How To Lose Friends and Alienate People (WPP in China)

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People often talk about the importance of “guanxi”, “face” and cultural sensitivity when doing business in China (see “Little Email, Big PR Crisis”). However, not every international business leader gets the message, as the latest news about WPP’s Sir Martin Sorrell indicates.

This Is Money reports an upset between Sorrell and Yan Gang, the Vice Chairman of WPP’s (Grey Global) Chinese partner (the state-owned) Citic Guoan. The report states:

    “Yan Gang, … said Sorrell had treated him ‘very rudely’ during an April meeting in London. The meeting was to discuss management problems at the joint venture, which had been running for 14 years…Sorrell is said to have a different version of events but declined to comment on the issue. He recently spoke in glowing terms about doing business in China. ‘One thing that you find when you come to China is that CEOs are smiling,’ he said in Beijing.”

The New York Times also quotes Yan as saying of Sorrell that he “had absolutely no manners, no upbringing and no culture.” Owch!

It is also reported that Citic now plans to set up shop with WPP rival Omnicom – a year before the contract with Grey Global was due to end. Could there be more to the alleged loss of face than meets the eye? If so, it would not be the first time that cunning negotiations “with Chinese characteristics” (or arguments with “rude” foreigners) have been used in order to achieve business aims.

It is also far from the first joint venture to have hit the rocks in China (the old “same bed, but different dreams” story). The wholly-owned foreign enterprise (WOFE) remains the structure of choice for foreign investors – where regulations allow. Grey is now expected to go down this route, as advertising WOFEs have been allowed since January.

However a business is structured in China, it helps to have a CEO or Chairman that takes the time to develop trusted relationships over time. But no amount of investment in “face” is going to save an underperforming venture. Business is business – in China like anywhere else.
See news sources:

    WPP hit by China blow
    This is Money – UK
    AN ALLEGED slur by advertising industry titan Sir Martin Sorrell has led to his WPP Group’s Grey Global agency being dumped by its partner in China. …

    Agencies Stop Being Polite and Start Getting Real
    New York Times, United States – 3 hours ago
    A change in a joint venture between advertising agency companies is typically a prosaic matter. But this time, as they say in Hollywood …

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