In this week’s Jeitocast, Karen Beaman interviews Michael Novak, CEO of Tertia Corporation, U.S. representative for China’s International Software Services Fair — the Comdex of China — and past president of Clark Consulting Group, the largest intercultural communications company in the U.S. with a focus on U.S.-Asia business communications. The jeito Karen and Michael discuss is:

What do companies need to know about doing business in China?

Michael begins by discussing some of the cultural differences that organizations need to be aware of when doing business in China:

1- Group Decision-Making: Decision-making and information sharing are considerably more consensus based and group-oriented, which can be a source of conflict when coming in contact with more individualistic cultures, such as the U.S.
2- Saving Face: The importance of saving face in a group and not putting someone in the position where they have to make a decision in front of others is important. There is a Chinese saying, “A person needs face like a tree needs bark.”
3- Demonstrating Humility: Humility is highly valued in China, particularly when talking about yourself or your family. Conflict can arise with the U.S. culture where much value is placed on self-promotion: this is seen as boastful in China.
4- Universal Knowledge: The Daoist tradition says that knowledge is universal: everyone is entitled to knowledge and wisdom. The cultural conflict shows up in issues around intellectual property, where in China ideas are seen as belonging to everyone.
5- Minimizing Idle Chatter: The Buddhist tradition values putting thought into everything you say; thus, typical Western activities like brainstorming can be more difficult in China as they are seen as wasting people’s energy.

Michael says there are four main reasons that companies are expanding their business into China:

1- Selling into consumer market, bringing growth opportunities outside of the first tier countries.
2- Lower costs, starting as a distributor and moving to set up offshore outsourcing operations.
3- Privatization of state-owned enterprises, offering significant new business opportunities.
4- Proximity to Korea and Japan, bringing access to other countries through regional operations.

 

 What do I need to know about doing business in China? [19:46m]: Play Now | Play in Popup | Download