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China, more than just a contract

AS a number of Australian businesses have discovered in recent years, while doing business with China can be highly rewarding, it can also be problematic. Local businesses Challenge Dairy, Automotive Engine Components, and more recently iron ore developer Fortescue Metals Group, have all struck difficulty in their Chinese forays. According to WA Chamber of Industry and Commerce Chinese business trainer Stephen Choo, contracts are a common area of misunderstanding between Chinese and Western business interests. Historically, he said, the Chinese were unaccustomed to signing the type of legal contracts so common in the West. “A contract to the Chinese is seen as a beginning of a business relationship rather than the end and I think that is where the conflict lies. A lot of Westerners go to China, they sign a contract they say ‘fantastic’ … and that’s it,” said Mr Choo, who is also Curtin University Academic Area Head of Entrepreneurship. “But to the Chinese it’s just the start of saying ‘we want to do business together’. “You can argue until your face turns blue and say we have signed a contract and if you don’t do this I am going to sue you. If you persist at this you may gain in the short term but that would mean the end of the relationship altogether.”

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