Gee… what would happen if a Chinese company in the US, complained that their systems were hacked by the US government looking for terrorist activity?

Would that be unfair business or national security?

Or what would happen if a Chinese spy plane was forced to land in the US?

The China Google Dance is in full swing….

Someone attacked Google in China.

No proof, as yet, has been found who is to blame.

Allegations have been made… fingers pointed… feathers ruffled… threats… posturing… Basically it’s been a typical week doing business here in China.

Unless definitive proof is found that the Chinese government was behind the attacks, (my 2 cents) Google ain’t going anywhere.

In fact, I won’t be surprised if/when Google issues and apology to China

I, the company Google, apologize to you, the country China. – something like that.

The Western papers are having a field day serving up “Tough China brisket” and Western citizens are eating it up.

Western politicians will use the situation to further their own goals… business as usual really.

Doing business in China is tough.

Period.

Full Stop.

Everyone on the ground knows the playing field is uneven, the rules are interpreted differently and people get hurt when they play by a set of rules that they don’t quite understand.

Pssst… When you are not playing on your own field, take the time to learn how the other field plays the game.  If you don’t like the way they interpret the rules, you can always choose to stay home and NOT play.

China is like Vegas. It’s the house.

Everyone knows that ‘House Rules’ always favor the house and yet, people still keep coming, hoping to win.

It’s China baby…  it’s China.

Ok… This is blatant self promotion. (90% at least… read on why the other 10% actually is doing  business in China related

A good friend of mine works for CNN (guanxi matters).  She read the book, enjoyed it and thought a China SME business perspective would be fresh for CNN .

I did my first interview a week ago, stood outside and froze. Both physically and then when the interview started mentally. I have lectured at a number of universities, done a number of radio interviews, even was on TV once, but this was the first time I had an interview where there was a time delay in responses.  Add that to the fact, that you are staring at a camera and there are voices from all over in your head.  (I’m not crazy… there was a mic in my ear)

I stumbled in the interview. I froze. I couldn’t even remember how to spell CNN.

While I may be overly harsh on myself, as they said it was good. I was very happy to hear there were technical difficulties and I would have to re-shoot the interview.

So herein lies the rub.

China is rough and tumble at times, and it is THAT which enables you, when you invariably stumble along the way, to pick yourself up, dust yourself off and try it again!

I did it with Sammies, time and time again and you need to see the rough times as being part of the experience.

Sometimes 2nd chances are easy to see, but most of teh time, you have to make them happen.

oh yeah, here is the link to the CNN interview, CNN blog post and I’ll put it up on the media page too.

What a way to end the year and start a new one.

Wishing you a safe and Happy New Year!

Sam

Classic China questions from Josh Gartner (American Chamber of Commerce)

Sam Goodman
Podcast

04 September 2009

Can you solve the Rubik’s cube?

If you can you are in the minority. Most people either don’t care or don’t know.

Let’s say that China is like the Rubik’s cube because most people outside of China either don’t know or don’t care about it.

And just as the Rubik’s cube has made a bit of a come back in the past few years, there is a growing number of people who want to ‘get’ China.

This is for all those people.

When the Rubik’s cube first became popular in 1980, I was 9 year old. I could solve one side. Any side. But always only one side. I never read a book on how to solve the Rubik’s cube. I never really asked anyone for help and as there were no mystical revelations… I never progressed beyond one side.

Not to surprisingly, I quickly grew tired of solving only one side it, put it aside and for over 25 years, never thought about it.

December last year, I was having breakfast with some friends and a buddy showed up with his beautiful new girlfriend, who could do the Rubik’s cube in about a minute. I was impressed.

I figured I’d ask what the ‘secret’ was and she told me in about one minute about a few cube ‘fundamentals’ that I simply never thought about when I was nine. (Did you know there are only 7 algorithms (a series of moves) needed to solve it?)

Well, on December 20^th, I decided to solve the Rubik’s cube before the end of the year. It of course, took me a week to get around to actually buying one, but I bought one on Sunday. Then that night I watched 2 videos on YouTube, (Part I and Part 2) wrote down the seven algorithms and spent about an hour the following two nights. (My daughter was 2 at the time and wakes up in the middle of the night, EVERY night, kicks me out of my bed and then wakes up around 6:30 every morning to play with dad. Needless to say I conk out around 11:00 p.m.)

So at 37 years old, I solved the Rubik’s cube in 3 hours (My mother is so proud). No, I’m never going to solve the cube in under a minute or blindfolded, but that was never really the point. I wanted to ‘get it’ and I did.

Do I understand the mathematical reasoning behind the algorithms? No. But neither do I understand the deeper technologies behind my phone, my car, my computer etc, to be able to work them. You don’t have to.

China is the same. You do not need to have a deep understanding of China’s 5000 year history or China’s political landscape but, without being aware of a few China fundamentals, the odds of you ‘figuring’ China out on your own, are slim.

China is certainly not a toy, nor is it a fad, but for many, China certainly is a puzzle. It doesn’t have to be.

Quick note:

While this may be obvious to many, I feel the need to say this; just because you get the fundamentals of China, or the Rubik’s Cube, there is still no guarantee or short cut to fame and fortune. It is a solid start, which provides you with a tremendous advantage to avoiding failure.

This post is written for all of the MBA students who have gone through the Beijing Sammies Business Case.

As much as I  would love to help you (cheat) by adding some comments to the questions, that would be wrong. wink

Follow up info…

So… what happened next

I exited Sammies end of 2003, post SARS.  (SARS kinda makes question #4 an easy one. No. Don’t invest!) Then, the new owners ran it into the ground in 10 months.

What or how that  happened is the topic here.

I recall at least four main operational mistakes were made that lead to the end of Sammies.  Before those,  I would comment that the person brought in to run the business was an excellent at ‘operations’,  but a poor ‘builder’. The general rule is that a company requires 2 kinds of people to grow; the entrepreneur who has the vision to build (focusing on the what and why of the business) and the operations person who focuses on the who and how to accomplishing the vision.

I was the builder, who also acted as the operations person.  Over the years I did have a number of operations managers but never found one who could be that real partner.  (Not finding that partner was one of my major mistakes.) ANYHOW….

So the  new leader was solid with operations, cutting costs and tightening processes, but not such a good builder. So let’s go over the mistakes.

Mistake #1

The Central Kitchen was a large 2 storey complex (500 smq / 5000sqft) and one of the first things he did was squeeze everything into the first floor and planned on renting out the 2nd floor.  Not a terrible idea, but he began this endeavor before actually securing a tenant for the 2nd floor. So, with Murphy’s Law in full effect,  once everything was moved, he found a tenant… for the 1st floor and began the process of moving everything up the 2nd floor.

Note: he just took over a company that had gone through SARS and if you read the book and hear about My Black Monday, you will know there were other difficulties too, so having to put effort into moving everyone down stairs and then back up stairs in the first few months is NOT where resources and energies should have been spent.  Not to mention how disruptive it must have been to the already shaken staff  (new leader in the house, yo).

Focus on reducing cost – I get that and on it’s own that mistake could have been overcome.

Mistake #2

Right out of the gate and while the up and downstairs circus was going on, the new leader opened 2 new locations… on the cheap… in horrible locations.  It was not a good sign when I got a call from the new guy bragging that he could open 2 locations for less than the price of me opening one.

Needless to say the locations were “dogs”, that amounted to nothing in terms of revenue, were a waste of resources and cheapened the Sammies brand.

Strike 2. But again, nothing fatal and something that could have been overcome.

Mistake #3

This mistake was the worst and one,  to this day, I  do not understand how such an experienced restauranteur could have made it.  Some background info – In addition to running Sammies the new guy was also responsible for 2 other restaurants: an Italian place and an Indian place.

They envisioned the Central Kitchen to be the Central Kitchen for all of these  restaurants.  Good idea. What I thought they would do was, using the Beijing Sammies call in number, be able to tell the loyal Sammies’ customers that you can now get Beijing Sammies and the Italian Brand and the Indian Brand all in one convenient number.

They didn’t do that.

Instead, they mashed all the brands under the Sammies name. Yeah…

Imagine calling in for a Deano Spambeano and get offered a chicken tikka masala.  Needless to say the brand got massacred.  That mistake on it’s own is what kills restaurants.  Seeing it happen to Sammies, just made me cringe.  I could see they were heading off a cliff.

Mistake #4

So what does the investor do after seeing the new guy make mistake after mistake? He takes him out and brings in his wife.  His wife is a local lady who runs his other China business (a sourcing company). They do a good job and she is very capable running the operations for this business.  Please note that this business deals mainly with Chinese suppliers and dealing with Chinese suppliers is NOT a role for a soft and fuzzy person.

Like I said, she did her job well, but that style of operations did not fit with what the Sammies employees were used to. After a while the staff got sick and tired of being treated in this new manner and decided to strike back.

I have said before and for anyone who has experience in China, you will understand that there is no way you can follow all the rules.  Either the rules change  all the time or they are unclear or they can be interpreted in different ways… anyway you slice it, it is easy for someone to walk in and point to where you are doing something wrong. Sammies employed a government relations person specifically to deal with this aspect and she did a great job.  We didn’t have any troubles while she was employed.  The new boss let her go.

Well, with the staff unhappy and looking to fight, they found something and took action.

Quickly thereafter, Sammies was closed.

So sad, too bad.

R.I.P.

Beijing Sammies

1997 – 2004

You made a damn good sandwich!

It happens, it has happened and it will continue to happen; miscommunication, misunderstanding, misinterpretation… which invariably lead to mistakes.

Then, shortly after one of these occurs, I hear pretty much the same sentence repeated across industries and departments.

“I was very clear with my (instructions, goals, plans) and they all said they understood…”.

Yes, there are times when you have in fact been lied to, BUT the goal here is not to play the blame game, but rather to improve your chances of reaching your goals. So let’s start with this common and outwardly harmless reaction.

It’s a proven fact that the language we use affects our thoughts, which shapes our moods and emotions, which influences our perspective, which affect our language… around and around we go.

This reaction is step one that leads into the dark side.

Dramatic pause… (insert your own favorite Star Wars cliché here)

I’m hoping by taking this issue and bringing it into the spotlight, the next time you notice yourself or someone else sliding down the unconscious and mostly unintentional mental slippery slope, you will become aware of it and stop yourself.

It goes so something like this… I was very clear…

I was very… straight forward, clear-cut, unambiguous, unmistakable, unequivocal, indisputable, undeniable, irrefutable, unquestionable, incontrovertible, unarguable, incontestable, indubitable, obviously true, understandable, logical, reasonable… on and on the thesaurus goes…

Bottom line, you were good, right, truthful, proper, accurate… yada yada yada.

And since you did not reach your goal even when, “they all said they understood”, there is at least a trace of the other side being the opposite of you. “They” were… not clear, imprecise, distorted, crooked, warped, bent, twisted, dishonest….

Which smells of deception, façade, fraud, sham, trickery, pretense, cheating, dishonesty, deceit, lying, treachery, duplicity…

Which reeks of, a ruse, artifice, fabrication, mendacity, deception, untruthfulness, corruption, subterfuge, ploy, a con… OH THE HORROR!!!

(That was the most thesaurus fun I’ve ever had.)

Unfortunately as the months go by, such comments cease to be a ‘trace’ and any unconscious or unaware meanings become hinted or veiled insinuations, and then open innuendos and then… it’s really time to go home.

When the truth of the matter is, you thought you were being clear and you thought they understood.

If you are new to managing and/or new to managing in China, be aware that you will probably have to start with measurable, baby-step goals and you will certainly need to begin the process, checking more often than you may be used to.

Don’t forget just because they speak English does not mean they think like you. (Check out High Context vs Low Context Cultures, here, here or here)

The good news is by doing this, you will understand faster who really ‘gets it’, who requires a different approach and who frankly, does not ‘get it’… and probably never will.

So be aware of what you are saying and how it affects you.

Two high school football teams decide to play a match.

The visiting team is from London, England and the home team is from Dallas, Texas.

Both teams love “football”.

Everyone is clear.

Everyone is excited.

Everyone can’t wait to get started and play.

On the day of the match the London team arrives on the field on time and is shocked to see the other side wearing what amounts to body armor.

No one thought to check if the rules were the same.

When the visiting team decides to play on, you can bet there are going to be some injuries and from the home team’s perspective, any injuries incurred is really the visiting team’s own fault.

Before you come to China to play the game of business, be sure to check how the ‘rules of the game’ are different.

Or else, you get what you deserve.

Oh, there are a number of reasons to fail in China, but this one is hands-down the most frequently made mistake. The kicker is that most people don’t even realize this is the source of the mistake, until after the damage is done.

You’re looking at the problem… wrong.

Most people think of a business as the product or service they provide, i.e., the end result.

Business = Product or Service

That’s certainly not wrong, but most business owners actually see their business as the systems or processes that produce the end product or service.

(Of course if you are a one-person operation, i.e. a freelancer, like a designer, then you are the business and all your ‘systems’ probably stay in your head.
I am talking about bigger businesses with a staff of around 10+ people where the systems and processes are codified.)

With the right systems in place, it’s pretty straightforward to train new people and therefore easier to scale your business and deal with inevitable turn-over. From here we get the saying People run the Systems and Systems run the Business.

If this is basic stuff for you, hold on. I’m almost there.

Of course, let’s not forget the final piece of the puzzle, the end user, the person buying – your clients or customers.

So we now have:

Plug in the PEOPLE
Into the systems or processes of your business that produce the final product or service.
Then sell to other PEOPLE in the same country.

Another way of looking at this is your business is “sandwiched” between people on either end. (I used to make sandwiches for a living so I just love being able to elevate the sandwich into a teaching tool)

For the typical business owner in the States, the people on either side (your staff and customers) are very much like yourself.

And therein lies the rub.

When you come to China, the people who operate your systems and processes are not the same as the people back home.

There are subtle differences and it is those differences that cause a tremendous amount of friction in what you see as a well oiled machine.

Think of the game of Plinko.
http://www.kongregate.com/games/StapleGun/plinko

Your systems were created for straight lines. (Just think how much easier Plinko would be if the chips were straight lines.)

Then you come to China and find these circular chips. From one perspective they are like the people running your business, but they’re not, they are circular chips.
All of a sudden, the chips dropped in the same place give an uncertain result. They simply do not fall in an orderly manner.

If that doesn’t work for you, think if it this way; how about making your favorite traditional sandwich but with a tortilla instead. Given the different foundation material, you would either make a slight modification and turn it into a wrap and have a successful result, a good meal or… you make no changes, stick to doing things the way you have always done them and end up making a mess.

When you come to China, understand the people are different and so the systems and processes that run your business that were made for the people back home, will have to adjust accordingly.

And THAT is why simply transplanting your “business” into China, fails.

Sure, this may also mean that your end product or service requires some tweaking too, but that’s another story…

Being an entrepreneur, I just love how just about all the entrepreneurs I come in contact with, all seem to have some form of ADD(Attention Deficient Disorder) and as soon as my book gets mentioned, invariably the next question is ”So. What are the most made mistakes?”

They don’t want the top 10; that apparently is too many. No, they just want me to give them the main main main ones.

Ok. Here you go.

Mistake #1 – Rookie Mistakes

Everyone does them from time to time.

We get distracted or have too much going one, whatever…

@%it happens.

I’m talking about doing something that we know from experience, is a mistake.

And as sure as night follows day AS SOON AS we make the mistake, maybe even before the result is there, it dawns on us, our eyes roll and we brace ourselves for the full impact of what we know is coming.

It may be as simple as forgetting to wipe down the public toilet, or as serious as not doing your independent reference checks for a new hire or partner. Whatever the situation… it’s not good. When you do it to yourself, you grit your teeth, face the consequences and do whatever you have to clean up the mess you just made.

You probably beat yourself up a bit mentally, but God help the poor sap on your team who makes such a mistake.

Experience tells us that every industry, every market, every product, every whatever… has their own unique set of lessons or truths that are obvious in hind sight but seem to be mistakes made over and over by those just getting started. Well, China is no different.

Ok. If that was not concrete enough for you…

Mistake #2 – I know what I know and that’s what I know

Stay with me a second…

I’m pretty sure we all have patches of memories from when we were little. Flashes of scenes that happened long ago, that for one reason or another have always remained fresh and clear; scenes that seem to re-play themselves like commercials of a previous decade’s products.

Well, I have this one memory of when I was a kid growing up in Texas. I was on my own, sitting in the backyard on the patio furniture and in the middle of the table was one of those wide, shallow, flat-bottom pueblo colored plate/bowls. Well, crawling on the table was a single, pretty-big, black ant. I guess he was off looking for something because he moved in a purposeful fashion. And as it is my memory let’s say he was on a mission.

Well, after a quick survey of the table, he finds the plate/bowl, climbs up and begins walking along the rim. It was a pretty wide bowl so I imagine to his little legs he felt like he was making good time and traveling in the normal straight line. In no time he had circumvented the plate/bowl and started on round 2.

I was transfixed, watching this purposeful little guy, who was doing what, from his perspective, was the right thing; he was moving determinedly forward on the path in front of him. Around once… Around twice… Around thrice!

He just kept going.

He didn’t stop to see if the surroundings looked familiar or waiver and venture off the path. It’s not like he could stop to ask directions, there were no Guide Ant along the way. And besides as a guy ant, asking for directions didn’t seem to be in his hardwiring.

No, he kept going on the path, his path. He stuck to doing exactly what he knew and what he thought was right.

Somewhere in the middle of Round 5, I had visions of this poor fella dying of starvation on the rim of that pueblo plate/bowl. So I took a deep breath and blew him off rim. It took him about a half second to survey his new surroundings and then he was off searching for whatever he was searching for.

That memory has always remained fresh in my mind and likes to replay itself.

Last night was Friday night and I went to a bar with some buddies. Now, my daughter is almost 2 1/2 and so I really cannot remember the last time I went to a bar on a Friday night with some buddies. Don’t get me wrong, I know I have been to bars with buddies before, I simply cannot remember they last time.

Anyhow, I saw another buddy there whom I hadn’t seen in a while and we got to talking about what he was up to. Well, he’s doing business development for a large, successful American brand that is new to the China market. He’s been in China a while and his job is to develop China.

The company is very successful in the US and quite large, yet is new to China. They know what they know and they see the path ahead. From their perspective, the path is clear.

In no time we had the same (tired) conversation about quality, or rather the US side talking quality, quality, quality and my buddy and I doing the same, ‘Oh jeez, I know where this is going’, slow head shake.

While the West loves to talk quality, the China market seems to care very little about quality; at least compared to how much they do care about image.

In other words, it all comes down to face.

We then had a brief conversation about how the US has a very famous brand and how they cannot believe the few customers they have had so far, want to get rid of their logo. Which takes us back to the idea that, your ‘world-famous-back-home brand’, means zilch here.

My buddy knows he has a 2 front war* on his hands and will calmly face the battles ahead; I just hope he can blow them off course before they starve along the path.

* Struggling to gain ground in the China market and struggling with corporate back in the States.