It’s an election year here in the United States. 2012 will also mark changes in the Chinese government as well. The backdrop to all of this is a seemingly constant stream of rhetoric from the U.S. that China has unfair trade practices. President Obama made reference to that in his State of the Union message this past Tuesday calling for the creation of a new trade enforcement unit that will be tasked with investigating unfair trade practices in countries, he said, “like China”. Both President Obama and the Chinese government know that any punitive action as a result of this investigation is highly unlikely.
I’ve been to China a handful of times over the past two years and our company is doing business by helping Chinese companies in the U.S. as well as helping U.S. companies enter the Chinese market. I’ve learned a great deal and have much more to learn in the coming years. However I have learned a number of very important things. Here are three to think about:
1) The Chinese will not be pushed around. It’s like when you are being yelled at by someone and you eventually just tune out. Jumping up and down demanding that China accede on trade practices and currency valuations will have little or no impact on how China will act.
2) Win-win does not mean the same thing to the Chinese as it does to Americans. I can hardly count the number of times I’ve had a Chinese businessperson tell me Win-Win right? With a smile and a handshake. Win-win to the Chinese means the company wants you (the U.S. side of the venture) to take all the risk in helping them develop their business in the U.S., and for the most part, non-major Chinese companies are unwilling to invest any money in developing the U.S. market. This should not be all that surprising given that just a little over thirty years ago the notion of marketing and advertising was as foreign as – well, a free society.
3) It is an understatement to say that it takes patience to have your China market strategies bear fruit. When I tell my Chinese associates and U.S. expatriates that we’ve been able to gain client engagements in China in less than two years they are amazed and impressed. For me it feels as if it’s taken a really long time with constant work, some missteps and changes in strategy. I’ve been told repeatedly that having success in anything less than three years is unusual.
I believe most Americans are smart, smart enough to realize that starting a trade war with China will not help the U.S. get its goods and services into the fast-growing market any faster. Yes of course we all desire a level playing field and at the same time it’s frustrating to have to deal with the subsidization of Chinese enterprises by the PRC government. However the U.S. and other western countries will be far more successful if they try to find more collaborative methods to effect policy when it comes to the Chinese.
The Chinese are not focused on helping the west rebound from its financial difficulties. China has its own problems. But the Chinese are aware that they are holding the right cards at the moment. That China will continue to try to exploit its hand should come as no surprise to anyone.
But somehow that doesn’t seem to be the case. Do you think I am being naïve? Practical? Neither? Both?