So you've decided to pursue a joint venture in China, but aren't sure how to find a partner. While you focus on finding someone with similar goals, Anthony Yen suggests you think about the differences, particularly the cultural differences.
Such as assuming that the eleventh-hour demand that sounds unreasonable is a deal killer, said Yen, chairman of ABC International, Inc., a Cleveland-based consulting firm. Yen said he has been sourcing material in China since 1971.
Learn to expect such late-inning negotiating positions and keep a concession in reserve, in part so both sides can ``save face,'' he said.
Saving face is important in negotiations in China, said Yen, who suggests hiring an agent who then can take the blame for any ``miscommunication'' in the talks.
``You need someone to help you negotiate - you need what I call a `scapegoat,' '' said Yen, who said he has helped organize more than 60 joint ventures in the past quarter-century.
Yen spoke at the Crossroads Forum, an event on how to organize a joint venture in China, sponsored by Injection Molding Magazine. The forum was held Jan. 8 in Anaheim in conjunction with the Medical Design & Manufacturing trade show.
Other speakers at the forum urged flexibility.
Bruce McClain, an associate professor of accounting at Cleveland State University and the owner of Cleveland International Trading Co., which imports industrial goods from Asia, cautioned that written contracts can have different meanings in China than in the United States.
That's not always a bad thing, he said.
While it can have disadvantages for U.S. firms, it also means that Chinese firms are less likely to resort to a lawsuit to settle a problem, he said.
``Contracts don't mean as much to the Chinese as they mean to us,'' McClain said.
It's also important to do your homework and assert your rights, said James Zimmerman, a Beijing lawyer with Cleveland-based Squire, Sanders & Dempsey LLP.
For example, don't accept at face value statements that every dispute must be arbitrated in China, said Zimmerman, who has practiced law in China for five years.
Chinese law allows arbitration outside the country, which can be an important decision because Chinese arbitration standards are not well-defined, he said.
And while he said that the concept of ``saving face'' is an important one in negotiating with the Chinese, he urged some skepticism when someone claims they need a certain concession so their boss does not have to lose face.
U.S. companies also should not be shy about seeking government financial help for an overseas venture, said George MuÃ±oz, managing partner of MuÃ±oz Investment Banking LLC in Arlington, Va.
The Overseas Private Investment Corp., a federal agency, provides loans of between $250,000 and $200 million to companies doing business overseas, said MuÃ±oz, who was president and chief executive officer of OPIC from 1997-2001.
Typically, private banks are more skeptical of long-term loans overseas, but the government set up the fund because it's interested in promoting stability in overseas markets, he said.
The U.S. government loans can account for up to 70 percent of a project, but a company must show that the investment is new and that no commercial bank would loan the money, MuÃ±oz said.