The Paradox of China - Relationship and Change

A U.S.-based multinational technology company decided to select a Chinese company as one of its primary suppliers.  The company was impressed by the technical and quality capabilities demonstrated by the Chinese supplier.  Furthermore, it was drawn to the vision and desire expressed by the most senior leadership of the Chinese company that the partnership would be for "long-term" and would be "strategic".   As work heated up in joint product development, one thing started to worry the U.S. executives - they've noticed a frequent change of personnel from the Chinese side, making it difficult to maintain the "long-term" continuity they had assumed.


People trying to "decipher" China are often perplexed at the paradox exhibited between the philosophy and the practices that they experience in reality.  In the case above, is the Chinese company long-term focused or short-term focused?  Does relationship matter or not?  Which is the real China, and how do we make sense of these contradictions?  To understand China and its complexity, we need to accept that contradictions coexist but that they can be explained from different perspectives.


On One Hand:

Having a network of relationships is key to succeed in China.  Relationship needs to be built upon, above all, personal trust or trust by association.  It can take a long time to build but it will remain strong for a long time, too.  For this reason, businesses look for customers, suppliers, partners and employees who pass the "trust screen" to have the long-term relationship with.  They always emphasize the intention to be "long-term" partners and disassociate with those who do not invest in relationship building and are only aiming for one-time transactions.

On the Other Hand:

On the other hand, it is a common practice for Chinese companies to frequently rotate their managers to different positions.  Mid to senior level managers may rotate as frequently as every two years.  This is not a practice that is conducive to maintaining the relationship continuity with their clients.  It also puts extra burden on the clients to keep investing in the new people that come on board.   But the reason behind this practice is the need for control, an important part of the centralized management system style that most Chinese companies employ.  The paradox being, with too strong relationships come too much control, and too much control can be a threat to the very senior leadership.


On One Hand:

The Chinese exhibit a very high level of tolerance for ambiguity.  Adapting to change is a deep-rooted cultural trait dating back to the teaching of Daoism.  The Chinese worldview is that nothing is fixed, and things always change.  Take, for example, a major Chinese company gets into trouble with the U.S. government over the issue of IP protection.  As a result, the Chinese company is banned from bidding on certain projects in the U.S.  While in dismay, the Chinese managers' take on the new is one that's un-feathered: "It's only temporary.  It will change."  This principle belief has also guided the Chinese attitude towards things such as: market share over profit, low-cost market entry strategies, as well as how binding contracts are and how exact requirements should be followed.    

On the Other Hand:

On the other hand, more and more Chinese companies are now venturing out to established markets like the U.S.  They set up offices, hire local employees and engage with local clients.  One of the biggest feed back towards these companies is that they continue to operate in the "Chinese way" and not being fast enough in adopting new practices that work in the local market.  Viewing from a different perspective, a few things help explain this phenomenon.  The Chinese has a tendency toward ethnocentrism in that they believe in the superiority of their own thinking.  This is further fueled by the fact that many companies that expand to the developed markets are highly accomplished in the domestic market and some even in international markets.  Furthermore, many lack the experience in the new market, and this makes the learning curve a very steep one. 


These are but two examples of the paradox of Chinese culture exemplified in business.  As perplexing as it may seem, we can try to understand them by looking through using different lenses and effectively deal with them by using different means.   


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