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Doing business in China: debunking 3 common myths

Posted on from Economist Executive Education Navigator

How can you do business successfully in China, the world's second largest economy?

China is an undisputed force in the business world today. By now, most major enterprises understand the importance of figuring out how to do business in the world’s second-largest economy. Yet unwise assumptions have proven to be a veritable roadblock to success. We asked Jack Wood, professor of management practice and organisational behaviour at China Europe International Business School (CEIBS), to share his thoughts on the common myths of doing business in China.

Professor Wood brings a unique perspective to this topic. A Swiss-American dual citizen who completed his education in the US, he has been living and working in Shanghai for three years. And not only does he have a PhD in organisational behaviour, he has also recently earned his Psychotherapy Diploma from the C.G. Jung Institute in Zurich, giving him insight into both the substance and the psychology of doing business across borders.

Myth 1: All you need is a brilliant strategy to succeed in China

Reality: Strategy isn’t the issue – leadership is.

The business landscape in China, as elsewhere in the world, is littered with brilliant strategies gone awry. No matter what country they’re operating in or with, companies fail not because they lack great strategies, nor because they come up against seemingly inscrutable ways of doing business. Companies fail because of failures in leadership. They fail because of an insufficient awareness of the deeper currents of human behaviour – of the universal psychological similarities and differences that influence human life.

Myth 2: The Chinese way of doing business is significantly different from the Western way

Reality: Business is business and people are people.

The fundamental text of doing business in the West and in China is similar. But you have to know the subtext. The differences in subtext between Western and Chinese business approaches – like differences among European and Asian approaches – are primarily political and legal in origin. When trying to understand how China deals with problems like food, environment, health, product quality, and market opacity, it’s important to realise it’s not because of something specifically “Chinese”. The problems and associated business culture are largely the manifestation of a “young” and relatively compartmentalized economy and political framework.

Myth 3: Leadership in China is different

Reality: Fundamentally, leadership is the same as it always has been and will be, in China and anywhere else.

There are no significant national or cultural differences when it comes to the exercise of leadership. Reading a book or attending a lecture will not make you a better leader – in China or anywhere else. Leadership is a social process. It can only be learned through practice in group settings – to learn about oneself, others, and how groups and organizational systems really work. Any strategy or technology approach that does not address the deeper psychological currents in the exercise of leadership will ultimately fail.

So what’s effective in developing strategies for doing business in China? Providing the right environment for practicing leadership skills, a thorough understanding of the depth of psychology underneath it all, and the capacity to appreciate the subtext and nuances that are such an important part of doing business in any culture.

This article originally appeared on The Economist Executive Education Navigator blog

Economist Executive Education Navigator

Economist Executive Education Navigator

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