Andrew  D.  Hirsch  General  Manager  &  General  Counsel  

Fuelcor  LLC  CO2TL    

 

Interac(ve  Roundtable  Business  Culture  in  China  

 Bridging  the  Cross  Cultural  Communica(ons  Gap  

East  (PRC)  -­‐  West  (US/EU)      

"Ru xiang sui su" (Chinese proverb: Enter village, follow customs)

                                                                                                                                               h#p://www.linkedin.com/in/andrewdhirsch/  

Topics  

1.  Defining the Gap

2.  The Importance of Intercultural Communications

3.  Describing the EAST (PRC) - West (US/EU) the Gap

4.  Bridging the Gap

1.  Defining the Gap

Kiss, Bow or Shake Hands? (Book by Terri Morrison) We are born into a culture –

•  Culture is complex system of norms, values, ideas, traits, morals, and customs shared by a society.

•  Culture is a system for creating, sending, storing, and processing information.

•  Provides a frame of reference (subjective) •  Culture is the way people solve problems

•  Culture is the context in which things happen

•  Allows us to understand and interpret the world around us Culture changes over time –

•  It is dynamic and interactive and multi-dimensional •  The world around us changes and influences culture:

infrastructure, communications, art, architecture, government, thought leaders, etc.

Having  Some  Perspec;ve   Rashomon, and Other Stories Ryunosuke Akutagawa The Story of A Murder as Told From Multiple Perspectives * In a Grove * The Testimony of a Woodcutter Questioned by a High Police Commissioner * The Testimony of a Traveling Buddhist Priest Questioned by a High Police Commissioner * The Testimony of a Policeman Questioned by a High Police Commissioner * The Testimony of an Old Woman Questioned by a High Police Commissioner * The Confession of a Woman Who Has Come to the Shimizu Temple * The Story of the Murdered Man, as Told Through a Medium

2. The importance of intercultural communication

•  Globalization of Markets

•  Technological Advancements

•  Multicultural Work Force

•  Trip-Polar World (AIK)

•  Global Production Chain

•  Global Supply Chain

•  Global Value Chain (includes IP)

Factors  Impac;ng  Culture  

•  National •  Regional/Ethnic •  Gender •  Generational •  Social •  Business (corporate, organizational,etc) •  Context •  Individual v communal •  Communication style •  Concept of time

East  -­‐  China  Examples  of  Differences  in  

Culture  West  -­‐  US  

Group   Values   Individual  Trust   Values   Rules  Compromise   Values   Confront  Flexible   Values   Reasoning  

Internal  self  control   Values   External  Self  Control  

Modesty   Values   Acheivement  

Harmony   Values   Winning  

Saving  Face   Values   Pride  Silence  Oriented   Values   Noise  Oriented  Respect  for  status   Values   Respect  for  results  

Respect  for  elders   Values   Respect  for  competence  

Truth  oriented   Values   Fact  oriented  

Curious  &  Inquiring   Values   Value  privacy  Hypocri;cal   Values   Open  

East  -­‐  China  Examples  of  Differences  in  

Culture  West  -­‐  US  

Hierarchical   Management   Equality  Flexible   Management   Structured  Adap;ve   Management   Direc;ve  Understand   Management   Doing  Informal   organiza;on   Formal  Jack  of  all  trades   organiza;on   Master  of  None  Integrated   organiza;on   Fragmented  Coopera;ve   organiza;on   Compe;;ve  Sharing     Ac;on   Selfish  Collabora;ve   Ac;on   Control  Long  term   Ac;on   Short  term  Customer  Focused   Ac;on   Profit  Focused  (quarterly)  Indirect   Ac;on   Direct  Interdependent   Ac;on   Independent  Being   Goals   Doing  Time  is  life   Goals   Time  is  money  

3.  Describing  US-­‐PRC  Cultural  Differences    

The Barriers of Cross Cultural Communications

•  Body Language •  Personal Space •  Etiquette •  Establishing trust •  Religious Belief •  Social habits

Build  Your  Knowledge  of  Other  Culture;  Then  Act  &  Communicate  

 WIN-­‐WIN:  Both  Cultures  Can  Gain  By  Learning  More  About  Each  Other  

Improving Cross-Culture Communication Study your own culture first. Learn about other culture. Be culturally Savvy. One culture is not better than another: do not stereotype. People are people everywhere: there are differences among

cultures abroad just as there are in the US Seek common ground Observe nonverbal cues in your culture Adapt to local Preferences Empathy: try to see the world through another’s eyes. Saving face: respect the feelings and dignity of others Patience: tolerance, patient, silent Build trust and relationship, not business Show respect and value differences Speak Plainly and use small words to reduce communication

errors (big problem for lawyers)

Basic Business Issues

Greetings In most Asian countries - a gentle handshake

Staring at someone can be seen as intimidating and disrespectful (especially Japan)

Touching

Don't Touch in Japan

Personal Space in China – just like in US.

Business Card

Business cards printed in English and the local language on the other side.

Present your card before asking for others' cards

Hold card with both hands so they can read your name (not the other way around)

If presenting yourself to more than one person, start with highest rank downwards (respect).

Look at card & study it (the business card is the person presenting who they are).

Hold while talking -- Don’t just put in your pocket. Show some respect (in the US too).

Always bow / nod when handing and receiving business cards. Be appreciative.

China Business Formalities Dress code is formal when dealing with foreigners. Business people are addressed by their titles. Note: Surnames representing higher formality in addressing others. Before deeply talking about business, Chinese appreciate to make friends with each other and to deal with business mostly during dinner (careful!).

Be extremely respectful based on the status of another. Entertain at same level. Punctuality is essential (respect) Place of seating based on importance of positions and titles of people.

Phone calls, state your company name before your own name. Be attentive to the formality required when emailing. First name rule: when someone tells you to call them by their first name. Don’t be an ugly American. But, do develop a relationship. Bad news: through an intermediary (loss of - face, Guanxi, harmony) Instead of saying no, say something like not determined yet, or difficult, or inconvenient. Don’t close down opportunities, your goal should be to get to yes.

On  July  9,  2012,  China’s  State  Council  announced  the  12th  Five-­‐Year  Development  Plan  for  Na(onal  Strategic  Emerging  Industries.  7  strategic  emerging  industries  and  20  key  projects:    These  are  the  best  opportuni;es  because  they  are  desired.      

1. New energy auto industry 2. Energy-saving and environmental protection industry

Energy-efficient industry Advanced environmental protection industry Resource recycling industry

3. New generation information technology industry Next generation information network industry Fundamental industry of core electronics High-end software and new information service industry

4. Biology industry Bio-pharmaceutical industry Bio-medical engineering industry Bio-breeding industry Bio-manufacturing industry

5. High-end equipment manufacturing industry Aviation equipment industry Satellite and its application industry Rail transportation equipment industry Marine engineering equipment industry Intelligent equipment-manufacturing industry

6. New energy industry Nuclear energy technology industry Wind energy industry Solar energy industry Biomass industry

7. New material industry New functional material industry Advanced structural material industry High-performance composite material industry

As  provided  by  the  Plan,  the  key  development  direc;on  and  main  tasks  for  the  12th  Five-­‐Year  Plan  period  also  involve  20  key  projects:    Key  energy-­‐saving  technology  and  equipment  industrializa;on  project  Pilot  project  for  equipment  rela;ng  to  key  environmental  protec;on  technology  and  product  industrializa;on  Important  resource  recycling  project  Broadband  China  project  High-­‐performance  integrated  circuits  project  New-­‐type  flat  panel  display  project  Internet  of  things  (IOT)  and  cloud  compu;ng  technology  project  “Beneficial  Informa;on  for  the  People”  project  Protein-­‐based  biomedical  products  and  vaccine  project  High-­‐performance  medical  treatment  equipment  project  Bio-­‐breeding  project  Bio-­‐based  material  project  Avia;on  equipment  project  Spa;al  infrastructure  construc;on  project  Advanced  rail  transport  equipment  and  its  key  assemblies  project  Marine  engineering  equipment  project  Intelligent  equipment-­‐manufacturing  project  New  energy  integrated  applica;on  project  Key  material  upgrada;on  project  New  energy  auto  project  

Thoughts  for  PRC  Coming  to  the  US  Have people who can help you achieve your goals– who understand your business, who can act as your agent(s), and who can be effective in law, government, business development, etc..

The PRC should be concerned about it’s global brand. There is a tension between the stated PRC national plan for moving from making things to inventing things as the basis for being competitive on a global level.

•  NOTE: if the PRC is known as an unsafe place, critical new technologies will go there last. There is still 75% of the world market.

•  NOTE: the knowledge based economy does not create middle class jobs. Take a lesson from the US.

The real gap everywhere is getting small great technology companies to move from idea to product. Fostering commercialization of new products takes money. In the US, inventors have a clear path to foster commercialization through a safe pipeline. GPC, GSC, GVC (IP)

•  One option for the PRC: foreign investment in US knowledge based companies in areas of PRC interest. Example: energy efficiency, environmental technology, biotechnology, etc. This can be accomplished by establishing funding entities with US lead teams that can invest in US companies. This must be done through trusted intermediaries to avoid suspicion from US companies about protection of their IP.

•  NOTE: there is a gap in the Western world for patient capital at the start of the commercialization s-curve that can be filled by Asian investment. Once these companies have products, they can license, sell, partner, etc. and the Chinese investment will be worth more (win-win).

•  NOTE: There is also competition from Hong Kong and Singapore to be the trusted leaders and Asian IP knowledge centered hubs. And, other sovereign wealth funds (Europe, MENA/GCC have been in the US investing in US technology companies. This has helped improve connections and relations and establish more trust and respect.

US-­‐PRC  Rela;ons  Today      Government  to  Government:  mul(lateral,  bilateral,  and  unilateral  ac(vi(es.      

Unilateral  =  reports  and  pronouncements.      Bilateral  management    S&ED  &  JCCT  Mul;lateral  organiza;ons:  WTO,  WIPO,  UN,  etc.  Pending:    Trans  Pacific  Partnership  will  this  be  like  other  ASEAN/APEC  or  like  the  Trans-­‐Atlan;c  Business  Dialogue  with  public  and  private  and  all  sectors  of  industry  or  is  this  duplica;ve?  

 

Business  To  Business:    US  Chamber  of  Commerce,  American  Chamber  of  Commerce,  mul;ple  patent,  trademark,  copyright  related  interna;onal  organiza;ons,    industry  trade  associa;ons,  legal  groups,  and  foreign  policy  organiza;ons.        

Educa;on  Ins;tu;ons  to  Educa;on  Ins;tu;ons        

City  to  City    

Cultural  Exchanges    

Individual  to  Individual    

Don’t  forget  to  align  business  and  IP  by  using  context:  History,  Science,  Technology,  Energy,  Environment,  Economy,  People,  Legal  Values/Culture      

KEY TAKEAWAY Intercultural communication skills can help you succeed in doing business in China and US. Remember that we live in a global economy knowledge based economy: you have choices about where and how to do business.

“In matters of taste, bend like the willow. In matters of value, stand like the oak.” Chinese Proverb