The Six Represents

The Six Represents

The Six Represents? Why this awkward, seemingly grammatically incorrect title? When former Chinese President Jiang Zemin coined his original phrase, the "Three Represents", he articulated the means by which the Chinese economic miracle must balance the needs of its society. Here are President Jiang's translated words that were later canonized in the Chinese constitution: The Three Represents are "the development trend of China's advanced productive forces, the orientation of China's advanced culture and the fundamental interests of the overwhelming majority of the Chinese people."

This concept is also an illustration of the challenges of languages, when East meets West, and the meaning is often lost in translation. To crystallize the Three Represents, the Chinese are proclaiming a commitment to: energetically moving the economy forward, while respecting and preserving their 5,000-year-old culture, and meeting the needs of the modern Chinese society. The last commitment is intensified by the phrase "overwhelming majority," arguably a precursor to the evolution of a more democratic society.

Here are six areas of focus that the Chinese and Western sides need to understand to achieve success in business. These are:

1. Enforcing contracts: How Westerners view contracts largely contrasts with the view of their counterparts. The Chinese jokingly call such divergent approaches "teaching a parrot to sing opera." Historically, the Chinese have viewed a contract as a flexible agreement that changes with times and conditions, resulting in many disappointing and costly situations.

2. Selecting the partner, based on quality and respect: Western companies must carefully screen a Chinese partner so that they meet U.S. standards yet are able to navigate the murky waters of the Chinese bureaucracy. Once bound, the partners must maintain an open relationship based on candor and, most important, respect.

3. Protecting intellectual property: For most Western businesses, this is not a major concern, as the forces of the market play a far greater role in their success by (a) aligning with a partner who has capital at risk, and (b) an aggressive first-to-market strategy. For technologies that require protection, however, there are essentially three forces at work: (a) the Chinese government has shown good progress by formulating and enforcing stricter intellectual-property laws and, of course, its accession to the WTO; (b) Western ingenuity in withholding proprietary elements of any product being produced in China, so the partner or manufacturer does not ever hold "the keys to the kingdom"; and (c) the availability of qualified legal counsel, in China and the U.S.

4. Leveraging the "3M advantage": The foreign partner can contribute three elements to any Sino-Western partnership: Management, Marketing and Manufacturing know-how. China, for all its head-spinning advances since Deng Xiaoping's declaration in 1982 that "to become rich is glorious," still lags far behind the West in management and marketing. Although, in manufacturing, it must be admitted that aging facilities in the U.S. can barely compete with the cutting-edge factories in the China.

5. Repatriating profits: This is a problem that many companies still face, as the Chinese have constructed enticing schemes to enhance profitability. But having stranded income in China is a perplexing issue that multinationals have confronted for years. Basically three avenues are available to Western enterprises: application to the banks and government for export of profits; countertrade of products that can be purchased in China and then resold in the West; and legally funneling profits to a foreign company's Chinese subsidiary. The fourth, and most efficient, will come when the Chinese allow their currency to more freely float against others.

6. Navigating the labyrinth: The complexities of culture, language, custom, food, business practices, work ethic - all part of the Chinese mosaic -create perhaps the most challenging place in the world for a Westerner to conduct business. For the sincere and tenacious, however, the rewards can be commensurate with the challenges.

The solutions are based on common sense: always conduct yourself as though you are a guest in the home of your Chinese hosts; listen more, talk less and do not be afraid of periodic silences during get-togethers; and finally find yourself an honest and capable pathfinder. Whether a Westerner or Chinese national, reward that liaison fairly and never underestimate the importance of having a constant presence in China, not relying on your own shuttle diplomacy.

Gary L. Wolfson is chief executive of Genesis China Inc., a business-development firm specializing in bilateral commerce between Western and Chinese companies. He can be contacted at (561) 988-9880, or at gwolfson@genesis-china.net.