywhere. You will find people trying to sell you something. From a very young age, Chinese people are accustomed to bargaining.

Our environments are essentially our training grounds. For example, if you are brought up in Perth, on the western side of Australia, you’ll probably be able to ride a surfboard. Or on any farm in the world, you will understand how to live in wide-open spaces. If you’re Chinese, you are brought up in a world of negotiation. The minute you walk out of your door, you are surrounded by a bargaining culture. The entire process becomes second nature because you see it every day. The second reason is that there’s not much space in China. As a child, you’re generally playing games of strategy like chess, go, or backgammon. These are all games that don’t require a lot of space. You can put them in your apartment. If you’re brought up playing chess, you’re used to thinking strategically about what happens several moves ahead. And on top of these, the Thirty-Six Strategies are embedded in the culture.

Now, let’s consider Westerners. Most Westerners, unless they’re in an unusual situation, only really negotiate twice in their lives: to buy a car and to buy a house. You may buy several cars or several homes, depending on what you do, but as Westerners, we don’t have a lot of experience at negotiation. Our culture hasn’t served as a very strong training ground for negotiation. We are so far behind in the skills of negotiation that going to China can feel really scary.

What can Westerners looking to do business in China do to overcome those fears?

When I first arrived in Taiwan, I didn’t have room to feel uncomfortable. I was young and out of money. I had to figure it out. If my introduction to China would have been as an expat with my apartment taken care of by my company, I think I would have struggled. So whenever someone goes to China, I recommend to try taking themselves out of that comfort zone. Go to a market and grab a shirt or some item, and bargain. Practice. They will argue with you, but they love the game. Like any game, if we learn the rules, we can play the game with Chinese people and feel confident.

Are there other rules outside of the strategies that are important to understand for doing business in China?

The concept of guanxi is central to the Chinese culture. The closest English translation of the word is “relationships.” While building relationships is very important in any business environment, the concept means something different to the Chinese. For example, you might call me and tell me that you know someone who used to live in Adelaide. In a Western sense, I might ask where your friend lived, but if you’re Chinese, you don’t care about that detail. Instead, you only want to know who else that person knows. You want to get a sense of their own network of personal and business relationships.

Developing guanxi is not confined to business conversations, though. It’s important to focus on friendship before business to develop a real sense of camaraderie — not just a working relationship. Generally, the stronger your guanxi is, the better off you are in a negotiation.

Another important component is “face.” In Western culture, face is how  you see yourself. In Chinese culture, face is how other people see you. For conference organizers, it’s important to know how this concept impacts Chinese attendees at events. Most of the time, a Chinese person will not go to a conference alone. Organizers must think very much in groups instead of individually to appeal to a Chinese audience. When they’re looking at setting up events in China, they really have to focus on giving attendees a complete set of instructions. When a Chinese person enters the conference, they want to know where they can go and what they can and cannot do. If they get lost or break a rule, it can create bad face, as they do not want to be seen in front of people not knowing a piece of vital information.

Is there one specific strategy that you feel is especially important for someone who organizes meetings and events to grasp?

Strategy One — “Fool the emperor to cross the sea” — refers to a Chinese  emperor who wanted to fight Korea, but he was too afraid to board a ship and sail the sea. So his generals decorated the ship with food and drink and led the emperor down a dark tunnel to a room where he feasted and celebrated for several days. He had no idea that the room was actually on the ship, and he ended up in Korea.

One of the companies that does this very well in China is KFC. When you go to a KFC, you’ll find a rice soup for breakfast. All the other menu items are the same. They’ve focused on something familiar to Chinese customers to get them in the store. In order to get business through the door, they’ve fooled their customers to go across the sea.

This strategy directly relates to one of the most important negotiations that event organizers must win: the negotiations with their attendees. It’s really about making people feel comfortable enough to try something unfamiliar. Event organizers must be able to fool their attendees so that their attendees feel comfortable meeting new people and exploring new ideas. They must make sure that when attendees arrive, they feel a sense of comfort. Because when you’re in a familiar environment, you feel safe. You can do business with someone when you feel safe.

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