Tag Archives: trade with China

Working for a Chinese Company

Author Gary Moreau

Sino-US trade continues to get a lot of attention in Washington, particularly in light of North Korea’s relentless missile testing. And trade between China and the US continues to be characterized as a unilateral issue—from Chinese factories to US consumers.

In reality, however, Chinese companies have now made direct investments in every US state and most congressional districts. From 2000 to Q2 of 2017 Chinese companies have invested $135 billion in the US, reaching $3.4 billion in 2012 alone. Most of these investments have been in US manufacturing assets and have resulted, by one estimate, in more than 140,000 US jobs on American soil.

While it has become increasingly common to hear of American friends and family who now work for Chinese companies in the US, moreover, American companies continue to reap the benefits of China’s economic miracle.

McDonald’s has 2,200 stores in China and sells 1,600 hamburgers every minute. Walmart has close to 450 stores there, employing roughly 100,000 people. (wal-martchina.com), and that’s not counting Walmart’s extensive sourcing operations there.

General Motors, which has, in many ways, been the poster child for the declining US middle class, has 60,000 employees in China (gmchina.com), roughly 1/3 of its total global workforce. It plans to open, moreover, five new manufacturing plants in China in 2018, and sell close to 5 million vehicles there, almost half of its vehicle sales worldwide. (https://www.gm.com/company/about-gm.html)

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It seems quite unlikely, therefore, that American industry will line up behind any attempt to start a trade war with China. And while there may appear to be some poetic justice in giving American companies that moved production out of the US their due, the trend has gone on for too long for a correction to do anything but further compromise the interests of American workers. Imagine what would happen to the GM jobs that remain in the US if the company were to find itself unwelcomed in China today?

The more likely scenario, once the heated rhetoric out of Washington dies down, is that there will be more and more direct Chinese investment on American soil. Wage rates are not as punitive as they once were, largely for the wrong reasons, energy is cheaper in the US than anyplace else on the planet, and local governments are lining up to shower new investments with taxpayer largesse in the form of infrastructure improvements, job training, and tax avoidance.

And what if you are one of those Americans that find you are working for a Chinese company in the future? Well, generalities are always risky, but here are a few pieces of advice:

1. Your Chinese employers will be laser-focused on one thing: results. They will care far less about programs, processes, and general initiatives that are often accompanied by acronyms, posters in the cafeteria, and tee shirts.

2. Your benefits may actually improve. Chinese companies, for example, provide far better maternity benefits than most US companies.

3. Words carry less weight to the inductively minded Chinese than they typically do in the West. Keep this in mind when you find yourself on either side of a communication.

4. The rules of socially acceptable personal questions are quite different. The Chinese will not hesitate to ask you how much you make or how much you paid for your home. They will not expect you to ask them personal questions about their marital status or family size, however. And they will certainly not expect you to invite them to your home.

5. Any questions you may have on issues of work/life balance will be accepted politely but are unlikely to register.

6. The investment horizon for those involved in capital projects will be measured in months, not years.

7. Cash is king. They are likely to have little tolerance for throwing good money after bad, no matter how confident you may be in the ultimate payback of your idea.

8. The inscrutable expressions you are likely to encounter among your Chinese colleagues can be very misleading. The Chinese are far less retentive than perceived and quite comfortable in being downright silly.

9. The Chinese consider Americans to be excessively polite. We’re always saying please and thank you. They are not so inclined and sometimes interpret our behavior in this regard to be a bit suspect.

10. Don’t expect a lot of “hi’s”/”hello’s” in the hallways. They are often baffled by our willingness to acknowledge total strangers. They generally divide people into two groups: Those they have a relationship with and are thus obligated to,and 2. Those they don’t. In essence these people don’t exist.

As luck would have it, I just got off the phone with a gentleman about to interview with a Chinese company. He is of European background and I summarized my experience as thus: I have worked with businesses around the world and the parallels I would draw are that in terms of personal culture, the Chinese are closest to the Latin cultures, particularly Mexico. In terms of business culture, however, I always found the Chinese to be closest to the Dutch. Both are very forthright and matter of fact.

On balance, I believe the Chinese and American economies will continue to mutually integrate. And that will be a good thing.

Keep an open mind. And remember what Confucius said: “Wherever you go, there you are.”

You may contact the author at gary@gmoreau.com
Visit my personal blog at www.gmoreau.com

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The Law of Unintended Consequence

The author giving a lecture to international business and Chinese culture students at North Central College in Naperville, Illinois..

Be careful what you wish for. It may come true. That’s a sage bit of conventional wisdom that is a variant of the Law of Unintended Consequence. You may get what you want, but it may come with baggage.

Americans have long debated whether or not a businessperson or a career politician would make the best president. However you come down on that question we are in the process of finding out.

Even beyond his flamboyant style, his hyper rhetoric, and his proclivity to Tweet whatever he is thinking at the moment, it would be hard to find a past American president with less political experience than Donald Trump. Even retired military generals who have gone on to the highest political office in America had to negotiate the ladder of ascension in a large and politically competitive institution.

As have most CEOs of most large public companies. Donald Trump, however, spent most of his career at the top of a family business with his name over the door. He had to negotiate some pretty big deals, and that always involves a little bit of political maneuvering, but he has never had to compete for the corner office with his political enemies.

While many Americans have already made up their mind, only time will tell if President Trump makes a good president or goes down in the annals of infamy. I offer no predictions here. This is a blog about China.

One thing we should have learned in the nascent days of Trump’s presidency, however, is that negotiating a business deal and negotiating a diplomatic deal are not one and the same. And it has to do with the Law of Unintended Consequence.

In negotiating a business deal the negotiators often posture to the same extent politicians do. But the language is often different. The volume is different. And the trade-offs are different. The desired objective is generally obvious in the business deal and there are often trade-offs negotiated under the umbrella of the overall agreement.

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And that appears to be how President Trump and his team plan to negotiate with China. Taiwan, trade, and the South China Sea are just components of one big overall deal defining the relationship of the world’s two largest economies. As Trump would say, “Everything is in play,” just as it would be if he were negotiating the merger of two corporations.

But that is not how diplomacy works much of the time. And the result is that President Trump’s very public negotiation is working very much in favor of the Chinese. They are, I suspect, in no way disappointed by the current state of affairs although, given the extensive political experience that the current Chinese administration has, they will never acknowledge that publicly.

President Trump’s harsh rhetoric on China, of course, has not gone unnoticed in the rest of Southeast Asia. Contrary to pushing China’s neighbors into the protective skirt of the US, however, that rhetoric, and the geo-political risk it suggests, may be pushing China’s neighbors further away from both China and the US, a result that will ultimately favor China and its desire to assume greater leadership in the region.

Dr. Samir Tata, a former intelligence analyst and founder of the International Political Risk Analytics, recently wrote an insightful piece for Forbes Opinion. In it he argued that President Trump’s current rhetoric, along with the US’ unilateral withdrawal from the Trans-Pacific Partnership (TPP), as well as the Obama administration’s lack of interest in supporting the Asian Infrastructure Investment Bank (AIIB) sponsored by Beijing, will likely push key member countries of the Association of South East Nations (ASEAN) toward an official policy of neutrality along the lines of Finland, Sweden, or Switzerland.

In the event of armed conflict between the two superpowers, were such neutrality come to pass, the US could be seriously thwarted in its ability to exert military strength in the region. (Nations which are officially neutral would presumably not allow any foreign military presence on their soil.)

According to Dr. Tata, China is pursuing a much more holistic strategy of trade and investment throughout the region, “having displaced both the United States and Japan as the most important trading partners of the ASEAN countries.” To what extent this strategy will undermine existing security agreements in the region is unknown.

In business, however, while risk is to be avoided, uncertainty can often be employed to your benefit, particularly in a business negotiation. In the world of diplomacy, however, uncertainty is risk. And the harsh rhetoric of the “America First” doctrine is sure to put doubts in the minds of many foreign leaders considering who to dance with.

And that may ultimately prove to be the Achilles Heel of treating diplomacy like a business.

Contact: You may reach the author at understandingchina@yahoo.com. Mr. Moreau is also available for public speaking and the provision of third-party written content on a wide variety of topics for your website or other communications material.