Yeah, I voted. First I liked them both, then hated them both, then stopped caring, then got scared, then I decided. Usually I just vote against people — this time I actually voted for someone.

If you’ve got a ballot lying around, do something with it. It’s pretty simple and takes no time at all. Ballots are supposed to be postmarked the day before the election, so now is your moment.

And what about those of you who have never registered or received your ballots? Lie. Tell people you voted. Tell them you voted early. Tell people that you always vote and that everyone you know votes.

Nothing makes Americans look dumber than non-voting. Especially this time. So you know what you have to do. Get your story straight and stick to it. Live it.

Fedex is delivering ballots free of charge. http://shanghai.usembassy-china.org.cn/100708vote.html

Here are the addresses in Shanghai:

“Express Your Vote” Shanghai FedEx Drop-off Locations
US Consulate American Citizen Services Center, 1038 West Nanjing Road 8th F
美国驻沪总领事馆，南京西路1038号梅龙镇广场8楼
Hours: Mornings 8 - 11:30, Afternoons 1:30 - 3:30, closed Tuesday afternoons

American Chamber of Commerce, Suite 568, Shanghai Centre, 1376 Nanjing Road West
上海美国商会 中国上海市南京西路1376号上海商城东峰办公楼568室
Hours: 9:00 a.m. to 5:30 p.m. (Mon – Fri)

FedEx Xuhui Station, No. 28, Lane 411, Shi Long Rd., Xuhui District
徐汇区石龙路411弄28号
Hours: 10:00 - 22:00 (Mon - Fri), 10:00 - 18:00 (Sat)

FedEx Changning Station, D3, No. 291, Sui Ning Rd., Changning District
长宁区绥宁路291号D3
Hours: 10:00 - 22:00 (Mon - Fri), 10:00 - 18:00 (Sat)

FedEx Zhabei Station, No. 39, Lane 709, Lin Shi Rd., Zhabei District
闸北区灵石路709号39号
Hours: 10:00 - 22:00 (Mon - Fri), 10:00 - 18:00 (Sat)

FedEx Jinqiao Station, No.615, Xin Jin Qiao Rd., Pudong
浦东新金桥路615号
Hours: 9:00 - 24:00 (Mon - Sat)

FedEx Pudong Airport Gateway
Warehouse E, Int’l Express Center, No. 600 Hai Tian Wu Rd., Shanghai Pudong Int’l Airport
浦东国际机场海天五路600号国际快件中心E库
Hours: 9:00 - 24:00 (Mon - Sat)

Please note that many FedEx outlets in Shanghai will not participate in the “Express Your Vote” program.

I’ve been on the road this week - talking to logistics managers in Shenzhen, US buyers in Jiangsu and academics at Fudan University. The sky isn’t falling for most of these folks in China just yet - but no one is talking about how tough it is to expand or how much trouble they’re having finding managers anymore. It’s just about holding ground right now. No big surprise there.

The really interesting development is what’s happening in my inbox. I’m hearing from lots of old friends and friends of friends - all showing renewed interest in China. But they’re not talking about investing or setting up businesses — they’re curious about the chances of finding gainful employment in China. Some of these people are recent grads trying to get a bit of real-life-China experience, but some are bankers and financial managers with serious experience.

They don’t know much about China — but they are convinced that it is the answer to their prayers.

Those Who Can, Teach

This is the beginning of a very one-sided love affair, if you ask me. I don’t know what Wall St. refugees think is waiting for them in China — particularly the ones who speak fluent Trader-ese and no Chinese. Unless they are willing to work 100% commission cold-calling cynical expat managers about offshore investing miracles, there are going to be few takers for their highly specialized talents. Aren’t the Chinese interested in learning about the securities business? Yes and no. Wall Street-style finance wasn’t too highly respected in China last year — and now it’s akin to a war crime. Chinese bankers aren’t chomping at the bit to learn how to repeat western mistakes.

Lot’s of these people will never get past the planning stages of their China adventure. Others will decide early that they won’t be able to transfer their skills. Many of the younger ones, disenchanted with their old industry or willing to take the time to build up their China CV, will follow in the footsteps of those that came before them. Many will end up teaching English and studying Chinese. The lucky ones will get to sit in the same room with professionals in their field and will doubtlessly try to parlay their new ‘guanxi’ connections into lucrative careers. Most will be teaching kids the finer points of grammar and pronunciation.

Are any of these folks appropriate for your business? Possibly. We’ll be seeing more of these economic refugees looking for a new life in Shanghai and HK if the global economy fails to spring suddenly back to life by the first quarter of 09. Now it’s the finance people, but soon you’ll be seeing CVs from a broader cross-section of professions and industries.

Choose carefully, and remember your own situation. There’s a good chance that the worst of the economic downturn in China will occur while western economies are already starting to recover. Make sure that any China newbies you hire will A) help you survive the downturn by reducing your overall costs or improving your SHORT TERM revenue generation, and B) stick around to put their new experience to work after western firms start hiring again.

You will probably want to take your time. The selection of CVs may be improving soon.

A recession isn’t a ‘get out of good-management responsibility free card’. As the economic problems set in and business falls in China, it’s to be expected that middle managers revert to an earlier, uglier ‘mei you ban fa’ style of problem solving. ‘It’s the recession. No one is buying. There’s nothing we can do.’

When low level managers do this, it’s annoying. When middle managers do it, it threatens the future development of the business. But when senior people do it, it’s just throwing in the towel. You may as well close up shop now. When senior managers and owners lose hope then the business dies.

Senior management and the recession in China

Now is the time to do a quick audit of your own expectations about the coming tough times. I understand you want to be a stoic, tough-guy optimist and say that it will be over soon. Or that your business model is so robust that you’ll come out of this stronger than ever. But there’s a good chance that the recession engulfing the world’s economy will be deeper and longer than anything we’ve seen in a long time. For many young entrepreneurs and managers, this is the first serious economic test you’re facing. Make sure you get a few things right from the get-go.

This is no time for phony bravado OR Cassandra-like gloom.

You don’t want to be the dummy that announces that your business is an unstoppable juggernaut on Monday - and then has to tell your staff that payroll will be late on Thursday. This economic trouble can go on for 2 years – you need the faith and good-will of your team, your suppliers and your clients. Learn from other failed leaders – the minute phony optimism becomes transparent, ‘Mission Accomplished’ becomes a punch-line. It’s the same for ‘we’re unstoppable’ or ‘tough times make us stronger.’ This kind of bravado is great if it’s true and you can sell it to your team — but the early phase of a long, hard recession is no time to make yourself look like a laughing stock.

Conversely, if you go to the other extreme and let fear and desperation get the best of you then you are going to lose the respect and support of the people you need most. That might not seem like the end of the world right now – but it may just spell the end of your business in 6 months. You’ve got to secure the loyalty and devotion of your team now – while you still have the chance.

Is a global recession going to mess with your China business? Yes. Is it fair? No.

No, bubbie, it’s not fair and it’s not your fault. You did everything right. You took the risks, you worked hard to build a business, you came out here at the right time, you stuck it out through the tough times. And now that things are FINALLY looking good, along comes some economic death-storm that destroys everything it touches.

If you are like a lot of expats running businesses or departments in China, you’ve probably already passed through the first stages of Denial and Isolation.

Just 4 more stages to go until you reach Acceptance. Hope you get there quick.

The 5 stages of grief are

Denial & isolation
Anger
Bargaining
Depression
Acceptance

Denial — “The recession won’t hit China at all because of China’s big reserves, large domestic market and untapped potential markets in the interior of China. The government won’t let it happen. China doesn’t hold any sub-prime debt. The government can create demand at will.”
Heard it all, said most of it. It’s time to move on.

Anger — “It’s _____’s fault. Bush. Greenspan. Oil prices. Global warming. America. Europe. Wall Street. ”
But sometimes expat managers blame their own team for things that are completely beyond anyone’s control. During good times that can come off as demanding and quirky. During bad times it’s just nuts and dangerous. You can rant about stupid presidents and business leaders across the globe - but the moment you start ranting at your own people you cross the line into ‘unsteady under fire’. A recession can last years. That’s a long time to wear the ‘unsteady’ label.

Bargaining – “Ok, there will be a downturn, but it will only be minor — maybe dropping China’s GDP to 9% - 8.5% at the most — and it will mostly focus on manufacturers… “
Nope. Doesn’t work like that. If you are new to recessions, you have to prepare for just how deep and broad they can be. People like to think of ourselves as rationale, responsible, thoughtful and dammit - yes, even a little courageous at times. But when markets panic we all turn into livestock and stampede across the landscape like scared, dumb animals. There is no rationality. When people stop spending and banks won’t lend, then there is no bottom. You can’t really map a recession until it’s over. You can’t analyze or predict what it will do or for how long.

Depression. “This is the end of the world. I’m going to end up at a Toyota dealership on the outskirts of Schenectady. My life is over.”
2 issues with depression in China. 1 - If things get really tough, the Chinese will bum out far more than you will. It will take a while. They will be tough and optimistic in the face of overwhelming odds — and then one day everyone you know will become semi-catatonic at the same moment. Chinese market sentiment tends to move like a pendulum. It’s all good or all bad. Don’t get sucked in to the Chinese gloom-tsunami. 2 - No one likes a whiney boss. Tough up. You’re leading people now. No screaming, no crying.

Acceptance. “Holy cow. We’re gonna have to get rid of 2/3 of the staff and cut our prices by 40%.”
Acceptance doesn’t necessarily mean that you’re coming up with great ideas, but it does mean that the blood is returning to the problem-solving parts of the brain. You are now in a position to make a plan about your own future. You can alter your business model, reduce or enlarge the scope of your business and take other actions that will influence your own fate. The sooner you get here, the easier it will be to make the tough decisions about how to survive this thing.

Some visitors from the US are in town meeting with suppliers. They’re in the bulk chemical industry. Business has been hit hard, but these guys have been around for a while and know how to manage a downturn. They’re doing exactly what they should be doing, and are actively managing their supply chain and cementing their relationships.

About 1/3 of their meetings were cancelled. The Chinese suppliers just didn’t think it was worth the effort to come to Shanghai to meet.

These guys aren’t huge buyers, but they are serious, long term and committed. Just the sort of counter-party the Chinese are supposed to be geared for.

What’s up? Are Chinese suppliers in the sector still feeling confident? Are they oblivious to what’s happening around the world? It’s possible that Chinese suppliers of some materials and products are still doing well. But there’s another possibility — the Chinese sell-side doesn’t have that many moves left in its repertoire.

It’s not like the Chinese were sell-machines before the recession. China was all about cutting prices low enough to make buyers find them. They had the lowest number. For many Chinese companies, price was always the sole advantage.

Now that they don’t have the lowest price - or the lowest price isn’t enough to spark demand - China’s sell-side isn’t reacting consistently. True, many of them do they not believe that the global slowdown is their problem. But the real issue is that Chinese suppliers have very few options for dealing with a low-demand trend even if they want to. Their price is already low - and dropping it by 2% per kilo isn’t gonna make empty factories and full warehouses balance out. Aggressive price cutting and opportunistic selling are the only moves a lot of Chinese suppliers have. Those that had the capacity to offer better service, higher quality or innovative value-added features have already done that.

So where does that leave expat managers in China?

Don’t give them the opportunity. You know what’s coming — Chinese competitors are going to try to move into your space and drive prices down. Beat them there and force potential competitors to look elsewhere for markets where predatory pricing will work.

Price isn’t everything. Pushing on a string doesn’t work. You have the capacity to experiment with other options. Your Chinese competitors might not. Make sure your offering still has value to your customers. If that means adding service or re-tooling your product, then that’s what you have to do.

CRM - Customer Relations Matter. Reach out to your clients - and suppliers - just to maintain contact. This is no time to be absent. Engage with your clients, prospects – and suppliers – just so that they remember who you are and what you’re about.

In a recession, the only real shortage is of buyers. You have to make sure you hold on to ones you’ve got before you go looking for new ones.

A hearty Happy Wednesday from Shanghai. I’m sick of talking about how awful everything is going to be, and have been struggling to find a bright side to global business slowdown.

First, you get to watch your enemies die slowly and horribly. True, you are also slowly (and horribly) going the same way – but if you are careful and strong and fortunate, you will live to see them perish. Boo-ya!

Second, as the pace of business slows you now have the bandwidth to start instituting those plans, ideas and refinements that you’ve been pushing back on all this time. Everything that has been Priority #2 on your To Do list since you set up the business.

We’re gonna look at the second option t]day.

Cheap ideas for squeezing blood from a stone.

Ideal recession-tasks are the knowledge-intensive activities that are cheap or free, and will help you recover faster when people start spending again. If possible, get teams working on theses projects. Make sure that you are recording and storing the output – some of these people won’t be around in a year.

Slow-market tasks:

1. Refine business plan – especially marketing. And finance.
The good news about formal, realistic business plans is that they really can help your think strategically and rationally about your company. The bad news is that you never have time to prepare integrated Operating, Marketing, Financing and Manpower plans, like you are supposed to. Well, you have time now. Start with the marketing plan – because that’s the one that will have changed the most. Finish with the financing plan, because that’s the hardest, and potentially the scariest.

2. Review printed or written material.
Remember your big CRM (customer relationship management) plans? This is the kind of labor intensive, time consuming project that you always knew was important but never had time for before. Whether it’s a newsletter, blog, website or email campaign, now is a great time to reach out and communicate with your market. The great thing about a CRM plan is that it will help you recover faster and stronger when the economy turns around. It can also be done on the cheap if you want to.

3. Review customer service procedures. MD – phone home!
Test your customer service process to make sure that those precious clients who are trying to reach you don’t run into any roadblocks. Call your own office (or have someone else call) and try to get the sales floor, the marketing department or the CEO. Sign up for you own newsletter online. Ask for a brochure to be sent. Fix these bottlenecks right away, because when times are tough every client is crucial.

4. Re-write training materials.
Training is more important to you than ever, because the flow of new high-caliber hires is probably going to be pretty low. Start by reviewing your orientation plan. Then do customer service. This is a great activity to delegate to new managers or potential leaders.

5. Competitive analysis and market research.
Ok, this one is probably going to be a moving target – but having an updated SWOT analysis is always a great idea. If you think that you will be focusing more on the China market in the future, then researching and targeting should be your priority.

Most China business strategists who wrote their original business plan more than a few months ago probably factored in a hefty GDP growth rate in the 10-12% range. Now that we’re looking at significantly lower consumer spending both abroad and within China we have to adjust to new realities. Depending on your industry and target market, we may be in for a long period of slow or no growth in China.

Recessions can last for years. Success isn’t about rocket-fueled growth now – it’s about out-lasting your competitors and staying alive. You just want to be among those still standing when consumption starts to pick up again.

This may be a great time consider tweaking your China business model. Here are a few ideas that may help:

1. Refine your market target. The days of throwing stuff at a wall to see what sticks are over. Know more about your target market than their ages and income. You have to work harder to get people to spend in a recession, and that means understanding their idea of value.

2. Control the overhead. Manpower and rent are hard to lower later. It’s hard to fire in China so don’t be too quick with that help wanted ad. Everything in China looks cheap until you add it all up — especially salary and associated HR costs.

3. Outsource smart. Consider starting with market research. Hiring experts for highly targeted tasks could end up being a great investment – especially if it helps you control your headcount and sell more.

4. Trim expansion plans. This will be a tough one for some bosses who envisioned growing their Shanghai business into a global powerhouse. Can it still happen? Yeah – but probably not for a while unless you have already budgeted and financed a concrete expansion plan. If you thought you could finance your growth from current profits and plug gaps with quick bank financing, you may want to reconsider.

5. Take another look at the REAL Chinese middle class. That means people earning 4-10,000 rmb per month in most of China. Make sure you have localized and researched. If your business model is geared towards the “Benz Chinese”, you had better understand that this is a very small, over-sold group. There are, in fact, large numbers of real middle-class Chinese earning less than 10,000 rmb per month, but their purchasing behavior is very different from the beautiful people you see on the Bund.

To quote Paul Denlinger at China Vortex, ‘the dumb money in China has already been made’. If you are trying to sell inside China and your target market is expats with money to burn, then you have to reconsider.

There will be fewer expats as large firms localize and MNCs downsize.

The expats here are tighter with money – and a good deal more skeptical and cautious then they once were.

There will be more competition from all quarters for the shrinking expat dollar. China is relatively more expensive than it used to be as recession knocks the wind out of US and Euro prices for things like real estate, investments, travel –and just about anything that can be bought online.

A leaner, more modest operation that targets a highly focused market segment makes sense in any recessionary environment — particularly for expat managers and owners doing business in China.

Last week I had lunch with two former Chinese staffers. They are both young professional women, living at home with their parents and holding down interesting, good-paying jobs at a Shanghai WOFE. When I asked them about their feelings on the economy, they didn’t seem to really understand what I meant. They, like many Shanghai office workers, are blissfully oblivious to the problems affecting the economies around the world. One of them told me that if things should turn bad in China (and it was very unlikely), that they would just find new jobs.

Expat managers who think that the global recession is already starting to show up in China need to be very sensitive to the pendulum-like nature of the “Chinese street”. Chinese switch from boundless optimism to grim depression quickly and without warning. Far more than in the west, local sentiment tends to move in lock-step from one extreme to the other. If morale in your shop does turn sour, you will be hard-pressed to turn it around.

What can expat managers do to maintain high morale among their Chinese workers?

Expat managers will find their options constrained

Downsizing in China under the new labor contract law will not be a simple thing. Staffers with contracts (and that should be just about EVERYONE in your company) have the law on their side. Lower sales or higher expenses are not valid reasons for layoffs or mass firings. Neither is “bad attitude”. Tough-guy tactics that keep US workers panicky about getting fired - and therefore compliant and desperate - simply don’t apply here. No, you are stuck with the team you have, so it’s your responsibility to make sure that you get the most out of it. And in China, that means keeping morale strong.

5 things expat managers can do in China to maintain workplace morale

Stop looking Crazy, Blind or Clueless
If profits are down or the sales pipeline is looking thin, there’s a very good chance your Chinese team already knows. In fact, they probably knew before you did. Optimism and a positive outlook are great — as long as it doesn’t make you look clueless or crazy. Workers like a boss who believes in the company’s future - but only if they think he can really execute. If orders are down because US customers are broke, you have to acknowledge it. People are willing to follow a leader through tough times, but only if it looks like they will do better with him than with someone else.

Talk often, Say little Don’t clam up now. This is the time to be visible, to have an upbeat but sensible outlook about the future and to keep your team up-to-date about company business. Beware of the other extreme, however, and don’t start conducting impromptu economic seminars stressing how bleak things truly are. Develop a ‘recession mission statement’ that gives your team enough information to maintain their faith in you and quash rumors, but not so much data that they get lost in a sea of bad numbers. Consistency and transparency should be your watch-words in tough times.

Reset goals Those optimistic goals you had for sales, expansion and new product lines should be revisited. Remember - your team doesn’t necessarily feel that they are in a crisis. If your managers and staff have been working on an expansion or a new product for the last 9 months, they are going to expect to execute on it according to the original schedule. You will have to sit them down and reset some of last year’s ambitious goals.

Handle layoffs and firings properly Chinese contract law does allow for firing workers on probation and in the case of negligence or underperformance, but you have to handle it very delicately. Experienced expat bosses know that it is usually cheaper and easier to buy off the unwanted employee and persuade them to quit in exchange for an attractive severance payment. The second-to-last thing you want right now is an ugly court case for improperly terminating someone. The absolute last thing you want is to piss off the remainder of your team for bullying and exploiting one of their friends.

Leave the door open to 2-way communication One of your salesmen comes to you and complains that his commissions are lower than he expected. You bite his head off and tell him that he is lucky to even have a job, and that if he spent more time selling and less time whining the company wouldn’t be having these problems. Well, you’ve succeeded in shutting him up — and you’ve probably silenced everyone else in your company. They won’t come to you with any more complaints - or questions, concerns, observations, ideas and suggestions. Chinese staffers tend to be much more reticent and passive then their western counterparts — even when they have something important to say. This is the time to encourage dialogue - not stifling it.

People walking around like there’s no problem are part of the problem.

If you aren’t tweaking your business model than you are making a very large mistake.

Optimism is great, but now is the time to face facts. The global recession is affecting business in China unevenly - but it is definitely going to start having a bigger impact on all expat managers in China. Some of you are already feeling the pain of collapsing orders, are struggling to keep a recent start-up afloat, or are just starting to notice a deceleration in your earnings growth.

A certain type of manager - particularly those from the US and UK - think that their job is to encourage high performance by maintaining an upbeat, business-as-usual demeanor. Great. Keeping morale strong is one of the most important thing a manager can do.

But just make sure you don’t cross the line from OPTIMISTIC to CRAZY & CLUELESS.

How do you talk to your staff about hard times ahead?

Senior managers don’t like admitting that they don’t know what’s going to happen next — especially expat managers of multi-cultural teams in China. You have 3 ways to handle management-staff dialogue when it comes to a sustained economic problem.

1) Denial. Ignore the problem. Say nothing. Don’t let them say anything. What recession? What downturn? If orders are down, it means the sales and marketing teams aren’t doing their jobs properly. Get back to work and stop bothering me with all of this crybaby stuff.

2) Deathbed Confession. Orders are falling - expenses are not. Your reserves are gone. Your best people are assessing other options. Confronted with the pressures of a ravaging recession, the desperate and despairing boss calls all of his people together and tells them what they already know — the train is off the rails. (This technique works best if you have spent the last week holed up in your office with one or two key people and act emotionally unstable and manic-depressive when you do emerge from your fortress-office.) These boss-staff meetings work best if you bring in a chart or visual aid demonstrating just how bad things are — and have been for the last 6 months. Then ask if they have any ideas for turning around the company’s fortunes. Ridiculing and deriding the first staff suggestion insures that the meeting will be a quick one.

3) Information policy. Use every formal and informal medium you have to calmly, honestly explain the situation. Highlight the good news, but be as honest as you reasonably can about the bad news. Incorporate a regular update on the economy and the impact of recession on China and your business. Write a brief column or letter in the company newsletter. This transparent policy has three effects:

* Your bad news might not be as bad as what they think the bad news is.
* Head off and neutralize morale-killing rumors that will make your best people leave
* Make it boring. Yeah — make the recession boring. Talk it to death. Stop the whispers and the rumors by taking the secrecy and intrigue out of the equation.

If expat managers in China decide to go with Option 3 (intelligent transparency) will find that they have the most support from the people they need the most in the event that we start to feel the full force of a recession in China.

Yesterday we talked about the importance for expat bosses in China to do everything possible to hold on to key managers. Now let’s take a look at what the recruiting and hiring process will look like in a post-boom China.

Isn’t the China HR market on sale now? Can’t you hire from the ranks of the battered MNCs with hiring freezes and orders to slash headcount? Yeah, but remember — your cash flow is low, your profit sharing plan is underwater and commission levels are depressed. Your ability to make big hires is going to be as restrained as any other major prospective expense. Expat entrepreneurs with a help-wanted sign in the window (or on 51Job) are going to be getting the best CVs they have ever seen in China. But that doesn’t mean you’ll be hiring experienced Wharton MBAs for rmb 5,000 per month.

Just because they decided to hold a global recession doesn’t mean your China HR challenges are any easier.

China HR market will get looser and less rational in a recession

Most Chinese still see the global slowdown as someone else’s problem. It’s possible that migrant factory workers in Shunde and Dong Guan are stressing out about their prospects — but the Starbucks set in Shanghai is still gliding along with their head in the clouds. They like feeling like they hold all the cards at the HR table, and they show no sign of moderating that view. The recession is an unfortunate event happening to someone else, somewhere far away — and it’s probably their own fault or the result of a character (or cultural) deficiency. Sad, but not a China problem. Nothing to worry about — and certainly no cause to change expectations about salary, title or perks.

Don’t be surprised if that optimism persists even as MNCs start reducing headcount and medium sized businesses start declaring bankruptcy. The new “China HR Thing” that those damned bloggers talk about just may be the disconnect between the dismal economy and the outrageous demands for gold-plated compensation packages from unemployed managers with 8 months of experience.

Who is selling whom?
Lots of owners and HR managers will walk out of job interviews feeling very confused. Your attitude is that you control the last seat in the last life-boat on the Titanic. The guy sitting across from you is acting like you are damaged goods. China was already feeling more confident and self-assured BEFORE the Dow started spelunking - but now Chinese yuppies will start regarding westerners like the Ancient Greeks. Very sophisticated in their day — but that day is now long past.

So where does that put the expat owner who wants to make a strategic hire?
Chinese still prefer large, famous, international companies that pay well, promote fast, train often, and look impressive on the business card. Small and medium sized firms are even more suspect now than they were before the economy went to hell. It may seem like they are interviewing you. What can you do to make sure that your post-boom recruiting is the silver lining in this crisis and not another drain on your finances, resources and mental health?

Don’t oversell. Just because the Chinese interviewee doesn’t think that the recession is his problem doesn’t mean he thinks its not YOUR problem. This is no time for bravado. Remember, unless you are a Fortune 500 household name the kid across the table is 99% certain you will go bankrupt in a week. If you are expecting him to beg and plead for a spot on your team, you may be very mistaken.

Create a compensation plan that makes sense. If you think you can get away with the same salary that you offered last year — but effectively no commission, profit share, bonus or other variable compensation plan, then think again. One of the hardest thing for owners to understand is that workers who used to get bonus and profit share worth 25% of their base salary now feel that they are suffering from a pay cut. This is probably a great time to revisit your compensation plan for the entire team — because if your new hires get better treatment then you are going to have an enormous morale problem.

Don’t bad-mouth anyone. Chinese are much more team-oriented than westerners. You may be stressed, panicked and bitter about your shattered plans, but your interviewee isn’t. Keep the conversation professional, focused and upbeat. Entrepreneurs tend to get defensive about their business — but explaining why there is a vacancy in your shop shouldn’t be about character assassination. If you had to let someone go — or if they moved on because of falling real compensation (or falling real confidence), then explain it quickly, clearly, and move on. Remember — in slow times, team morale is critical

Focus on long-term The next couple of years are likely to be pretty dismal. Don’t hide from that, but don’t make that the central theme of your company description. Focus on your long-term prospects, and talk about where you expect to be in 3 - 5 years. If your guy finds a 3 year planning horizon unrealistic, then maybe you don’t have an appropriate candidate in front of you.

Use delegation, visibility and titles to make up for constrained funds. You may not be able to pay out big salary and bonuses, but you can make up for that with impressive job titles, highly visible projects and other signs of power and status. Don’t count on this erasing the salary issue completely — but it will help.