It like what an analysis put it, the top end technological breakthrough consisted of three main elements; American’s Idea, Indian’s software and Chinese’s productivities. In the 1950 to 1970s, China was in fact isolated from the rest of the world. Asia countries, Singapore, Korea, Malaysia, Taiwan and Hong Kong was the world sweatshops, producing the products/services for the world wide market, namely America and so on. Things had moved on since 10 to 15 years ago where China adopting Capitalism in a big way. Multi-National Corporation was all rushing into China to setup operation and manufacturing plants to take advantages of the low production cost.
Although the labor cost along the coaster line of China was increasing, there are still many inland provinces where the MNC can tap on to further reduce the cost of operation and therefore increasing their profit margins.
On the scale that was never experienced before, Chinese Merchant was swamped with increasing orders for their products/services, Hong Kong used to be the hub for China had mature and effective English speaking executives to handle oversea orders, sales enquiries, payment transactions, packaging, delivery options and can be handled smoothly.
However, smart businessman such as yourself faced with fierce competition would like to maximize the profits margin by dealing with Chinese Manufacturers directly. This is a totally different ball game altogether, in this article, I am going to share with you’re the typical Chinese merchant mindset so that you can take full advantages of it and close the best deals you ever had.
First of all, there are few main type of Chinese you need to be aware of, there are mainland Chinese, oversea born Chinese, such as Taiwanese, HongKonger, American born Chinese, Malaysian Chinese, Singaporean Chinese and last but not least Indonesian Chinese.
The Mainlander are enjoying the capitalism in a big way, where many of them set up operation and manufacturer partnering with Oversea investors. The well known Taiwanese Chinese are the best business man around, they basically dominated most of the small and medium operation and manufacturers in China,. They are the first batch of Oversea Chinese set foot in China, the well know brand name like Acer, HongHai, BenQ, UMC, TSMC just to name a few and so on. The 2nd main group are from HongKong who are more specialized on financial, property sectors. The rest are from Singapore, Malaysia and Indonesia.
To understand Chinese, one must look at the modern history of China, after the war in 1930s, there are not many job opportunities, starvation is common, together with many natural calamity, like massive flooding, earthquake, typhoon, famine and so on, many were forced to move out of their hometown and migrated to Asia, like Malaysia, Singapore and Indonesia and so on. Those who stay behind weather through the difficult times and were once again faced with the cultural revolution in the 1960s where personal freedom was taken away, scholars persecuted.
So Chinese are virtually an economical species where the primary goals in life was to achieve prosperities as they regard wealth is the only way to establish stability if life, a form of insurance and protection against all the persecution and hardship they themselves or their parents encountered.
The Chinese merchants primary objective when dealing with business is to make the best profit out of it no matter what, they will go to the last resources to make sure they keep your account and service you with good quality products for long term relationship. I am sure you heard of term like “GuanXi” which are indispensable when dealing with Chinese. I will explain more on this in the next section.
To understand why Chinese behaving the way the behave, one must know Typical Chinese value family first then the country, Basically, all the welfare of individuals are not guaranteed by the institution but rather on themselves, to survive in the highly competitive society, the common practice are to deliver speech and conversation depending on different situation, on official occasion, people are tone toward the greater principles and between colleagues, official lines are quoted, however. at home, it is a totally different range of topics.
Most Chinese didn’t have strong institutional supports and most depended heavily on their own family influences and resource to have a head-start, like higher education, getting married, getting the first property and so on.
In other words, Chinese had suffered a great deal of poverty, political instability, natural calamity, unjust treatments for the past generations, things had dramatically improved with the first and 2nd Oversea Chinese located outside mainland China who achieved strong financial goals from doing business, getting higher education and good paying jobs in the 70s and 80s followed by the China being capitalized where along the coaster area, hundreds of millions of Chinese suddenly gain great amount of wealth from the influx of direct investments from overseas, setting up factories, offices and so on. Being a communist state, local resident in these area were given dividend and profits from the land and rental incomes generated from foreign investment.
This new huge group of Chinese are far more prosperous than their fellow comrades staying further inlands. They becoming the new exodus of eager spending tourists spending million of dollars on all around the world.
So, to deal with the Chinese Merchants for trades, one must understand that the followings personal characteristics;
- They had general chronic stress from the unsteady political environment
- They value relationship more than anything else as opportunity to make money out of it.
- They regard relationship as a form of guarantee or insurance for future exploitation and don’t mind giving in at the beginning.
- They hold high regards on reputation and will go all extend to protect it to avoid losing the trust and faith from their business contacts
- They keep their end of the bargain even verbally to further enhance their reputation for even bigger business opportunities
- They are generally humble, modest and had a mild degree of inferior complexity
- Any damages to the reputation is a serious matter as they regard them as great shame.
So, the key elements of the average Chinese Merchant are relationship, reputation, trust and faith. One can take advantage of these factors to greatly improve one’s profits margins. By now you should know why these factors are more important than a piece of contract, due to the historical backgrounds, they engage business in this manner for a long time rather than as in western countries where emphasis are on the business contracts with legal responsibilities where in China or other as countries enforcement are of limited effects as compared.
Either you are a suppliers or customers, these tactics will work for you. Following are the Do and Don’t Do when dealing with them for business.
Dos:
- Make contacts, understand their business models, nature and all the necessary background, find out who is the actual decision makers
- Show genuine interest on their personal details, like families, hobby, education, experiences, birthday and so on
- Follow up with frequent calls, emails greetings, by now, a relationship had been established.
- Build up the trust with small little trivial things, like prompt reply of emails, prompt feedbacks on quotations or samples.
- Leverage on your others credentials of other business deals, suppliers, track records and so on
- Now you had built the fundamentals relationship with reasonable trust level and good reputations, next is to conduct the actual business dealings
Don'ts:
- Do not engage serious business negotiation right from the start with them
- Do not emphasize too much on the cost reduction/pricing/delivery at the beginning
- Do not put them in alarm or defensive mood by threatening them
- Do not talk too much of yourself but rather on them to break down the psychological barrier
- Do not have too much an emphasize on the contract on the beginning but later stage where trust level had been established.
In conclusion, you are using their own techniques to turn the table around to your advantages, with the relationship built up first as a frame works and the benefits you stressed that they will received if they give a good pricing and supports to you, You will beat them at their own game. They will give favorable supports and pricing to you as compared to those of their other business buyers and suppliers. You will in no time establish a strong reputation in the circles as a foreign buyers or suppliers who knows the game well. Remember, it is not how much you know that people care, it is how much you care that people really appreciate. |
