By William R. Dodson
Severe Acute Respiratory Syndrome (SARS) is no common
cold. SARS is an especially infectious disease with higher than average
kill-rates. Billions of dollars worth of plans for Foreign Direct Investment
(FDI) were put on hold in Spring 2003 as executives of Fortune 500, multi-billion
dollar companies and medium and small enterprises curtailed their dealings
with China for fear of boosting SARS through a global contagion.
Companies placed bans on travel to China; foreign staff that had planned
to attend international conferences in China cancelled their reservations;
negotiations that were to happen face-to-face were put on hold indefinitely.
Effectively, anyone traveling between China and other countries from any
one of the hotspots on the mainland were sequestered for at least ten
days until authorities were sure the passenger was not contaminated.
Now, with the World Health Organization (WHO) and the United States Center
for Disease Control (CDC) lifting the travel warnings to China, companies
are looking forward to when their representatives can once again engage
Chinese businessmen in China in personal dialog. Still, it is helpful
to consider making permanent some of the strategies companies adopted
as workarounds to the SARS-related travel bans.
Here is a prime example of rapid and sustained response to a major disruption
in China-related activities: A division president of a multi-billion dollar
auto-parts manufacturer based in America quickly shifted gears to maintain
the momentum of his efforts in China. For instance, market research he
was going to conclude on the ground in China he continued through the
Internet and through long distance phone calls. Instead of meeting the
president of a Chinese company face-to-face near Shanghai, the president
quickly set up a videoconference session. He used e-mail more often to
correspond with his negotiation counterparts in China, and bolstered back-channel
communications to overcome impasses.
The Internet
The Internet is an effective but limited research tool if criteria are
limited to the English language. Foreign companies can extend their reach
into China through searches in Chinese language for Chinese content. For
instance, a search for distributors of a plumbing fixture in China revealed
very little information in English. In Chinese, however, Chinese analysts
were able to find an explicit list of 20 distributors for a competitor
of the foreign company. The list provided contact information and information
about the state of distributor networks in the country.
Teleconferencing
Phone calls by Chinese analysts based in America reveal a great deal of
information, too. Business communication in China is not as rationalized
as it is in Western countries. For instance, publicly traded companies
in the West have annual reports; industry associations are the keepers
of statistics about their industries, sales, growth projections and market
share. In China, though, the only way to discover much of that information
for private companies and State-Owned Enterprises (SOEs) is by talking
with others—company presidents, sales managers and secretaries. The
challenge is speaking their language, literally and figuratively. To develop
a rapport with Chinese nationals in China it’s important to speak Chinese.
Further, foreigners need to know the key cultural words and phrases that
will unlock the pent-up conversations about an industry. So, even though
a company may be sequestered in America or France or Britain, isolated
from direct contact with Chinese counterparts because of an inability
to travel, it’s still possible to forge ahead with market research that
will illuminate business prospects in China.
Chinese Staff
Instrumental in keeping the American company president’s efforts to enter
China from flagging was the use of Chinese professionals to translate
videoconference proceedings and e-mails. Key to communications was the
experience his translators had developed with industry nomenclature and
processes common to operations in America and China. Chinese managers
would sometimes send e-mails solely in Chinese and sometimes in both English
and Chinese. Or the division president would write an e-mail in a curt,
direct form of communication that would sometimes just not make sense
to the Chinese. A translator would quickly re-organize and re-frame correspondences
for Chinese audiences. Also important was the ability of the translators
to turn around translations within hours. Often, the American president
wanted China to receive his responses at the start of the next Chinese
business day so he was sure the obligation for follow-up fell squarely
on the shoulders of the Chinese.
Establish Alternate Channels of Communication
The president also found it necessary to resort to back-channels more
often during this period than he would if he could travel. Back-channels
are communications between Chinese on both sides of a negotiation that
moderate disagreements between foreign and Chinese companies. Chinese
representatives are sometimes not comfortable directly confronting their
foreign counterparts about issues with which they may disagree or may
not understand. Chinese business will use a roundabout method for getting
their message across to their foreign partners.
In one instance, one of the Chinese parties with which the president had
begun negotiations during the SARS quarantine had suddenly become mute
after a meeting of intent had revealed both parties interested in going
ahead with negotiations. Through back-channels, the American company discovered
that the Chinese had become overwhelmed by the number of questions the
Americans had sent to learn more about the Chinese company, and by a non-disclosure
agreement the Americans had sent the Chinese. The Chinese representative
for the American company used back-channels to explain to Chinese managers
in China that the American president required the information so he could
talk with his company’s board; without such measures it would not be possible
for the Americans to continue conversations.
International Travel with a Twist
The American president also agreed to travel to a country mid-way between
China and America to continue negotiations in person. The American knew
it is of paramount importance sometimes to meet in person the individual
with whom one is negotiating. Settling on a country that had no SARS problem
would give them both a retreat from their home offices that would encourage
relaxation of approach and greater creativity than videoconferencing.
Unfortunately, the American president was not able to make full use of
the sister-office of the market-research group he employed. Most Chinese
cities barred entry to residents of Beijing, where the office was located.
As well, the Chinese government had restricted many train and flight schedules
to essential travel. Under other circumstances, the team could have traveled
to facilities to extend market research activities and perhaps even to
continue negotiations.
The SARS virus has forced Chinese and Western businesses investing in
China to think about international business in a different way. Though
the barriers to traveling to China are lifting, it is certain that there
will be future disruptions in China to developing and maintaining business
there, beyond SARS. A China Development department staffed with Chinese
nationals is insurance that minimizes disruption to investment activities
that can cost a company millions of dollars in real and projected revenue.
Author Bio: William R. Dodson is Managing Director of
Silk Road Communications, L.L.C., a market research and business development
consultancy that positions companies for success in China and Greater
Asia. He is the contributing editor on international business to the American
Management Association’s (AMA) MWorld Journal of Management. His
Website is www.silkrc.com
He can be reached at wdodson@silkrc.com
or +1 (847)630-1271.
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