KEY POINTS:
Old Kiwi hands in China marvel at the naivety of politicians and fresh-faced businesspeople when it comes to doing business with the People's Republic.
Long before China became "hot", important New Zealand business leaders recognised the potential of the China market and invested considerable time and energy to get a foothold.
China is a far easier place in which to do business than even five years ago but problems of transacting business in a one-party state where promotion in public agencies is sometimes determined more by Communist Party membership than ability remain. The free trade agreement with New Zealand, another building block being carried along China's capitalist road, has not got rid of them.
China's wall of tariff protection was hardly ever a real block to doing business with the economic powerhouse.
The pressing problems that broke many early China-based foreign businesses and inhibited western exporters were more to do with day-to-day issues such as corruption, bad debts, dishonest agents, a decrepit banking system and valuing assets in a country with an ambiguous attitude toward private property.
At heart the West must deal with an alien culture where English is not the lingua franca of most business sectors and where the ways business deals are negotiated and business is transacted are at odds with the free world.
According to Ed Weymes, associate dean international at Waikato Management School, it comes down to a cultural divide.
"Foreign businesses will fail if they do not understand the Chinese way of doing things. There is no need to adopt these ways but merely to adapt to them."
Top New Zealand negotiators might not, in his view, be the right people to win contracts.
"They may be too direct, too forthright and used to drawing a line in the sand and defending it against all challengers. A negotiator with a high level of emotional intelligence and intercultural communication skills is preferable."
It seems that understanding the culture is more important than learning the language.
That puts huge pressure on New Zealand business people who lack language skills and, in some cases, know little of China's history or culture.
Yet such impediments have not discouraged leading New Zealand companies from cashing in on the publicity and goodwill from the free trade agreement to gear their businesses for the projected bonanza it will generate.
China is still a complex market where the best plans can be destroyed by poorly drafted contracts, bad legal advice and over-zealous contract negotiations.
New Zealand Trade & Enterprise's "Navigating China" report on the website www.nzte.govt.nz is perhaps the most practical guide to doing business in China. It contains little of the recent political hype associated with the free trade agreement but much practical information including step-by-step guidance on conducting day-to-day business and many warnings about what can go wrong.
There are no guarantees that even when all the correct steps have been followed that things won't go wrong. Chinese commercial courts are notoriously unreliable where it comes to enforcing contracts, even where the breaches are blatant and actions against errant Chinese companies, officials and agents in foreign jurisdictions are not recognised in China. Western businesses must, therefore, look for security in other areas, not least "getting the culture right".
