ABC Radio: Good morning Mr Ching. Can I put you on hold now?

CMK: Yes.

ABC: Okay thanks. We are talking about doing business in China. We have heard about the case of Stern Hu, and how sometimes doing business in China can go wrong. There is a case that is mounting against the Australian businessman Stern Hu, but we will not go into the case now. It does bring up the question about doing business in China. We heard about having to be careful about dealings, and we do not want to break the law. But at the same time, building relationships in China is a very important part of doing business. The way of doing business in China is different from many of us in the West do business. There is a book written by Ching Mia Kuang called CFO Guide to Doing Business in China, and he’s on line from Shanghai right now. Mr Ching, welcome to Radio Australia today.

ABC: There are very important things you brought up in your book very early on. You say that the economy in China has been growing at 10% a year and on track to be the world’s largest economy soon. The way of doing business in China is obviously going to be something that the people in the West are going to learn how to do.

CMK: Yes, correct. Exactly because of the huge growth in China, it is important to understand how to do business in China.

ABC: Now, let’s say that some of the things we do in the West need to be turned around to work, like in the West we do a lot of business based on deadlines. We need to have information by certain dates that needs to be said, but you say that a very important thing is to take your time and do not try to push people into doing things.

CMK: Yes. Because in China there are several things that the growth and development takes a certain period of time, and there are certain due processes that need to be carried out. Therefore it is not wise to rush into things. You need to look at China from a long-term perspective.

ABC: It is certainly an attitude of many Westerners that they do work by deadlines. They need to know when they can expect things to be delivered, when mergers might happen, whatever the decision is. Is there any chance that China could start to adapt to the Western way of thinking, or China not change?

CMK: Certainly. We must understand that China has gone through about 30 years of economic reform, and the entire market has about 1.3 billion people that has been opening up to the business world. They are also adapting and synchronizing with the Western world’s ways of doing business, including those you mentioned of adhering to deadlines. This is not new, and has been so for the last 15-20 years. I think that many of those processes that are developing and changing are basically meeting up to deadline and requirements of the international business world.

ABC: So there are changes happening fast. You are suggesting that the West needs to be just a little more aware of the fact that the people may not necessarily adhere to your demands when you want them to do it.

CMK: Well, basically the people has been changing towards that; and certainly because of the vast country, the various cultures, and the different cities and provinces, it does take time, but it has been changing very fast. The Chinese Government has developed and formulated various laws, legislations, policies, rules and administrative regulations to govern both local and foreign businesses. With regards to these rules, there could be those relating to investment, accounting, taxation, and they are continuously been updated very quickly with the latest reform requirements. The outside world needs to be familiar with these rules and regulations.

ABC: The other thing that is, of course, very ambiguous about building relationships. It is said very important to have relationships first, not just do business first, and then have a relationship as a consequence of that business.

CMK: Yes. I think in most countries and most cities, when people do business it is really very much related to relationships, probably much more in China, because of its long culture history, and the vast country. Hence their specific cultures, relationships etc need time to build up.

ABC: I think a lot of Westerners have heard that face is something very important in Asia, especially not to be critical of the person you are dealing with who may be of Asian background. But your book also mentions that “yes, give face, but not too much face”, as one can actually overdo it. Where is that line drawn?

CMK: It is not exactly something that we could easily draw a line, because it takes time for businessmen or women to be particularly aware. Over time they need to practice or through interaction in different business environments. Generally, people in China are very warm, and do welcome foreign investments like most countries do. In terms of relationships and cultural awareness, like those of “nodding and bowing”, most of the time you will find that your China counterparts would be very glad to teach you. You just need to ask casually when you see but might not understand it initially. Be a little aware and do not be shy; just ask. As time goes on, and as you practice, you get more familiar with those cultural behaviours of people and you can build a longer relationship.

ABC: Even now, politicians are finding it a problem dealing with diplomatic incidents. We have seen quite a few happening to China and Australia. Australia do not know how far to go without losing China’s face in the discussion.

CMK: I think in the political aspect, it could be a little more sensitive because there are certain political protocols in the government level. For foreign businesses and politicians, they need to be a little more careful in that respect.

ABC: in what we are talking, we do not want to touch the case Stern Hu, who was called this, this is businessman, who has been arrested, not charged yet with anything. But this just shows sometimes, our operation of doing business can be seen differently from China. Sometimes there are some difficult minefields to navigate.

CMK: In relation to this, my only comment would be that I strongly believe in the Chinese Government, like any government in the world, would act in accordance with the law. I have strong belief in the Chinese Government.

ABC: Now, let’s also talk about something very interesting. This was like Australia in the 1960s, where the Pecking Order, specifically hierarchy, is very important in Australia and China. This describes that the group is more important than the individual. What do you mean by that?

CMK: I think in China here, most of the time we stress the community, the development of community where everybody lives in the group, where the importance and benefits of each and every individual has to be taken care of in the group. This is very much seen in the Chinese society here, and most of the people practice that. In terms of formulating policies, procedures, rules and regulations, this is a key importance of the Chinese Government that I think is well taken care of.

ABC: Alright, it is been terrific being here. The book is CFO Guide to Doing Business in China. Ching Mia Kuang, thank you for your time this morning talking to us from Shanghai. We know it is quite early. Thank you again.

CMK: Thank you. Bye bye.