December 31st, 2009
12:34 AM GMT
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Sam Goodman is a Canadian who went to China in 1995 to study Mandarin. Along the way, a craving for Western sandwiches made him an accidental entrepreneur, as creating food for foreign students turned into the restaurant “Beijing Sammies.” Goodman eventually opened five locations with a 100-person staff and $1 million in revenue. Goodman got out of the sandwich business and is now a management consultant and chief operating officer of Climate Action, an environmental services company. But his experience as an entrepreneur in China – navigating a nuanced landscape of cultural, political and economic hills to climb – led to his book, "Where East Eats West: The Street Smarts Guide to Business in China."

Goodman shares his short list of top biz mistakes Westerners make in China.

1. Any variation of “doing-things-like-you -did-back-home.”

You’re not back home anymore.

2. Overestimating the mystique of Face and Guanxi (network/relationship)

Understanding the concept of face in China is important, but Goodman says don't over-mystify it. To put it simply, face is appearance over substance. Goodman writes, "It's not just what you say, but how you say it.  Did you say the right things? (What you thought doesn't really matter.)"

3. Misunderstanding how (much) Face and Guanxi affects your business.

"In the West, if you make a mistake it's understood that this happens. If you fall off your horse, you get back on. In China if you do something wrong, your family loses face. That's much more important."

4. Seeing China as one market

"Western Companies need to understand that China is really many markets (just like Europe) with different characteristics."

5. Miscommunication

China is a “high context” communication culture, which is to say the words used is the least important tool. The situation – how, when and who is saying what – speaks more than words.

6. Thinking a contract is binding

"In the West, a contract is black and white. In China, it's relationship based. Don't be surprised if after you sign a contract in China, the Chinese come back and want to re-discuss a clause."

7.  Long term goals with no term implementation

"Large corporations come into China with a 'long term strategy", then bleed money month after month, year after year always thinking that things will turn around in a few years and the bleeding period is necessary to 'lay a foundation'."

8. Confusing language skills with management or business skills

A good Mandarin or English speaker doesn’t necessarily mean they have a head for business.

9. Assuming price and quality are connected

"Westerners tend to think: the higher the price, the higher the quality. In China, asking a high price is an issue of Face."

10. Managing by remote control

In his book, Goodman writes, "Folks here like to make deals eyeball to eyeball with people they know who also know other people they know."

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soundoff (22 Responses)
  1. Holger

    It is true that it is all about connections in China. Often business is done with a middleman who of course will have a small commission for bringing people together.
    While in the west we would think that this is just someone who wants to make money by providing contacts, in China this person can influence the outcome of your business deal.
    You have a problem with your contract? Do not try to find a legal solution! Contact your middleman and he will negotiate your concerns.
    The very small fee for a middleman does not say anything about his influence.

    December 31, 2009 at 2:04 am |
  2. Chad Anderson

    What he said about face was bull's eye. Chinese want to appear to be morally upright but actually don't care about whether they really are.

    January 1, 2010 at 11:04 am |
  3. DGoodman

    I know Sam Goodman. He knows what he's talking about.

    January 3, 2010 at 5:23 am |
  4. conroy

    China is actually a vast & diversed market. Different districts and defferent living standrds bring defferent market demands, that's the key hint doing bussines in China.

    January 3, 2010 at 2:24 pm |
  5. JSG

    As an entrepreneur with North American sensibilities and extensive 'in the trenches' experience in China, Sam's ability to clearly synthesize key elements integral to successful business in China make him a unique resource and ally for those seeking to understand and succeed where so many have Westerners have previously failed.

    January 4, 2010 at 1:58 am |
  6. Dave W

    The personal connection,guanxi, is, of course, very important in China, and what Goodman has said is partially right. But who can deny that guanxi is no exsistence in western countries. I've got some friends working in KPMG, they say, many partners have a certain amount of guanxi with the top management. Few people can climbe onto the ladder without that. In a word, guanxi is everywhere.

    January 4, 2010 at 1:01 pm |
  7. Chris

    Guanxi in USA is called simpler 'networking"

    January 5, 2010 at 10:30 pm |
  8. Susan

    I came from China. I thought that Guanxi is important only in China.
    But I have learned throughout the years that Guanxi is just as important here in US. It is not what you know, it is who you kow.

    January 6, 2010 at 5:28 am |
  9. Edward Eng

    I agree. Guanxi is important in Asia but it is just as important in the States. For example, "Hey officer, my uncle's also a fellow policeman. Is there anything you can do about this minor traffic violation?" Catch my drift? What I would like to know is, how important is data for doing business in Asia? Can you, Sam, or anyone else knowledgeable shed some light on this?

    ===================
    Edward Eng
    getchee Staff Writer
    http://blog.getchee.com
    ===================

    January 7, 2010 at 7:58 am |
  10. Dias

    What my colleagues and I have realized through the years here is that guanxi is not just a fancy synonym for 'networking.' To oversimplify it for the sake of time, guanxi is networking combined with face combined with 'gunnegtions' combined with cronyism combined with nepotism. Guanxi is inscrutable and complicated. So can networking be, but guanxi... hoh boy oh boy, it takes the mooncake!

    January 11, 2010 at 11:48 am |
  11. S&Y

    Ya. That is simply true that Guanxi is the most important in China. If you have a very stronge background or i quote in tthe article"networking", it is so easy to make things happen. And for a businessman, it is easy to achieve theri goals. But theri are so many different relations, people have to be brilliant to choose theri connection to be successful.

    January 11, 2010 at 5:39 pm |
  12. Sunly

    I like the word "networking".haha

    January 13, 2010 at 2:31 am |
  13. Ahmed

    I hate to break it to ya Sam, but the points you have listed are common themes among most of the Middle-eastern, Eastern, and Far Eastern societies. Perhaps the only difference is how these qualities vary along the spectrum. But if you notice closely, some of these points also transcend to the Western societies. For example, If you don't know the guy, you should know the guy who knows the guy. This occurs in business and personal dynamics of both societies.

    January 13, 2010 at 2:22 pm |
  14. BARBADINE

    right if guanxi is the middle man in china, then it's not only all eastern countries but everywhere, when i was sailing in venezuela and columbia, it was best to pay someone to deal with the custom or emigration ; being a woman i was not allowed to be seated in front of the officer wearing a short pant (tell you what : these men have i don't know how many mistress) , and anyway it goes faster, so be it...

    January 14, 2010 at 10:04 pm |
  15. NJ

    i think no matter you are white, black, or asian, and no matter whether you are European, African, or American, you could see those things in these different societies. It is just that in different societies, they have some characteristics more standing out. Like China, people more emphasize on guanxi due to the reason that Chinese have the traditional view on family and friends. It is just exaggerated a lot during these years. It is not a good thing but you can see it more or less in other courtries.

    January 19, 2010 at 12:51 am |
  16. dulylomo

    Face is not just a vanity fair as most of the westerners understand it. In China and most other east Asian countries. Face is gained or lost in front of others, this is utterly important because those East Asian countries are close-knitted societies, you lost your face then you lost your credibility and "brand image". Americans can just shrug it off and forget about it because there is no other watching, in Asian countries everyone is watching! It is a matter of survival in the (business/social) communities than simple embarrassment! In China "sorry" literally translated to "I can't face you", you see Japanese/Korean apologizes by putting their forehead to the ground as a gesture of "can't face you". So don't under-estimate or just shrug the "face" off. Because this face is not that American face you put on back home!

    January 20, 2010 at 6:18 am |
  17. zhang

    well ,i do not agree with you .as a native chinese ,i think what u said is just partly true .

    February 1, 2010 at 3:10 pm |
  18. aaron

    one important mistake non-chinese companies make is actually having porfitable business models. This means if you're plan is too good your business will fail.

    February 13, 2010 at 2:19 am |
  19. henry

    lol thanks for shareing,as a chinese,what I will say is that just be honest and ull make it。besides,stop bashing C

    February 19, 2010 at 12:53 pm |
  20. Sabrina Curtis

    To CNN Contributors,
    On the subject of Chinese policies. I have written Senator Webb and Lindsey Graham and mentioned that we need to impose the following on the subject of China's manipulation's of it's currency. This came up due to some other reasons. I mentioned the following in my letter's to the senator's : How can we let the Chinese or any other country to get away with not following any regulations? There were other comments I left not related to this that I mentioned in my letter to the senator's as well. I did mention policies related to China and how it manipulates it's currency. I also mentioned that the United States needs to bring back it's manufacturing jobs and stop relying on countries that are not following trade rules, and as I mentioned manipulating their currency. ** My cat was one of 4 cat's that was killed by Menu Foods, and was part of a 2007 Washington Post article, that is what got me to write our senators. I wrote my state senator, James Webb, Lindsey Graham(Since he is the ranking member on the Agricultural Committee, and Richard Durbin(Menu Foods Investigation)*** . I also said that until China will comply with trade laws(In this case agricultural laws), that we need to impose legislation that makes trade more restrictive with China. In addition, I mentioned that we need to impose tariffs on countries like China.

    February 25, 2010 at 1:39 pm |
  21. Real Chinese

    Face issue is what chinese used to earn the money,the power of the governor can be used as face in the business,and it is totally,sometiem the people's life and the futrue of the country is less important than the governor's face,party's face,due to this issue china will stuck in the dark age.

    March 14, 2010 at 8:56 am |
  22. Kellerman

    Just as mentioned above ,many businessmen going to trade in China have come to realize the the role of the so-called guanxi played in doing business with Chinese ,especially when you wanna contact the government.As the saying goes,no money ,no talk.U need to invite the guys with power in hand to dinner,remenbering to giving them precious gifts such as jewls or cash.This is a significant step towards your success.You know corruption has deeply rooted in China for thousands of years.

    May 24, 2010 at 1:16 am |

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