Doing agribusiness in China

This is the third of a series of six papers written for the journal ‘Primary Industry Management’. This one was published in June 2013.

For this paper we had three authors: Xiaomeng (Sharon) Lucock, Malcolm Cone and myself. The work was led by Sharon and formed the first part of her PhD studies.  It is based on case study work undertaken with New Zealand firms operating in China.

The focus of the work has been on cultural differences and how they affect business practices and relationships. About half the interviews were with Kiwis and undertaken in English. The other half were with Chinese and mainly undertaken in the Chinese language.

One of the key emergent  ideas was that Chinese tend to go with the flow. It is all about positioning and being in the right place to take advantage of opportunities as they arise. Contractual details are seen as guidelines based on the current perspective. As the situation changes, then it is logical for the operational and contractual details to also change.

China is a country ruled by people not by law. Of course there are laws, but it is how the laws are interpreted that is important. Harmony is a core value both in life and in business, and coercion is regarded as destructive.

All of the above means that relationships are very important. In business, there are two types of relationship: long term and short term.

Long term business relationships require alignment of interests, so that what is good for one partner is also good for all partners. With long term relationships, it is all about win-win.

These long term  relationships take time to develop. The Chinese have learned from their struggles that trust has to be earned rather than assumed

In contrast, short term relationships may well be win-lose.  The Chinese have become culturally ‘hard-wired ‘by many generations of struggling to value survival above all else. This can lead to opportunistic business behaviours.

The paper is available as a pdf here.
Lucock Woodford Cone Doing Agribusiness in China PIM Jun 2013