Weighing in on the Chinese Mindset Debate

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I believe this most recent debate started on China Law Blog where Dan Harris was reporting on a conference presentation made by an old China hand. The presenter, Janet Carmosky, made the following points (as summarized by Dan):

  1. Americans think the Chinese lie and steal.
  2. China’s morality is not the same as ours.  Ours is based on Judeo-Christian values.  China’s is not.
  3. Key to dealing with China is to get into a network.  Real Guanxi.
  4. Chinese mindset is the following:
    • Tomorrow never comes.  When it does, you can start all over anyway.
    • Never tell anyone what you are doing unless you know what will be done with that information.
    • Take the opportunity, even if that means breaking a contract.
    • Nobody operates independently.   Survival depends on a network.
    • Do not trust anyone and respect only those in your network.
    • Teamwork and transparency are a drain on the system.

Dan went on to say where and how he differed with these conclusions, and over the past couple of days, some others have chimed in (e.g. here, here and here).

First off, I’m not in any position to get into a pissing contest with the "Old China Hand" crowd.  I’ve only been here since mid-’98, and my Chinese language skills do not measure up against some of these folks. All that being said, I have been involved with a LOT of transactions over here, some large, some small, many in between. The vast majority of these involve foreign companies doing business with Chinese persons or enterprises. So that counts for something.

OK, so my first reaction to all of this is probably closest to one of Dan’s readers who essentially was offended by these kinds of cultural generalizations. Me too. It’s not like I’ve never made such generalizations myself, but I like to think that I understand their limitations as business advice.

Before getting to those generalizations, the first point in the list above is interesting, that Americans believe that Chinese lie and steal. Anyone who has heard my standard stump speech on China intellectual property rights enforcement knows how much I detest media characterizations of IP over here that lead everyone to think that, well, that all Chinese folks lie and steal. A lot of politicians feed this belief as well, and certain multinationals who admittedly have it bad over here do everything they can to push the idea that IP law and enforcement has made no progress at all in the past six years, which is far from the truth of course. So do a lot of American’s really believe that Chinese folks lie and steal? Probably yes, but who is responsible for this? To some degree, the press and the politicians, goaded on by specific lobbying organizations (who shall remain nameless). This also feeds on quite old Western racial opinions of Asians as sneaky and dishonest – I will leave this topic with that distasteful reminder of the recent past.

OK, on to the fun stuff. The discussion on religion and morality is a lot of blather, in my opinion. "Judeo-Christian" morality and ethics sounds nice, but even if you can point to a text and a tradition, so what? A lot of very famous religious figures in the U.S. have recently been found to be chasing after controlled substances and young boys – does this tell us anything? Moreover, how many self-identified ethical people actually live up to the rules in their sacred texts? And who decides which rules to follow, and if there are disagreements, how can we generalize at all? Hmmm, problematic, I’d say.

My favorite line in this debate on Judeo-Christian ethics is from The Useless Tree: "Indeed, it wasn’t that long ago that the Christians were fiercely beating up on the Judeos."

Next on the list is ‘guanxi‘ (relationships). Lots of consultants have made a lot of money over the years talking about guanxi and then trading on their own. If you got to China early enough, you got a good place at the table and the government dealt with you as one of the few foreigners over here. If you spoke good Chinese and could drink bai jiu, even better. Me, I’m with Dan Harris on this and don’t place all my eggs in the networking basket. These days you really don’t need to, because as the economy has reformed and the rule of law has improved, those kinds of trust-based business structures have diminished. This is not a Chinese cultural issue to me at all, it’s an economic reform and political economy issue. I believe that as the economy strengthens, the rule of law strengthens, and corruption lessens, guanxi will be less and less important, save for niche industries and big-ticket deals. Let’s face it, relationships will continue to be important is some areas, the same as they are in D.C. or London or Brussels. We shouldn’t kid ourselves into thinking, however, that because a lot of State-owned companies used relationships to get business done in a post-Communist economic system that this was somehow indicative of a specific cultural characteristic.

Same goes for teamwork and transparency. I wouldn’t trust other people or share information if I was living in Beijing in 1969 either, and old habits die hard. A lot of stuff happened in this country that negatively effected the mindset of an average businessperson. One can certainly look at the 1949-1978 period at the very least; I would go back even further to the pre-World War I period in China for evidence of all this. The question is whether this is now somehow part of the Chinese psyche or just the echoes of social realities. I would argue for the latter.

OK, I’ve blathered on enough on this (mostly incoherently), but it is good to get it out of my system. I should note that there has been a great deal of academic research done on trust, rule of law, and how social and economic institutions have dramatic effects on the reliance on guanxi to conduct business. In other words, I am not pulling this stuff out of thin air . . .

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