On a cold December evening recently, the Longacre Theatre in New York was packed with an audience watching “Chinglish”, the latest hit play by Chinese American Playwright, David Henry Hwang. Laughter filled the theatre, the audience laughed about mis-communication and mis-adventures of an American doing business in China. However, I couldn’t stop thinking about the similar culture clash experiences in the US.
Although I was educated both in Asia and North America, and I speak both Chinese and English fluently, I am often approached by businessmen in the west, talking to me like a CD gone bad, taking almost 3 minutes to pronounce each word like “h—o—w a—r—e y—o—u”, as if talking really slowly will get the message across. Or their is the over the top bowing or some form of movement that resembles a comical break dance routine from those who studied all the how-to books. How many times do we hear that it is all about guanxi (关系), well, in order to succeed in the US, you will need a lot more than guanxi and the same goes for China too.
The world will truly be a better place if we actually understand one another and appreciate each other’s culture, values, systems and yes history. But the world is not perfect and this is not the case. With the super rapid rise of China, compound with the global economic crisis and now a critical election cycle in the US, I feel the reverse Chinglish situation is far more evident in the US today.
We see China has transformed itself from a third world country to now an economic miracle, the tectonic shift of power and wealth has transformed the nation and redefined markets and political landscapes globally. There are a lot of issues, but the US needs to embrace this change and not be xenophobic, this economic miracle has lifted 800 million out of poverty, created a new mega consumer base with insatiable appetite for all things American.
Manufacturing jobs have indeed moved overseas from the US. The US policies and companies are as much to blame as the cheap labor pool in China. This is an evolution; the trend is once again changing.
China and especially it’s entrepreneurs need to realize that manufacturing jobs and the production line is moving to the US and other low cost regions. The political rhetoric that has launched most of the anti-competitive measures only account for part of this shift. Manufacturing cost and other factors such as shipping cost, better utilization of technologies and consumer’s sentiment will drive manufacturers to once again consider manufacturing in the US.
During a meeting I had with Former Vice Minister of Commerce of China, Ma Xiuhong (马秀红), she stated that there are thousands of Chinese companies eager to invest and set up plants in the US, however they are restrained by lack of understanding, legal, global talents and at a loss at how to begin. In fact, the issue is far more complex, at the same time the opportunity far greater.
Chinese entrepreneurs are pioneers, it is hard to find a small town anywhere in the world without a Chinese restaurant or a small Chinese business. The same kind of pioneering spirit has helped Chinese companies take the African continent by storm. The operating environment and the stage of development is similar to that of China, which makes it easy for Chinese Companies to gain a foothold and succeed. This also explains why Chinese Direct Investment in Africa and South America is many times that of Chinese Direct Investment in the US. However, success can no longer be guaranteed even in developing countries unless Chinese companies adapt and revise their practices, local resentment will continue to escalate.
For the US market, Chinese companies cannot assume the same while investing and setting up plants in the US. The market is mature, the law is complex and the political system is very different than that of China. Nevertheless, this is an evolution also; manufacturers from other countries have learned, adapted and now thrive in the U.S.
It will take several articles to explain the appropriate steps and best practice to succeed in the US. In general, clear communication is paramount, and a realistic plan with proper expectations is key. Leadership of Chinese companies must have the commitment to build the appropriate capabilities such as global talents, change the way they managed and adopt best business practices in the west.
In addition, I would advise on identifying and working with the right advisor in legal, government affairs, site selection and finance will round out the essential.
Ultimately, after all the research, data modeling and negotiations are done, the intangibles such as the people in the local community, the work force, the willingness to accept foreign culture, the accessibility, eagerness and effectiveness of State and Local Government will drive the ultimate decision.
The US is a lot more than just the coastal cities, and the Southeast US now offer the most opportunities and value. Most States are a “Right to Work” State, which means the Labor Union is not an issue, and a State such as Alabama offers innovative incentives to help manufacturers with their anti-dumping tariff exposures among other tax advantage incentives.
I am particularly fond of working with rural communities in the South, aside from the cost being lower, the warmth of the people, the eagerness to work and the values they share is the America we read about in the past and aspire to be like, so unless you are in the financial sector, the South East is where I will start.
While working on the Alabama Trade Tariff Act with my partner, George Harris, I also came to appreciate the complexity and inner workings of US Governments on a Federal, State and Local basis. Here, finding the right State Government willing and able to help companies succeed is another criteria that a company must consider.
All in all, executed right, Chinese companies with bold commitment and determination to change their organization, find the right cultural mix and adopt the best practices will find themselves welcome in the US and be well on their way to building a global brand.
US will welcome the investment, opportunities to create jobs and an essential partner in bringing stability to the world, and gain access to the world largest consumer market.
And just may be maybe someday soon, we will understand and appreciate each other more, we won’t find plays like Chinglish entertaining at all.