Doing Business in China: Tips for an Outsider (Lǎowài)

As Western firms jostle to exploit the opportunities that the world's largest and fastest-growing economy can provide, there is a recognized need for caution, timely advice, and wisdom. In the early 1990s, Lucian Pye noted in Chinese Negotiating Style: Commercial Approaches and Cultural Principles (New York: Quorum, 1992) that doing business in China is vastly different from the West. He commented that what China lacked in technological and organizational skills, it certainly made up for in the sophistication of its negotiation and relationship skills. To this end, he stated that the Chinese "have known few peers in the subtle art of negotiating" (p. 74) and that "when measured against the effort and skill the Chinese bring to the bargaining table, American [Western] executives fall short" (p .74).

Reading through the texts of Tian, Ambler and colleagues, and Liu, it is clear that Pye's comments still ring true. There is still much that Western managers must understand to be successful in the Chinese business domain. This paper takes up this challenge by reviewing three recent texts that aim to guide what Goodall, Li, and Warner¹ (p. 63) refer to as outsiders (lǎowài) as they navigate the varied and at times difficult terrain of the Chinese business landscape.

A considerable challenge faces the authors of these three texts. As Ambler and his co-authors rightfully point out, "anyone studying or researching business in China will have realised, there are hundreds of books and probably thousands of magazines and journal articles in print" (Ambler et al., pp. 9-19). Indeed, a recent Google Scholar search with the words "China" and "business" in the title generated no fewer than 2,150 results. Unfortunately, no book on China provides exactly what is required. Experiential learning can be taught through role plays, simulations, and mock negotiations, but hip-pocket lessons and emotional tears go beyond reading texts. As Kriz and Keating² assert, relationship-oriented business practices are learned by doing rather than talking. The Chinese liken it to the popular Western allegory of being "thrown in the deep end and having to swim." However, this challenge not withstanding, all three texts provide valuable insights to guide outsiders who wish to do business in China. Hopefully, the information contained in these texts speeds up the learning curve and helps to avoid many of the pitfalls that have afflicted others before them.

An understanding of the key drivers of Chinese business behavior is important; as Nisbett's Geography of Thought (New York: Free Press, 2003) explains, Asians and Westerners have very different modes of thinking. Much of the difference in thinking is often attributed to divergent worldviews that have been inspired by contrasting philosophical, historical, and linguistic origins. To this end, Liu suggests that a book that sets out to guide lǎowài should be "designed to help Western readers to perceive businesses in China from a Chinese perspective and through the lens of Chinese logic" (Liu, p. xiii). To illustrate the inherent differences and varied ways of thinking between Western and Eastern logic, Liu uses the metaphor of Chinese and Western medicine. Liu notes Western medicine's linear cause-and-effect approach that starts with symptoms, testing, and then medical treatment, whereas Chinese medicine uses a circular, holistic approach:

[F]irst seek the cause of the symptoms by taking a holistic view . . . generally employing four diagnostic methods: interrogation, inspection, auscultation and olfaction and pulse-taking and palpitation. The condition is then often treated using different methods such as herbal medicine, cupping, breathing technique therapy, plaster, acupuncture and massage.

(Liu, p. xiii)

Our review seeks...