By Kent Clark, China Correspondent
Our first partnership to sell our English language learning website was with a book store company; as a point of reference, it would be similar to Barnes & Noble. This company, which is privately held, teamed up with the local government to create an international children’s education center that teaches everything from art and drama to English and even some yoga (yoga for elementary school students never quite caught on). Their marketing manager was a college classmate of my wife- there’s that guanxi thing again- and they needed some non-Chinese teachers to put the “international” in their international education center. I looked at them as a great way for our no-name brand to piggyback on a well-known brand, and instantly have access to their students. After the usual haggling about what each side would get out of this endeavor, we ended up signing a one year contract with them. We would teach their English classes and be a general presence in their institution, and they would in turn assist us with pushing our product to the parents of their students.
My experience in American business culture was that details of a business agreement could be discussed by any manager or executive. When it was time for the pen to hit the paper however, not having a lawyer draft and review any legal agreement could have catastrophic effects. This is of course true with large companies, but also true with smaller companies like ours. As we were going back and forth with the book store company, my initial instinct was have a lawyer get involved. Our local employee who was facilitating the negotiations said a lawyer would be unnecessary; that isn’t how business gets done here. (I’m sure when major foreign companies enter this market and work with a local company, there are armies of lawyers.) When I asked how she could be sure this larger, well-known company wouldn’t bully us because we didn’t dot the i’s and cross the t’s when writing the contract, she said she was not worried about it. My wife has a good relationship with one of their managers, I had already done some teaching for them and left a good impression, and if things went bad we would just stop working with them.
Her last point is the one I am now truly beginning to understand. If things aren’t going the way one of the parties wants them to, they will just stop acknowledging the contract. As an American, I am surprised that legally binding documents (they must have the official company stamp to be legal) can be so easily dismissed. This illuminates two important points of doing business in China. The first point is one that gets repeated like a broken record. Having good relationships with decision makers from partnering companies is easily the most crucial part to success here. Any contract can be nullified, any mistake glossed over, if the person in charge likes you.
The second point is that China’s legal system is still developing. Using the courts to decide a dispute does happen, but it is not the first thought that pops into one’s head when working over here. Finding (and paying for) a good lawyer seems like an enormous waste of time and money because there are still instances of backroom decisions being made. According to an adult to whom I teach English, when his business got sued a couple years ago he found a lawyer based on whether they had good relationships with judges. The lawyer he chose then took the judge out to dinner, gave him money, and the next day was victorious in court.
The reason I have been contemplating this so much is because I believe our cooperation with that company is coming to an end. Overall they were good to us and gave us some good opportunities, but they also were not entirely forthright with the number of and age of their students. There are still a couple of months left on the contract, but my wife thinks I am crazy to keep working there even though sales to their students have dried up. My initial instinct is to finish the contract I agreed to. Her initial instinct is that the contract doesn’t matter. I think I will follow the local on this one.