China’s “Going Out” initiative undergoes a shift

China’s Going Out initiative undergoes a shift.
Changes to China’s foreign investment policies put the onus back on us to improve how we conduct business with the Chinese.

The recent news that Chinese authorities are looking to crack down on outbound foreign investment following two disastrous investments in the Australian resources sector could potentially harm other relationships we have with the Chinese.

According to Kerry Stevenson, MD of Symposium, since the start of China’s ”going out” initiative in 2003, Australia has been a favourite foreign investment option – much of it due to our booming resource industry. Ms Stevenson believes people fear of the crackdown could have a negative effect on Australia and China as a whole.

There is no evidence to suggest the new rules are anything more than the Chinese government becoming more proactive in managing risks associated with outbound investments, said Ms Stevenson.They certainly do not signal the end of Chinese investment in the resource sector. Being fearful of this could affect the great relationship we currently share with China.

Ms Stevenson believes how we manage our relationships with Chinese investors is the key to maintaining good long-term investment relationships.

This sentiment is echoed by Leonie McKeon, Managing Director at the Chinese Language and Cultural Advice.

Ahead of appearing at Symposium Resources and Energy Symposium in Broken Hill next month, Ms McKeon has identified her top ten tips for negotiating with Chinese in business. Ms McKeon believes that spending time building strong relationships with the Chinese is what will lead to lifelong business ties.

McKeon top ten tips for negotiating with Chinese:
1. Understand the Chinese negotiating culture

The physical surroundings that Chinese people are born into play a big part in how they feel about negotiation. It is common in China to see open air markets and people bargaining to get the best deal possible. Most Chinese people feel quite comfortable about the process of negotiation as this is a normal part of their everyday life. A well-known saying in China is Everything is negotiable.

2. Spend time developing and maintaining guanxi

The closest English meanings for guanxi are relationships, connections and ones social ties. Relationship in Chinese culture means a business relationship, and carries the same importance as a strong friendship, marriage or partnership. Solid guanxi can be with you for the rest of your life, and like any relationship, it takes some effort to maintain. Developing and maintaining guanxi is a vital part of the negotiation process. The Chinese often say no relationship no business

3. Understand Chinese hierarchy

Chinese culture is a hierarchical culture; therefore you need to understand the hierarchy of the Chinese people with whom you are negotiating. This hierarchy will determine how you address people, where you sit in the meeting room and how you introduce your group.

4. Understand face

Face is different to the notion of self-esteem. Self-esteem is about how I feel about myself, but face is more about how others feel about men. In Chinese society it is important to be respected by the group in which you belong, as the focus is on the individual’s position within his/her own social group. Face is always gained, lost, or given in front of others. A Chinese person reputation rests on how much face he/she gains. It defines a personal place in their social network. Sources of face can be wealth, intelligence, skills, position and solid social connections.

5. Think carefully about what you say and how you say it

Chinese negotiators are often highly sensitive to perceived slights and insults. Two Australian business people can argue the point and say exactly what they feel, and after a confronting meeting can still end up being good friends. This kind of confrontation will not be well received by Chinese business people. If you feel that you have no choice but to issue an ultimatum or lay down the law, make sure it’s worth it. Doing this without thought may seriously damage your relationship and therefore be detrimental to the business deal.
6. Avoid asking direct questions

Asking very direct questions can cause loss of face. A strategy to avoid asking questions in such a direct manner is to change the structure of your questions. Instead of asking yes/no questions it is better to ask more open-ended questions.

7. A no can look like a yes

In communication, Chinese people often use a circular style to express rejection or refusal. Looking at this example, Under the current circumstance, we would like to discuss this matter when the opportunity arises, this sentence uses very positive words to send a no message. This kind of answer can leave you with an optimistic view that things are moving forward, however it is a gentle rejection.

8. Keep harmony and avoid conflict

To a Chinese person, a harmonious society will bring development, peace and prosperity, whereas conflicts are not treated as problems of communication but rather as detractors from harmony. As a result, aiming to establish a conflict free interpersonal and social relationship is the ultimate goal for Chinese business interactions.

9. Translate you materials

Before a negotiation you need to have all of relevant materials translated. This paves the way for smooth communication. Make sure you use a reputable company to do the translation job, as an unclear translation has the potential to destroy a business deal.

10. Engage a professional interpreter

Always have your own interpreter rather than relying on the interpreter from the Chinese side. You need to engage a professional interpreter, as just because someone is Chinese doesn’t necessarily mean they can interpret. The more you prepare the interpreter for the interpretation assignment the smoother things will be. Good preparation means providing the interpreter with your presentations and meeting agendas so that they can research any unfamiliar terms and ask you questions prior to meetings.

 

For more information – or to register for the Resources & Energy Symposium – visit our website or please contact:

Symposium
Level 9
66 King Street
Sydney, NSW, 2000
+ (61) 2 92994350
info@symposium.net.au
www.symposium.net.au

 

©2018 - Precious Metals Investment Symposium

Precious Metals Investment Symposium