How a stalled US–China investment meeting was saved by understanding that “doing business’ meant something different for each side.

By David Dayton, Founder, Silk Road International

I've spent my career working in between Western and Chinese business cultures. And I can usually feel when a meeting is starting to go sideways before either side can clearly identify the issue. This was one of those meetings.

The Situation

A medium-sized U.S. company was preparing to bring on a group of investors from China, both to provide capital and to help guide its management team through the early planning of a new Mainland China office. The Chinese delegation led three international franchise groups with stores across Europe, the Middle East, and Asia. 

The two sides sat down to plan the investors' upcoming trip to the United States — a meeting that, on paper, was simple logistics. I had arrived early for a separate meeting with the participants regarding HR strategy and so was invited to sit and listen in to this first get together.

The Friction Point: Dueling Monologues

The Chinese side opened with a detailed plan for the their trip to the US; including time with their American counterparts, dinners with their families, visits with university professors who had researched the investment sector, a tour of the local university campus, and a few other local activities. Times to discuss numbers and contract specifics were mentioned only in passing.

The American CEO was visibly frustrated at this plan. Hearing no fixed meeting times, agendas, or a business proposal, she reworked the itinerary on the spot, stripping out most of the relationship-building events in favor of table time to "discuss business." The Chinese delegation politely pushed back and suggested their original events be restored to the itinerary. Twenty-five minutes in and neither side had moved. The American CEO was openly questioning whether anything “substantial” would get done, and the Chinese delegation was quietly reconsidering whether these were the right partners.

Both sides were fluent in English, both were seasoned global operators, and both were negotiating in good faith. They were simply having two different meetings in the same room and at the same time, “dueling monologues.”

The Intervention

That's when I asked if I could make a brief comment. Though I had been invited to talk to them later, I was careful about what I said as I was a guest in this room. But I could see both sides were simply talking past each other, and that it was a fixable problem.

To the American CEO I said: the Chinese delegation had already committed to the investment at or above the expected amount. What they need isn't more financial detail, they already believe the business plan is sound and the team is competent. What they need is the kind of personal trust that, in their business culture, has to be built face to face, with families and colleagues, before capital changes hands. The relationship activities weren’t a detour from the deal; for them, it was the deal.

I then turned to the Chinese delegation and said: the American side doesn't need personal trust in the same way that you do. Because the U.S. legal system has a higher baseline of institutional trust; that risk is already covered. What the Americans lack is proof of business competence. None of them had heard of the Chinese delegation's companies before, and so the avoidance of a technical discussions was being interpreted as evasiveness.

Each side had been trying to move the other toward what it considered the obviously correct way to do business, common sense, without realizing the other was doing the same thing, but working from a entirely different definition of how to do business.

The Outcome

With both understandings open and on the table, the temperature in the room dropped almost instantly. The two sides agreed to extend the trip by a day, they kept nearly all of the family and university events, and added working sessions the American side needed. The investment ultimately exceeded the originally discussed amount, and the relationship that almost didn't survive one planning meeting became the foundation for multiple new offices in China and a business that is still active today.

I didn't change either side's position. I just identified what each of them already subconsciously knew about their own culture but hadn't realized the other side didn't understand. I pointed out that common sense wasn't common and doing business meant very different things.

What Can You Do With This?

Every person in that room was a highly experienced, multi-lingual, globally-minded executive, all negotiating in good faith. What they lacked was a shared definition of “doing business.” That gap is common, often it's predictable, and almost every time it's manageable, if you know what to look for. 

Four things I tell teams heading into a cross-cultural deals:

  • Ask before you build your agenda. Privately ask each side what a “successful trip” or “successful meeting” looks like before you draft the schedule. Don't assume your definition of “doing business” is universal.
  • Put relationship time and time at the table time on the agenda as two separate line items. Protect both instead of trading one for the other when time gets tight; cutting either one sends a signal, even when you don't mean to.
  • Don’t fall for the Fundamental Attribution Error. When one side sidesteps a central topic it can mean they consider it already settled or of secondary importance, not necessarily something they're avoiding. Don’t attribute bad intentions to their behavior before you act (in error).
  • Get a neutral read on the situation. A ten-minute reset in the first meeting is cheaper than renegotiating trust after both sides have gone home frustrated. Before the meeting spirals down, find someone who can read both sides and get them involved before the relationship is damaged, not after.

This is what we do at Silk Road International: getting inside cross-border deals and translating the culture, the logic, and the “obvious” assumptions each side is negotiating from. If you have a deal, partnership, or negotiation where you suspect the two sides are having different meetings without realizing it, contact SRI.