Doing Business Overseas: The Basics

About 25 years ago, I wrote a book for a major publisher on doing business in China. It won a good deal of praise in the business press, which surprised me … because I didn’t really know much about the subject. My experience of China had consisted of one trip to Hong Kong … conversations with an executive in my company who actually did do business in China … and reading a good deal of Chinese poetry in graduate school. Still, I managed to cobble together a book that covered the basics. (Essentially, it was a book on doing business with a communist bureaucracy.)

At the time, my theory of how to deal with the Chinese (which I included in the book) was simply this: The Chinese have a different way of looking at behavior than we do in the West. They do not distinguish, as we do, between what a person is really like and how he behaves. To the Chinese, how you behave is what you are. Thus, it is very important to behave correctly in China. And by “correctly,” I mean as they would want you to.

In subsequent trips to China, I’ve found that theory to be largely true. But I can’t say I’ve had enough experience to qualify me to say much more than that. At this point, I have no idea whether I’d be capable of doing business in China – and yet, the idea of getting access to this huge market is certainly enticing.

With a population of 1.3 billion, China has the world’s largest and fastest-growing economy – and it is attracting foreign businesspeople by the boatload. In a new book on the subject, One Billion Customers, Wall Street Journal China Bureau Chief James McGregor says that contracted foreign investment in China now averages $420 million a day.

“China has allowed foreigners in only on its own terms and those are often opaque,” writes McGregor, “contradictory and bewildering. All too often, laws are only law when they benefit China.”

Confusion is endemic, corruption is rampant, and mistrust is pervasive. “Business in China has always been conducted behind multiple curtains and amid much subterfuge,” McGregor says, “and that hasn’t changed.”

Still, people are flocking in.

This is the advice McGregor gives to those who wish to do business there:

Don’t get frustrated by lack of cooperation. Chinese society is based on self-interest and is very strong on competition.

Be wary of manipulative businessmen. If and when the Chinese can take advantage of you, they probably will.

Don’t submit to aggressive bargaining. The Chinese are not afraid to ask for too much, and if you give them what they want, that’s your fault.

Frame your arguments to show how your business is good for the Chinese. Don’t criticize what they are doing.

Expect that your technology and business practices will be copied.

I have mixed feelings about McGregor’s advice. On the one hand, it seems wise to assume that the Chinese are intelligent, aggressive businesspeople. On the other hand, it would be a terrible mistake to assume – as you might, judging from some of his comments – that all Chinese are selfish, corrupt, and xenophobic.

I know expatriate businesspeople living in Central America who say the same thing about Latin Americans. They are all stupid. They are all lazy. They are all corrupt. I’ve been doing business in Nicaragua long enough to know that this kind of thinking is crazy. Most Nicaraguans are honest, hard working, and smart.

I think what happens to foreigners who come in from the outside is that they are met by the kind of people who are likely to meet barbarian invaders – aggressive, risk-taking businesspeople who are out to make a lot of money and are distrustful of the people they are working with.

So here’s my advice – some informal “rules” to follow when doing business overseas:

Know a bit of the language. If you speak it, great. But if you don’t, learn some common phrases and use them. Making an effort to speak the local language will impress your international business associates.

Understand the critical customs. In China, for instance, decision-making is often a collective process. (An unfortunate legacy from communism.) Knowing this ahead of time, you can be prepared for lengthy negotiations.

Be humble but don’t feel the need to bend over backward to ingratiate yourself. Treat everyone you meet with respect. Be polite. Be honest.

When speaking English, speak slowly. Simplify your vocabulary and avoid jargon and colloquial expressions. Avoid using contractions (“he’ll” instead of “he will”).

Encourage two-way dialogue. Saying what you mean is not good enough. You must get your business associate to repeat it back to you to make sure there are no misunderstandings.

Agree on a protocol for following up on objectives after you have left the country.

When visiting any foreign country – for business or pleasure – keep in mind that you are a visitor. This may seem obvious, but many people seem to forget it when they arrive on foreign soil. As a result, they act rude and obnoxious … just because things don’t proceed in the “American” way.

[Ed. Note: Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.]