Daily Archives: October 12, 2010

Outsourcing? Two Years to Turnaround!

While short and sweet and filled with a number of (now) obvious pieces of advice, a recent article over on CIO Insight on Nine Things No One Ever Told You [about offshoring] made two great points that many articles miss:

  1. Process Matters and
  2. It Takes Time to Get a Stable, Productive Process

    often 18 to 24 months if you and your partner are new to outsourcing!

In other words, if this is your first time, expect that it will take two years to get the full extent of the payback which might not be as much as you expect after infrastructure investments, change management costs, travel, and rework are factored in (which will often be [much] more than you expect).

And process matters. Without sound processes and standards in place to keep the business running smoothly, it is more work to manage multiple relationships, each of which will function poorly without a strong foundation. So, if you still haven’t realized that the outsourcing craze has finally stopped and decide you want to chase after the runaway train long after it has left the station, remember this: Two years to turnaround. Ouch!

Share This on Linked In

Cultural Intelligence IV: China

This series is edited by Dick Locke, SI’s resident expert on International Trade, author of Global Supply Management — A Guide to International Procurement (which was the definitive guide for almost a decade), and President of the Global Procurement Group which regularly gives seminars on International Trade and working with International Cultures.

As highlighted in last year’s post on Overcoming Cultural Differences in International Trade with China, China is one of the most developed cultures in the world, with a long history behind their well establish social order, which requires an inequality between any two people to maintain stability. (That’s part of the reason that the Chinese generally believe that all foreigners — who are traditionally inferior, corrupt, decadent, disloyal, volatile, barbaric, and devils-in-disguise — are inexperienced in matters of business even if they are technically competent.) As a result, dealing with the Chinese can be very difficult for an outsider, and a North American in particular.

With respect to Locke‘s seven key cultural differences (first outlined as six in his classic text on Global Supply Management), China has an implicit power distance between any two individuals (which is higher in the North than in the South), a monochronic approach to time in business, and a strong distaste for uncertainty. Maintaining harmony and face is of utmost importance, individuality is not, but privacy is deeply respected. They may ask blunt questions about your personal situation and beliefs, but that is only to understand what may offend you (so they can avoid doing it). After all, they praise virtue to the point that two mutually exclusive answers can both be true if both are virtuous.

Verbal communication in China is very indirect where business is concerned. Since harmony and face must be maintained no matter what, all answers are soft, there are no admissions of a failure to understand, and direct “no”s are effectively taboo. That’s why you can’t ask them a yes/no question. If you want to know if they understand a request, you have to ask them what they are going to do. Thus, you should be calm and polite in negotiations and avoid getting loud. However, the opposite holds true in social encounters. Socially, it’s okay to be boisterous, and it is expected at meals (at the appropriate time). And you can be quite loud, especially if laughing at yourself.

Non-verbal communication is effusive in their society, hard for an outsider to read, and even harder to master. As a result, you should avoid large gestures, as many are taboo (including the pointing of the index finger, finger snapping, and whistling), and maintain an impassive facial expression during business (as frowning is a sign of disagreement and smiling can be simply a polite way to mask uncertainty or uneasiness). Eye contact should be avoided in greetings as almost everyone is unequal and respect must be maintained, emotions should be reserved until you know the right times to display them, and you should allow them to dictate the distance between you, which is usually at most 3 feet (and just enough to respect your privacy in accordance with their cultural norms) as they will often speak quietly to avoid disturbing others who may be nearby. Finally, you must avoid personal contact (unless they touch you, at which point you may reciprocate in kind) as the Chinese generally don’t like to be touched. As with many Asian cultures, touching is reserved for (close) friends and peers.

As per our last post, meetings primarily exist to gather information (and decisions will be made back at the office). Once they get to know you, negotiations will get progressively detailed to the point where the questions are so precise that it will be almost impossible to answer them without disclosing your IP. This is common practice to make sure you are truly interested in a mutually beneficial long-term business relationship and not just looking to exploit cheap labor. It has nothing to do with your IP (although IP theft is a serious problem in China and you have to invest equal effort to insure that they are also interested in a long term business relationship). And meals, while they may last hours and get loud and boisterous later on, are formal. You must not discuss business until the host brings it up. A few other pointers is that he who extends the invitation always pays (but you can pretend to fight over the bill to gain points), you must eat hearty to please the host, but you must leave some food on your plate when you are full.

Finally, one other point that you should remember is that the Chinese will often disparage their own accomplishments and there is a social protocol to this. Specifically, you are expected to respond with a complement. For example, if a Chinese person says that he may not have chosen the best restaurant for you, do not say something along the lines of “we’ll manage“. Instead say that you’re sure the restaurant choice is impeccable and/or that he outdid himself in its selection.

Share This on Linked In