The elaborate knot pictured here looks like an intertwined maze of strings, but it is actually only made from a single piece of red rope. The knot has historically (since 960 A.D) been offered to delegations as a token of cooperation, partnership and integration. While I've accepted many knots in the spirit of friendship and cooperation in which they were offered, in retrospect, the Chinese knot could also symbolize the difficulties of doing business in
Firstly, a person recognizes the color of the Chinese knot- red. Historically, red signifies good luck and happiness. What the redness of the knot implies is that the Chinese person's heart is totally behind the partnership. They are willing to put themselves lock, stock, and barrel behind the venture. At the same time, even though the color has no direct correlation with
Secondly, even though the knot is made from one piece of rope to symbolize unity, the actuality of any business venture in
Thirdly, even though the Chinese knot is beautiful at first glance, its complexity is a picture of the kind of maze of issues that businesses have to deal with when trying to establish a successful venture in
Finally, FEAR NOT!! Because, while being a foreign businessman in
But as in all partnerships, there will be change. We, at ChinaBizSuccess, don't want to give you the necessary information for success in
So, ChinaBizSuccess offers you, our readers, a Zhong Guo Jie (Chinese Knot), in the truest sense of its meaning.
-Bobby
ChinaBizSuccess.com Co-Editor
President- Top Translation, China
Return To Article List
Twenty Days in China
Introduction
We scanned the faces of individuals and took in every nuance of the scene as we walked down Chang An Jie,
For the first part of the morning the scene was too massive and overwhelming to take in individual elements. Gradually we were able to focus in on the faces of the people. At first they all appeared similar, with slightly rounded faces, a different eye shape but not nearly as ‘slanted’ as the prevailing image of the Chinese in Western countries. I don’t know at what point I began to distinguish individual differences. But, as we proceeded on our walk, I gradually began to see that the crowds of people really represented a number of distinct, different ethnic groups. We learned that because of the huge events in coming days that people from all over
The majority of the people out this day were young and middle aged. Mixed among them were aged, senior citizens. The young people were animated but they mostly cast their glance aside as we passed them. Their fresh faces and purposeful walk bespoke individuals with a lot to do in a short period of time. Every young person seemed fit without any excess weight. Some of them may have been Olympic athletes. All of them had cell phones and many were using them as they walked along apparently describing the scene they were witnessing. I imagined that some of them may have been telling their friends about the only American couple they saw as we marched along with them.
From time to time off to the side sitting beneath a tree or in a quiet corner we saw young lovers entranced in sweet exchanges. Like young lovers everywhere, they were oblivious to their surroundings and had entered a quiet place with room for only two. The strange familiarity of these scenes was comforting.
Frequently we would come upon two young girls walking along arm in arm. In
One group was clearly unique and I was told that they were from
Another group was made of military veterans who, as such groups the world over, appeared confident and in charge as they wove their way through the crowds. They were easily spotted in their red caps, walking along waving their red flags.
Elderly people were escorted by groups of family members. While these groups were smaller than some previously mentioned, they were clearly protective of one another and watchful to the needs of the older members of the family. I don’t recall seeing any older ones in wheelchairs or using walking canes. Although older ones may have only been in their late 40s or 50s, many had the grizzled look of people used to a difficult past. The really older grandparents were watched over with great respect and attention. But, they all were capable of keeping up with the pace of the group.
These family groups seemed to take more notice of us than any other. Several times we noticed that they were mesmerized by our every move. But, they didn’t approach us and we were too new to the culture to understand, at this point, the correct courtesies. We just continued to watch and learn. However, we never failed to smile which is, after all, a universal language.
When we saw platoons of soldiers marching, they all looked as if they had been cloned. They were all taller that the average population and uniformly fit and very trim. Clearly, the soldiers were chosen and trained to be a very elite group. Only occasionally would I catch one glancing at my wife and me but with no expression or emotion evident.
Endless waves of Chinese tourists, officials, and young people moved along the twenty foot wide sidewalk. The broad boulevard was filled with cars, bicycles and pedestrians. It seemed all of
-Ron Firmin
(ChinaBizSuccess.com Contributor)
www.ronfirmin.com
Return To Article List
At 8:08 p.m. on August 8, 2008, the world will witness the start of the most hyped and widely anticipated international sporting event of all time: the opening ceremonies of the 2008 Beijing Summer Olympic Games. An estimated 3 billion viewers and 30,000 journalists from around the world will tune in.Most reports about the Beijing Olympics tend to focus on the spectacular stadiums, the amount of money spent (10 times more than the 2004 Athens Games!), and other material displays of wealth and technological know-how. But I believe that the most significant effect of the 2008 Olympics will be the psychological impact on China's people.
As I've said before, China's most valuable asset is its people, and the 2008 Olympics will boost the sophistication and confidence of the country's huge population. The Summer Games will improve the poise, national pride, foreign language skills and social skills of millions of Chinese. And these qualities will make the country more competitive globally. Both Japan and South Korea went through the same transformation when they hosted the Olympics, and both countries showed the world that they have what it takes to be world-class competitors. China will do the same thing -- but on a much larger scale.
China's government takes the Olympics so seriously that the Ministry of Education put together special Olympic textbooks for 400 million Chinese schoolchildren. These textbooks are meant to teach kids important values like fair play and good sportsmanship. And to help Chinese students develop an international perspective, more than 200 elementary and secondary schools in Beijing have formed alliances with other schools around the world. Beijing students have been traveling to foreign countries as well as hosting visiting students. While in Shanghai recently, I saw a group of high school students from Moscow visiting China as a part of this international exchange program.
The Olympic Games also bring new learning opportunities for thousands of Chinese professionals and government officials working on major international projects. Thousands of Chuppies working in law, engineering, accounting and journalism have actually quit well-paying jobs to work for the Olympic Committee to gain once-in-a-lifetime experience. Lawyers are working on complex global multimillion-dollar contracts while construction engineers are working with some of the world's top design firms to build cutting-edge facilities like the Olympic "Bird's Nest" Stadium and "Water Cube" Aquatic Center. This valuable international experience elevates the skills of an entire generation of Beijing's best and brightest.
In addition to the professionals who are working hard to make the Olympics a success, 100,000 volunteers from various parts of China will also help the Games run smoothly. These volunteers were chosen from more than 1 million applicants, and they're very proud to be a part of this historic event. While in China in December, I talked to volunteers at Beijing's Olympics organization, and I was impressed by the caliber of the people. The volunteers were unfailingly polite, patient, knowledgeable and always willing to help. I was glad to see that they have been very well-trained and recognize the importance of their work. Their exemplary behavior was a dramatic improvement from the poor service and bad attitudes that I've seen in many lower-level Chinese government employees in the past, and the volunteers gave me great hope for Beijing's future.
In addition to the 100,000 volunteers, the 16 million people of Beijing are also committed to making their country proud during the Games. The city has requested that workers in 17 service industries -- ranging from restaurants and hotels to hospitals and transportation -- improve service etiquette, learn English, bathe daily and wash their clothing frequently. A large number of people in Beijing still live in homes without easy access to hot running water, so this isn't as easy as it sounds. Cab drivers are now required to keep their cars clean and refrain from smoking. And neighborhood watch teams, made up of mostly middle-aged women who once reported suspicious activities to the Communist party, are now assigned to help direct local traffic and make sure people wait in line for bus rides.
Another problem that China is working to fix is Beijing's congested traffic. Like many major cities around the world, traffic jams are common in China's capital -- after all, the city currently has more than 3 million cars. To solve the congestion problem, Beijing is making subway rides easier and cheaper. Over the past six years, the length of Beijing's subway tracks has increased from 32 miles to more than 130 miles. To encourage more people to use the expanded subway system, the city charges a fee of only two yuan (about $0.30) per round-trip ticket to and from any station along the subway route. In addition, the city is starting to use a new system to reduce vehicle traffic. Cars with license plates ending in odd numbers are only allowed to be on the road Mondays, Wednesdays and Fridays, while cars with plates ending in even numbers are allowed to travel only on Tuesdays, Thursdays and Saturdays. So far people seem willing to accept the new system, which is good news for both commuters and pollution levels.
Traffic congestion and air pollution will be the two greatest challenges that Beijing will face during the Olympics. Even though there's not much that can be done to solve the problem completely, reforms are under way. On my last visit to Beijing, I saw rows of trees planted along various major highways. The city government has also relocated some of its biggest polluters to areas outside of Beijing (such as giant state-owned Capital Steel Company). I'm not sure if these measures will be enough to reduce the city's smog to acceptable levels. I remember that a few years ago, several runners collapsed during the Hong Kong Marathon as a result of the city's poor air quality. I hope that Beijing will be able to prevent the same problem from happening this summer.
All of these efforts demonstrate China's burning desire to make their country a more welcoming place and an active participant in the global community. I have no doubt that China will succeed. The Olympics are creating a "can-do" attitude amongst a whole generation of young Chinese who will see that they're good enough to compete with the best in the world. This change in attitude and spirit will help China go far both socially and economically.
-Robert Hsu
(ChinaBizSuccess Contributor)
www.chinaprofitstrategy.com
Return To Article List
Things to avoid: First, do not go immediately to your seat at the dinner table. Wait until someone seats you and then invite the number one guy on the Chinese side- make sure you find out who that is- to sit down beside you. Where people sit is a big deal to the Chinese. The basic rule is that the guest of honor will sit facing the doorway, and then seating will trickle down from there. You don’t have to know the pecking order of everyone present- they will figure that out-but they will make a big deal over it. Just watch it and enjoy. Second, do not immediately begin to discuss business once the food is ordered. While we put business ahead of pleasure, the Chinese prefer to do business after everyone is relaxed and full. The Chinese might expect a Westerner to go straight to business, but they will be more at ease if you enjoy your meal first. Third, do not be afraid to ask for a fork or spoon to eat with. Chinese understand that you may not know how to use chopsticks. At the same time, it would bode well for you to practice using chopsticks before you make your trip. Any effort you can make to understand and participate in their culture and customs will be appreciated by them. Last, do not “make your plate” like you would if you were eating a western meal. Chinese meals consist of many dishes placed in the center of the table (sort of like a western dinner table), but each person takes only the little bit they can hold with their own chopsticks and places it into their bowl. Chopsticks don’t pick up very much so a person has to reach for the serving bowls over and over again. Many Americans will get frustrated trying to use chopsticks or get tired of having to reach into the serving bowls so often. Because of this frustration, many people will then resort to scooping large amounts of food from the available dishes and putting it into their rice bowl. This is considered very rude (akin to gluttony) in the Chinese culture. The best thing to do is to pick and eat as best you can and then, if you don’t get enough to eat, grab a Big Mac or Snickers after the meal when you are alone. Things to do: First, make sure that you always bring a gift with you to meals and meetings, even if it’s just a bag of fruit or snacks. Just don’t come empty handed. Second, make sure that you have studied up on the local cuisine and can make some suggestions if you’re asked what you would like to eat. Chinese are very proud of their culture. Your knowledge of their local food will impress them and give them face, but it also helps you to have some control over what is put on the table. Note that each province and sometimes even each town has its own unique dishes that it is known for. Make sure your research is specific to the area you will be visiting. Remember that it’s very important to your Chinese host that you enjoy your meal. If you have a pioneering palate and aren’t afraid to dig into unknown dishes, you’ll put your host at ease and give him face. Third, make sure that you are ready for the toasting that accompanies a business dinner. I don’t drink alcohol and that’s not a problem with them, but I always fill my cup with something and toast away. Make sure you don’t just lift your glass and listen to their toasts, but be ready with a toast of your own (even if you have to use an interpreter) that praises your host, the meal, the city and the venture you are about to undertake. Fourth, make sure you don’t get in a hurry. Take your time over the meal. Even the size of the bowls used for dinner and the design of the chopsticks is an indicator of how slowly your host plans for you to eat. Take your time, participate in the conversation, and be genuinely interested in all that your host has to say. Two or three hours to eat dinner might seem like a waste of time to your efficient Western mind, but it is two hours well spent to cement your relationship with your new associates. Last, make sure that you take care of the bill for some of the meals. Paying the bill can be an event in and of itself. Most of the time, when the bill arrives it will seem that a fight is about to ensue over the privilege of getting to pay. By your second or third meal (but certainly not the first) you should try to join in with this jostling as best you can. However, if jostling doesn’t fit your personality, here’s an inside secret from us guys who live and work in China
In China, Meals Take the Place of Meeting Rooms and Whiteboards
Every culture seems to do business around meals. However, the Western idea and the Chinese idea about what makes a successful business dinner could hardly be any different. While a shrewd American businessman will drink cautiously or forego drinking entirely until business is complete, every Chinese person feels that business goes more smoothly if everyone is a little bit tipsy. Sounds pretty incompatible so far, but it gets even more so. While Americans like to sit down and get right to business, thinking that work comes before pleasure, Chinese like to linger over dinner making small talk and complimenting each other- only doing business after everyone is relaxed and (remember what we said above?) just a little bit tipsy. But you don’t have to let different customs intimidate you. By following a few do’s and don’ts, you can make a good impression on your hosts and lay a good foundation for future business endeavors.
Act like you are going to the restroom, stop by the cashier’s desk, and pay the bill before it ever makes it to the table. If you have an interpreter with you, explain to your interpreter before the meal that you would like to take care of the bill, give them money to cover the cost, and instruct your interpreter to take care of the payment without being noticed. This will surprise your host and give them a good impression of your forethought and resourcefulness. Never let your new partner take care of all the costs of meals, hotels, and travel because this will put you in a place of indebtedness, and, in Chinese culture, that’s the last place you want to be!
-Bobby 4/08
ChinaBizSuccess.com Co-Editor
Negotiating with the Chinese
My business travels in
Key Points of Power Negotiations
1. Always ask for more than you expect to get
This is a basic principle for anyone buying or selling.
2. Never say yes to the first offer
This bit of advice is incredibly difficult for first time buyers in
3. Use the “Vise Technique”
4. Don’t split the difference
When your negotiations drag out and you are ready to split the difference in price just to get things going – Don’t. Let your Chinese counterpart make that suggestion in order for him to “save face” and feel as if he is controlling the negotiation, taking the negotiations out of deadlock. Don’t let pride stand in your way of letting your Chinese supplier win the negotiations. At the end of the day the winner is the one who walks away with most profits. Getting the Chinese supplier to offer the split may take some coaching or nudging on your part.
5. Understand Chinese tension and remove it
American tension during negotiations usually begins with body language or facial expressions easily identified as a nervous reaction to a point made or an issue challenged. The Chinese, on the other hand, do not express tension with the same mannerisms. Chinese nervousness is usually made public by giggling or subtle laughter. When your Chinese counterpart starts giggling under pressure on a negotiation point, stop and recognize his discomfort, and use this as an opportunity to “save face” for your Chinese counterpart by relaxing his stress. Change the subject immediately and move away from the touchy issue. Make your change in direction obvious and forthwith. This will communicate your desire to “save face” for your counterpart and avoid his embarrassment while placing you in a favorable position to balance the negotiations. This can result in your Chinese counterpart feeling indebted to you for your kindness.
6. Make time your ally
Dawson reveals what he calls the 80/20 rule in negotiations. That is, 80% of the concessions are made in the last 20% of the time available. If you know that your counterpart is restricted by time, then learn to stall and hold the significant points of negotiation until the last hour. Keep in mind that Chinese are 7,000 miles away, have no time zones, are on average 12 hours ahead, and like to eat lunch on time. As the buyer, schedule your negotiation meetings around 10:00 AM China time. This equates to approximately 9:00 PM EST, 8:00 PM CST, 7:00 PM MST, and 6:00 PM PST. Have a sense of urgency to end your day and push the negotiations through lunch. Just remember that this tactic works best for significant negotiations or first time suppliers. Using this tactic over and over again on the same supplier, however, will result in the Chinese ordering lunch in and a long night of negotiations for you.
7. Develop walk away power
According to
8. Seek out guanxi opportunities
Another tactic that works well in negotiating with the Chinese is to identify the decision maker in the group and gently ask him to separate and talk one on one. Explain to the decision maker that you needed time to “clear your head”. In Chinese culture this is simply an opportunity to refocus and relax. The decision maker will understand and respect your decision. In addition, you now have the opportunity to build a relationship. I recommend that you avoid discussing the negotiations; such discussion would be considered a rude tactic. Simply take the opportunity to build a relationship that could prove a value in the future.
9. Learn the culture not the language
Most business man think that learning the language of their foreign counterpart will provide a great advantage in negotiations. Although learning the language may flatter your Chinese counterpart or help you order a meal, it will not help to win at the negotiation table. I recommend that you learn the Chinese culture, behavior, gestures, and body language. Force your counterpart to speak English or better yet use a translator; let the language barrier work to your advantage. During negotiations, I watched the body language of my counterpart as the translator delivered my message and then planned my next point. When the translator delivered my counterpart’s response, I over exaggerated my expressions, setting up my next point for delivery. In many negotiations, my translator delivered the concession that I was looking for but I responded disappointed or frustrated only to receive a lower concession from the Chinese supplier.
-James 4/08
ChinaBizSuccess.com Co-Editor
[1] Roger Dawson’s The Secrets of Power Negotiations is available online at Amazon.com
Return To Article List
Respect in Relation to Face
One tax bureau clerk in
On the other hand, Company B’s accountant was very cordial to the clerk and showed respect for her position. Every time the clerk finished a procedure for her, she would show gratitude, as if the clerk was doing her a special favor. Company B’s accountant also showed sympathy towards the clerk’s hard work, even though the clerk’s work was not really that hard. This gave the clerk face and left her feeling that she was respected. Because of Company B’s accountant’s approach, the clerk gave her clear instructions, even some inside advice, regarding the procedures the accountant had to go through.
Later, Company B’s accountant made a serious mistake in her financial report. The tax bureau clerk gave her specific instructions on how to fix the problem and even went to bat for the accountant by contacting other government offices concerning the problems. In the end, Company B had the problem taken care of without any financial loss or penalties.
Company A’s accountant made a similar but much smaller mistake. She went to ask the clerk questions concerning how to fix the problem. The clerk was reluctant and impatient to assist. A quarrel ensued because the accountant believed it was the clerk’s responsibility to help her out. Of course, this made the situation worse. The accountant was now in a bind and had no way to fix the problem without the help of the clerk or someone with influence inside the department. In the end, Company A was levied with a large fine for the small mistake the accountant made.
This example shows that under the same rules, personal feelings, which are based on relationship, can lead to very different results in
In the Chinese culture, we consider rules more as a way to bring us benefits and conveniences. We have a saying: “The rules are dead, but man is alive.” This indicates that the execution of the rules is largely based on the executor. In other words, the effects of the same rule on different people vary greatly from one case to another.
How do you gain as much as possible and avoid trouble as much as possible under Chinese law? The answer is to develop a good relationship with the executor(s) of the rule. In
When we Chinese talk about a rule, it is considered as a general suggestion rather than a specific requirement. In the above example, the tax bureau has a lot of flexibility in examining and “punishing” the two companies because of their tax problems. Here, personal feelings are playing a key role as they almost always do in
In the Chinese culture, respect is closely related to face. Instead of making a clear line between right or wrong, we emphasize harmony and a delicate balance. Respect shown is most often returned. We look more to the human relationship to solve the problem than the rules concerning the situation. As long as the person we are dealing with thinks that he is given enough face, which he considers respect, he will reward you as much as possible within or even beyond the rules.
-Younger 4/08
ChinaBizSuccess.com Asia Editor
Return To Article List
ChinaBizSuccess Case Study At the same time, the President of Company C sent people to report to the government authority that the general manager of the shopping mall, who worked for Company T, was involved in embezzlement and divulging national secrets. Shortly thereafter, the general manager (from Company T) was temporarily forbidden to return to attend Company T’s meetings in his own country. Other officials in the shopping mall, who were appointed by Company T, were also removed from their positions. Company C appointed new leaders to fill these positions. This news was reported in Company T’s home country and drew attention from both governments. The Chinese authorities blamed Company T’s general manager for his imprudence in dealing with such a delicate situation. Later, the general manager was allowed to return to his home country. The shopping mall was formed by Company C and Company T each holding 50% of the company totaling 750 million RMB ($102 million US). The problem was that while Company C was fiscally sound, it was more importantly politically backed. In name, it is a public company, but in actuality, it is tightly controlled and even in some ways financed by some government authorities. In this way, Company C’s president had the upper hand with his very tight relationships within those government offices. So, this is our case study and predicament. What could have been done to prevent this situation? First, the 50/50 share agreement was not favorable to Company T or any company when doing business in a foreign country. Second, before it had developed a working knowledge of the situation in China, Company T should have avoided co-operating with such a company as Company C. A little research would have given them insight into who was backing and controlling the company, i.e. the government. In managerial practices and philosophy, there were too many differences between the two companies which endangered their co-operation. The shopping mall was set up in a key city in China where government officials of different levels are involved in the businesses. This complex relationship network was overwhelming to the managerial staff from Company T. It is not surprising that Company C’s President acted the way he did, because he has a close relationship with many authorities who actually had a vested interest in the business. So, whenever there was a conflict, it was impossible for Company T to get a fair shake. Usually, it is very easy for the Chinese partner to know all the activities of the foreign partner in a joint venture in China. Therefore, once the foreign partner makes a mistake or has a problem, it will be taken advantage of by their Chinese partner. Therefore, in a joint venture, it is always safer for the foreign partner to hold at least 2/3 ownership. In this way, the foreign partner controls the administrative positions in the company. Because of China’s gigantic market, many foreign companies are willing to invest in China, and they will usually enjoy a lot of privileges or special treatment. For example, in some places, the local police will temporarily block the traffic for potential investors as they travel through the city. At the onset of establishing the shopping mall in Beijing, the local government temporarily set up a special office to handle all of the registration procedures. This impressed Company T, and they had no doubt about Company C’s strong relationships within the local government. But, as they were enjoying this convenience, they forgot that while a strong relationship could bring them benefits, it could also bring them harm as well. The different managerial and operating philosophies between the two companies made the situation worse. First, the shopping mall’s general manger from Company T was too assertive at the onset of the operation. He adopted the American style that emphasizes efficiency, which is quite opposite to Company C’s “style”. Also, Company T’s general manager’s dominating approach made the President of Company C feel as if he were only playing a minor role and thus making him feel as if he were losing face. In this example, the foreign partner made a mistake that most foreign investors make. That is, they almost always only focus on the market in mainland China and how they want to strive to promote the business as quickly as possible. They usually pay little attention to the mentality and customs of the Chinese partner and the importance of human relationships among the local people. When there is a conflict, their attention is on the business itself instead of the relationship, so the lack of communication and personal respect accelerates the conflict. At this time, a temporary compromise has been reached between Company C and Company T. Former leaders from Company T will retake their positions in the shopping mall. Some people believe that if Company T will fight back, they can receive compensation for the difficulties they have been through. But, twenty years of personal Chinese business experience tells me that fighting back isn’t the solution to this situation, and here’s why. First, there was a meeting scheduled to hash out all of these problems. Company C’s President refused to attend the meeting and sent a subordinate instead. This was obviously humiliating to Company T. Because of this, no one will take Company C seriously. Can Company C’s President and Company T’s general manager co-operate in the future? My answer is NO. In addition, what has happened in the past will also damage Company T’s general manager’s authority in the future operation of the company. Second, Company C had already removed all of Company T’s managerial staff from the shopping mall, and appointed their own staff to take over these positions. Since the compromise was made allowing Company T’s administrative staff to retake their positions, the people from Company C, who took these positions, will have to “return” them. This will surely influence the working morale on both sides. Third, the President of Company C hasn’t gone anywhere. He is still there scheming and plotting behind the scenes. The only thing that has changed since the compromise is that Company T’s staff has received their positions again. Actually, there have been other similar cases in which a foreign investor could do nothing but surrender to this system of doing business. One thing to note is that as long as those investors do not make the case an international sensation, the Chinese authorities will not take it seriously, and usually the case will end without any actual settlement. Here is my suggestion concerning the investment in the shopping mall in China. If the foreign partner wants to set up a joint venture, he should hold the majority in the company, and it should begin on a small scale so that he can gradually understand the Chinese laws, customs and mentality. If any disagreements arise, the two companies should resort to the arbitration committee. This committee has people from other countries and is relatively open to the public. In this way, the foreign investor can partly avoid there being too much of the Chinese side’s relationship influencing the conflict resolution process. Actually, investors can now open totally foreign-owned department stores in China, as well as many other kinds of business. This can avoid a lot of unnecessary conflicts. Even if the investor does need to have a Chinese partner, it is suggested that he not find one in the department store field. Otherwise, the managerial and operational differences will result in conflicts. The foreign investor should find his Chinese partner in a field like real estate, which may help in reducing the cost of finding a building, land or even construction. The way that the above case study will probably end is that Company C will demand 51% of the company or threaten to pull out of the cooperation with Company T. So, the only way this can end good for Company T is to get all of its investment and interest back over the next few years. If they can do that, they should consider themselves lucky.
A large shopping mall was set up in April, 2007 in Beijing, China. It was a joint venture between a foreign owned company that’ll we’ll call Company T and a large Mainland Chinese company that we’ll call Company C. Both companies’ financial background was very strong, and it seemed that the shopping mall’s business would surely take off. But, it was not long before conflicts between Company T and Company C ensued. In August of 07, the president of Company C, who is also president of the shopping mall, claimed that the administrative staff from Company T was embezzling money from capital that was allocated to construct the shopping mall. Later, several Chinese government officials paid a visit to the shopping mall financial department and confiscated all of the contracts and financial records. Actually, one month before this happened, there were some signs that things were starting to go bad. At the company board meeting in July, representatives from Company C required that Company T show all financial records. After reviewing the records, they brought to light “problems” regarding the expense and income shares between the two companies. They especially pointed out that Company T was spending too much money on the construction of the department store. They also hinted that staff from Company T might be involved in embezzlement and bribery. Leaders from Company T only saw that as a misunderstanding and tried to clarify the situation, hoping that more communication would solve the problem. Leaders from Company C did not give a response to Company T’s explanations.
-Jack 4/08
ChinaBizSuccess.com Asia Editor