Getting to "Yes" with Chinese Companies
May 22, 2019
By William R. Dodson
The president of a major American rubber manufacturer had traveled several times to China over two years. He had not had any luck in establishing relationships solid enough with Chinese executives to even broach the subject of a joint venture between his company and any Chinese company.
He returned from a recent China trip frustrated that once again he and his vice presidents had made no breakthrough in their relations with Chinese companies. But because he had to show some results from the numerous efforts he had made in traveling to China, he crafted a direct, no-nonsense e-mail to the president of a Chinese company, the operations of which impressed the American executive. He wanted to enter into a joint venture with the company, and he wanted majority interest in that venture. He passed the e-mail to Silk Road Communications for review and translation into Chinese.
The target company was privately owned, and had been for over 15 years. The owner of the South China company was a proud man, with little education, having come from the countryside after years of forced labor as a peasant. He had grown the company to the point where it was the second largest in its field in the automotive industry in China.
Silk Road Communications deemed the American president’s lengthy e-mail to be too long, too direct, and too close-ended. Silk Road Communications consultants were concerned the e-mail might have the opposite effect on the Chinese president than what the American president intended. The American president wanted an immediate “yes” or “no” answer from the Chinese. He wanted to know if the Chinese wanted to “fish or cut bait,” as the American president was fond of saying.
Silk Road advised the American president that the e-mail letter was too aggressive and too direct in its proposition. We suggested that Chinese people can indeed be quite direct, but only after they feel they have established a substantial relationship of trust with their counterparts, Chinese or foreign. Further, the American president had not taken into account the degree of pride the Chinese president had for his company: the Chinese entrepreneur had built his enterprise from the ground up after the chaos of the Cultural Revolution, despite his lack of education and experience. It would be tough in any culture to broach the subject of a majority interest in any tightly held company.
Silk Road staff reworked the e-mail in Chinese. The new e-mail turned the old e-mail on its head by building relationship and credibility for the American company. In Chinese language the vocabulary, sentence structure, cadence, historical, and literary allusions are all important in establishing the sincerity and quality of the relationship. It was important that the Chinese president understand the level of education and of professionalism of the American president’s Chinese “staff.” In this way, the American president would gain “face” and, therefore, credibility, in the eyes of the Chinese president. The Chinese president would then feel that the American president was someone who could understand Chinese people and the “Chinese way,” and so was someone who could do business with the Chinese president.
We also cut out the interrogative tone of the e-mail. If the Chinese president simply answered “no” to the question of whether he wanted a joint venture in which the foreign partner was the majority shareholder, there would be very little room for exploring other constructive options for cooperation. Instead, Silk Road Communications asked whether the Chinese president would indicate whether he was at all interested in discussing a joint venture with a foreign company. Once face-to-face talks were opened, the two parties could establish a greater degree of trust between them. The issue of ownership proportions could then be broached with a greater degree of comfort, and the two sides would have greater confidence that they could explore creative alternatives to the original proposal.
Once the Silk Road staff explained the rationale behind the revised e-mail to the American president, he approved the new approach. The e-mail was sent out to the Chinese president, who greeted it with enthusiasm. Within a week the two companies opened up direct discussions about a joint venture. And, the Chinese side soon after revealed it was amenable to taking a minority stake in the new enterprise.
It was the first time the American president had succeeded in persuading a Chinese company to agree to such an arrangement.
About the Author(s)
William R. Dodson is Managing Director of Silk Road Communications (SRC), a China investment research and development company with offices in Chicago, Beijing and in the Suzhou Industrial Park, near Shanghai. He lives in Suzhou. Contact him at [email protected]