Complex laws and cultural differences are perhaps the biggest obstacles American companies have to overcome when doing business in China.
“It ain’t easy,” said Richard Piazza, chairman and CEO of PharmaPrint, an herbal-remedy manufacturer based in Irvine. That’s why PharmaPrint has attorneys in both America and in China. And business contracts are written in English and Chinese.
In addition, it’s a lot easier to get a deal signed in America than China, Piazza said. “Nothing moves at the rate of speed that the U.S. does.”
Then there is the language barrier: “You’ve got to make sure you’re very clear.”
Piazza’s company is finalizing a deal with China New Industries Ventures, a government-funded venture-capital company. China’s herbal health industry is four times that of America’s $2.5 billion industry, so China is an important market for his company, Piazza said.
The Chinese people are learning about venture capital and learning about commerce, Piazza said, “but they’re not unsophisticated and they’re not unknowledgeable.”
He also noted cultural differences should be observed and respected. Piazza said when he was served turtle soup in China with a dead turtle floating in it,not exactly appealing to him,he ate it anyway so he wouldn’t appear rude. The Chinese also don’t de-bone their food, he said. They chop it up and cook it and you have to eat some bones because it’s rude to put your fingers in your mouth.
Tom Yuen, chairman and CEO of SRS Labs, said some of the two countries’ business philosophies are very opposite. China has few business theories about managing a production floor, operations or inventory. American business on the other hand is “very systematic and very disciplined.”
SRS Labs, bought Valence Technologies Inc., a 230-employee Hong Kong chip designer and consumer-electronics manufacturer, in 1998.
He attributes his toehold in the China market to his prior work experience in China and his Chinese heritage. Born in Shanghai and raised in Hong Kong, Yuen has leveraged his experience as co-founder of Irvine-based AST Research. He helped AST attain the largest share of the PC market in China.
Yuen also points out that employee expectations in China are different than in America. In China, employees expect lifetime employment, he said. They also expect dormitories and eating facilities at the factories. Employees want to feel part of a family in China, whereas in America, employees punch in and out. And if an American employee is doing a good or bad job, the boss says so, “but in China, you may not be so open.”
