MBA, PhD, or KTV?

By Pete Brunoehler

The Chinese have an enduring and enviable track record of global business success, ranging from multibillion-dollar enterprises to stereotypical but traditional restaurants and laundromats. To effectively work with this group that greatly influences Malaysian commerce, you’ll first need to understand what makes them tick.

Regular readers may recall that in the November 2014 issue of The Expat, an article entitled ‘Business Etiquette For Expats’ appeared, largely focused on Chinese business practices. I’d like to pick up on that insight, offering my personal experiences with this dynamic group of businesspeople. I’ll begin with a tongue-in-cheek question: Which acronym is most important when doing business with Chinese colleagues, customers, and suppliers: MBA, PhD, or KTV?

Education is unbelievably important in Chinese culture and within Chinese families. I have attended high school and university graduation ceremonies all over the world where Chinese students have tended to dominate the valedictorian ranks. Within the family context, we know that so called Tiger Mothers are demanding, ‘not to be messed with’ educational motivators. As such, with expectations of hard work and success beginning at a very young age, companies all over the world, including Malaysia, have Chinese leadership that is well-educated, hungry, and very motivated to achieve commercial and financial success. PhDs, MBAs, etc. abound. However, for building solid, long-term relationships, whether as colleagues, customers, or suppliers, I’d humbly suggest that an equally important acronym toward achieving success would be KTV! (For those of you that may be unfamiliar, KTV is the acronym designating a Karaoke Lounge – particularly in China.) Chinese businessmen globally spend time in like establishments, imbibing liberally with their aforementioned customers, colleagues, and suppliers; the camaraderie resulting from a few good drinks and a few bad songs can literally determine the fate of a potential business relationship.

In a memorable personal experience, a company that I worked for had a disgruntled customer located in Inner Mongolia, China. To make a long story short, I was in a nearby city when I learned of this customer – previously spending substantial amounts each year with my company, but had ceased purchasing due to a perceived quality issue with one of our products. Since I had regional responsibility, and was not far away conducting training – and as no one from our China operation had resolved the issue – we set up an afternoon appointment with the plant manager. Together with two local colleagues, we set out to his office for the 4pm appointment. We’d determined ahead of time that if the discussions were going well, we’d invite him to dinner. Despite a frosty start, we reviewed the issue in detail in his office and made suggestions that would resolve the issue as it was in fact an application problem, not a product quality problem. Still refusing to restart buying from us, we invited him to dinner and he accepted. Once we arrived, as usual in China, the Tsingtao (beer) and Maotai (alcohol) began to flow with customary toasts, drinking 1:1 together, and a lot of gan bei (bottoms up). The atmosphere warmed considerably – and literally. About halfway through dinner, which had been largely liquid up to that point, he told us that he’d give us one more chance! When queried by my local colleague as to why, he said, “Because your boss came here, and because your boss can drink.” So it was not the technical talk that drove the outcome, it was the socialising and drinking.

KEY TAKEAWAYS:

1) While Western customers and decision makers will often make purchases online, via unsolicited emails, and/or with suppliers that they’ve only just met, most Chinese businesspeople will desire and even demand that you’ve established some personal rapport in order to do business together.

2) That relationship building will normally feature alcohol. While I have had colleagues whom for various reasons abstained from alcohol (always perfectly acceptable), the strong desire from Chinese businessmen will normally be to drink together.

3) In my GM roles, I have had important Chinese customers who I personally knew time the placement of their orders according to my visit and our having a few drinks together. That is the power this activity can wield with these customers.

In conclusion, much of the enduring legacy of Chinese business success comes from a good educational basis, hard work, and a strong business mindset. Quite often, though, all of this only meshes together in the presence of pi jiu (beer) or bai jiu (rice wine).

Gan bei!