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Australians must ‘face up’ to Chinese business

Cool it, Ocker: Former top GM executive Kevin Wale says Australians need to better understand local customs when dealing in China.

Business relations in China governed by the ‘face’ culture, says ex-GM China chief

2 Dec 2013

AUSTRALIANS need to curb their gregarious nature and show potential clients appropriate respect when doing business in China, according to recently retired president of General Motors China, Kevin Wale.

Speaking at the annual conference of the Federation of Automotive Products Manufacturers (FAPM) recently, Mr Wale said showing respect for your counterpart was a key part of the ‘face’ culture that dominates Chinese business.

He said relationships were governed by the ‘face’ culture where, for instance, even the size of your car’s engine could cost you a contract.

“Face is very important. It’s important that you comply with the requirements,” he said.

“Traditionally black was the sign of government. You had to turn up in a black Audi if you wanted to do business with the government.

“And you weren’t allowed to turn up with a car with a higher engine output than what the government guy had. It’s important you comply with these expectations.”

Mr Wale said this rigidity was breaking down a bit now as trends waxed and waned and people became more familiar with global colours and fashion trends.

“The interesting aspect about the luxury goods is that, as a sign of face, you must have the latest luxury car and you certainly never show up in a used luxury car,” he said.

“I have no idea what happens to all those cars when the next Porsche, or whatever, comes out and someone has to change over from the old model to a newer one, because they just don’t sell them on the marketplace.

“If the market is a million luxury cars a year and they change over every two or three years, there’s a hell of a lot of cars that are being parked somewhere that aren’t being used because they don’t fit the Chinese definition of success.

“If any of you are entrepreneurial and smart enough, go buy the old cars, ship them somewhere and make a lot of money,” he quipped.

Mr Wale said the best way to learn the subtleties of the ‘face’ culture was from Chinese business partners or contacts.

“It’s a little difficult to think that a westerner can understand Chinese taste or Chinese requirements when you can’t watch television or read the newspapers. It is very important to listen to what your Chinese partner is telling you,” he said.

“First, you need to find out a little bit about the people you are dealing with, and there’s plenty of people who know them.

“Then you need to work out how to show them appropriate respect. If you don’t show them respect, they’ll be courteous to you but they will not be listening.”

Mr Wale said a key element of showing respect was to meet the Chinese on their terms.

“If they want to go to dinner, go to dinner. If they want to eat Chinese food, you eat Chinese food. You don’t push it away and ask, ‘Where’s the steak?’“You ask how their business is going, talk socially. They don’t want to get into too much business to begin with. They want to find out about you.

“If you are a drinker, they definitely want you to have a few drinks. There’s a reason for that because they don’t believe you show your inner self until your inhibitions have come down a bit.

“The good news is they are generally not very good drinkers.”

Mr Wale warned that while the typically open approach adopted by Australians made them easy to deal with, businessmen had to be careful this trait did not inadvertently embarrass the senior Chinese person at the table.

“You just have to make sure you don’t embarrass them in front of their subordinates. Make sure you know the hierarchy so that you speak to the right people at the right time.

“Australians have a tremendous habit of being egalitarian and talking to anyone.

“In a Chinese hierarchy, you have to be careful you are not ignoring the most senior guy, who might be sitting quietly at the table while you’re having a great chat to his assistant.

“That goes down very badly. No-one will say anything to you, but he won’t want to talk to you again.”

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