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INTRODUCTION If you’re looking to form an offshore company, one of the biggest decisions you’ll need to make is which jurisdiction you would like to set it up in.
Japan’s food self-sufficiency rate was 73% in 1965 falling to 37% in 1993. The rate held around 40% from 1998 to 2007 and slowly crept up to 41% in 2008 (compare this with 128% for the United States and 70% for Britain in 2003). At the national level, the goal is to return to 70% self-sufficiency. Add to this heightened consumer demand in Japan for ‘safer’ food and greater uniformity in appearance of the food and you have the start of a trend in food production.
Despite its crowds and fast pace of life, Japanese society retains an air of politeness, ongoing respect for traditional values and a low crime rate. On this last point, a recent report by the Japan Times showed a 40% drop in crimes from 2,800,000 in 2002 to 1,700,000 a decade later. Putting this in perspective, this is about 1,360 crimes per 100,000 Japanese residents compared to 3.466 per 100,000 in the United States.
In July 2010 police found the body of an 111 year-old, nominally Japan’s oldest man, lying in bed. The problem was that he had died 30 years earlier. By the time he was discovered, his 81 year-old daughter had collected JPY9M (about US$109,000) in pension payments. Subsequent investigations showed that this was not an isolated incident:
Debt Japan's government debt exceeds that of other industrialised nations while gross debt is around 200% of GDP (in the US, UK and Germany the ratio is below 100%). While the financial markets are punishing Ireland, Greece and Portugal for their high public borrowings, Japan stands largely immune.
All The Tea In China
While China may not be the most accessible country with which to do business, its progress and commercial success have been incredible. With 1.6 billion consumers, staggering GDP increases and ever-growing foreign trade surpluses, China's continuing economic ascendancy is undeniable.
With huge opportunities for trade co-operation in China, setting up successful relationships is vital. JOAN TURLEY
offers some guidance
While China may not be the most accessible country with which to do business, its progress and commercial success have been incredible. With 1.6 billion consumers, staggering GDP increases and ever-growing foreign trade surpluses, China's continuing economic ascendancy is undeniable. And the pragmatism and flexibility with which it has embraced necessary changes to trading legislation - in agreement with the country's World Trade Organisation entry in 2001 - have further stimulated foreign direct investment and the country's appeal for Western businesses.
It also has a hunger for Western-style knowledge, business practices and cultural understanding (the UK alone aims to educate 900,000 Chinese students in the next five years). China is shopping for the skills to embrace East-West trade co-operation, create a soft landing for Western businesses, and build sustainable partnerships, which will make it a preferred destination for buying, selling and investing.
An encouraging and exciting prospect, then, and one not lost on the flurry of European businesses, commercial attaches and professional institutes courting China on a weekly basis. And yet, many UK businesses register anxiety and insecurity at the prospect of trading with China, and the attrition rates of businesses that have failed to realise their goals in the country, while diminishing, are nonetheless significant.
What, then, is the challenge and how do we meet it successfully?
Despite legitimate concerns about issues such as intellectual property rights and the prolonged timelines for converting business and getting paid, the real challenge to building effective business in and with China is a relational one.
The Chinese inscrutability; stereotype has persisted in the psyche of many UK business people, leaving us unsure about the rules of engagement with China and the way we can build common ground for business success.
To relate to China we must begin by accepting it is one of the most relationship-based cultures in the world. In China relationships drive business, not the reverse (a model we find more comfortable in the West). Relationships are the means by which the Chinese facilitate life, the modus operandi of business exchange and implementation and the ultimate means of protecting agreements and contracts.
The relationship base (Guan Xi) which one has acquired in China acts as professional portfolio, and business collateral. It is literally, as one Chinese business leader described it, ''money in the bank''. As such, relationships are protected, nurtured and developed with enormous care and prudence. But we must not fall into the trap of seeing them as certain Western analysts have cynically suggested, as merely self-serving or materialistically based exchanges.
Relationships in China constitute strong bonds of shared experience, mutual proofs of good faith, common goals and aspirations. They are used to create trust as a basis for ''business friendships''. This is the model which the Chinese prefer - a climate in which partnerships and business relationships act as an extension of the family model which governs business just as it governs so much of Chinese life, rituals, thinking and values.
Relationships, then, are the primary driver of professional and business success in China. Their importance is further underpinned by another concept fundamental to understanding how to win Chinese hearts and minds. Mianzi or public reputation/face and perception, is a deep and powerful concept governing the behaviour of all Chinese people, in all areas and at all times.
Every person in China is raised to beaware of representing the collective 'face' of family, company, region and nation in the conduct of their life and business. As such, they become skilled at choosing their associates and business relationships with extreme care. Their over-arching guide in these choices is the need to find people who will sincerely and reliably partner them in the business of public reputation and face.
It is here that the greatest opportunity lies for those of us who are seeking a long-term and profitable association with China. If we can prove our reliability and trustworthiness in the business of building face, then we will earn our privileged place as trusted business friend. The relationship will then add momentum to our business dialogue, and, if correctly nurtured, ensure longevity and loyalty to our business dealings.
So how do we go beyond stereotypes of inscrutability and earn our place as preferred partners to the Chinese? Much of this can be achieved by understanding the three key tenets of good relationship practice, China style: character, communication and protocol.
It is wise to lay aside Western preconceptions and business assumptions as we explore these.
First, character. The Chinese are interested in who you are. In China, you are the brand. Bearing in mind the matter of face, certain qualities are highly prized in Chinese business culture: trustworthiness, integrity, humility when appropriate, strength and the ability to think collectively, we - versus you and I. All of these qualities make the Chinese feel safe, as guardians of face. The Chinese think long-term in relationships and so sincerity is advised, as inauthentic or short termist behaviour is flushed out by the skilled Chinese mind and the prolonged timelines for the execution of business deals in China.
Next, communication. The Chinese value succinctness. Unnecessary wordiness indicates poor analytical or strategic thinking - qualities highly prized in all professional and business classes in China. So streamline your communication. Respect the public face of your Chinese counterparts by avoiding idioms with which they may be unaware, (eg, belt and braces, ball park, etc) and avoid direct or untabled questions which risk loss of face for individual team members.
In China, meetings are for exploring goals and celebrating success. Much of the time, business outcomes happen outside the formal meeting room, and so avoid language which is confrontational, or driven by time or outcomes. It feels pressurising
and conflictual to the Chinese, whose core language Mandarin is, uniquely among the languages of the world, primarily built for consensus and agreement.
Lastly, protocol. Much of the business which the Chinese carry out is done, ''on the table''. The social context is critical in China and the boundaries between work and social engagement are fluid and minimal. Remember that your goal for success and respect in China is to enter the elite category of ''trusted business friend'' to the Chinese. So respect for the tradition of sharing food and the many rituals that accompany it in China, is primordial. Knowledge of seating arrangements and safe topics are very helpful in achieving a respectful participation in business banquets.
The real process which is being carried out is the building of shared experiences, the observation of character and the building of trust - in essence, bonding - at a level of importance unimaginable in the Western model where professional friendships often have to be encouraged and nurtured by formal teambuilding events.
If we embrace relationships as immense business collateral and the basis of our engagement with China, and if we invest in them with the sincerity and dexterity of the Chinese model we will undoubtedly achieve our business goals. Remembering that relationship drives outcomes in China will encourage us to think relationship first, results second.
However, we have an opportunity to go further. If we can find the sincerity to approach China from the perspective of what value we can add, as well as how we can be prospered in our business dealings, the Chinese desire for identifying trustworthy business friendships, will prove gratefully responsive.
This is where the business opportunities lie. Relating to, rather than ''managing'' China is the business objective of the 21st century. For those who embrace the task sincerely, China will prove rewarding and profitable terrain and will accord us our place in one of the most dynamic economic success stories of our time.