IAAD China Working Method

By Ben Boterkooper

China is a unique and special country. A lot of people and companies are actively working in or

with China. Not all of them turn a profit, with many of them experiencing operational

difficulties. In order to be profitable in China, it's important to find a China-specific working

method. A working method that was created to fit

• Language: English
• Publisher: China import leads BV
• Release date: Dec 21, 2020
• ISBN: 9789090338101

Ben Boterkooper

Ben Boterkooper, entrepreneur in China, leveraged his successful and profitable managing methods to process millions of USD in contract values. During his initial years in China, he sustained large financial damages. He experienced operational difficulties and learned the hard way what it means to do business in China. By analyzing the issues he faced, focusing on the question what specifically made business in China so difficult, he developed a working method that has led him to profitability in China: the IAAD-China-working method.

Book preview

INTRODUCTION

The road of entrepreneurship in China is filled with situations and confrontations that are fundamentally different from those you’ll find in the Netherlands or any other Western country. I learned this the hard way. When I started doing business in China as a purchasing company, I lost tens of thousands of euros. In China I was confronted with an entirely different business reality. Suppliers often do not deliver according to agreements, resulting in poor product quality. I fell for the classic scheme in which one party pretended to be a company they were not, and incidents like these repeatedly proved me naive and uninformed. I suffered a great deal of financial damage, but I gained something even more valuable in the form of knowledge. To me these were the costs of learning and I was determined to understand what I was doing wrong, and how I would turn all of this into a future profit.

Through hands-on experience doing business in China, learning from my errors as well as my successes, I eventually turned the initial losses into profits. The knowledge I gained on Chinese culture and how to create a sustainably profitable business in China led to the start of my consulting company CIL China, a qualitative partner for purchase and supply chain management in China. Nevertheless, China remains a difficult country to work in. I developed a standardized way of working that we utilize to help other companies turn a profit in China. This standardized way of working is what will be described in this book. It’s applicable to any company that has business-to-business relationships with Chinese companies. Successfully implementing this method will guarantee you to turn a profit in China.

IAAD China working method

Through our consulting company CIL China Ltd. we protect the interests of many foreign companies that are active in China. CIL China offers Chinarelated consulting, management and a local office. Companies that do not have a local Chinese office, employees or management, can use us as their own. We are able to successfully do so by using the China strategy and standardized working method IAAD, which I personally developed. The method IAAD stands for Interests, Agreements, Assessments and Data.

Our China strategy is based on Chinese history, relevant cultural aspects, social norms and traditions as well as the Chinese and international law practical reality. The working method IAAD is based on the fundamental characteristics of China that have a direct or indirect influence on business and operations. These characteristics often are cultural aspects that are incomparable to the Western way of living and thinking.

The Chinese culture deals with incidents and situations in a fundamentally different way. The country holds a thinking model that is fundamentally different from the Western model. Their system of living is entirely based on Chinese cultural values and expectations, and these cultural characteristics are deeply rooted in the way the Chinese conduct business.

As a result, it’s not realistic to expect to find the Chinese willing to simply do business the way we are used to, nor would it be to expect you to start reading and writing Chinese. A bridge needs to be built, and our standardized working method IAAD will help you to do so.

Practice not Theory

This book was written based on my personal experiences, collected through years of entrepreneurship in China. These experiences have allowed me to start CIL China and develop a standardized method of working that creates guaranteed profitability in China. This is not knowledge gained from history books, a Bachelor in Sinology or at a University; the knowledge in this book stems from practice and is focused on the practical applications of Chinese cultural characteristics when doing business in China.

The cultural aspects described in books on Chinese culture or history sometimes show up in a different form in day-to-day life. Interpretation of Chinese culture and the effect it has on interpersonal relationships differ from person to person and it’s possible other sources may disagree with some of the conclusions I’ve drawn. Everyone is entitled to their own opinion on Chinese culture and disagreeing with each other and having sensible discussions will only allow us to further improve our understanding of this difficult subject.

The complex nature of the Chinese culture means that I will limit myself to those aspects which are relevant to IAAD. My goal is to explain these in a way that allows readers to understand and apply this information in a business setting. Our aim is to allow the reader to be able to use this method without requiring extensive prior China experience.

Structure

This book contains three parts which will explain important characteristics of China and the Chinese culture, and how these apply to a business setting. It will introduce IAAD and teach you how to use this method to generate structural and sustainable success and profitability for your business in China.

In part one, we start with the first step of acknowledging China and accepting another thinking model than the one we are used to. To do so, we will discuss a number of fundamental characteristics which are important to discover and acknowledge. This will generate insights that can help you to see China in a different light and foster a better understanding of China in general.

In part two, we continue with a second step by further focusing on Chinese cultural aspects and systemic differences in thinking. You will learn about the country and cultural characteristics which are at the source of business characteristics that play a significant role when doing business in China.

In part three, a third step is taken by defining the business characteristics that are relevant to conducting business in China. Business characteristics which play a role across all sectors and industries. You will learn to understand and recognize these aspects for purchase, sales, as well as personnel management in China. These will be explained from the import side as well as the export side of business with China.

In part four, you will be introduced to the IAAD method. The first three steps will have provided you with the necessary understanding of China and its business characteristics to be able to easily understand this method of working. IAAD will be explained step by step and from different angles. You will learn to understand and implement this method in your business in and with China, becoming more profitable through doing so.

Westerners and Chinese

In this book, the differences between Western and Chinese ways of thinking are a common topic. For the benefit of clarity and legibility, I often use the terms Westerners and Chinese. This refers to people and/or companies that typically look at things from a Western of Chinese model of thinking. In no way am I suggested all Chinese or all Westerners think in exactly the same way. Luckily, the reality is that many people and/or companies have the ability to switch back and forth between different models of thinking, especially if they are used to living in a multi-cultural society.

Chapter 1

AN OLD AND COMPLEX COUNTRY

A complex country

China is a special and complex country. It has over 2000 years of cultural history; a culture with its own fundamental beliefs, customs and traditions. A culture that is at the heart of everything the Chinese do on a daily basis. A culture that has shaped every aspect of life in China. To the Chinese, the preservation of their culture is always a priority. Their belief in these cultural principles, the idea of being Chinese, is comparable to the workings of a traditional religion. This would make it one of the oldest religions found on the planet. The Chinese are rightfully proud of their culture, and have a firm belief that everyone would do well to be Chinese. Historically speaking, this makes a lot of sense. However, it contradicts the general image that Chinese want to copy our Western ways.

The Chinese are a people that possess an unparalleled entrepreneurial spirit and drive for development. A people that treat others with respect and deals with people and their surroundings in the way that they would like to be treated themselves. The culture has an eye and space for other identities and ethnicities; this is largely triggered by the strong image they have of their own cultural identity. They firmly believe the Chinese to be a unique ethnic group, uncomparable to for example Japanese, Vietnamese or Koreans. Nevertheless, they have always been incredibly adept at blending into different cultures around the world. They blend in, but still maintain their own Chinese culture and values wherever they go. It’s not without reason that we can still see Chinatowns and Chinese communities around the world.

People in China have a way of living which is fundamentally different from the Western ways that we know. It’s a communist country that was able to develop a system that achieves sustainable success in the modern capitalist world. While doing business in this unique environment, multiple layers of complexity need to be navigated. First of all, the cultural characteristics form a foundational layer of complexity. Next, an additional layer of complexity is added through China’s model of governing. As the Chinese have developed a system of governance that aims to encourage international trade in a capitalist environment, the first impression of doing business in China is likely to be surprisingly similar to what we are used to in the West. However, as you dig deeper you will reach these layers of complexity that have driven so many to lose money or give up on China entirely.

"China has developed a method to benefit from, and be profitable in, the Western business model. Does the Western model have a method for doing the same with the Chinese model?"

Massive development in the background

After the Second World War, Western-European countries have solely focused on adapting to the American Western model of business and have encouraged further development and export of this method for conducting trade. During this period, China was never considered a factor. Until 30 years ago, China simply was a massive but incredibly poor country, which did not play any significant role on the economic or political world stage. While we focused all our attention elsewhere, China developed in the background, as quietly as possible, in a manner that would do Confucius proud. Modern day China is the factory of the world and one of its greatest economic powerhouses. It is well on its way to once again become the greatest economy in the world, as it was between 1500 and 1870, barring a short period of Indian dominance. What’s different this time is that China will also want to claim its rightful throne on the geopolitical stage.

In conclusion, there’s a single nation that we are industrially dependent on and which will soon have the largest economy in the world. Nevertheless,