Hey you. 

You in the home office working 16 hour days.

You lonely business guys and gals in isolated startup purgatory.

You anything-but-average Joe wearing seven different job hats trying to stay afloat.

We feel your pain.

So we come bearing anti-anxiety medication from China’s SME Challenge, held today by AmCham-China.

We hope these 12 pills of local wisdom will make your small and medium-sized enterprise (SME) work life a little easier in China land. So down these tidbits, then go ahead and take a much-needed Ambien-free nap.

On HR Solutions

1) To find those angel employees, spread your wings. Meet with college representatives face-to-face to build a long-term recruiting relationships. There’s nothing like having a third-party eye watching out for the moment manna falls from the sky.

2) Forget corporate culture. Think team spirit. And you’re the lead cheerleader. So ra ra ra! Don’t you dare put that pom-pom down. A sheet of paper with company values is nice, and that’s what your employees will cite if anyone asks about corporate culture there. But the invisible mojo of team spirit is what counts. So let the girls paint their nails in unison on the job if you’re in a creative field. “When I see that I’m very happy,” said Hersey Cao, president and CEO of AcrossChina Communications Group. “Then I believe they will have more passion for work as well.” Yep, they’ll chip a nail soon enough banging out well-done work on their laptops.

3) Train and develop employees like you’re at a multinational. You don’t have to be a disciplinarian. It’s not about beatings continuing until morale improves. But a well-oiled machine is a beautiful SME thing.

4) Put your smallness to use. You’re not at a Fortune 500, so when you stand up, you can see everybody. “That’s the beauty of small,” said Simon Wei, vice president of ChinaOK Network and Technology Ltd. Open your mouth. Communicate with the whole team. Repeat.

On Partnerships

5) Thank your lucky stars, even though they can’t be seen in China. Joint ventures used to be the only navigable foreign business route, they could last for 10 years, and have a maximum 50% of foreign ownership, said John O. Hjelset, executive director of Norse Dragon Co. Ltd. Now lots of industries can benefit from Wholly Owned Foreign Enterprises (WFOEs), and if you can, you absolutely should opt for this over a joint venture. Let’s say this as straight as an arrow: No panelist recommended a JV over a WFOE.
¼br> 6) If you absolutely have to have a Chinese partner because it’s required in your industry, get the guy to bring one of the following to the table: either a building, land, or a good vibe. “If it’s a person you can just get along with, that’s a great asset too,” said David Wood, president, The ChinaCare Group.

7) Chinese partners may seem coy when it comes to running the CEO show, but don’t be fooled. They often want to control personnel, Mr. Hjelset said. Modified word to the wise: HR is power. And absolute HR power is power absolutely. So when your company suddenly seems haunted by apparitions of new faces and mysterious employee disappearances, remember: there’s no such thing as corporate ghosts – only foreign managers in nervous-breakdown mode after losing company control.

On The Next Best Thing

It’s hot sauce. The kind you make after growing hot peppers on you rooftop. Get going because David M. Jacobson, managing director of SinoFile Information Services, hinted he’s getting some jalapeno seeds ready.

On Corruption

9) Of course, no panelist openly advocated crossing the ethical line in the sand. However, some companies (and maybe your competitors) have handed over a nice car or apartment for personal use to someone exceedingly useful. And that scholarship for “smart” little Jimmy might just be bankrolled by his powerful uncle’s grateful client.

10) Mr. Wood, however, noted there’s a big difference between good guanxi and corruption, and he’s disgusted with the latter. If you’re a healthcare company in need of good docs, maybe you could woo them by organizing professional events to help them build their reputation. It’s better than going down a devilish path, or baijiu-ing.

On 1.3 billion Chinese customers

11) It’s ok to ignore them. “The foreign market in BJ is already large enough for us to grow and stay busy in,” said David J. Roberts, managing director of Kroznot, a multimedia company. There also are fewer cultural faux pas when aliens deal with other aliens. Except Mars/Venus relationships. Those are just impossible.
¼br> 12) Then again, we’ve all been boys chasing girls at some time or another (where boys are companies and girls are customers). “Why should I [a Chinese client] pay you?” wondered Priscilla Ho, founder and managing director of Prescient Marketing Ltd. “You have to show them the value,” she said. “Make your value a little more scientific, a little more concrete,” she said. Then you can charge a more premium price.

AmCham Member Matt Young, editor & publisher, bizCult.com

Probably the first time you ever considered doing business in China you heard about the critical value of guanxi, or connections. In the old days business could not be done here without strong guanxi, although many people have made the mistake of thinking it was the most important component, ignoring other factors along the way. In truth, you need to have a good plan in addition to trusted connections.

The topic of guanxi came up during the ‘Partner Management’ portion of AmCham-China’s first annual ‘SME Conference.’ The panel included Jeremy Goldkorn (Danwei.org and Standards Group), David Wood (The ChinaCare Group), John O. Hjelset (Norse Dragon Co Ltd,

Hong Kong), and Michael Wester (True Run Media). The discussion, which included attendees, centered around the true value guanxi, and what might veer away from legitimate relationship building into something that people should steer clear from.

 

Several of the participants admitted that they had originally under-estimated the value of connections, and thought that if they simply had a good business model and a strong planning that they would succeed in China. However, trial and error taught them that, while guanxi is not the be-all and end-all, it is nonetheless important. (They also pointed that this is not a fact confined to China.) There was a consensus that the culture in Beijing and Shanghai now focuses less on the old-style relationship building of baijiu and KTV that was once ubiquitous, but that the substance of building trust nonetheless endured.

 

All of this leads to an obvious question with a number of different viewpoints: In modern China, just how important is guanxi?

 

Money is a reason to work, but sometimes it’s completely overrated.

Imagine Joe Tith, sitting in his office. He’s sipping on a fresh cup of Starbucks from the new office latte maker, his big front teeth draped over the cup in delight.

Jenny

Bay, fresh back from a department retreat, is unusually cheery and smiles in Joe’s general direction, which makes his day. Needless to say, he gives her a toothy grin. Meanwhile, the VP of corporate social responsibility announces over the loudspeaker that Joe’s favorite cause, Save Godiva, is has just delivered a 1,000-piece chocolate box in thanks for the company’s solidarity.

Then, into Joe’s email inbox pops a job offer from another company.

 

They’re offering more money, and note the following benefits: Each office comes with its own bottomless coffee pot, courtesy of a ruddy personal assistant required to be “cheery” at all times. The company, Godiva, offers an unrelenting supply of its sweets in no-cost vending machines, for employees and their loved ones.

 

Joe isn’t thrilled by the Godiva offer, as he just spotted a cake on his desk with icing that reads: “From Jenny;) .”

 

Joe’s story illustrates a point recently made by Felicia Choy, vice president and co-founder of Choy-Valentine, a senior executive development company.

 

“At the end of the day, 100% of the population does not work for money,” said Ms. Choy, who is slated to moderate a panel on HR issues at China’s SME Challenge, sponsored by AmCham

-China. The event takes place Friday, January 25, at China Resources Hotel.

“People use

money as an excuse to leave a company, but if you’re happy in a workplace, I don’t think you will leave just because next door pays a few dollars more,” Ms. Choy said.

 

Certainly, every company isn’t a utopia of delightful benefits. Small and medium-sized enterprises have an especially hard time competing with multinationals on benefits packages.

 

Not to worry, Ms. Choy said. Focus on the following:

 

· Top management should hold the same values dear, and spread them among staffers. Being small can be an advantage in this regard.

· Create a caring environment. Ms. Choy knows one local SME that, to its credit, provides medical checkups to employees to show that it cares about them.

· Emphasize “discipline, process and infrastructure.” This is what multinationals do well, and if SMEs can replicate this, they will do well in hiring and retaining staff.

 

AmCham Member Matt Young, editor & publisher, bizCult.com

This is the sixth and last post in a series discussing the upcoming China’s SME Challenge event

John Hjelset, executive director of consulting company Norse Dragon Co. Ltd., knows a thing or two about China partnerships. As president of the first Norwegian joint venture (JV) in China in the 1980s, Mr. Hjelset since has learned the virtues of going it alone, which he’ll discuss at China’s SME Challenge, sponsored by AmCham-China. The event takes place Friday, January 25, at China Resources Hotel.

In his JV, culture tug-of-wars were inevitable.

“We bought a building and some ships,” Mr. Hjelset recalled. “We wanted to depreciate the buildings and ships so much per year [for tax purposes]. Depreciation of ships and vessels was ok [with our Chinese partners]. But depreciating the building was out of the question – because buildings go up in value, they thought.”

Mr. Hjelset got a chuckle out of that.

Other problems were not so funny.

“As a general rule, one Chinese partner cannot serve all your needs,” Mr. Hjelset said. “That was one of the weaknesses of the old system – the thought that, ‘If I have a local partner, they can take care of everything from A to Z.’ There is no such thing.”

Today, Mr. Hjelset advocates using Wholly Foreign Owned Enterprises (WFOE) as investment vehicles whenever possible. He suggested contracting with service providers when necessary, and abiding by the following pearls of wisdom:

The best contracts should be put in a drawer and never taken out again. If you start looking at page 17, clause 32 B, that’s the beginning of the end of the contract partnership.
• Educate new company personnel about the intentions of the contracts when they were signed. Intentions are just as important – if not more important – than the underlying words.

It remains very difficult for foreigners to build up sales and distribution networks in China. You can have a WFOE but very strong contract arrangement with sales and distribution.

AmCham Member Matt Young, editor & publisher, bizCult.com

This is the fifth post in a series discussing the upcoming China’s SME Challenge event

 

As founder and editor of Danwei.org, Jeremy Goldkorn is to English-language

China blogs what Sigmund Freud is to psychoanalysis. Father Goldkorn is not, however, known for his business acumen – even though he has it. Danwei.org started out as a hobby. It grew into a business eventually, but in a besieged Chinese industry: media. Mr. Goldkorn’s fluency not only in Chinese, but in structuring business arrangements, is what has enabled him to survive and thrive. Given his experience, it should come as no shock Mr. Goldkorn is moderating a session on partner management at China’s SME Challenge, sponsored by AmCham-China. The event takes place Friday, January 25, at China Resources Hotel. While he’ll be inclined to give his panelists the mic, here are some of this virtuoso’s thoughts on dealing with partners.

Lesson one: Avoid the joint venture It’s never easy working with someone else, especially in a joint venture. Mr. Goldkorn noted the cultural differences in play there. State-owned companies, or the many ones with similar cultures to them, easily clash with

U.S. and other foreign corporations.

That may be ok at the staff level, where leaders can help employees iron differences out, but partners at odds can spell disaster. In other words, the Danwei founder suggests avoiding the danwei, or Chinese work unit, at all costs. Lesson two: Court the WFOE Wholly Foreign Owned Enterprises (or WFOEs) are in Mr. Goldkorn’s mind the best foreign setups—when possible. In that case, there’s no answering to a Chinese partner. Not every industry, such as Mr. Goldkorn’s, can easily benefit from such investment vehicles. But if you get a WFOE opportunity, make it love at first sight. “I don’t see anything wrong with a WFOE,” Mr. Goldkorn said.

Lesson three: Find the workaround Get creative with your partnerships. Maybe you don’t need a company partner. Maybe you just need a good contract and can rely on another company to provide you with a needed service. “I have worked usually with contract relationships with Chinese companies,” Mr. Goldkorn said. Just make sure you own what you need to critically own. Mr. Goldkorn recalled one instance in which a foreign founder of a magazine was ousted by a Chinese partner.

Although the businessman started the magazine, he didn’t actually own it. He owned a consulting company, his wife owned an advertising company, and they were in contractual relationships with a Chinese company, which owned the magazine license, Mr. Goldkorn noted. That was a critical piece of property, however, and not having it eventually ended the businessman’s career with the magazine, according to Mr. Goldkorn.

 

Despite the horror stories, “In most industries you have to have workarounds to deal with inconvenient legislation, not just in the sensitive ones,” Mr. Goldkorn said.

 

 

AmCham Member Matt Young, editor & publisher, bizCult.com

This is the fourth post in a series discussing the upcoming China’s SME Challenge event

 

Imagine you’re in the waiting room of a Chinese hospital.

The chairman of the hospital company board, who is also the chief company investor, walks in with his Armani suit and glimmering diamond studded cufflinks, seemingly in anguish.

He announces that he has broken his thumb, and starts screaming at the staff to help him.

He goes bananas when they try to calm him down, jumping up and down at first, and then doing one-handed backflips. He begins walking quickly around the waiting room, raising his fist to keep any staffers away that start to chase after him. As he regains his composure, the hospital CFO enters the lobby.

She immediately recognizes the chairman, and calls staff over to have him fixed up immediately.

He backs away, looks at his watch, looks up, and says “Coo-coo.”

Then he fires the CFO and sings “Wild Thing,” by Chip Taylor, before leaving.

So which of the chairman’s actions might be considered most outrageous?

To you or me, perhaps it would be the backflipping or singing.

The company CEO, however, should find it preposterous that he has fired the CFO. Managing the CFO is the CEO’s job, after all.

While this anecdote clearly is over-the-top, David Wood, president of The ChinaCare Group, suggests that Chinese investors and board members all too often want to micromanage healthcare settings, having the CFO report to them, for instance, which is wrong.

“The concept that the CEO manages the organization is not accepted in principle by Chinese managers,” Mr. Wood said. “The directors get involved, and they get involved at inappropriately low levels.”

Hence, managing your Chinese partner’s management expectations – a topic Mr. Wood will speak on at China’s SME Challenge, sponsored by AmCham-China – is critical. The event takes place Friday, January 25, at China Resources Hotel.

Mr. Wood’s firm, which often agrees to manage healthcare providers, begins with a clear contract, making his firm the “exclusive operator and general manager [and the] client agrees not to interfere in day-to-day operation.”

If for any reason the healthcare provider balks, Mr. Wood walks away from the deal.

One potential client and healthcare company board chairman, for instance, “wanted to come in, review expenditures for that month and change the budget for the next month, every month,” Mr. Wood said. “I said this is not acceptable.”

Mr. Wood did, however sweeten the deal, by saying the he would take the budget results every quarter to the board of directors, which could then make changes if they desired.

The difference is, the CEO remains in charge day-to-day, without having to deal with unnecessarily traumatized CFOs.

AmCham Member Matt Young, editor & publisher, bizCult.com

This is the third post in a series discussing the upcoming China’s SME Challenge event.

 

As someone looking to identify and promote potential stars within your company, what’s the second-most important quality you should look for? Patience.

That’s according to Ben Wang, president and CEO of Beyondsoft Group, a Chinese company with more than 2,000 employees. The most important quality is an impressive performance track-record over the last one to two years, he said.

Certainly, this quality of patience would strike Western managers as a little bit odd for an employee virtue. Creativity might be desired. Or perhaps work ethic. But patience?

Yes, said Mr. Wang, who has been with Beyondsoft since its inception in 1995 when it had just a handful of employees. Now it serves leading companies like Microsoft and IBM, and Mr. Wang has been invited to speak at China’s SME Challenge, sponsored by AmCham-China. The event takes place Friday, January 25, at China Resources Hotel.

“If you want to become a leader you have to have patience to influence the team members to drive the team to go the right way,” Mr. Wang said.

Maybe he’s on to something there. Many Chinese, after all, are shy, Mr. Wang said. They often will not voice their true opinion unless they trust you. And trust – a foundation for interpersonal relationships – takes time to build.

“If you don’t have patience, you can do a good job but not achieve excellent results,” Mr. Wang said.

Someone with a lot of patience is not necessarily passive.

“If you look at all the leaders of SMEs, they have lots of patience, and do things more aggressively and with long term commitment,” Mr. Wang said.

So, how do you identify these people with patience?

Aside from just connecting with them to find out who they are, you could observe their energy, Mr. Wang said.

“People who are patient always have energy and are eager to do things,” Mr. Wang said. “They are a little bit different from others.”

Special employees, meanwhile, deserve 80 percent of company leaders’ attention, Mr. Wang said.

“They are the team, they are the potential, and they can help to grow business in the future,” he said. “You should give them more opportunity, promote them, and let them try. Sometimes they will make mistakes, but give them opportunity.”

The human resources issue continues to remain the most difficult challenge Mr. Wang faces, along with many Western companies. But, he said, identifying and rewarding able employees should make things easier.

 

AmCham Member Matt Young, editor & publisher, bizCult.com

This is the second post in a series discussing the upcoming China’s SME Challenge event

If you’re a prospective small and medium-sized enterprise (SME) in China, stop fidgeting over what kind of office you should set up. Kirvan Henry Pierson III, principal of China consulting firm XLOCATE Ltd., has a simple recipe for success, which he’ll discuss at China’s SME Challenge, sponsored by AmCham-China. The event takes place Friday, January 25, at China Resources Hotel. Here are some ingredients:

• One part rep office. Delay filing a Wholly Foreign Owned Enterprise until you need to book RMB revenue.
• One part gumption. Just do it. Put people on the mainland ground, do business development and try to get partners. Small foreign companies have no credibility in China without a respectable office and staff. To do business in China, you must “spend ahead of revenue” (demonstrate a local presence before revenue contracts can be secured).
• One part distribution partners. Don’t think you will start selling direct—that’s expensive and high-risk.

Mr. Pierson doesn’t like to mince meat, or words.

He finds the correct way of doing business in China is often anathema to U.S. businesspeople, and is much more digestible for Chinese, and even Europeans.

“American firms want to make sure they are in total compliance with government regulations at all times, whereas the Chinese firms they are competing against don’t worry about that stuff,” Mr. Pierson said. “If the government finds you out of compliance, they will generally tell you you’re out of compliance. Unless you present a serious threat to somebody who has special connections, you will never get the police called on you and your operation shut down. Generally, do what you want to do, and wait for the government to say, ‘No, you can’t do that.’ Then take steps to get into compliance.”

A joint venture (JV), tossed into your company mix, apparently is as palatable as ipecac.

“Don’t go in with idea that you need to share ownership with a mainland partner,” Mr. Pierson said. “That’s the recipe for disaster. Do not do a JV under any circumstance unless the government requires it in your industry. And even in these cases, there are often ways to structure around the requirement. In a minority ownership JV situation with a mainland partner, you will get your pocket picked.”

Invest your money into building an organization that you own and control, Mr. Pierson said. Write contracts with Chinese partners as appropriate. This reduces risk in the case of non-performance by the partner. The bank account, and the underlying asset you build, should belong to you, he said.

AmCham Member Matt Young, editor & publisher, bizCult.com

This is the first post in a series discussing the upcoming China’s SME Challenge event.