Apr 20 2007
My first consulting gig
I know this is a little stale by now (written few years ago) … but back to 1999, Wei, a Chinese entrepreneur turned publisher had asked me to assist him in his quest to license few American magazines. He had been publishing a glossy business magazine that mirrors the format of Forbes for two years and has begun generating small profit. Since high quality business magazines in China were scarce back in the late 90s, his magazine was able to attract high-end advertisers such as BMW, Audi, Volkswagen, Rolex, Piaget, Cartier, Omega, Nokia, Martell, Dunhill, Sony, Montagut, Shangri-La hotel, web sites, restaurants and residential real estates. He felt that time was ripe to raise fund in the US, license titles such as Forbes, Harvard Business Review, Modern Bride, Inc., InStyle to China. He had even planed to start a bridal trade magazine to strengthen his portfolio.
To start off, I begun to rewrite his business plan that included correct misspellings, grammars (yes, I actually did that .. perhaps adding more misspellings… lol), and charting the financial statements. As I expected, the financial figures changed from time to time in order to make the end result more convincing. “It’s un-audited” was all Wei would allow for an explanation. Then e-mail or mail them with the media kits to magazines soliciting meetings. Few days after my e-mail spams, we got a surprise: Forbes’ editor in New York is meeting us next Wednesday! Wei had his wish list and Forbes was majestically sat on the top.
The Art Deco Neoclassic limestone corner tower on Fifth was built in 1925, elegant and inconspicuous. Few Fabergé Imperial Easter Eggs were on display. The editor was reserved with a mild manner, occupying a corner office. There was a half eaten cake on the side table with fine china. He quietly listened to my pitch. Posted few questions here and there. When I finished, he nodded gently as if pounding on a speech while flipped through the media kit and Wei’s magazine. Then he looked up at me and confessed that he was in Shanghai this past April, and have heard about Wei’s magazine there. I perked up. A little bewilderment at the fact of a prestigious magazine easily granting us an audience had finally subsided. It was not a dumb luck after all. At the conclusion of the meeting, he suggested that we should send him a proposal with less than 5 pages.
We left his office and plugged into the chilly November wind with high spirit, excitedly discussing the meeting, planning our next step, unaware of the rush hour traffic as people leaving early for Thanksgiving.
A media consultant was what we needed. The consultant would beef up the proposal for Forbes. That, Wei reasoned would show us the format, which can be copied for the subsequent proposals.
While we began to interview consultants, some of them have fully staffed office in midtown and some are working by themselves, we also visited the magazine trade group that was funded by its members. Its International Committee chairman, an elderly industry veteran who has traveled the world, spared a few moments with us.
The consultant we eventually settled with was Jason, who has the reputation as an international expert. He works by himself and lives oddly nowhere near the media center, New York City. Soon we received his proposal for his service that include an all-expenses-paid trip to China. What Wei had in mind was a simple 5-page proposal that he could use it repeatedly.
The first draft had arrived promptly with us feeding him the necessary information. It was well written and concise. As we plot through it, we both made a scratchy stop on the statement that in order to bring foreign titles into China “… every one has to obtain an approval from IDG, …” Wei shouted out loud with redden face “That’s a bull-s@%t!” He got up and walked around, “Non-sense. It’s absolutely wrong.” He shake his head in disbelieve. It was not only wrong, but also laughable. The first thing that jumped into my mind was when China conceding to the joint forces of the eight powers at the beginning of the 20th century - the Boxer Rebellion. It was still fresh and painful. China has been anonymous and weak.
Granted that its history was not in every one’s textbook in school. But the way China controls its media in present days was widely covered in the US and the West was despised. The statement should have raised red flag right there for a saint mind. Give away media control privilege to a foreign company was just absolutely unthinkable. Let alone it was an American conglomerate!
I called. Jason e-mailed back a day later: “ … I checked with my sources, it’s correct.” We were disgust.
I pondered if its appropriated for me to give a veteran crash course on Chinese history. Jason e-mailed again “ … I checked with the Chairman of a trade group’s International Committee, he confirmed its accuracy. But I have also checked with other sources and waiting for reply.”
We all waited. Two days had passed. Finally, a messaged arrived in my mailbox “you are right. ” An Australian source had rectified him. Of course we were right. It seemed that if you knew little bit more than the rest of the pack, you could graciously label yourself an expert.
None of the venerable titles had gone Wei’s way at that time. But he did win a decent business title, which happened to be represented by Jason. Numerous e-mails and phone calls had exchanged for the up coming agreement. Jason tireless facilitated the negotiation. The standard payment terms had remained through out the negotiation. But as the agreement being fedex over for finally signature, Wei suddenly wanted to change the payment terms to his liking. This time, Jason shot over the roof.
“Irene, the payment terms had been the same since my first draft. Wei had agreed on it. Signed off on them. I have them here.” Jason was ready to send over those previous drafts that bear Wei’s signatures.
For Americans or the Westerns in that matter, a contract is a legal bending document. Your signature indicates yours consent to this contract. For most Chinese, it obviously meant entire different. A contract, it’s just a piece of paper filled with foreign language that they can ignore and discard at their will. It holds little power unless it fits my fellow countrymen’s liking or needs. Evidently they don’t see a contract the way the Americans see it.
Didn’t the Brits and Frenchies send their troops to Beijing in 1860 trying to enforce the Emperor to rectify the treaty he signed? The present of foreign troops in the heart of capital drove Xianfeng to escape from Forbidden City and ultimately died while in exile, in Jehol.
Wei brushed it off casually as if he had just seen the payment terms: “They require too much down payment.” He commented bluntly.
“Why didn’t you point it out in the beginning?” I was curious.
He detoured my question.
“It’s a trivial amount for them but very significant for me. The required down payment would severely restrict my cash flow. Without adequate cash, we’ll both loss at the end.” He talked with confidence and composure.
“Don’t you think the down payment is a good faith gesture rather than a financial transaction?” I probed him.
He nodded in agreement.
“If you couldn’t foot this amount, they may question your financial strength or sincerity to pull it through.” The terms were industry standard. Nothing out of ordinary.
“No, they won’t.” A sly grin spread on his face. One leg was already on the pirate ship and Wei was so confident that they would go alone.
Dutifully, I interpreted verbatim.
I often wondered if billions upon billions would have lost should the west modify a little. The Americans have little patience. They often overlooked the culture differences. English being the common language, they have little need to learn second language, let alone another culture. They are not used to bargain. They used to coming in with complicated contract written by expensively trained attorneys, ready to seal the deal within couple of weeks. The commercial and financial structures in China are still very fragile, if they exit at all. A lot like Wild West. China has never been a nation that governs by law. When things don’t go their way as expected in a mature market, the Americans became frustrated, irritated and complains followed. Eventually they walk away from the table. Chinese, who are coming from an airtight controlled environment and are struggling to learn the art of capitalism and its fine lines, they guard every bit of information as top secret. This aggravates every partner. The cultural difference plays major roll because five thousand years of history needs time to digest properly.
The magazine did not walk away: it negotiated, adapted and adjusted. They eventually went alone on Wei’s terms. After many debuts had been postponed repeatedly, finally the first issue hit the stand July 2002, according to Jason.
Wei had since moved his family from New York to Houston starting 99¢ stores. By the end of 2003, I called the magazine myself to find out when exact did their Chinese edition debut, and hopefully to know how have they progress since. After few transfers, I ended up with their general counsel. He politely told me that he would call back when he had the information. Few days elapsed and I called back. This time, he was not so polite. He demanded to know who I am, what do I do and why would I want the information.
“Is the publication of your foreign edition a trade secret?” I was taken aback at his interrogation.
‘It’s depend.” He coldly replied.
Perhaps thing did not go well, after all. Jason and I had exchanged e-mail at the end of 2004 wishing each other a happy holiday. He said that the magazine had pulled Wei’s license because of non-payment.
To start off, I begun to rewrite his business plan that included correct misspellings, grammars (yes, I actually did that .. perhaps adding more misspellings… lol), and charting the financial statements. As I expected, the financial figures changed from time to time in order to make the end result more convincing. “It’s un-audited” was all Wei would allow for an explanation. Then e-mail or mail them with the media kits to magazines soliciting meetings. Few days after my e-mail spams, we got a surprise: Forbes’ editor in New York is meeting us next Wednesday! Wei had his wish list and Forbes was majestically sat on the top.
The Art Deco Neoclassic limestone corner tower on Fifth was built in 1925, elegant and inconspicuous. Few Fabergé Imperial Easter Eggs were on display. The editor was reserved with a mild manner, occupying a corner office. There was a half eaten cake on the side table with fine china. He quietly listened to my pitch. Posted few questions here and there. When I finished, he nodded gently as if pounding on a speech while flipped through the media kit and Wei’s magazine. Then he looked up at me and confessed that he was in Shanghai this past April, and have heard about Wei’s magazine there. I perked up. A little bewilderment at the fact of a prestigious magazine easily granting us an audience had finally subsided. It was not a dumb luck after all. At the conclusion of the meeting, he suggested that we should send him a proposal with less than 5 pages.
We left his office and plugged into the chilly November wind with high spirit, excitedly discussing the meeting, planning our next step, unaware of the rush hour traffic as people leaving early for Thanksgiving.
A media consultant was what we needed. The consultant would beef up the proposal for Forbes. That, Wei reasoned would show us the format, which can be copied for the subsequent proposals.
While we began to interview consultants, some of them have fully staffed office in midtown and some are working by themselves, we also visited the magazine trade group that was funded by its members. Its International Committee chairman, an elderly industry veteran who has traveled the world, spared a few moments with us.
The consultant we eventually settled with was Jason, who has the reputation as an international expert. He works by himself and lives oddly nowhere near the media center, New York City. Soon we received his proposal for his service that include an all-expenses-paid trip to China. What Wei had in mind was a simple 5-page proposal that he could use it repeatedly.
The first draft had arrived promptly with us feeding him the necessary information. It was well written and concise. As we plot through it, we both made a scratchy stop on the statement that in order to bring foreign titles into China “… every one has to obtain an approval from IDG, …” Wei shouted out loud with redden face “That’s a bull-s@%t!” He got up and walked around, “Non-sense. It’s absolutely wrong.” He shake his head in disbelieve. It was not only wrong, but also laughable. The first thing that jumped into my mind was when China conceding to the joint forces of the eight powers at the beginning of the 20th century - the Boxer Rebellion. It was still fresh and painful. China has been anonymous and weak.
Granted that its history was not in every one’s textbook in school. But the way China controls its media in present days was widely covered in the US and the West was despised. The statement should have raised red flag right there for a saint mind. Give away media control privilege to a foreign company was just absolutely unthinkable. Let alone it was an American conglomerate!
I called. Jason e-mailed back a day later: “ … I checked with my sources, it’s correct.” We were disgust.
I pondered if its appropriated for me to give a veteran crash course on Chinese history. Jason e-mailed again “ … I checked with the Chairman of a trade group’s International Committee, he confirmed its accuracy. But I have also checked with other sources and waiting for reply.”
We all waited. Two days had passed. Finally, a messaged arrived in my mailbox “you are right. ” An Australian source had rectified him. Of course we were right. It seemed that if you knew little bit more than the rest of the pack, you could graciously label yourself an expert.
None of the venerable titles had gone Wei’s way at that time. But he did win a decent business title, which happened to be represented by Jason. Numerous e-mails and phone calls had exchanged for the up coming agreement. Jason tireless facilitated the negotiation. The standard payment terms had remained through out the negotiation. But as the agreement being fedex over for finally signature, Wei suddenly wanted to change the payment terms to his liking. This time, Jason shot over the roof.
“Irene, the payment terms had been the same since my first draft. Wei had agreed on it. Signed off on them. I have them here.” Jason was ready to send over those previous drafts that bear Wei’s signatures.
For Americans or the Westerns in that matter, a contract is a legal bending document. Your signature indicates yours consent to this contract. For most Chinese, it obviously meant entire different. A contract, it’s just a piece of paper filled with foreign language that they can ignore and discard at their will. It holds little power unless it fits my fellow countrymen’s liking or needs. Evidently they don’t see a contract the way the Americans see it.
Didn’t the Brits and Frenchies send their troops to Beijing in 1860 trying to enforce the Emperor to rectify the treaty he signed? The present of foreign troops in the heart of capital drove Xianfeng to escape from Forbidden City and ultimately died while in exile, in Jehol.
Wei brushed it off casually as if he had just seen the payment terms: “They require too much down payment.” He commented bluntly.
“Why didn’t you point it out in the beginning?” I was curious.
He detoured my question.
“It’s a trivial amount for them but very significant for me. The required down payment would severely restrict my cash flow. Without adequate cash, we’ll both loss at the end.” He talked with confidence and composure.
“Don’t you think the down payment is a good faith gesture rather than a financial transaction?” I probed him.
He nodded in agreement.
“If you couldn’t foot this amount, they may question your financial strength or sincerity to pull it through.” The terms were industry standard. Nothing out of ordinary.
“No, they won’t.” A sly grin spread on his face. One leg was already on the pirate ship and Wei was so confident that they would go alone.
Dutifully, I interpreted verbatim.
I often wondered if billions upon billions would have lost should the west modify a little. The Americans have little patience. They often overlooked the culture differences. English being the common language, they have little need to learn second language, let alone another culture. They are not used to bargain. They used to coming in with complicated contract written by expensively trained attorneys, ready to seal the deal within couple of weeks. The commercial and financial structures in China are still very fragile, if they exit at all. A lot like Wild West. China has never been a nation that governs by law. When things don’t go their way as expected in a mature market, the Americans became frustrated, irritated and complains followed. Eventually they walk away from the table. Chinese, who are coming from an airtight controlled environment and are struggling to learn the art of capitalism and its fine lines, they guard every bit of information as top secret. This aggravates every partner. The cultural difference plays major roll because five thousand years of history needs time to digest properly.
The magazine did not walk away: it negotiated, adapted and adjusted. They eventually went alone on Wei’s terms. After many debuts had been postponed repeatedly, finally the first issue hit the stand July 2002, according to Jason.
Wei had since moved his family from New York to Houston starting 99¢ stores. By the end of 2003, I called the magazine myself to find out when exact did their Chinese edition debut, and hopefully to know how have they progress since. After few transfers, I ended up with their general counsel. He politely told me that he would call back when he had the information. Few days elapsed and I called back. This time, he was not so polite. He demanded to know who I am, what do I do and why would I want the information.
“Is the publication of your foreign edition a trade secret?” I was taken aback at his interrogation.
‘It’s depend.” He coldly replied.
Perhaps thing did not go well, after all. Jason and I had exchanged e-mail at the end of 2004 wishing each other a happy holiday. He said that the magazine had pulled Wei’s license because of non-payment.
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In China, signing the contract is just the beginning…