An Update on the Coronavirus Impact on Doing Business in China Today

Bill Edwards, CEO of EGS, has been doing business in China for 37 years, starting with living in China from late 1982 through mid 1985. Our company opened an office in Beijing in 2014. Our company is currently helping four U.S. brand enter the Mainland China market. Needless to say, things right now are different than ever before

Here are some recent headlines and analysis that define what is going on in China today:

As of this date, all flights from the US to China and most to Hong Kong have stopped. Business meetings stopped 2+ weeks ago. The Chinese are learning to work remotely.

“China Passenger Car Association said sales fell to just 4,909 units in the first 16 days of February, from 59,930 in the same period in 2019”, South China Morning Post (SCMP), 022120

“China app downloads surge due to coronavirus outbreak Deadly epidemic has left tens of millions of people confined to their homes”, Financial Times 021920

“Coronavirus a boon for China’s tech-savvy supermarkets as homebound customers switch to online grocery orders”, SCMP 022120

Burger King®, Dairy Queen®, KFC, McDonald’s® and Starbucks® closed a total of over 7,500 stores in China in late January or early February.

“McDonald’s has implemented contactless pickup and delivery of Big Macs, fries and other menu items across the China. Customers order remotely and employees seal the meals in bags and put them in a special spot for pickup without human contact.” Reuters 021820

Some feedback from business contacts in China:

“We have been inside our Beijing home for over a month. Only one adult is allowed out every other day. Our temperature is checked by a guard on the way our and on the way back in. Our 8-year-old daughter has not been to school in a month and we have run out of videos for her. Our local grocery store now comes to our housing compound.”, Our company’s Managing Director for Greater China based in Beijing.

“Thanks so much for the nice email and your concerns, Bill. The Coronavirus has essentially stopped inbound/outbound movement and that’s not good for business. All of our staff are doing fine and no one so far has been affected. Many of us try to work remotely as much as possible and avoid crowds, subways, and restaurants.” Message from the Managing Partner of a Shanghai legal firm. 022220

But things are starting to change:

“China’s biggest factories are offering bonuses and the government has laid on planes, trains and buses to ferry people back to work.” Financial Times 022520

“Apple reopens more than half its retail stores in China after coronavirus closures. Apple’s store website shows 29 of 42 locations are opening”. SCMP 022520

With over 37 years of experience of doing business in China, I’m happy to discuss these business ramifications and solutions. I keep my thumb on pulse of the Chinese business market, monitoring daily changes and trends, and have insight on how you can protect and grow your brand in this critical market. Contact me directly at bedwards@edwardsglobal.com or on +1 949 375 1896

The Place of Culture in a Flat World

In April 2005, New York Times columnist Tom Friedman published the iconic book on globalization, “The World Is Flat: A Brief History of the Twenty-First Century”.

The title eludes to the perceptual shift required for countries, companies, and individuals in order to remain competitive in a global market where historical and geographical divisions are becoming increasingly irrelevant.

Per Wikipedia, “Friedman himself is a strong advocate of these changes, calling himself a ‘free-trader’ and a ‘compassionate flatist’, and he criticizes societies that resist these changes. In his opinion, this flattening is a product of a convergence of personal computers with fiber-optic micro cable with the rise of work flow software.”

Many readers, including this author, initially interpreted this as saying that the world is increasingly the same, diversity is going away. A re-reading of Mr. Friedman’s book, and subsequent writings, shows this is not exactly correct. He is proposing that the business world is adopting the same standards worldwide in order to compete with companies in other countries. A strong case can be made for this postulation.

Along comes culture. Dictionary.com defines culture as: “The quality in a person or society that arises from a concern for what is regarded as excellent in arts, letters, manners, scholarly pursuits, etc.; development or improvement of the mind by education or training; and the behaviors and beliefs characteristic of a particular social, ethnic, or age group.”

Businessculture.org says, “Culture illustrates the accepted norms and values and traditional behaviour of a group . . . ‘the way we do things around here.’ The culture of each country has its own beliefs, values and activities. In other words, culture can be defined as an evolving set of collective beliefs, values and attitudes.”

In my experience working in 68 countries over the past 42 years, culture is alive and prospering. In order to do business in other countries, you must be aware of the local culture and how it impacts business to be successful. Flatness is not as important as the culture with which you are dealing. In other words, you must be aware of the diversity in doing business that the local culture represents to be successful in today’s global business environment.

Robert Shaw, a highly experienced and successful global franchise executive based in Orange County, California, has studied the knowledge of local culture as a way to win in business. Mr. Shaw defines three major cultural types that you have to take into account to win in global business:

• Linear – Aggressive, time is money, task focused, individualistic, the “John Wayne” approach – North America, Australia and Northern Europe
• Multi-Active – Relationship comes FIRST and BEFORE business, top heavy hierarchy, only meet with decision-makers – Mediterranean, Latin America, Middle East and India
• Reactive – Relationships first, quiet nodding, listeners, group decisions – Asia (except India.) Nodding simply means they may understand what you are saying. Not that they are agreeing with you.

The aggressive ‘let’s get the deal done and go home’ that US business people often follow leaves no time to develop the relationships that most cultures value and require in order to get business done.

And here are a few cultural “no-no’s” to remember that Mr. Shaw and I have encountered over the years:

• White flowers as a gift in Japan – white is the color for funerals
• Showing the bottom of your shoes in the Middle East – dirtiest thing you can do
• Making the sign for ‘okay’ in Brazil
• Referring to Taiwan as a country in China
• Talking politics – sports and local culture are better topics
• Folding business cards – cards are expressions of who someone is and what they have accomplished

Terri Morrison, in her classic book, “Kiss, Bow and Shake Hands”, shares a few basic but critical cultural differences in doing business in key countries. In regards to meetings:

• In Brazil, lack of punctuality is a fact of life; be flexible about your counterpart’s (lack of) punctuality
• In China, punctuality for all appointments is important
• In India, Indians appreciate punctuality, but do not always practice it themselves!

The bottom line? While business processes may be flattening, cultures are not. To succeed in global business you have to add the cultural factor to your approach to people and companies in other cultures. Ignore the ‘non-flat’ local way of doing business because you think similar business processes are all that counts in a country and you will fail.

Cultures are what make the world an increasingly interesting place!