You now have a Chinese shareholder or manager? Expect some changes.

On March 23, I had the opportunity to attend a round table organized by the HEC Paris alumni association on the following topic: “How to prepare for having a Chinese manager or shareholder?” ¹ It is not insignificant that a school such as HEC invites its alumni to reflect on this issue. There’s no doubt that the rising number of Western companies taken over by Chinese firms and the establishment of more and more Chinese players in Europe and the United States will keep bringing it to the forefront.

Multiple topics were discussed during the round table regarding Chinese management style. For instance:

• relation to time, combining a long-term or even very long-term vision with a very quick go-to-market and an iterative learn-as-you-go approach;
• the practical approach of Chinese managers, who prioritize efficiency over theoretical principles;
• meetings, which are used to endorse decisions, not to make decisions; all decisions are made in advance, to eliminate the risk of someone losing face in discussions during the meeting.

All of these topics will be the subject of future detailed articles on this blog. But I would like to focus here on a subject that the speakers have dwelt on at length: the importance of socialization.

Personal relationship over business relationship

The speakers at the roundtable agreed on one very important point. In order to do business with the Chinese, it is essential to first establish personal, even friendly, relationships with them. From my personal experience and other experiences that I have heard, this can take various forms:

• long informal discussions on cultural subjects or anecdotes about each other’s countries, as a preamble to exchanges on business subjects which are sometimes addressed much more succinctly;
• endless dinners during which toasts and speeches follow a very strict ritual;
• shared leisure activities, such as the iconic karaoke session, but also excursions or golf games, which the Chinese are increasingly fond of;
• etc.

That is why you should not start a business relationship with your Chinese counterparts with contractual aspects. You should always start by establishing a personal relationship. Creating a relationship of trust is more important than the technicality of the contract clauses.

In conclusion, the speakers at the round table invited their audience to become aware of the cognitive biases that we all have, so that we can get rid of them. A real reversal of our perspectives is needed, as illustrated by this Chinese world map, which is very different from those we are used to:

¹ The panel consisted of:

• Catherine Bradley CBE, independent corporate director
• Pierre-Frédéric Roulot, Louvre Hôtels Group CEO
• Fabien Siguier, Adisseo Group HR & Transformation executive VP