Negotiate Your Adversary

Into Your Ally!

Six Secrets For Success Using Global Best Practices At Home

By Phil Richardson, CD, BA, CSM 

Author: Phil Richardson, CD, BA, CSM

Publisher: The Aaron Group

Excerpted from:

A Step Ahead— Globalize To Double Your Income:

60 Secrets For Success, At Home And Abroad

Copyright 2015 © Phil Richardson philr@globalize2X.com

All Rights Reserved

No part of the work covered by the copyrights herein may be reproduced or used in any form, or by any means whether graphic, electronic, or mechanical, including photocopying, recording, videotaping or information storage and retrieval systems, without the prior written permission of the author.

ISBN: 978-1-928155-74-4

Published by: The Aaron Group info@aarongroup.com

Library and Archives Cataloging in Publication

Richardson, Phil, 1947-

A Step Ahead—Globalize To Double Your Income—60 Secrets For Success, AtHome And Abroad Author Phil Richardson

Issued also in electronic format

ISBN: 978-1-928155-75-1 (e-book)

Website: www.globalize2X.com

CONTENTS

Dedication

Foreword by Raymond Aaron

Introduction By Phil Richardson

About The Author

To Begin With

CHAPTER 1

Negotiation: Can Everyone Win?

CHAPTER 2

Your Foreign Competitors Goal: Mutual Success Over The Long Term…But First, Theirs, Of Course

CHAPTER 3

Differing Negotiating Styles By Culture

CHAPTER 4

Align Your Capabilities with your Mutual Goals…And Then, Up Your Game To Attain Them

CHAPTER 5

B2B/B2G Cooperation

CHAPTER 6

The Rules of the Road: Corruption and Other Hazards

CONCLUSION

Now Execute

REFERENCES

Dedication

So many have inspired me to dream without limits and supported me whenI’ve reached for the stars.

In the forefront of them, I was blessed to have the most loving parents who nurtured me in every way possible, taught me their ethics and helped me to believe in myself. While they have both passed, their example and lessons continue to guide me daily in my journey.

They led me to God as a child and He has embraced me with love throughout my life. He has carried me when I was too weak to bear the burdens of life alone, and stood with me through all my trials. And He blessed me with so many precious gifts…the love of my parents, my life partner, my four sons, their partners and my seven grandchildren are absolutely the most important of them.

This book, with such an important message for so many, is dedicated to God and my family. May God bless you and yours as He has me and mine.

Foreword by Raymond Aaron

I’m so pleased that Phil Richardson asked me to provide a foreword for this very important book. He is an imaginative entrepreneur who succeeds in passionately sharing his exceptional international experiences and the lessons he has learned from them. You won’t be able to put the book down during your first reading and I know you’ll pick it up again and again in the future to refer to the potent secrets he wants us all to know.

I share his strong belief that internationalizing by adopting global best practices is the only way for companies and individuals to maximize their profit potential in an increasingly competitive world. No one can rely any longer on protectionist government policies or old ways of doing business to maintain their present situation, let alone to grow their prosperity.

Instead, we have to rise to meet the international competition that our rich markets increasingly attract by improving our strength and productivity. We must all learn and apply global best practices to succeed. While there are no guarantees for our success, there is an absolute certainty of failure if we do not adopt them in our strategies and operations.

And he also makes a strong case to seek out strong international partners and combine your North American knowledge and market access with their capital and vigor to capture an unfair share of your markets, both here and abroad.

Phil is one of those adventurous people who chose to work outside of his “box,” leading the development of world class property projects in the Middle East, India and China. There he learned greatly improved ways of conducting business from which we can now all benefit.

His mission is to share his knowledge with those here who want to double their income at home as well as abroad by applying his advanced knowledge and unique perspective.

He is someone who has already succeeded with this winning strategy and has helped many others to do the same. You must read his book to learn his vital secrets.

Raymond Aaron, New York Times Best Selling Author:

Double Your Income Doing What You Love

Chicken Soup For The Parent’s Soul

Introduction by Phil Richardson

This is the first in a series of e-books I’ve created to help North American businesses and their executives and managers to beat the increasing number of international businesses coming here to share in our rich markets. They are using global best practices to succeed and we must do the same to preserve our share of them.

I will tell you a fascinating story about my journey that is extremely important to your future prosperity and to that of your family and friends. In fact, it’s crucial to everyone in North America.

I lived and worked outside of my home country as an expatriate (expat) for a number of years and recently returned to be closer to my family and to share the lessons I learned. I now offer my knowledge to perceptive North American executives, entrepreneurs and professionals who want to learn global best practices because they too see how urgent our need is here. While away, I worked alongside people from many different cultures whose unique knowledge and skills made all the difference in achieving our mutual goals. In this book, I share with you the key lessons of globalization that I learned while working outside of my box.

We North Americans tend to forget how dynamic and massive the other major world markets are, especially those that are developing rapidly. The competitive spirit and brilliant capabilities of their multitude of entrepreneurs and business professionals are formidable. In their cultures, simply to survive, they must continuously develop effective new strategies and deploy them rapidly in response to their robust competition. They learn and apply global best practices continuously.

It’s urgent that we learn to do the same because our rich domestic opportunities increasingly attract their best and brightest to compete with us at home. We must learn the important differences in cultural thought, strategies, and global best practices they use, just so we can survive. You will learn about them in this book and by improving your competitiveness you will increase your personal, corporate and national prosperity. And you will position yourself to partner with them to your mutual advantage, both at home and abroad. Complacency is simply not an option for us.

If you want to dive deeper and more effectively into your rich veins of opportunity using global best practices, I am available for private consultation. I help companies and individuals formulate and deploy sophisticated action plans based on my deep cultural and professional knowledge of key world markets and their top players. And I can share with you the latest global best practices that can be applied across many industries and cultures. You can reach me at: philr@globalize2x.com

I look forward to contributing to your future success.

Phil Richardson, CD, BA, CSM

Globalization Specialist

About the Author

Enjoying a tea with friends in the Landmark, Hong Kong

Phil Richardson is a successful Canadian businessman with considerable international experience. As well, he is the proud father of his close family of four adult sons and grandfather of seven who inspired him to write his books on globalization.

He is a decisive senior property executive who has led sizeable teams in the successful acquisition, development and operation of iconic commercial projects in Asia, the Middle East and North America. To succeed, he applies the deep multi-cultural professional and personal knowledge that he’s gained in his thirty year career around the world. He is an executive consultant and teaches globalbest practices in all aspects of Asset, Development and Investment Management to an audience ranging from students to mid-managers to senior executives.

Previously, while based in Abu Dhabi, UAE and later in Hong Kong, China, he led a high quality team of International Property Professionals delivering best in class consultancy to the executives of property developers, financial institutions and investors. He has a wide network of contacts across Asia and the Middle East upon which he draws to remain up to date and influential within those regions.

The solutions he offers are the opposite of those past protectionist policies that only succeeded in adding great costs to doing business in North America and have drained our wealth rather than added to it. As you will read in this book, his solution is to adopt global best practices to optimize whatever we do and to partner with the multitude of high quality international people and companies wanting access to our rich markets. He believes passionately that we must blend our strengths with theirs in order to succeed both at home and abroad.

To Begin With

Revelation—Dubai, United Arab Emirates

“Mr. Richardson, Mr. Assad?” the limo driver asked when he recognized us from our photos in the crowded reception area of the Dubai airport.

I didn’t know it then but I was about to receive my best lesson in globalization just after I landed in Dubai for the first time. Lancy, our driver, had been recommended by a friend and we couldn’t have chosen any better. He is an Indian entrepreneur from Goa, India, and has worked in Dubai for 15 years. We quickly became good friends. We soon learned that he was very experienced at touring visiting executives around the UAE. They always asked for him, he said, and we came to know why…he helped to educate them and us in globalization!

“In Dubai, there is no ‘Sorry!’” he said as he enthusiastically delivered his first of many lessons to my friend and me only a few minutes after driving off.

And Lancy was so right. Millions of expats have been hired over the years, just in the UAE, of which Dubai is a part, to work very hard, and smart, to help develop the country.

This was the beginning of my learning experience that took me to Europe, The Middle East, India and China where I became fully globalized. What a journey it has been…and so worthwhile.

Not only did I learn how to maneuver and succeed in these different cultures, but the same global best practices that promoted my success there, are now proving invaluable to my business progress at home. They differentiate me and make me much more valuable as a business professional than I was before I left.

Chapter One

Negotiation: Can Everyone Win?

Our Western Goal: You Can Both Win! Is It A Myth?

“All boats float on a rising tide.”

—John F. Kennedy, 35th President of the United States.

Hope—Shenzhen, Southern Mainland China

“You are my brother!” my new acquaintance enthused after our tenth toast, he with his Baijiu shooters and me with my large glass of Hungjiu—red wine.

We were at a special birthday dinner for a “big” landlord in Shenzhen, China. I had been invited by my friend and partner who was the MC and so I took a place of high respect at the table of the honoree.

I was soon thrust into the spotlight by my partner, who asked me to come forward to extend my congratulations to the Birthday Boy! I took the microphone and said some nice things in English and in Mandarin. All the while, the landlord was beaming as he felt he was receiving an unusual honor, perhaps because my partner translated what I should have said!

When I was done, the landlord took the microphone and in one of my more surreal experiences, said “F--- you very much”repeatedly until he had finished mis-expressing his appreciation ten or twelve times! My partner could hardly contain himself from laughing, but succeeded, and so did I, and quickly I sat down.

Not long afterwards, the landlord came up to me, offered me his hand, and told me repeatedly thatI was his brotherand that we must meet again soon. I was very pumped by all of this as it looked like some big consultancy business for us.

However, over the next few weeks, my partner’s request to meet with the landlord produced appointments that were repeatedly set and then politely postponed. Finally, we concluded that the landlord had no interest in what knowledge I might have to offer.

I don’t believe that this experience reflected a lack of sincerity, at least when the word “brother” was used. It just didn’t have the lasting power that one would have hoped for. Just getting started towards a successful negotiation was painful. Our politically correct North American society loves to promote the idea that a Win/Win solution is the ideal, but many other cultures disagree, or if they agree, they interpret the meaning differently than we do. It’s an age-old question and an important one with a wide range of answers.

Today, we increasingly engage with international businesses because of globalization, whether we are at home or abroad. Everyone knows we have to negotiate in business and in life to succeed. But can all parties ever win at the same time?

The notion of a win-win relationship is certainly not at all foreign to Asian business people and companies. It’s just that developing one with a Western firm, in their view, is a lengthy and difficult process. The patience of each party will be severely tested during it as the respective cultures clash at times. At some point, one or the other may “blow a fuse,” likely the Westerner, and the effort abandoned. Both cultures know that a long association based on trust and mutual performance is optimal. So what frustrates these efforts the most?

Working with my Chinese business partner to produce a Win/Win result! (Image blurred to protect his privacy)

Chapter Two

Your Foreign Competitors Goal:

Mutual Success Over The Long Term… But First, Theirs, Of Course!

“Always be prepared to negotiate, but never

negotiate without being prepared.”

—Richard M. Nixon, 37th President of the United States

Technique—Paris, France

The boardroom was tense as small talk about being in the World Capital of Love swirled around it amongst those who had arrived. The room is a replica of an ornate 18th Century Gentleman’s library, but armed guards now stood outside its doors in one of the city’s most famous hotels. The surroundings couldn’t have been more opulent and suitable. This was a meeting between one of the world’s largest property development companies and one of the world’s largest movie studios.

“Very pleased to see you again” the CEO’s had exchanged greetings when they arrived an hour ago.

But the Studio’s Chairman was beginning to look more exasperated by the minute. He and his executive team had flown in from Burbank on their Gulfstream 9 only a few hours before. But our Chairman was nowhere to be seen, overdue now by 75 minutes as the antique clock on the mantle ticked away.

“I’m sure he’ll be along soon.” our British CEO offered politely to his anxious looking American opposite number. “We know our 737 is on the ground.” he added, a bit archly.

After finally agreeing to the long sought meeting with our

Chairman, everyone was anxious to settle the pressing business issues we came to resolve. Everyone, it seemed, except our Chairman.

But there was a lot at stake. On the table was the establishment of the new Middle East center of excellence for cinematic production…a full blown world class studio operation from which, it was hoped, would come movies to rival those of Hollywood and Bollywood. As well, a chain of cinemas to cover the whole region was planned, and last but not least, a huge indoor theme park was to form a part of our retail and entertainment mega project.

This aspirational vision had been formed a year ago, beginning in Abu Dhabi and then moving on to Burbank, over lunches with executives and celebrities. The toasts had been made and now it was time to move ahead with concrete planning.

But the world economic crisis had intervened since then and urgent face to face talks were needed to adjust the deal. Everyone’s global brand was tailored to portray unlimited resources, but reality had intruded and the ‘party’ was at risk.

The clock continued to tick away.

Suddenly, the double doors swung open and, with a flourish of white robes and proud demeanor, our Chairman “arrived”. The room breathed a sigh of relief as he grasped the hand of the Studio Chairman and shook it vigorously.

We all stood chatting for a few minutes while more refreshments were offered and then we took our places. The finishing touch to this “movie set” was the seating arrangement of executives, each across from his opposite number, seven per side, with me half way along our row. And what a great place that was to observe what followed.

It became clear as the meeting proceeded that resolution would not occur that day. After a presentation of the latest plans of the theme park based on the large scale model at the end of the table, our leaders set out to agree what they could.

The Americans pushed aggressively for agreement on each element, occasionally referring to the “hand shake” deal that had been done a year ago. The Brits rebutted with the need to agree formally, but based on more detailed planning before proceeding. And the Arabs…well they just watched. As the discussion of each element concluded the Chairmen would eye one another speculatively.

“We must resolve the timing of each element now to preserve our Board’s support for our overall deal” the American Chairman pressed.

Our Arab Chairman deflected

”We highly value your studio’s commitment to our country and company but we must consider what is the right timing”. But at the end of it, he made no offer to settle dates.

The elephant in the room was money, of course, and the uncertainty of making it available in a timely fashion. There was never the suggestion that sufficient resources weren’t available…it was just a matter of when. But if the Americans wanted more certainty as to dates, then perhaps an adjustment to the terms might be offered by them to effect it?

After five hours of this tennis match, exhaustion began to creep in. The Studio executives resigned themselves that they would not be able to report a successful conclusion to their Board. The price of oil had stubbornly remained below $50 per bbl. in recent months and it became clear that only when it returned to a healthy level would any of these visions be made real. The meeting concluded, leaving an unsatisfied feeling for everyone. But at least it was over and our Chairman’s message delivered: The Studio was just not that important to cause his country to tap its reserves to move more quickly.

We dispersed after the usual pleasantries, and went out into the warm summer evening, ready to let Paris distract us.

The Middle Eastern point of view on negotiations is very different than that typical for the Westerner. Stretching out discussions and delaying meetings and decisions is viewed as favoring them. And always there is their inclination towards dominating the discussion through subtle and not so subtle tactics such as arriving an hour and a half late for a meeting! Their hope is always to improve a deal over time in the face of the usual impatience of Westerners to “get a deal done”.

Yas Island, a $48 Billion iconic mixed use project in Abu Dhabi, UAE planned for 100,000 future residents with a 3.5 million square foot super regional mall, Ferrari World and Warner Brothers indoor theme parks and an outdoor waterpark for which I led the design, development and delivery teams

Chapter Three

Differing Negotiating Styles By Culture

“Know everything about the companies and people you are going to be negotiating with…

Leave no stone unturned; find out as much as you can.”Kevin O'Leary

Intentions—Shenzhen, Southern Mainland China

“Since the opening of China to foreign investment, much prosperity has been gained by many. However, in achieving it, we have lost our moral compass,” he sadly stated.

I was having lunch one day with a close Chinese friend and he explained the root of the societal problem his country faces very succinctly.

We had begun by discussing the generally selfish behavior I had observed regularly, especially when walking in the crowds on the Mainland and I was comparing them to Hong Kong.

“When the elevator doors open in any building in Mainland China I step forward to get off, but those wanting to get on are already rushing to board before anyone gets a chance to move! Why is that?” I asked.

“They only care about themselves,” he replied. “And families are changing as a result, with many parents abandoned by their adult children to care for themselves when they are old. It’s not our tradition. The government even had to recently pass a regulation to force people to care for their parents!”

So what has caused these shocking changes? To be fair, many people living in Chinese cities have just recently moved there from the countryside. As farmers they lack the basic training of how to conduct themselves in the city but no one takes the time to help them to learn how to do it.

“It is the absolute fixation on making money that I believe is the underlying cause. It is the reason why people are so self-centered…they are focused only on themselves. And I despair for my country.” he lamented.

This fixation on advancing their self-interest has intensified as the entrepreneurial spirit has infused so many in China over the past three decades. And it has often come at the expense of those foreigners with whom they partner.

It is very important to take the time needed to establish the character of one’s intended partner or colleague for this reason.

I told my friend that many Westerners have suffered from the same complex but that I had hope for the future, based on forming mutually successful partnerships and promoting longer term thinking on the part of everyone concerned.

“The Chinese word for negotiation—tan pan—combines the characters meaning ‘to discuss’ and ‘to judge.’ From a Chinese perspective, negotiation exists primarily as a mechanism for building trust so that two parties can work together for the benefit of both. Trust is built through dialogue that lets each party judge or evaluate the partner and the partner’s capabilities and assesseach other’s relative status. The negotiation process also enables parties to reach an understanding on a specific issue, condition, or transaction, in a way that lets each side feel that ‘a good deal’ was brokered. But the concept of negotiation hinges on creating a framework for long-term cooperation and problem-solving much more than on drafting a onetime agreement.”

Betsy Neidel—Negotiations, Chinese Style—China Business Review, November 1, 2010 http://www.chinabusinessreview.com/negotiations-chinese-style/

I found that the principle of negotiating a mutually beneficial outcome is acknowledged, just as Ms. Neidel states. I also found that in practice self-interest trumped mutual interest more often as not. The notion of a win-win relationship is certainly not at all foreign to Asian business people and companies. It’s just that developing one with a Western firm, in their view, is a lengthy and difficult process. The patience of each party will be severely tested during it as the respective cultures clash at times. At some point, one or the other may “blow a fuse,” likely the Westerner, and the effort abandoned. Both cultures know that a long association based on trust and mutual performance is optimal.

So what frustrates these efforts the most? The usual priority for an Asian or Middle Eastern firm is to establish a relationship through a process of the parties first socializing with and getting to know one another, without necessarily discussing the specific business that is of mutual interest. This typically includes several private dinner meetings for which the rules of etiquette noted earlier are the foundation. The hoped for outcome is a mutual understanding of how each can contribute to a relationship and, importantly, how each will conduct themselves within it.

The usual priority for the Western firm is to focus on the specific deal or opportunity that has caught their attention and to let the relationship develop after an agreement for action has been reached. Taking time for “endless” conversation and dinners might be seen as a waste of time by the Westerner and lead to frustration with the slow pace of the discussions.

“Western businesses negotiating with Chinese firms face many challenges, from initiating and smoothing communication to establishing long-lasting relationships and mutual trust, and from bargaining and drafting agreements to securing their implementation. Chinese negotiators can be at once warm hosts and friends and tough bargainers.

Unique Chinese cultural elements such as complicated local etiquette, obscured decision-making processes, and heavy reliance on interpersonal relationships instead of legal instruments all add to the complexities of Sino- foreign business negotiations, and can make the process tiresome and protracted. Besides talking past each other Chinese and western negotiators often harbor mutually unfavorable perceptions.

Many westerners find Chinese negotiators to beinefficient, indirect, and even dishonest; Chinese negotiators frequently perceive their western counterparts to be aggressive, impersonal, and insincere.

The way to decipher the Chinese negotiating style and bring about mutually beneficial results is to better understand the key elements of Chinese culture to which Chinese negotiators attune their business mentality and manners.”Cultural Notes on Chinese Negotiating Behavior James KSebenius (jsebenius@hbs.edu) Cheng (Jason) Qian

(JQIAN@HBS.EDU ) Harvard

Business School, Boston, MA USA December 24, 2008 http://www.hbs.edu/faculty/Publication%20Files

We all are aware that there are many differences between cultures and unsurprisingly, negotiating styles are included. I could write volumes about this topic, but British Linguist, Richard D. Lewis describes the challenges best, narratively and pictorially.

“By focusing on the cultural roots of national behaviour, both in society and business, we can foresee and calculate with a surprising degree of accuracy how others will react to our plans for them, and we can make certain assumptions as to how they will approach us. A working knowledge of the basic traits of other cultures (as well as our own) will minimize unpleasant surprises (culture shock), give us insights in advance, and enable us to interact successfully with nationalities with whom we previously had difficulty.”

Although cultural generalizations can be overly reductive, Lewis, who speaks ten languages, insists it can be done fairly, writing: “Determining national characteristics is treading a minefield of inaccurate assessment and surprising exception.

There is, however, such a thing as a national norm.” Lewis, Richard D. (2010-11-26). When Cultures Collide, Third Edition: Leading Across Cultures (Kindle Locations 8-9). Nicholas Brealey Publishing. Kindle Edition. ISBN-13: 978-1-904838-02-9 ISBN-10: 1-904838-02-2 www.crossculture.com

Differing Negotiating Styles

Chapter Four

Align Your Capabilities With Your Mutual Goals…And Then, Up Your Game To Attain Them

“Opportunities multiply as they are seized.”

—Sun Tzu, Famous Ancient Chinese General

Lessons Learned--Hong Kong, Southern China

“Imagine if you had to memorize 6,500 different symbols and you’re six years old? All you want to do is go play with your friends, but you soon learn that is not a choice until you’ve memorized your ration for the day.” My partner was explaining how kids learn in China.

“If you don’t, you’re punished…and harshly.” Teachers are failures if their pupils don’t learn and so they are very serious about the memorization required. They stand over their pupils and punish them corporally if they don’t share their seriousness.

My business partner had received advanced foreign education in the US and spoke English very well.

“The difference between Chinese teaching and Western is dramatic. When I first attended classes in the US, I was amazed at how nice the teachers were, and understanding if I made a mistake! That is not the attitude of Chinese teachers for sure. Some of them beat you for making an error!”

This telling conversation speaks volumes about the thinking styles of the average Chinese person. Unless they are amongst the lucky (and wealthy) few who go abroad for schooling, their education shapes them to learn as adults in the same rote-based way.

And their company trainers often use the same abusive techniques that their schoolteachers did, driving whatever is being taught into their minds with repetition and fear.

Why would you expect the Asian or Middle Easterner you are negotiating with to abandon their fundamental expectations and biases any more than you would do so yourself? That said, somehow you need to come together so your proposed mutual business can proceed.

I talked earlier about the various strategies to expect and accommodate in your dealings with Asians and Middle Easterners. They have ranged from learning the language to living the business culture to saving face, while working to lessen their suspicions arising in response to your strategies. Getting comfortable with one another is the first step and includes patiently listening much more than talking. Then aligning your commercial interests is next. All of this takes time…and patience, the latter of which will be tested frequently while the former is constantly stretched.

Understandably, styles of thought and their expression vary greatly, even within each country. That is rather like North America as regional differences here can be quite pronounced, and deadly to our businesses if we fail to respect them. So approach each international encounter with an open and perceptive mind..

In most Asian and Middle Eastern countries, it is the relationship between parties that is primarily important rather than the initial prospective business transaction. Time must be spent socializing and getting to know one another to determine if any relationship can even be formed. Once this is sufficiently advanced, and it’s been decided one can be established, the discussion can turn to the business deal at hand, but even then, not too quickly.

And this characteristic is just one of the many differences that you will have to take into account when dealing with the nationals of different countries. You may say you prefer to continue to do things like you always have and not get involved in learning these new behaviors. However, if you want to continue to prosper, you are going to have to do just that.

How can you optimize this process so it can be completed in the shortest time possible? The best answer is that you cannot accelerate the process while building the longevity and integrity of any agreement reached.

Why is this? Again, the best answer is the development of the trust needed to underpin any quality relationship that you might wish to enter. By and large, coming from a developing country will set one up to deal with the factors needed for each party to survive and prosper…the will is there for them to enter our markets as cost effectively as possible, and to prosper.

At the outset, it is very wise for you to take mental stock of what is important to you and what is not. Once you have settled that in your mind, you have to determine the importance to you and your company of arriving at your goal while risking its attendant exposures to risk, which inevitably are greater abroad than at home.

Once settled, engage your prospective partners in the style that they expect (and as stipulated by your experience and/or by your advisors).

Teaching Chinese Architectural and Urban Planning Masters-level students global best practices that I learned while working with Ferrari!

Chapter Five

B2B Cooperation:Invite Foreign Partners and Investors to Join Your Projects in Your Home Country

“The most powerful force ever known on this planet is human cooperation - a force for construction and destruction”.

Jonathan Haidt

Home Court Advantage—Toronto, Canada

“I love your green parks and blue skies.” my lunch partner enthused as the horizon very slowly slid past outside our restaurant window.

We were enjoying the view of Toronto from the top of the CN Tower, a land mark whose height was only recently eclipsed by the Burj Khalifa in Dubai. He was visiting from Shanghai, on a scouting trip looking for investment opportunities in North America. He had looked at many already and he’d confessed when we sat down that his head was spinning like the restaurant, trying to sort through everything he’d seen so far.

“I know exactly what you mean because I’ve felt the same way when touring Shanghai” I said.

Everywhere I had looked, opportunities were brightly shining. Every city has its own unique appeal…as well as disadvantages, but the latter are less obvious. And that is where the danger lies. I knew then that I needed an experienced set of eyes to help me to differentiate them. But with the many cultural and language differences how could I even begin to sort from the wide variety of consultants and would-be business partners to pick the right one to help me? Yet if I wanted to invest, I would have to. A real dilemma!

While this idea may sound like it’s full of risk and inconvenience, it has many virtues that recommend it. Please remember everything I have described to you so far and put yourself in the place of the foreign business people you’ve heard me talk about. They obviously saw advantages in dealing with a Westerner in their home markets, and sometimes the joint ventures they arranged worked extremely well. Why was that? Well, it’s simple; we Westerners had something special to offer that made the locals more competitive. Similarly, foreign investors and partners can do the same for you in your home market.

Firstly, there are far more businesses than you may think wanting access to North American markets. Secondly, the right potential partners bring with them intellectual and financial capital that will help you to differentiate your business from that of others. And lastly, they also bring new energy and an appetite to learn and deploy their experience in support of your planned joint initiative.

So how can you meet the “right” candidate for such a venture?

There is no shortage of choice as North America is the number one destination for many prospects from abroad. The key issue is the quality and fit of the candidates you choose to consider. The very best way forward is to develop and regularly use a potent network of international contacts and ask them for recommendations and references.

Then it’s down to you to follow up with them, using your research, intellect and chemistry to make the right selection. While you may not guess right every time, don’t use that risk as an excuse to pass on taking up this extraordinary opportunity.

Cooperation is the key word to listen for when spoken by Asians. It will tell you that the speaker has decided that you could be a suitable partner in a venture, for any number of reasons, and it’s your signal to act. Whether that is to backpedal as fast as you can or to lunge forward, will be up to you and what you’ve learned up to that point about the prospective partner. What you do next will influence your outcomes in Asia and at home.

Because of the fascination of Asian companies with going global, their cooperation with you may have to do more with accessing an initiative in your home country than for one in theirs; you can add significant value to such a partnership by contributing your strong domestic brand and superior market access in North America.

In principle, that is a good thing as I’ll discuss further in the next chapters. Combining the various strengths of each party can produce a formidable collaboration that will be competitive anywhere you might choose to go together.

Sorting the intricacies of business to business cooperation, whether with partners, clients or service providers is a study in itself, and one which I am hoping to help you with in this book and through my consultancy. As well, there are many other good international business specialists whose books and direct consultancy can assist you with this process. As you have seen, I have quoted them in my book. I, like them, am available in person to support your efforts to globalize.

There is another specialty that is a combination of science and art which must be mastered in whichever country you are working. That is the crucial Business to Government connection. In many ways, B2B is easier than B2G, since the latter is so often dependent on one’s long term connections with the appropriate officials. This is something we are just as well aware of in our home countries, so it’s not a new concept. The almost universal response to this is that the local partner will handle this responsibility since their relationships are a part of the equity they bring to a deal.

That said, you can appreciate the possibility that, as the outside partner, you might become vulnerable to “unbalanced” or “inappropriate” arrangements that could be made without your knowledge. While it is difficult for you to immunize yourself completely against this risk, there are some avenues to follow.

One is to insist that, as a partner, on an early introduction to the relevant government officials in the enterprise in question. Remember to bring your interpreter to ensure you know the temperature of the room and for her/him to relay to you any signals that all might not be right. Another tactic is that you should refer to your other independent local advisors to learn about all of the officials in question. But a caution: insisting on attending all meetings along with your partner is not advisable since it would be seen as an intrusion.

That is probably all you can do so you’ll have to accept the risk that your partner will give you a fair shake. But as a last test, regular reporting from your partner, cross checked by your advisors, may at least give you fair warning of impending issues.

Chapter Six

The Rules of the Road: Corruption and Other Hazards

“Power does not corrupt. Fear corrupts... perhaps the fear of a loss of power.” 
― John Steinbeck

Awakening-Macao, Special Administrative Region, China

Approaching Macao on the special high speed hovercraft which travels to it every hour, the skyline begins to remind one of Las Vegas. And sure enough, you soon see that there are the familiar casino names from the “Strip”—The Wynn, The Sands and The Venetian, to name three. Established one hundred and fifty years ago to provide for the insatiable hunger for gambling of many Chinese, Macao has really blossomed since the opening of the country to the West. In 2014, Macao’s gambling revenues were eight times those of Las Vegas at $48 Billion! It’s located very close to Hong Kong, and over the past twenty five years has been a favourite conduit for exporting ill-gotten gains from the Mainland.

$2 Trillion USD is estimated to have flowed out of China over the past twenty years! Certain Mainland Chinese companies would take cash from clients, open accounts for them at casinos in Macao, deduct a commission of 10-15%, and deposit the remainder in their name. When visiting Macao on vacation, the client would gamble some of this money but then transfer the rest to banks in other countries from his local Macao bank. There is now a crackdown on this process and Macao’s monthly gambling revenues have declined in 2015 by 40% from 2014 levels.

The phenomenon of corruption is present in business and government worldwide. It debilitates and drains economies and is generally seen as the blight it is, both nationally and internationally. However, in some cultures it is deeply ingrained and systemic. As globalization widens, more and more nations are deciding to try to end it since it deprives them of enormous amounts of tax revenue and investment capital.

The Chinese Communist Party Leader, Premier Xi, launched an anticorruption campaign during his first year in office in 2012, and since then many officials and business people have been arrested as a result. But expectations for its positive effects have to be tempered.

As with all organizations in China there are powerful competing factions within their leadership. It is the case that many of the ruling Politburo are billionaires, so you can rest assured that they will not damage the system that brought them their wealth. Also the loyalty of the 88 million Communist Party members is partly based on their access to opportunities to prosper, often through corruption, so disappointing them is not a good idea for the Party leaders.

The People’s Liberation Army is led by many millionaire generals whose wealth comes from their share of the commercial enterprises that the Government permits them to conduct. The Army keeps the Government in power. And of course, the people look to their leader’s actions for guidance. When they see that process continue, (the leaders response will likely be to also continue past practices, but more “gently.”) the common man will continue to do so too.

Corruption is still a significant fact of life in doing business in China, as well as other major nations such as India, notwithstanding their recent efforts to diminish it. The reality is that foreign companies are forced to participate in the process in order to do business. Some do so “unconsciously” by having a Chinese partner whose role in part, is to handle “commissions,” without advising or involving the foreign company.

But yet another of the dangers of doing business in China is that the “discovery” of such illegal activities by powerful competitors can result in fines or jail for their rivals, courtesy of complicit authorities. I’ve attended a number of business dinners at which one or two Police Chiefs are in attendance, as well as Party Secretaries. The former have the unilateral authority to detain people for as many as four years in “Black Jails” where people are sent for “reeducation”. Understandably they are feared, and occasionally used by various powerful people, such as Party Secretaries or successful business owners as a part of their strategies.

Deception by one’s own partner is also possible, of course, and on-the-ground vigilance is necessary to control this and other risks as best one can. They are very real and often outweigh the potential rewards of the enterprise. You must ask yourself from time to time if it’s really worth it to conduct business in China or other countries with similar attitudes.

Corruption Infographic. The Higher The Score, The Lower The Country’s Corruption

Conclusion—Now Execute

“A new world’s record was claimed today by a Chinese company that has successfully erected a 57 level office tower…in 19 days.”The Guardian Newspaper

http://www.theguardian.com/world/video/2015/apr/30/china-build-57-storey-skyscraper-19-days-timelapse-video

Action-Shanghai, Mainland China

At first, I thought, ‘How good is the quality of that project? It might fall down. In fact, I have seen a few tall buildings in China lying on their sides…maybe it’s going to happen to this one too?’

But then I realized that we should instead, applaud those developers who have learned from their past failures and may now have succeeded in revolutionizing the construction industry. Time will tell, of course, but full marks for innovation and courage!

If so, it’s not magic, they’ve simply found a new way to proceed to the same goal that all developers strive for, namely to build in the shortest time possible to begin generating income and crystallizing profits. This developer seems to have found the formula needed to greatly compress construction time, and to potentially increase his profitability significantly.

Appreciate that a willingness to experiment led to this discovery…the developer was not afraid to take the risk. And that is a great lesson to take from the globalization process. At some point, you have to pull the trigger…and take the risk. This hallmark of international development is often lost on North American developers who continue to produce the “same old, same old” of a tired out formula yielding look-alike shopping centers and other projects. And they are encouraged to do so by their lenders who don’t want more risk added to their business models.

However, the Asian, European, Latin and Middle Eastern developers, who have been arriving in force in North America, have different ideas. Bringing their adventuresome nature and good past experiences with them, along with plentiful investment capital, the fox is now amongst the chickens, and we are the latter! In a few years, the uniquely designed office buildings, shopping centers and hotels you’ve seen in pictures of Dubai, Hong Kong, Singapore and Shanghai will be a usual part of the North American landscape, and owned by foreign enterprises.

Their Asian and Gulf State developers will be risking the acceptance of their offerings by North American consumers, but honestly, what’s not to like about them? I believe their concepts, once executed, will revolutionize North American development, and it’s high time that it does.

Why should our consumers have to accept second best to what the rest of the world enjoys? And don’t forget, these developers aren’t shooting in the dark. They’re very thoroughly researching their target markets and arranging their communications with them before they start. Many of them apply global best practices in all that they do from concept to completion.

Their willingness to take risks and use imaginative designs and strategies will challenge many developers here. Those who are willing to also take the risks and even partner with knowledgeable Asian and Gulf State developers, will be the wise beneficiaries of this phenomenon. Those who don’t will fall by the wayside. Success goes to the bold and brave. 

References

China Business Review (2010, November 1). Betsy Neidel—Negotiations, Chinese Style. Retrieved July 17 2015 from http://www.chinabusinessreview.com/negotiations-chinese-style/

Lewis, Richard D. (2010-11-26). When Cultures Collide, Third Edition: Leading Across Cultures (Kindle Locations 8-9). Nicholas Brealey Publishing. Kindle Edition. ISBN-13: 978-1-904838-02-9 ISBN-10: 1-904838-02-2 www.crossculture.com

Sebenius,      J.K.      &      Qian,      Cheng      (Jason).      2008.      Cultural      Notes      on      Chinese      Negotiating Behavior. Harvard Business School, Boston, MA, USA. http://www.hbs.edu/faculty/Publication%20Files/09-076.pdf.

Transparency International. 2014. Visualising the Corruption Perceptions Index 2014. Retrieved July 30 2015 from http://www.transparency.org/cpi2014/infographic/compareCorruptioninfographic—TransparencyInternational

NOTES