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Before Hours: U.S.-China impasse
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April 16, 2001: 1:06 p.m. ET
Does the spy plane standoff risk damaging Sino-U.S. bilateral trade?
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NEW YORK (CNNfn) - The recent spy plane incident in China has some believing that the political standoff between two of the world's largest economies could dampen Sino-U.S. trade. Are U.S. trade sanctions against China a possibility?
And a recent survey showed that 94 percent of kids look to their parents to set an example for money-spending and -saving behavior. What are some lessons on money management that parents should avoid passing on to their children?
Ming-Jer Chen, author of "Inside Chinese Business: A Guide for Managers Worldwide," a guest on CNNfn's Before Hours Monday at 7:40 a.m., spoke about the fallout of the recent spy plane situation and the possible repercussions of the political standoff on U.S.-China trade.
CNNfn: Q.) In your opinion, how did the U.S. government handle the spy plane situation?
Ans: The U.S. government, from the beginning, has handled the situation very well, especially in the final resolution. They maintained this notion of face saving - that's a nice gesture. This is a most enlightening incident and it happens on a daily basis in business dealings - what are the differences between apologies and regrets and how do you communicate that to the Chinese?
The U.S. was able to get a resolution without apologizing. An apology has different cultural meanings. In the U.S. it has a legal meaning, while in the Chinese context it has no legal implications, so the U.S. cannot apologize. What they did was an apology in a sense, but it doesn't create legal ramifications, and from the Chinese point of view that's good.
Once the Chinese realized the apology had legal implications, they considered that and it helped them maintain face. Kissinger was the first to start this kind of approach successfully. He's a very culturally sensitive person.
CNNfn: Q.) How does the China incident exemplify the way the Chinese do business?
Ans: This is a most enlightening incident because it shows that there are some China-specific business fundamentals that companies need to pay attention to. Like, for example, the Chinese business enterprise tends to have a more expansive view of what constitutes a business. In China, the company has to do well in general but you also have to pay attention to what the social role of the business enterprise is. Some Chinese enterprises have 40 percent of their overhead going toward social welfare. You have to pay attention to the social dimension, like community services or even the government's agenda
CNNfn: Q.) How does the Chinese business environment differ from the American one?
Ans: The China market is very fragmented and regionalized. People in Beijing operate differently from those in Shanghai, so it's important to use locals -- real locals, not just Chinese -- locals with local perspective and networks. The Chinese market has been developed in the last 30 years and they've started having a critical mass, but because it's so segmented, when a company invests and operates in China, they should tap local talents.
CNNfn: Q.) What companies are achieving success in China?
Ans: Some examples are Motorola, Kodak, AIG and Kentucky Fried Chicken. 
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