Succeeding with a business partner in China is not always about great business acumen. Sometimes, it boils down to opening a taste bud for a snake delicacy.
Two companies, Analog Devices Inc. and Starent Networks Corp., said they have built relationships with their partners in China by being friends first.
ADI has a strong bond with TCL, one of the top handset makers in China, while Starent has strong ties with Eastcom, which makes both infrastructure equipment and handhelds.
The relationships often begin at the standards level, said Nick Lopez, director of business development at Starent. He explained that some of his company’s staff struck friendships with Eastcom and other company staff of China Unicom and Putian when they served on the standards committee of the Third Generation Partnership Project 2.
With contacts established, the individuals could then introduce their business interests and explore ways they could do business together.
“Relationship blossoms after initial meetings,” said Lopez, explaining that Starent staff was able to dialogue with Eastcom on ways to contribute to the local vendor’s wireless data system. “The biggest challenge for an outside company is to find out what their (the Chinese company) strategies’ are and how we can align.”
With China poised to be the most lucrative wireless market, foreign businesses are increasingly interested in working in the country.
Sometimes contacts begin while working with a carrier like China Unicom, he said.
Business deals could also spark from a need. “Our first contact with TCL was about four years ago when they entered the handset market,” said Doug Grant, director of business development at ADI, which provides chipsets for handset vendors.
Grant said ADI played a pivotal part in helping TCL build its cell phones, which he says now enjoy good talk time, standby time and radio performance. “We work closely with them doing basic phone designs, adding features-especially software,” said Grant.
TCL only has to bother with manufacturing, but not hardware, which they can leverage across five to 10 models, adding that the vendor focuses on the feature set and how to customize the products for specific markets, Grant added.
But after striking friendships, the companies often look out for certain cultural features. Food and parties are important, said Grant and Lopez.
If the Chinese company throws a party, remarked Grant, the American company should throw a party of comparable value. “It’s a matter of respect,” said Grant.
Lopez agrees. “Humility and compassion that your Western-style business ethics don’t always emphasize are important to the Chinese,” he said.
Grant said the issue of respect transfers into where a person sits at meetings, which means that the Western business person must learn and understand nuances of the culture by being there frequently. Both Starent and ADI said they spend a lot of time in the country and have people at various levels of the company hierarchy in China.
Being in China also helps to eliminate the barriers of doing business across different time zones, said Grant.
Describing how Chinese businesses make decisions, Lopez said it depends on a complex set of relationships, and it does not necessarily lie with one person. “The way they do business comes from a whole perspective,” he said. “Not one perspective. It is a communal decision.” He explained that there are a lot of cultural hierarchies.
The relationships are not only in the area of technology, but span engineering, purchasing and marketing, as well as executive levels. A constant interaction is maintained, especially to tally inventory and meet the market on demand.
Lopez said one of the upsides for Chinese businesses is that they also are doing away with some traditional ways of doing business, especially in the areas of intellectual property rights, which they take seriously.
