Success Magazine Chin-Ning in Tiananmen Square in Beijing, site of the 1989 anti- Communist uprising. Cheerful and charming, Chin-Ning Chu did not look at all like a teacher of warfare. But as I walked into the back of the crowded lecture hall at the Carnegie Council for Ethics and International Affairs in New York, I saw fear as well as fascination on the faces of the international deal makers who had gathered there to hear her. Chin-Ning was telling bloodcurdling stories of power struggles in ancient China. And completely enjoying herself. These stories and the strategies they illustrate are in the collective memory of most of the world's businessmen -- that is to say, in the memory of businessmen in Asia. Chin-Ning is teaching her mostly American audience the perils and rewards of doing business in the Pacific Rim -- "a culture full of human beings who are very busy thinking, strategizing," as she puts it. As a group of offspring cultures of the bloody, 5,000-year history of China, Asia has inherited a treasure house of tactics, wisdom, and insight into human psychology. Through Chin-Ning, that insight becomes the birthright of entrepreneurs throughout the world. It's scary stuff. Chin-Ning describes a technique called "Use Another's Hand to Kill" from the ancient Chinese military classic The 36 Strategies: A king had his men draw up a list of the enemy king's most able advisers. Then the first king publicly made a solemn vow before Heaven to divide the opposing king's land among those advisers, should he succeed in conquering it. The opposing king, sure that they had betrayed him, had his advisers killed—and, of course, was conquered easily in the ensuing battle. Chin-Ning concludes the ancient tale with a shrug, as if to say, "That's business." What has this got to do with business? Isn't the study of war hopelessly in conflict with the "empowering, sensitive, ethical, win-win environment" we should be creating? No quarterback ever thought that misdirecting his opposition was immoral. It's a matter of survival—just as it is for a company introducing a new product. Chin-Ning's subject is the art of keeping your opponents in the dark about your intentions so they don't eat you for lunch. Chin-Ning's mission is to teach Western businessmen how to apply classic ideas of Oriental strategy in Asia and in the rest of the world. Of course, no one in legitimate business needs his opposition eliminated—but through these ideas one learns the leverage points of the human mind. This is Chin-Ning's moment. Her book on strategy, Thick Face, Black Heart, which was published first in America, has now rocketed to the top of best-seller lists all over Asia. People pay $1,000 a head to hear her speak, and her name is proclaimed in newspapers and on television. She is the Toast of Taiwan, the Heroine of Hong Kong, the Queen of Korea. Chin-Ning escaped the Communist takeover of China with her parents in 1949. At a book signing in her hometown, Beijing, the crowds had to be turned away. The Communist government has decreed that her book on free-enterprise success will be a best-seller— though slightly altered to make it more politically correct. Whereas to Americans, Chin- Ning bears the secret wisdom of the Orient, in the East she is a successful consultant from the wealthy United States. In mainland China, her book is entitled American Thick Black Theory. In Hong Kong and Taiwan, she does radio, newspaper, and magazine interviews and speaks for an American "great books" documentary on The Art of War. Corporate honchos pay top dollar to hear her -- the organizations represented include Kodak, Pan- Asia Systems, Polaroid, the Canadian Embassy, the University of International Business and Economics in Beijing, Mitsui, Exxon, Monsanto, Roche Pharmaceuticals, Holiday Inn, and Coca-Cola. In Taiwan, Thick Face, Black Heart has displaced a tell-all biography of Deng Hsao- ping, by his daughter, on the bestseller list. A Taiwan newspaper features a drawing of the Chinese god of success reading Thick Face, Black Heart, scowling with concentration, his long beard flowing. "I talk about the positive aspect of the Taoist philosophy that is the basis for books like The Art of War and apply it to success," says Chin-Ning. "My book shows how winning is about self-conquering instead of manipulating other people. You bring forth this divinely ordained power within you. I combine this with mundane practicality." Chin-Ning is hoping to open a huge market for her ideas in mainland China, which has its own entrepreneurial class. She describes a typical representative she met recently in Beijing: He first sold Pierre Cardin suits in a little shop, then opened a Cardin sock factory. He now exports all over the world and owns a Lexus complete with driver. The Art of War The most influential strategy guide of all time, The Art of War, was probably written around 500 B.C. by General Sun Wu. It is required reading at military academies and businesses worldwide. Some representative passages: "Warfare is the art of misdirection. Therefore, when able, seem to be unable; when ready, seem unready; when nearby, seem far away; and when far away, seem near.... Attack [the enemy] where he is not prepared; go by way of places where it would never occur to him you would go." Her books on strategy have made Chin-Ning a "To win in battle so that the whole phenomenon on three continents. world says 'excellent! is not the highest excellence. He whom the ancients called an expert in battle acts where victory is certain, and conquers an enemy that has already lost. "Therefore, the best military policy is to attack strategies; the next to attack alliances; the next to attack soldiers; and the worst to assault walled cities." "The expert at battle seeks his victory from strategic advantage and does not demand it from his men." "He who knows the enemy and himself will never in 100 battles be at risk." "Know the ground, know the natural conditions, and the victory can be total." In Hong Kong, Chin-Ning speaks for a film on "Generally in battle use the The Art of War. 'straightforward' to engage the enemy, and the 'surprise' to win the victory. Thus the expert at delivering the surprise assault is as boundless as the heavens and earth." "If we can make the enemy show his position while concealing ours from him, we will be at full force where he is divided. "One's victories in battle cannot be repeated. They take their term in response to inexhaustibly changing circumstances." International executives at Chin-Ning's Beijing seminar. "Thus the reason the farsighted ruler and his superior commander conquer the The day after her Beijing book signing, I checked enemy at every move, and achieve in with Chin-Ning to ask if anyone showed up. successes far beyond the reach of the She had been angry with her publishers, who common crowd, is foreknowledge. only started publicizing it the day before. She was sure the store would be empty. "Oh yes," she "Such foreknowledge cannot be had says, with exhaustion in her voice. "So many from ghosts and spirits, deduced by People came, they had to close the door to stop comparison with past events, or verified them coming." --DMA by astrological calculations. It must come from people. People who know When Chin-Ning Chu left Taiwan for America at the enemy's situation." age 22, she had only a suitcase and two books. The books were The Art of War and a strange, "Intelligence is of the essence in slim volume called Thick Black Theory. She says, warfare. It is what the armies depend "I somehow sensed these books would be upon in their every move.... important to my life in America. "She settled in "So delicate! So secretive! There is California and worked at a number of jobs, nowhere that you cannot put spies to including real estate sales, before discovering her good use" real gift: helping Westerners make deals in the risky, fast growing Asian world. Her consulting "If the enemy is close and yet quiet, he company in Antioch, Calif, is called Asian occupies a strategic position; Marketing Consultants Inc. If he is at a distance and yet acts provocatively, He wants us to advance. Where he has positioned himself on level ground, He is harboring some advantage. If his language is belligerent, and he advances aggressively, He will withdraw. If he has suffered no setback and yet sues for peace, He is plotting." What is Thick Black Theory? Lee Zhong Wu, a disgruntled politician published it in 1911, a year of chaos in China, when Sun Yat-sen overthrew the Ching dynasty and set up the Chinese Republic. Lee was a scientist of political intrigue. He writes: "When you conceal your will from others, that is Thick. When you impose your will on others, that is Black. " Thick Black Theory describes the ruthless, hypocritical means men use to obtain and hold power. It went through several printings before being banned as subversive. Chin-Ning set out to exploit the truths of the major Asian military and political classics to create a survival manual for honorable entrepreneurs living in a dangerous world. What do you do for a living? I teach Westerners the elements of Eastern strategy that will help them in business and in life. And I teach Asians what they already know but don't always appreciate. What is it that Asians already know? Most Asian businessmen have read The Art of War, and they use it every day. Westerners need to know what to expect in the marketplace. In the next century, the biggest market in the world will be the Pacific Rim. What do you mean when you say "Asian"? The whole Pacific Rim was influenced by the Taoist tradition, which is from ancient China. It teaches that all your knowledge is connected: spirituality, war, philosophy. It's a great source of strength when you apply it to business. How does an "Art of War" attitude affect behavior? Chinese managers from a big mainland company came to the U.S. to Work with a Fortune 100 company. Some of the Chinese employees worked in the American office for a time. Americans didn't lock up their books, files, or anything. The American CEO asked me one day why he was paying so much for faxes going to China at night. He didn't know the Chinese were staying late and faxing his whole office to their bosses. Espionage is very important to Asian business. They want information about who is the real boss, who can make important decisions, and technical stuff. That sounds slimy. Why deal with characters like that? The opportunities are very big. In the coastal cities in mainland China, the economy is growing 40 percent a year. That has never happened anywhere. Companies all over the world are building factories there to take advantage of cheap labor - textiles, bicycles, pharmaceuticals. Real estate is going crazy there, too. Some condo apartments in Shanghai are $800,000. The only limit is how much the Communist government will try to hold down growth. Give us an example of how to read someone's strategy. A Chinese team came to the U.S. to do a joint venture making airplane guidance systems. As soon as they arrived in the U.S., the head of the Chinese delegation started talking to the American CEO about future joint ventures, dangling a carrot to say "Give me a good deal now." But his real purpose was to get equipment, go back to China, reverse engineer, and make the product himself, cutting out his American partner. How would you apply the ideas of Thick Face, Black Heart? Thick Face is sort of the opposite of "thin skin." It is your ability to take risks because you have a positive self-image that cannot be punctured by criticism from others. Black Heart is your willingness to take tough measures, despite your feelings, like a surgeon who had to ignore his patients' screams of pain in the days before anesthesia. The American in that situation should be prudent and not worry about insulting his guests. He should not be distracted by the promise of future deals but make sure that at every stage, his Chinese partners need him in order to make money themselves—and that they know this. Americans can be too timid and eager to please. The Japanese and Chinese use that to take advantage. What's the fundamental difference between East and West? The subject of a seminar I'm giving is "Chinese Back-Door Negotiations"—which is a Western term for the Asian habit of getting a deal done in informal or covert ways. What an Asian tells you and what he's thinking are two different things. What is, is not. What is not, is. To the Chinese, there is no front or back door. It’s just a door. This is how all negotiations are done. What is chaos to the Western mind is a way of life for the Chinese. As it says in The Art of War, "The most efficient movement is that which is unexpected." What are the practical implications? In mainland China, they consider the contract a Western thing; when they write a contract, they make it full of holes, like Swiss cheese. Everything in it is still subject to negotiation, even after the contract is signed. In Taiwan, which is more sophisticated, they will follow an international contract to the letter, but it is still only one page long. To compare, my contract with my American publisher looks like a little novel. In Asia, a contract is like a Chinese painting - you paint some color, leave a lot of blank space. A lot implied, never write it down. This drives American lawyers crazy. I hear from the governor of Oregon that Akio Morita, who is the founder of Sony, had a clause in all contracts that said if a problem develops with anything here, we renegotiate the agreement. It sounds like a nightmare. Chinese culture is based on an agricultural society. It is an economy of favors running back and forth, like helping each other with roof repairs in a small village. If your counterpart in a business deal won't do something he's supposed to by agreement, you don't sue. It is too hard to get justice. You find someone who owes you a favor - who is himself owed a favor by your counterpart in the deal. Your debtor gets your counterpart to perform for you. How can you get anything useful done? A Chinese company wanted to buy hardware and software from a U.S. company. But it had to get done away from the negotiating table: The men on the Chinese side explained that their company would never approve paying a realistic price for the software part, which included sending a man from the West over to teach them how to use it. In China, they put no value on software, intellectual property, R&D—because these things are easily obtained through espionage, through stealing. But they put a great value on hardware. So the Chinese emissary said, informally, "Charge more for the hardware, less for software; the total will be the same." This could not have happened in the formal, accountable part of the negotiation—because it's illegal. You have to structure the deal to take advantage of what you learned by the back door. Everybody benefits. Just make sure what you do is in line with a greater good. How how can one use misdirection? Sometimes you can use misdirection when a partner can't see the benefit of working with you unless you misdirect. Show him something that you know will entice him. The worm is seen, but the hook unseen. I had a client in Oregon who wanted to sell grass seed to the mainland Chinese. But the Chinese idea of beautification is to pull grass out, not plant it. He was trying to sell refrigerators to Eskimos. I went to the Chinese government and said my client wanted to buy grass seed and was looking for a low-cost producer. I said the Americans were naive, and since that is the Chinese attitude about foreigners, they accepted it. I told them they could earn foreign currency selling grass seed to my client. They welcomed me with open arms. I knew the Chinese could not produce quality grass seed at a reasonable cost; the weather and agricultural methods are too bad. I visited China often with American technicians, teaching the Chinese the production skills, the benefits of plush, green lawns, and how to maintain them. A couple of years later, the Chinese gave up trying to sell grass seed— they were losing money. But they had learned its value. Now they wanted to buy from my client. In the 1990 Asian Olympic Games in China, the fields were covered with American grass. It was a big hit. Now lawns are grown in public places, including homes of the highest government officials. The Chinese pay $5 to $20 per pound for seed—five times what it costs in the U.S. What are the most important things to be learned about business from Asian military classics? Business virtues, like detachment. Often a Westerner doesn't want to come home without a deal. His people will think he has failed. You have to be able to walk away—or you'll get stuck with a bad deal. No deal is better. Walk away, let them call you back. That leaves potential for a better deal. We like to be attached to things, but it makes us inefficient. A detached salesman makes a better salesman. A detached ice skater - detached not from the task but from the fruits of success. That lets you touch the pure spirit. Toughness: Good deal making is a mixture of friendship and toughness. One element you will encounter in every Asian deal is mooching - taking things that aren't in the deal, asking for bribes. You delicately have to keep them from taking advantage. Play dumb. Or make sure your home office has a corporate rule against what they ask. Make a rule up, if necessary. The killer instinct: Many times, Asian partners will look to build the advantage over you. You want to build a nice relationship—but you also have to let them know they're not the only game in town. Let them know their place. I know a woman who works for a Fortune 500 company that sells test instruments in Asia. When Chinese clients come to visit in the U.S., they expect her to show them around, take them out, treat them fancy. She will deliberately not do that - she'll take them to lunch but, at dinner, drop them at the hotel. She lets them know they're important but not that important. Show them they're not doing you a favor by doing business with you. Otherwise, they'll forget why they're buying your equipment they'll think you're trying to repay a favor. Be willing to use shame and guilt—which drive Asian societies. To me, it seems such a natural thing. If your counterpart has an opposite position to you, and you can't solve it, sometimes you want to remind him of the past favors you have done him—how you have gone out of your way to make his life easier—and he is not returning with equal intensity. You put him in shame of his ingratitude. It's foolish, but it works. Use threats, too. Asians always like to renegotiate when things aren't going their way. You can, too. Go look for other partners. Use this other deal as a threat. Yielding: At times you have to know when not to be tough. Use retreat as a method of advance. A British plastics dealer told me he always adds 2 or 3 percent to the price of his goods, so that when the bargaining begins, he can give his margin to the Chinese, and let them save face. Play the naive foreigner. Don't ever tell them you know a little Chinese or study strategy. How can you trust anyone in this type of deal? I should tell you what you probably know: You will meet many people in Asian business with whom you will have a meeting of the heart—you discover that games are not necessary. So I am speaking of the general environment, of people you have not come to know. With them, you must constantly analyze your real value or perceived value. If a Chinese venture partner sees how you can make him look important in China, he wants you around. You must often teach these people about business—many pretend to know much but know little. What's the biggest difference between the minds of Eastern and Western businessmen? In my lectures on Thick Face, Black Heart, Asians are more open to spiritual information. It doesn't offend people. They realize their greatest potential comes from this. What's the most important step in self-improvement? What drives businessmen to take action is always the same—an inner human strength and wisdom from within. That comes from your connection with your Maker, which is always available within every one of us. The difference is each person's ability or inability to draw upon it. Stop the mind's chitchat, make it totally focused and at ease. You use the mind, then set it aside, and let the divine flare come through. ________________________________________________________________________ __ [Duncan Maxwell Anderson, SUCCESS senior editor, has followed the strategies of Chin-Ning Chu's career for several years.] Thick Face, Black Heart The following are quotes from the American edition of Chin-Ning Chu's book, Thick Face, Black Heart: The Chinese character for money is composed of three symbols One symbol means gold. The other two represent spears. The first spear symbolizes the outward struggle for survival. The second spear represents the battle within. Before one can fight and win the outward battle, one must win the battle within. A holy man was taken by the angels to visit heaven. As they were escorting him through the heavenly mansion, they passed through a great hall piled high with gifts. They were the things people prayed for, but quit their prayers right before they were to be delivered. Conquering others requires force. Conquering oneself requires strength. —Lao Tzu, Tao Te Ching The greatest warrior, when standing in the midst of the battlefield, sweats with fear. However, while his body is fearful and his mind is fearful, his spirit is fearless. In China, dogs are not kept as house pets but me used to protect the home from intruders. The dog learns quickly to discriminate between welcome and unwelcome visitors: 1) Attack any unkempt stranger. At best he is a beggar. 2) Attack any stranger who seems weak spirited, furtive, or lacking in confidence. It is unlikely that any trouble will come of it. It is an easy way to demonstrate to the master that you are vigilant. 3) Don't attack a well-dressed stranger. Chances are too good that he is a welcome visitor. 4) Don't attack a high-spirited, confident stranger. He might attack you himself. If he is well dressed, too, he is probably important. Wag your tail, and ingratiate yourself to him. These simple rules of discrimination are common among the world's businessmen as well as among Chinese dogs. Use the Opportunity Offered by a Fire to Rob Others— Whether or not you have set the "fire" any time your opponent is weakened by war or calamity is a good time to strike. Kill the Rooster to Frighten the Monkey -- Years ago in China, when a monkey was disobedient the trainer killed a rooster in front of it. Witnessing the poor rooster's death agony served as a powerful teacher. Pretend to Be a Pig in Order to Eat the Tiger— If you are willing to undergo humiliation— dressing like a pig, as it were— you will entrap and beat fearsome adversaries. FROM Thick, Black Theory: "Boring in: You must seize every little opportunity to advance your prospects. When you find such an opportunity, enlarge it. If there are no opportunities, focus your thoughts on creating an opportunity."
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