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What a Chinese Restaurant Taught Me About International Business
A great gateway to understanding a foreign culture and overseas business styles can be explored in your neighborhood Chinese restaurant. The interactions and lessons in your local noodle parlor can translate as a “how to” guide for Chinese business.
Can you spot the boss? Is there a designated chain of command? My experience in Chinese restaurants (even ones with more than 50 staff) shows that there is one designated boss, and he or she makes every decision. The Chinese themselves refer to a “velvet fist” that the boss wields…his say is final, but the words are softened with paternalism and good feelings. This management style translates to large firms as well. Even CEO’s in large Chinese firms have the tendency to be involved in more details than their Western counterparts.
Pronunciation and language
A CEO of a large firm asked me how he could take his firm into China. I asked him: “how will you handle the fact that not one Chinese person can say the name of your brand?” Since he didn’t believe me, my advice was to walk into a Chinese restaurant, put his product in front of the waiter and ask him to pronounce it! He was shocked to find out that no one in the room could say his the name of his product! What an inexpensive way to do some basic market research.
There is this concept in Asia that anyone who helps with anything, can help with absolutely everything. I can’t count the times a Chinese restauranteur has a “brother in China who can source products” or a “cousin who can help me with Chinese business,” or “knows how to sell products in Asia.” A man selling $8 plates of fried rice is unlikely to be a marketing specialist in Asia.
Truth and lies
When a westerner walks into a restaurant and told his order would be ready in 5 minutes and it takes 20 minutes, we feel we’ve been mislead. Chinese aren’t necessarily lying here. They are saying “it won’t take long.” Think of how many times you’ve been told in the USA “it’s not in the budget” instead of “we don’t want your product.”
Level of intimacy
There is no word in Chinese for intimacy and there is no word for privacy. Chinese restaurants are often “under designed.” In many cultures (and larger cities in the USA) waiters will ask you to share large tables with other groups. On the level of intimacy, it’s not uncommon to see bright lights and hear the waitstaff and cooking staff speak loudly. What this tells the diner about what is private and what is public translates to business.
Belief in future
This is a common cultural discussion point. Have you every noticed why most Chinese restaurants have red decor? Red is the color of luck in China. It shows a belief in luck. Scholars of China find the culture to be very superstitious.
This concept, loosely translated to “back door” summarizes how Chinese business gets done. If you have Guan Xi (GWAN SHEE) or relationships, everything is possible. If you don’t, nothing is possible.
Few diners feel any kinship with a bathroom in a restaurant. It’s why we often see nice restaurants with paper towels or other garbage on the floor. The same lack of Gaun Xi can be seen in the parking lot of many Chinese restaurants. Since the drivers don’t know each other, the parking lot can be seen as a “free for all” by us.
It seems that every article on Chinese business talks about how Chinese can lose face (pride) easily. Negotiators are often warned about the dangers of making Chinese lose face. Intermediaries are often brought in to float ideas back and forth so that disagreements and suggestions between 2 parties become indirect. As a trusted go-between in many negotiations, I’ve been privy to statements and feelings that would never be communicated directly. An example in a restaurant this idea of “face” is evident when a customer wishes to return a dish. This can bring a sense of shame and make the transaction difficult and uncomfortable. The waiter must communicate to the Chef that the food wasn’t satisfactory, making the chef lose face as well. In an example in Hong Kong, the use of face comes right to your table. When you pay for your meal and the waiter brings you change, he/she often has coins on a small metal tray laid out. The customer then chooses the coins to leave and the coins to take off the tray, all in the presence of the waiter who holds the tray in front of him.
So the next time your planning that big international trip, go out for an ethnic meal and keep your eyes open.
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Three trends are coming together that make American companies look
more and more at getting overseas investors: money is easier to
move internationally, there is an abundance of new wealth coming
from the third world, and there are scores of new intermediaries
saying they are connected to this wealth. These intermediaries take
the shape of brokers, investment bankers, P/E fund managers and
Opening your firm to foreign money also opens up many cans of
worms. Suddenly your firm will be dealing with issues of culture,
law, taxes and transaction costs. Before you take a single dollar (or yen, rupee, euro,
etc.) from abroad, think about these 5 Points listed here:
1. Will your other investors mind? Will your current investors care
if more funds come from country X? Does country X help or hurt them
financially, legally or psychologically? Getting your current
investors’ permission might be necessary.
2. Will your overseas investors have access to your company’s
trade secrets? Frequently, investors want to understand and
potentially copy your intellectual property. It may be impossible
to track the actual source of overseas money. Thus, some overseas
investor could be connected to a real (or future) competitor.
Investment dollars might come from a real (or future) client or
vendor. Will they be able to access your “secret sauce”
and do you mind if they do?
3. Do you understand how to deal with the investor’s culture?
We are back to the No. 1 stumbling block in international business:
the differences in culture. If your way of doing business is
completely different than what your investors are accustomed to,
then there may be potential conflict on the horizon. How will you
deal with their views on risk, profit, law, ethics and management?
How will they deal with yours? How much education and hand-holding
will be necessary? How active will your investor be in running your
4. Do you realize it may take more time to deal with an overseas
investor? The single biggest cultural difference is our perception
of time. The overseas investor may be willing to invest, but not as
quickly as your firm wishes. Investors are often known for showing
high interest initially, and then stalling. In places like Asia and
the Middle East, that syndrome is even more widespread.
5. Are there tax consequences to your company taking foreign money?
Even if you completely and fully understand the U.S. tax
ramifications, does country X’s tax practices agree with ours?
Are you suddenly filling out a tax return for country X?
Few investors are in a rush, especially when investing overseas.
While they are taking their time it’s an opportunity for your
firm to take yours and do proper due diligence.
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