11 December 2019

How to work effectively with China

Published on 11 December 2019
Patrick English, Director of Taimona Consulting, deals with China for a living. He helps companies, organisations and government agencies better understand China, and develop strategies to achieve specific goals. Much of this involves mediating between cultural expectations and vastly different approaches to doing business. Insights spoke to Patrick ahead of his College of Law Working with China session.

Having served in Shanghai and Beijing as Trade Commissioner in Beijing, and Consul General in Guangzhou and a range of other senior diplomatic and trade roles, Patrick is intimately familiar with how the Chinese do business.

“For many organisations, dealing with China is largely ‘transactional’ - typical ‘cut to the chase’ and let’s ‘do the deal’ mentality,” said Patrick. Frustration can result in organisations pulling the plug before they make any real progress. 

Crossing the river while feeling the stones
Much of Patrick’s work involves start-ups, not-for-profits and government agencies. Unfamiliar modes of negotiation often confuddle new entrants to the Chinese market.

“You must understand who you’re dealing with,” explained Patrick. “In some cases, the relationship - or ‘guangxi’ - is presented as the basis of the engagement, sometimes in place of verification of information. Due diligence is critical.” 

Ascertaining the purpose of a deal can be equally challenging.

“The Chinese are extremely good negotiators, so they tend to keep their cards very close to their chest,” said Patrick. “This means constantly working with them, and having the patience to go over the same information until its purpose is revealed. Sometimes the goal isn’t discovered until after the deal is done!”

All in all, this makes for a wholly different negotiation experience. Fortunately, Patrick has developed a few principles to help guide and clarify the process.  

“Nothing is agreed until everything is agreed,” advised Patrick. “Throughout the process, everything is up for reconsideration or renegotiation. It’s more of a holistic approach. When the contract is signed, negotiations begin in earnest.” 

Indeed, Patrick advised it’s best to consider contracts ‘living documents’ rather than fixed agreements. Additions and alterations are always possible, and may be requested by either party.

‘Saving face’ is a long-established tenet of Chinese culture. 

“If you need to ask a question or make a decision, this could be problematic,” said Patrick. “Find a way to do this outside ‘official channels’ so as not to cause offence or break the relationship.”

As a whole, Patrick described the process as ‘crossing the river while feeling the stones’.

“You might have an idea of where you need to be, but getting there is the more creative part,” said Patrick. “Put in place a plan. Make sure that it’s both flexible and adaptable to the changes that you may encounter along the way.”

 Understanding China is about understanding people
The Maori people of New Zealand have a saying, He aha te mea nui o te ao. He tangata, he tangata he tangata

“It means, ‘what is the most important thing in the world?’ The answer? ‘It is people. It is people. It is people’,” said Patrick.  

“The Chinese are a people before they are a market, an economy or a competitor,” said Patrick. “Understanding this, Chinese history and culture are critical if you want to work more closely with China.”

Patrick’s work as a diplomat, dealing with Chinese trade and contracts, has given him an opportunity to witness and participate in the Chinese judicial process. This saw him involved in the New Zealand China Free Trade agreement.

“Once signed, my team was responsible for ensuring information about the agreement and how it would benefit New Zealand companies was available immediately,” said Patrick. He also chairs a New Zealand government agency which works closely with Chinese scientific organisations to improve dairy cooperation between New Zealand and China.

Unlocking the world’s largest trading economy
According to Patrick, it’s not a question of, ‘what are the advantages of working with China,’, but ‘what are the disadvantages of doing nothing and failing to work with China?’

“China is never going to be easy,” admitted Patrick. “However, China is the largest consumer market in the world and is expanding like few other countries throughout history. Either you have a plan to engage with China, or wait for China to implement their plan for how they want to work with you.”

For both New Zealand and Australia, China ranks among our largest markets for education, tourism and merchandise products.

“Both our countries know this, but so do the more than 140 countries who also count China as their largest merchandise trading partner,” said Patrick.