Being Smart About China Business

1/20/2010 - Sam Goodman, founder of famous Beijing Sammies cafes, learned his lessons about doing business in China the hard way.  He recently published a book, Where East Eats West: The Street Smarts Guide to Doing Business in China so westerners new to China business might avoid some common "rookie mistakes."  Sam will be presenting at upcoming China Business Boot Camp in Philadelphia on February 18.



TCBN: Sam, we’re so happy to have you with us today on The China Business Network. I have to say your book is reviewed on site, I read your book, I loved your book because it talks about - you’re welcome! I think lot of people love your book.

It talks about something that no other China business book I’ve ever seen discusses, which is the importance of having the right mindset. That is to say, it’s not about the data points, it’s not about the knowledge, it’s not about knowing right people. You’re not even ready for any of that until you get your head pointing in right direction and come to the realization that the rules are different in a different culture. And the worst mistake you can make is to walk into it without examining your assumptions what the rules are. You’re just setting yourself up to get really, really frustrated.

GOODMAN: Absolutely.

TCBN: I just love that it’s called “The Street Smarts Guide to Doing Business in China.” Tell us how you got to the point of writing this very, very on-point and very entertaining book.

GOODMAN: Okay. I arrived in China in 1995 after spending two years in the east – I spend a year in Hong Kong and a year in Korea. When I came here it was like “okay, this is going to be different.” I came to learn the language. The original plan to be professor comparative mythologies. I came to be a student for a couple years, and I had no place to hang out. So somebody, one of my buddies, who used to make sandwiches in our room basically said “shut up and do something about it.”

We were making sandwiches in our rooms. Then we’d all reconnect back at my place, and we’d have a non-Chinese food feast about once a month. And that was pretty much the beginning of what became Beijing Sammies. We used to call it chicken sammie, or veggie sammie, or whatever. So when I said “we really need place to hang out”, he then came back with “do something about it.” And I said “alright I will.” Very shortly after you gotta call it Beijing sammies - we used to always call them sammies.

So I went through, well not only China rookie mistakes, but also business rookie mistakes. I made quite a few of those starting up. I started the business when I was 25, back in 1997. After about five years we had five locations, corporate catering business, online ordering, about 100 staff, and over a million in revenue. So we were doing quite well. Again, I didn’t start off to set up a chain of cafes, but things went very well. We had the best sandwiches, the best smoothies, the best desserts, and really great coffee. People really they gravitated towards it: the foreigners because they were sick of eating Chinese food 24/7. The Chinese came slowly but surely because foreigners were hanging out there. There’s quite a few foreigners so there must be something good. And by the time that we had all these locations well over half of my clientele were Chinese. Once we were downtown I spent most of our marketing dollars really marketing towards Chinese markets.

TCBN: So you hit it right spot on, and then you learned a lot of lesson and -

GOODMAN: You mean made lots of mistakes? Yes.

TCBN: Yeah, you know. People make mistakes and sometimes they learn things from them are not necessarily as useful to others. You’ve managed to package them. Give us one of your chapter headings.

GOODMAN: This is - they’re in like eight sections. This is the section on operations, finances, and human resources, and every one’s got its own little cute little subtitle and this is “Start working calming breathing practices. Now.” Chapter 67 “China’s talent puddle.” Then there’s “Education insanity.” Let’s see, there’s the “dark side of face and creativity.” “It’s wrong to steal a lot.” “Why your purchaser has a BMW.” And then “Honesty and the third counting book.” I could go on.

The reason I ended up writing the book is because first, when I was at Beijing Sammies, after couple years of making mistakes, I was like “this is silly. This business thing in China has been done before and I really should be talking to people who’ve done it before so I’m not making same mistakes that they have.” I ended up contacting number of CEOs or managing directors of the Fortune 500 companies I was catering to. And very quickly learned that the troubles, trials, and tribulations I was going through were the same as these larger companies. They had problems logistics and retaining of quality talent, and recruitment was an issue, the production. All the issues that I had from a café chain and making our own things. We ended up having central kitchen, we made our own things, we did our own baking and all that. They had the same problems. I found very interesting I realized what I was going through was transferrable for the future. By the end of 2003 I exited the company, and then very shortly after I was recruited by Korn/Ferry, the world’s largest executive recruitment firm. I spent two years working for them, helping Fortune 500 companies and their leadership teams build their leadership teams in China. I saw the same problems, the same mistakes by these Fortune 500 companies being made over and over again.

TCBN: It’s so true. Wherever you are, no matter what stage business you’re at or what business you’re in, if you’re doing it in China you’re going to run into issues of “I’m not being understood, I’m not seeing what’s really happening, I’m not being told what I think I’m being told, I’m not moving forward, I’m not in control.” It’s all this kind of universal cultural and mindset stuff.

GOODMAN: Right. And so when I had seen this - and again, after Korn/Ferry there was the Westinghouse nuclear power plant negations. And the same thing when new guys came to China, they were making the same assumptions, the same mistakes over and over again. In the book I call them “China rookie mistakes” because in any industry and sports even, there are rookie mistakes that someone who’s been on ground doing something for X number of years, when see new guys come in they’re like “okay, 80% chance they’re going to make these mistakes.” All the rookies do that. Rookie mistakes. What I wanted to accomplish with Where East Eats West – which, by the way it’s called Where East Eats West not because China’s out to cheat you and eat you alive, but because the westerners come to China uninformed and unprepared on the whole How, Where, and Why doing business in China is done differently. And that’s what then gets them eaten alive. That, and the fact “where east eats west” was the Beijing Sammies slogan. It worked out well for both sides.

So that’s why I wrote this book. And my goal of it was, again, it’s written really for guy on the ground, in trenches, and not so much in board room. So each chapter is 2-3 pages.

TCBN: I think it’s great. I think everyone in board room should be reading it, too. You know, get sense of humor and get a grip.

And there’s a lot of debate. I find myself a lot of debates about whether … what role ethics plays in all of this. What are ethical standards of Chinese of Chinese businesses?

GOODMAN: I think it’s fair to say that what works in North America does not always work in China. The flip side of that is what succeeds in China does not necessarily work on the international stage. In all fairness to the Chinese, again, if you’re coming to play in their sandbox, you have to understand their rules. Given that there’s 1.3-1.5 billion people, the number of people, the population density, the level of competition because there are so many people has affected the way people do business in China.

North Americans, if you’re living in New York, you have an idea of it. But anybody outside of New York, the one thing I constantly here is how blown away people are with the sheer number of people here. It never stops. Again it’s one of the chapters is “Chinese water torture” because the little things just keep coming at you at all times - you’ll eventually go nuts. It’s understanding that, from a western standpoint, earliest taught the ends don’t justify the means. The process is just as important as your results. In China, because so much competition, ends do justify means. Whatever it takes get job done - that’s okay. While people certainly do not outwardly say that lying, cheating, and stealing is good, if we don’t talk the entire truth or if whatever needs to get done to get the job done, if you accomplish it you’re still considered a winner.