There was a group of 12 young people in a room. 7 of them some degree of Chinese (from local Mainland to American-Chinese). 5 of them Western.

I asked them whether they agreed or disagreed with the following statement:

“A bad decision is better than no decision.”

100% of the western kids said “better to make a bad decision’.
100% of the ethnic Chinese kids said ‘Better to make no decision’.

Common sense isn’t common (though it can be sensible)

Common sense is different in each culture. If you grew up in an American household, you were probably taught that action and activity were better than indecision and inertia. Chinese people think this is nuts. They understand your intellectual reasoning – that action increases knowledge and forces progress – they just think it’s insane. When confronted with a new and potentially risky situation, Chinese will wait for more information or for the environment to change. Chinese business people don’t mind the risk of loss – but the risk of uncertainty really bothers them. They would rather wait and delay making decisions altogether until the situation clarifies.

Significant Cultural Difference => Significant Commercial Difference

The “bad decision vs. no decision” discussion isn’t a new exercise. It’s based on some old HBR article that’s been kicking around forever, and every International Management instructor uses it at some point. But when markets were jumping, the cultural difference favored western decision-making. The rising tide was lifting all boats, so it didn’t really matter which one you hopped into – as long as you picked one. The losers were the guys who waited too long to make a choice and lost their opportunity.

In choppy or declining markets, the advantage shifts to the conservative decision-maker. Over the last year, the quick and the bold were hammered. People who thrash around in the quicksand of collapsing demand are the first to get sucked under. When the situation is as unclear as it is right now, the downside risk of loss starts outweighs the upside opportunity for gain. Right now we are getting mixed signals – and there is a lot of talk about inflation and a second recession in 2010 or 11. China-based managers may feel that they have enough to worry about, but there’s always more.

One of the strengths of the go-go American can-do attitude is that we always look for the light. We keep moving, keep trying to make progress. But in China that can lead to friction when our Chinese partners, clients and suppliers take exactly the opposite path and hunker down to wait out the bad times.

Still not time to chomp at the bit

We’re moving back to the ‘hurry up and wait’ mode of Chinese business. Everyone wants to see all the numbers and brochures like they’re about to make a decision – but then nothing. Even though this is traditionally busy time in China, business is still pretty dry for lots of us.

China’s international management set is advised to take it slow. Remember – the most dangerous thing about a recession isn’t its severity, but rather its duration. Just because you are ready for big action doesn’t mean your colleagues and clients are. Keep supplying your prospects with data and keep the contacts alive. The last thing you want to say to a potential Chinese client or partner right now is, “it’s now or never”. Under these uncertain market conditions, they will invariably tell you “never” – and mean it.

Read a different perspective on the issue at ChineseNegotiation.com
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This entry was posted on Wednesday, April 15th, 2009 at 11:28 am and is filed under Managing in China, Bear wrestling. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.