The unsuspecting foreign investor will be surprised to find how helpful everyone is in China. Indeed, it often seems that China’s biggest sector after manufacturing is China strategy consulting. A Google search of “China consultants” comes up with more than 20 million results.
One of the reasons that multinationals do relatively well in China is the depth of their management teams. Medium-sized companies do not usually have this kind of depth built in; they will often need external support for their China projects, and there is a daunting pool of consultants to choose from in a myriad variety of types and sizes. This article reviews the most common types of China consultant – and advises on how to keep them from sidetracking a project.
Jack of all Trades
The China consultant can be a blessing to an inexperienced China investor. However, it is extremely important to choose one that understands the client and what the client wishes to do. If an investment project fails, it will not help to blame the hired hands, i.e. the consultants.
The generalist China consultant – the “old China hand”, or zhongguo tong, as they are known in Chinese – can play an important role. In many cases, these consultants have little knowledge – far less than the client – of the industry in which the client is operating. They rely to a great degree on their “China knowledge” and their network of more or less helpful relationships, the famous guanxi everyone talks about in China.
China is clearly different in many ways from Europe or the US. However, it is not the unfathomable enigma made out by many China consultants. Naturally, though, unscrupulous consultants wish to make China more mysterious than it actually is in order to sell their services or to maintain their role in a project. If a consultant states that he is a crucial part of the project (as opposed to becoming crucial by doing a good job), it is probably time to find a different consultant.
However, it would be unfair to dismiss the China consultant entirely. Consultants can and do play valuable roles. It is important for foreign investors to select a consultant with whom they feel comfortable and who can cover manpower or expertise shortcomings within their own organization.
For many consultants, it is not the success or failure of the project that matters. Rather, it is whether the project proceeds that is important. In many cases, unscrupulous consultants prepare feasibility studies which have best-case scenarios that are almost sure to be reached, and worst-case scenarios which are only slightly less optimistic.
Case Study: The Intermediary
An article in the Harvard Business Review on Doing Business with China entitled “Chinese Negotiation” lays great importance on the role of the “intermediary” (Zhong-Jian ren). An intermediary is basically a person who can bridge the two sides in negotiations or in a mergers and acquisitions transaction and intercede when there is conflict. The authors advise that the intermediary plays an “indispensable” role in such discussions:
“Only a native Chinese speaker can read and explain the moods, intonations, facial expressions, and body language Chinese negotiators exhibit during a formal negotiation session. Frequently only the zhongjian ren can determine what’s going on … the zhongjian ren can step in because he is an interpreter not so much of words as of cultures.”
If a company is intending to go into a business relationship of any duration or complexity and in order to communicate with the potential Chinese partner it needs someone to analyse his “moods, intonations, facial expressions, and body language”, then the company most likely should be looking for someone willing to communicate more directly.
One should also bear in mind that the mission is not accomplished with the signing of a contract, but with the establishment of a successful project. At the time of project implementation, the zhongjian ren will no doubt be off brokering deals elsewhere while the client will be sitting with Chairman Liu, trying to work out what he means when he crosses his arms and speaks with a slightly higher than normal lilt.