By William R. Dodson
Face or "mianzi" is the single greatest reason
for the Chinese government’s reluctance to share its SARS infection rates
and patient access with the rest of the world. Face is the identity with
which one associates oneself and which one projects to the world; the
identity by which a person wants to be recognized by others. In Chinese
culture, without Face, a person has no relationship with those he wants
to impress most.
The international business community should learn from this episode in
China’s history that the root cause of the fear and uncertainty in China
surrounding SARS has its roots in the Chinese predilection for maintaining
Face at all costs; even if the final tally is death itself.
Economists have projected the Chinese economy will decline in Foreign
Direct Investment (FDI) and GDP this year as a direct result of the spread
of SARS throughout the country. China watchers expect the GDP to lose
as much as a percentage point on its typical seven to eight percent per
year growth rate. Foreign companies have cancelled business trips and
withdrawn their foreign expats and their families from the region. Concerns
about contamination have also brought about the indefinite postponement
of conferences and exhibits. Everywhere in the world at this writing,
countries have declared a containment of the radius of infection and a
reduction in the number of cases of SARS. Everywhere, that is, except
in China.
The single greatest reason for the divestment of appetite in Chinese business
affairs vis-a-vis SARS is the uncertainty surrounding the contagion. Has
the spread been contained? Is the rate of infection decreasing? Has patient-zero
in each of the Chinese cities been caught and quarantined, the individuals
with whom he or she came in contact identified and hospitalized? The lack
of answers to the questions and the changing answers that the government
does deliver do not adequately meet the responsibility the PRC has to
the world for transparency of information.
Of course, as in any government, those in the highest positions require
Face to move along their agendas and to ensure their legacies for the
future are secure and reflected upon in a positive light. It was inevitable
then that with the outbreak of SARS occurring in Guangdong province at
precisely the same time as the 54th National Congress of the Peoples Republic
of China, the news of a highly contagious infection would not have been
released. November 2002 was one of the most important transitions in government
since Deng Xiaoping anointed Zhang Zemin the leader of China. In November,
it was the announcement of Hu Jintao and the new Standing Committee of
the PRC that overshadowed the perceived risks of the contagion spreading.
November 2002 also marked Zhang Zemin’s attempt at accession to the same
pedestal upon which stand the statues of Mao Zedong and Deng Xiaoping.
Certainly there was an economic impetus as well to covering up the existence
of a fast-spreading disease that originated in one’s own country. Spring
Festival—or Chinese New Year—is the biggest holiday of the year.
The two-week long holiday sees the largest migration of human beings on
the planet. Chinese travel to their hometowns and villages to be with
their families, no matter where they might be working. The PRC banks on
the revenue consumers generate during this furious time of travel, gift-giving
and meal-taking. To have declared a public health emergency just before
the Festival might have caused the GDP to dip even sooner and more deeply.
Chinese travelers would simply have stayed home.
By March 2003, the virus had struck its first victims in Beijing. Still,
the world had not heard the news of an airborne disease that is as highly
contagious as the ebola virus. The People’s Congress once again needed
to project the image that all in China was well, politically, socially
and economically. Hu Jintao and his coterie were officially taking their
positions as the new stewards of the world’s most populous country. It
was a time during which the outgoing leaders defined their legacies lest
the world forget; and the incoming officials announced their agendas.
Everything had to be perfect.
But things were far from perfect, and less than two weeks later SARS had
broken out of China to severely affect Hong Kong. The disease then spread
to Canada, Europe and Southeast Asia. Now, SARS could keep Singapore and
Hong Kong’s economies in recession and drive companies in the travel and
tourism industries into bankruptcy.
When the SARS threat diminishes and the uncertainty enshrouding the virus
subsides, one lesson foreign enterprises should take away as they pursue
their Chinese joint venture targets and business negotiations is that
Chinese businessmen will sometimes use Face to hide the true facts of
their businesses and to misrepresent the true conditions of their activities.
Cutting through the artifice of Face too late in the development process
could be as deadly to your company’s efforts as SARS has been for the
Chinese economy.
When structuring those deals in China, then, take nothing at Face value.
William R. Dodson is Managing Director of Silk Road Communications,
L.L.C., a market research and business development consultancy that advises
companies on how to enter and succeed in international markets (www.silkrc.com).
He also is the contributing editor on international business for AMA’s
MWorld Journal of Management. He can be reached at wdodson@silkrc.com
or (847)722-7817.
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