Mind the Gaps: Singapore Business in China

3. Learning from Experience

Singapore Business in China 65© 2005 Institute of Southeast Asian Studies, Singapore 3 Learning from Experience Introduction Singapore has now had over two decades of experience in operating in China. In the initial period up to 1990 investments were mainly through small-scale, family and ancestral networks. The lessons learnt then continue to colour the views of the smaller private sector entrepreneurs and many have learnt to operate successfully following from their initial experiences. The more aggressive investment and trade relationships have been in the last decade. In this wave there was the movement of larger investments by government-linked companies, government agencies and the bigger private sector enterprises, some of which were described in Chapter 1. Their experiences are more varied and continue to shadow business relationships. This chapter draws on the findings of the field interviews done in China and in Singapore, and distills some of the more important lessons learnt from the Singapore presence in China. These lessons cannot be seen in isolation nor are they cast in stone. At the current time China is undergoing a transformation, and the two provinces of Liaoning and Reproduced from Mind the Gaps: Singapore Business in China, by Sree Kumar, Sharon Siddique and Yuwa Hedrick-Wong (Singapore: Institute of Southeast Asian Studies, 2005). This version was obtained electronically direct from the publisher on condition that copyright is not infringed. No part of this publication may be reproduced without the prior permission of the Institute of Southeast Asian Studies. Individual articles are available at 66 Sree Kumar, Sharon Siddique and Yuwa Hedrick-Wong© 2005 Institute of Southeast Asian Studies, Singapore Zhejiang provide some glimpses of how these changes affect the provincial business culture. More importantly, these changes in practices and perceptions are themselves being moulded into new contours that define relationships between the investing and host communities. In this shifting landscape it will be necessary to reconfigure and refine the lessons as new experiences emerge. Nonetheless, the lessons expanded on in this chapter provide clues as to which areas will continue to provide guidance for operating in an evolving China. Flexibility is Key China consists of a multitude of cultural nuances and operating environments. Each province has its own approach, anchored in local customs and behaviour, to addressing business issues. Understanding these local differences is essential to operating successfully in China. A common theme in this montage of differences is the need to be flexible and fluid in decision-making. There are no clearly defined frameworks on which Singapore businessmen can rely to engage in and cultivate business. The operating environment in China is fluid. The crafting of memorandums of understanding, and the preparation of legal documents are only the beginnings of a business relationship. They are meant to be guidelines for further negotiation and expansion as the business relationship becomes more concrete. This open-ended structure is an alien concept for Singapore businesses for which the formal document encapsulates the business relationship in a contractual manner. In China, the document serves only as a platform for further discussions, followed by revisions and redrafting the overall game plan. This is not an unusual state of affairs in societies in which personal connections and trust play an important part in business relations. The Western notion of a contract that specifies all the terms of the business partnership is now part of the Singapore business ethic. It specifies clearly the deliverables, timelines, nature of risk sharing and the like. This certainty in business relations allows the parties to focus on the task at hand — that of running the business and achieving the objectives that have been agreed to. This assumes a familiarity with Western norms of accounting, business practices, legal formalities and the idea of the “rule of law”. China’s emerging business community, in this sense, is less formalistic. Singapore Business in China 67© 2005 Institute of Southeast Asian Studies, Singapore Two strands of China’s history merge in a wider confluence.25 This first, more recent, thread is the influence of a centrally planned, communist model which has enveloped the more traditional mindset that has prevailed in China in the past. The communist model does not cater to the idea of contracts based on market transactions. It is the existence of a market and the fluidity within which business is transacted that gives rise to the need for certainty through contracts. The lack of a history of operating in...