04-02-2019

GanBei! – here is your China investment agreement

Guestblog: 

Peter Rasmussen (Director Larive Group China) explains how to handle the Chinese drinking etiquettes:

I could see that Jens Holgersen was sweating like an animal. He was seriously drunk! “To the bottom, Mr. Jens! Let’s prove that we are both serious about your investment!” the Vice Mayor joked. His staff joined him in a loud laughter. I wanted to rescue Jens. He was new to China, and I had serious worries about his health. “Mr. Mayor, let me represent Mr. Jens in this toast,” I said, as I stepped in. At that point I was already drunk too, but nowhere near as bad as Jens…and we were only half way through the dinner. The Vice Mayor had poured BaiJiu, a strong Chinese liquor, into a beer glass for Jens… It must have been least the equivalent of 5 or 6 normal shots! I took the glass out of Jens’ hand and said “Ganbei” and flushed it down.

Let me explain how this began – why it happened – and how it ended…

Jens was Chairman of a Danish company, let’s call it Stroeby Aluminium, supplying precision components to the telecom industry. Over the past two days Jens, his General Manager, Leif Møller and myself, had been visiting empty factory buildings in order to find a suitable production site for Stroeby Alu in China.

In most investment zones there are rules about how much tax a company must pay to qualify for leasing a factory building of a certain size… As with everything else in China, this is negotiable… just like rental fees, tax breaks, VAT refund, subsidies and so on. Your agreement with the Chinese authorities on these things is written into an “Investment Agreement”. And that was what Stroeby was about to do at the end of that day.

We started out in the early morning. It was terribly cold, even inside the offices where we had our meetings. The Chinese, headed the by Director of the promotion Department, all wore long woolly underwear to keep warm. That much was clearly pretty obvious. I was wearing them too, however, Leif and Jens apparently didn’t think about that. They wore thin leather shoes and Western suits. There were small droplets dripping from Jens’ big nose and he used the backside of his hand to wipe up the mess … until a very concerned Chinese lady discretely offered him some tissue paper.

We were offered warm tea and, because of this, poor Jens had to visit a toilet everywhere we went. It is an unavoidable reality that comes with age for every man. “A prostatic gland thing,” Jens said reassuringly. His doctor had told him it was nothing to worry about. “As long as you can still pee without hitting your shoes you are ok!” had been the encouraging words his doctor had said.

By the time we finally ended up in the administration office it was already dark outside. We decided to discuss the last few items in the investment agreement over a dinner and sign it the following morning.

This dining room was very big with a huge round table. There were all kinds of cold dishes set out for everyone already. From cucumbers in soy sauce to jellyfish and duck tongues – merry-go-round. Immediately Jens got nervous. “How the heck do we sit here? You can hardly shout from one side of the table to the other!” he said. I gave him the 60 second lecture on Chinese banquet seating.

“Imagine a clock,” I said. “The most important host will sit with his back to the wall facing the door.” In this case it was the vice Mayor. “Let’s call his position 12 o’clock. To his right side, that is 11 o’clock, the most important guest will sit. That’s you Jens! To his left side at one o’clock, the second most important guest will sit. That’s Leif. “At 6 o’clock, the second most important host will sit – that is the Director of the Promotion Bureau and at his right side the third most important guest will sit. That is me”.  I scored some important points with Jens when the Chinese guided us to our seats just as I had predicted. He was impressed!

The Vice Mayor followed normal protocol and started the dinner with a “bottoms up” toast. He then began to eat. In China that means, “Bon Appetit”. Everyone can begin to eat at that point.

Hot food was served. Always the most important guest first, then the most important host, and then clockwise. The Chinese cuisine is incredibly diverse and simply fantastic. At one time Jens and Leif were both losing their fight with some big crabs and Jens somehow managed to accidentally spray some nasty crab-stuff all over his shirt and tie. The Vice mayor ordered the waitress to help Jens and Leif dissect the beasts. I was struggling as well, there was a lot more crab than I had the skill to take on and had to leave most of the creature untouched on my plate.

Getting to the official courtesy exchange the Vice Mayor joked about the size of the little Mermaid (it is only 125 cm tall) and complemented Denmark for Hans Christian Andersen’s great fairy tales. Jens complemented China for the fast trains from Shanghai to Beijing running at over 300 km per hour!

Sometimes the Chinese serve a lot of alcohol at their banquets… That night each one of us were served both beer and Chinese Baijiu. The beer was said to be our, “beverage.” Empty glasses aren’t a thing in China. The waitresses just kept coming around and filling up the glasses so that you could never really judge how drunk you were supposed to be.

Everyone toasted with us. There were twelve people seated around the table, nine Chinese, and us three foreigners. Before we were half way through the banquet the Chinese had each toasted at least twice with each of us. If you do the math then you see that we each got at least eighteen shots right there, while they had each gotten perhaps six.

Not understanding the way of the Chinese business deal, Jens got upset. “They are trying to get us drunk” he said, as if he had just discovered a plot of some massive conspiracy. I replied, “Of course they are! That’s how the Chinese measure the success of the banquet – how drunk we are, it’s not bad!”

Leif was OK and seemed quite happy with the way things were going. He had started his own “home-run” toasting all the Chinese one by one while trying to teach them a Danish football song, “We are red! We are white! We are Danish Dynamite!” Judging by their faces he was right, at least in one sense. Leif was totally red in his face and Jens was totally white… And dynamite? Jens had gotten increasingly upset and was about to explode! So I decided to take a short “timeout” and explained in Danish some simple drinking tricks to try to help Jens and Leif from being rendered completely hopeless.

“Firstly, NEVER drink when nobody toasts you.” I had seen both Jens and Leif drinking beer in between the shots. “Leave that glass on the table – no matter how thirsty you are. Or at least find a Chinese person to toast with so that they also get something”

“Secondly, whenever one of them toasts with you – pull the others along – so we all get equally as much. And whenever possible, pull the main host into it too. Because when he is done – everyone is done”.

Thirdly– go to the men’s room and stick your fingers in your throat” I said. It may sound disgusting – but it is what many of them do.

I knew they wouldn’t follow my advice number three – and I never do it either… But they immediately learned and followed rule number one and two which was a pleasant relief. From this point onward, our game changed. We won a few yards here and there and things were rolling along smoothly.

Then came a dish that almost had Jens going bananas. “Drunken Shrimps”. It’s really quite a thing to see. Live shrimp in alcohol, flopping around and eaten alive! Jens looked over at the Chinese translator and said, “This is animal cruelty,” and asked him to translate that to the Vice Mayor. Luckily the translator was familiar with damage control, “Mr Jens says the food is very delicious,” the translator said in Chinese.

The Promotion Department Director filled his own and Leif’s beer glass with Baijiu and said, “Let us toast on good cooperation Mr. Møller! If you can finish one third of your glass, I will ensure you that the lease of the building you want comes down to 30 RMB per square meter per month. If you drink half, we make it 25. And if you can empty the glass we make it 20!” With a loud “Ganbei!” they both emptied their glasses…

I don’t remember if Leif visited the men’s room after that Baijiu bomb, but he still seemed to be the one of us who was most sober. I could hardly talk anymore. My tongue felt twice its size and I’m pretty sure I must have sounded ridiculous. At one point I had to go to the toilet (not to do the finger trick, I swear, I just had to pee.) My first brilliant idea was to tie my shoelaces because I didn’t want them to drag on the wet floor. So, naturally, I bent down. When I reached the position where you can tie shoelaces I stumbled forward and fell over. When I got up I was so dizzy that I could hardly walk.

Not long after I came back, the final “life-line” was thrown onto the table. The fruits! When the host orders for these to be served, you know that it’s soon all over. The whole thing had lasted under two hours from beginning to end.

When we got back to the hotel Jens was in very bad shape. I followed him to his room and got him to take off his shoes and jacket. Down in the hotel lobby I asked Leif if we should grab a cup of coffee to sober ourselves up on. He could barely walk to the lobby bar. I ordered a big mug of hot coffee. Much to my surprise, Leif ordered another beer!

The next morning, I picked up Leif and Jens at the hotel. We had scheduled a final meeting with the administration where we would sign the investment agreement. Jens was in the lobby when I arrived but there was no sign of Leif, so I called him in his room, “Oh my… where am I” he said. “What time is it? I will be down in five minutes.”

We took a taxi to the investment zone. I was sitting on the front seat when suddenly Leif rolled down the window. We were passing through a picturesque part of town, so I thought “Oh God no, he’s going to puke…” I turned around and saw Leif with his head out of the window… He must have had it out there for a good 30 seconds before he pulled it back into the car. “Just shooting some video of this beautiful town!” he said with a laugh. He was holding a video camera in his hand. Respect!

An hour later Leif and Jens had landed their investment agreement! The lease fee was set at 20 RBM per sqm per month and Stroeby got a sweet tax subsidy too! My company Asia Base could begin the process of getting Stroeby Alu registered and established in China.

Oh, yes, one more thing… When we said goodbye to the Chinese they had prepared a gift bag for each of us. Two bottles of expensive BaiJiu to bring home!

Ganbei!

Partner in China

Asia Base is Larive’s local partner in China, having its office in Suzhou (near Shanghai). Asia Base is specialized in tailored market research services and could support with enterprise establishment, as well as advice on local governmental policies and regulations. Asia Base helps businesses perform better in China, through their local knowledge, network and experience.