Long term relationships are never easy, especially when one of the partners is a Chinese SOE. Until recently, many European and a few of the more patient & deep-pocketed US firms took upon themselves the role of a corporate Dr. Phil, offering easy, smug advice on how to woo and win the affection of a Chinese partner. But now even the happiest of Western partners – like GE, Siemens and BASF – are publically complaining that they are not feeling very significant in China in any more. If there’s trouble in commercial paradise for the most eligible suitors, where does that leave the newcomers?
The question is becoming the "new Chinese paradox" – why do so many commentators (including Mainlanders) insist that Chinese dealmakers have a long-range, relationship-oriented view of business when their actions seem so short-sighted and mercenary? Aren’t Chinese dealmakers supposed to be long term thinkers?
Yes, they are. But that doesn’t necessarily help you.
Chinese like playing the field
The truth is that a long term Chinese relationship really is extremely valuable to Western firms, but it is likely that your Chinese counterpart is fairly indifferent to you as a long-term partner. Just because Chinese have a well-earned reputation as long-term, deep thinkers doesn’t necessarily mean that they are looking to settle down with any long-term partner in general – and a Western one in particular. Many Euro and American management teams that have been involved with a Chinese supplier for more than 10 months tend to congratulate themselves on achieving a win-win, guanxi relationship but the reality is that they are actually engaged in a series of one-off deals with the same people. Once a better opportunity presents itself, the Chinese side considers itself a free agent.
But what would the ancestors say?
Western firms that are getting a little more "mature" — with a bulging pension liability and a thinning customer base – like the idea of settling down with the sexy young Asian firm that still has its best demographics ahead of it. Sure, the match may make sense on paper right now, but do the local Chinese targets share the same long-term hopes and dreams? The ugly truth is that established Mainland firms – the kinds with government support and resources of their own – tend to see a Western brand as a short-term partner, a medium-term customer and a long-term competitor.
Sure, the Westerners can be fun for a while. They have interesting technology, a new way of doing things and, oh – that intellectual property can be hot stuff. But once the assets have been transferred and the IP has been digested – well, that Western firm seems more appropriate as a customer, client or even a distributor. And in the longer term – say five or 10 years – the math changes completely. Now that partner is looking like less and less of a source of assets and growth and more of a liability – or even a competitor on the global stage. The Chinese firm knows that it is quickly outgrowing the maturing Western counter-party.
It’s probably best to let commerce take its natural course now — before things start to look ridiculous.