DiligenceChina

China Business Definitions

Expatrapreneur – Westerner who starts a new business in China. Usually involves a number of business plan rewrites, false starts, mental breakdowns, racist rants, cries for help, fits of despair and alcohol dependency. Potentially your best bet when looking for local professional service providers. Look for foreign run ops that have been on the ground for at least 2 years. Many foreigners burn out early, so make sure that your choice of consultant or service firm is in it for the long haul.

Dot.CN — China’s internet industry. Venture Capital firms are said to be chasing after start-ups in Beijing and Shanghai with buckets full of cash. Company’s are being started with no business plan or earnings model. Investors are valuing companies based on multiples of anticipated revenue because there are no earnings. In no way related to the Dot-Com boom in the US during the 1990s because it can’t happen here. (See GRAVITY — Myth of )

Gravity — A mythical, non-existent force reputed to pull high-flying things back to Earth. Does not apply to China or things Chinese.

Toe Shot — unfortunate historic tendency of some persons and nations to shoot themselves in the foot whenever success seems within grasp. “Sample Usage: Bing was at the top of the candidate list until he handed in a bogus expense account. Shot himself in the foot for 38 rmb in cab fare.” Can also be applied to countries and economies.

China Premium -– Paying inflated prices for a company or opportunity that is almost certain to lose money – usually in or related to China. Usually paid by the same people or companies over and over. Only works when you can get someone to pay YOU the China premium.

DDE - Dangerously Disgruntled Employees. In America, we worry about these guys showing up with a shotgun or an M16. In China we worry about the lawsuit and the weblog. If you’ve never seen a lawsuit-driven media event in China, you’re in for a treat. They are passionate, public, humiliating, and can go on for an inordinate amount of time. Usually good fun, unless its your company getting sued. [You fired the guy for stealing computers and doing a lousy job, but now you have to write a letter apologizing for insulting the nation? Go figure.]

Face – as in “to lose face”. I’m not really sure I know what this means. It seems to be something that showed up in a western movie or book about China and then took on a life of its own. It’s the business etiquette version of “Chow Mein” — it seems to have vaguely Eastern origins, but now bears little resemblance to anything a Chinese person would really recognize. It never, ever helps you. It puts all the responsibility on you to modify or limit your responses, but does not seem to have any impact on how locals treat you or the agreements you have just reached. If someone ever warns you about making someone else “lose face”, it’s going to be a VERY expensive conversation.

Local Local — Mainland Chinese who were born here, went to school here and got all their experience here. A tiny group — about 1.2 billion & change. Often overlooked in the past, but becoming a bigger and bigger part of the MNC management family (or “moving up the food chain”, as we like to say back home). Good news for HR managers all over China — the new crop of graduates is 5 times as skilled and capable as the Class of 1996. Bad news for the Class of 1996, though. Sorry guys.

MWM — Mainlander With Money. News weeklies will tell you that every third Chinese was a penniless alley-urchin who built a manufacturing empire out of dreams and empty plastic bottles — but most of the local yuppies in Shanghai or Shenzhen work directly for big, international companies. The Chinese middle-class is here, they have money to spend, and they only like 1/2 of your stuff. It’s your job to figure out which half. Oh — and they want to spend their own way. They’ll buy the Buick, but they want to buy the Buick in Chinese. Maybe. Sometimes. It’s your job to figure out the details, but the money really is there. And there’s more on the way.

Greater China — Mainland China, HK and Taiwan. I’ve heard it applied to Singapore – but only by Singaporeans and Brits who have lived there. For a while certain types of people were trying to include San Francisco and Vancouver. No. If someone tries to convince you that it includes Korea, Australia or Vietnam, excuse yourself from the table and keep walking.

Chinese (language) – Mandarin. In HK they still use Cantonese, but are making an effort to ramp-up their Mandarin. Shenzhen and Guangdong prefer to speak Cantonese, but all of Mainland China teaches Mandarin in schools. (Unless you are in SE China, Cantonese is of NO value. Speaking Cantonese in Beijing, Shanghai, or anywhere else in China is like speaking Spanish in NY. Very useful in 2% of the restaurants downtown – worthless everywhere else. If anyone tells you anything different, walk away.) Sometimes older books and Brits will refer to “putonghua”, which simple means “common/regular language” and refers to Mandarin. Some people claim it is the local Beijing dialect – but an army of Beijing cab driver tells a different story (in their own weird way). Shanghai has its own dialect, but then again so does just about every city, village and outpost in the Mainland. Basic rule of thumb: If your counterparty can’t operate in Mandarin, you’ve got a potential problem on your hands.

Kitto-ed — Verb. Derived from Mark Kitto — well known Shanghai publisher, Sinofile, and unfortunate bastard who single-handedly started Shanghai’s most popular and well respected ex-pat lifestyle magazine, only to be unceremoniously screwed over by his partners and government officials. Sample usage, “Ooh, have you met Goodwin’s new local JV partner? Dodgy bugger, that one is. Afraid Ol’ Goody’s headin’ straight for a right Kittoing, he is.”

SCM — Special Chinese Method. What all young, male mainland Chinese seem to believe exists to solve any conceivable business challenge. Note: Unless you are cooking, writing, or bribing local officials, THERE IS NO SPECIAL CHINESE METHOD!! Or rather there is, but it will not result in an outcome that you consider to be successful or effective. If there really were SCMs that worked, you wouldn’t be here, now would you? SCMs are invariably simple, require little pre-planning but much post-disaster management, and usually involve handing over money or valuable equipment to an employee’s classmate’s friend’s neighbor’s colleague’s son. Would you really be surprised to hear that it never, ever works?

Chundits — China Pundits. A growth industry. Often quoted in Business Week and Time magazine. The basic rule of thumb in China is that if you read it in the glossy news weeklies, it is either out of date or was never really true. You will learn infinitely more wandering down HuaHai Lu for 15 minutes than from 10 pounds of magazines. Invest in a trip if you want to know about China.

Ex-pat — A westerner living in China. Usually long term. Many speak Chinese, or have access to reliable bilingual partners. Can make great partners, or can be money-pits. Find out how long they have been in China – and differentiate between Mainland, HK and Taiwan. Then find out about their on-the-ground experience. There’s nothing inherently wrong with an English teacher from Taipei – unless he’s trying to pass himself off as a “Greater China Management Consultant”. The basic rule of thumb: any answer that isn’t 100% clear in the first 20 seconds should be understood as a “no”.

ABC (and CBC)– American Born Chinese (or Canadian Born
Chinese). Don’t automatically assume they speak good Mandarin. Benefits are familiarity with the culture and language (maybe). Drawback is that the locals don’t trust them, and will often test their “Chinese-ness” by convincing them to screw you over.

Returnee or “HaiGui” — Mainland Chinese who have lived overseas. The term has been more and more liberally applied as their market demand has risen. Find out 3 things:

1- Did they study overseas, work overseas, or spend a weekend in Hong Kong once? Solid work experience is worth paying for – anything else is of questionable value.
2- Where did they live? There’s a big difference between working at Citibank in NYC for 2 years and spending a semester in Frozen Oaks, Montana during their junior year at college.
3 – Where are they from originally? This can get a little blurry in modern China. If your guy can tell you he was born and raised in Beijing and worked in Chicago for 5 years, you have a winner. Beware of long stories involving being born in one place, growing up in another but “really being from” somewhere else. I knew one guy who was from the US, Taiwan and Shanghai at different times throughout a single business trip. Trust me – it sounds as stupid to Mainlanders in Chinese as it sounds to you in English. Run away.

Taiwanese – The good news is that they have some great attributes. They really do speak great Mandarin, have the same customs and understand the business culture of China. The bad news is that they tend to flip-flop on the identity issue, and will not hesitate to screw you over to demonstrate to Mainlanders that they are “one of the guys”. Get references, and evaluate on a case-by-case basis.

HK – They have only been Chinese since 1997 – before that they aligned with the running bulldogs (British). Very useful in Shenzhen – particularly in property development. Less valuable in Shanghai and Beijing, though they can be experienced and extremely savvy. Be aware that Mainlanders don’t consider them to be really Chinese (unless they are in the room at the time). Mandarin abilities can vary.

Singaporeans – Ok, write this down: There really aren’t any Singapore-Shanghai-ese, or Shanghai-Singaporeans. They are two different places – and are actually quite far apart. Singaporeans will tell you that they are really Chinese. Mainlanders don’t know what the hell they are talking about. Now, there are plenty of Singaporeans doing great business in China, many do speak reasonable Mandarin, and they may very well make great partners and consultants. But unless there are some extenuating circumstances, Chinese don’t consider Singapore to be part of China.

Foreigner – That would be YOU. Chinese outside of Shanghai tend to associate all westerners with America. Shanghaiese people have long experience with Europeans, and will sometimes assume that you are French or some other Euro type. Don’t be offended (well, try not to be offended), as they are not trying to be insulting. In fact, you may be surprised at how well you are treated in China. (That does NOT apply to overseas Chinese – particularly ABC females who tell me that they are appalled by the treatment they receive. It is apparently one of the tougher things for overseas Asian females to deal with in China. Being a western male, however, is pretty great here – though you have to remember not to be too smug to your female Asian associates. You may think this is a useless detail that you will not need to remember. You are wrong. Trust me.)

Now, here’s the important thing. The average Chinese person has a weird love-hate thing going with America. On the one hand, they think you are super-human in terms of your intelligence, strength, power and ability. On the other hand, they consider you an inferior life-form — something akin to a reasonably clever dog who has been trained to walk upright and wear a tie. There are probably all sorts of long-winded sociological theories for explaining this bizarre phenomenon. Do you really care about any of them? The business ramifications are that your counterparty may spend a lot of time kissing your ass, but will try to screw you over as quickly and severely as possible. (Just like back home! One of the few familiar aspects of business here.) Also, Chinese think all Americans are rich and incapable of learning even the simplest facts about doing business in China.

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