Daniel (left) & Lutz (right) Berners

Daniel (left) & Lutz (right) Berners

  • Lutz Berners founded Berners Consul­ting in 2009. His brother Daniel added the São Paulo office to the company one year later. With their expe­ri­ence from working at multi­na­tional corpo­rates, they assist clients with inter­na­tional market entry, mergers and acqui­si­tions, joint ventures and
    inter­cul­tural coaching. Lutz Berners has co-authored two German books about doing busi­ness in China, the latest being “Mit leichter Hand das Schaf wegführen: Chancen im chine­si­schen Markt stra­te­gisch nützen”.

Want to get to know Daniel (left) & Lutz (right) Berners?

Get in touch

Still curious?
There is more to see here:

All Articles

Brazil and China seem like polar oppo­sites. What led you to focus on those two coun­tries?

DANIEL: It was a combi­na­tion of coin­ci­dence and plan­ning. I always toyed with the idea of beco­ming a consul­tant. When I was younger, I took advan­tage of indu­stry oppor­tu­nities and then went into consul­ting at 35. But I had been in Brazil for a long time, and nine years ago, my brother and I said, let’s do it toge­ther. Stra­te­gi­cally, it worked well.

LUTZ: I encoun­tered China for the first time 20 years ago, and then it became a recur­ring theme in my life. During my studies and internships, I went to China. I worked for a major auto­mo­tive supplier and had to deal with the country too. I noticed that there were very few Chinese specia­lists in large compa­nies, but there is a great need. At the time, I was already quite expe­ri­enced with China and spoke the language fluently. So, I came up with the idea of beco­ming self-employed. We started with auto­mo­tive suppliers. Mean­while, we work on ever­y­thing that has to do with tech­no­logy in the market. Over the years, a clear focus has emerged on advi­sing part­nerships between German and Chinese compa­nies. There was and still is a gap in the consul­ting market. And that became our niche.

There are immense cultural dife­rences between Europe and China. What are the most striking ones compa­nies routi­nely face?

LUTZ: In busi­ness terms, the most important question is what kind of person am I dealing with; for example, as a European buyer talking to a Chinese seller. And we have found that the simi­la­ri­ties of the func­tion as a buyer and seller can often compen­sate for cultural diffe­rences. It does not matter so much whether I’m dealing with a sales­person from China or France. The national cultures are very diffe­rent, but they are still a seller and they have many things in common. Expe­ri­enced busi­nes­speople usually get along very well with people from other cultures, because they interact based on these func­tions. Never­theless, cultural diffe­rences play a role. In China, the focus on the group is a big diffe­rence to Germany. In addi­tion, there are gene­rally clear hier­ar­chies in Chinese society. That explains why titles on busi­ness cards are so important. You study them inten­si­vely when you get one, because you have to know where you stand in rela­tion to the other person.

Do Chinese people basi­cally have the same under­stan­ding of hier­ar­chies as us?

LUTZ: That’s very complex. It depends on the company, who’s the customer, and who’s the supplier. The customer is always king, but you have to consider the size of the company too. The big one is more important than the little one. If a large company supplies a small one, but at the same time you have a high-ranking salesman sitting oppo­site a young buyer, then it really gets tricky. That’s why people in China often go out to eat with busi­ness part­ners to build rela­ti­onships.

Are Chinese open to Western busi­ness culture and forgi­ving of missteps?

LUTZ: I call that my “call to sere­nity”. As a foreigner in China, you can theo­re­ti­cally do a lot wrong, but every effort is perceived posi­tively.

Seems very compli­cated. How is it in Brazil?

DANIEL: Much less so. The culture is very European or American-influ­enced. People are pretty informal and open-minded. This has some advan­tages. You are welcomed with open arms. In many Brazi­lians’ eyes, ever­y­thing that comes from abroad is thought to be better quality per se, like the mana­gers who come over here having a better educa­tion than the local ones. That’s the stereo­type that prevails here.

The stereo­type sounds like it is not the case.

DANIEL: Well, of course, there is the tend­ency for good people to be sent abroad. But the fact that Brazi­lian culture is much more similar to ours also has disad­van­tages. You can misjudge the market here, because you simply assume it’s like Europe. People think, “Great, that’s like Germany, we’ll do it all ourselves.” But that’s often a mistake. In Brazil, you need a lot more flexi­bi­lity, profes­sio­nally and priva­tely, because things are diffi­cult to plan. Twenty years ago, when infla­tion ceased, I got an excel sheet from the head office with the request to enter a ten-year plan. I laughed because I would barely know what I would sell next month. Many things are incom­pre­hen­sible to us Germans, such as why a licence has not been issued for three months or why the fire brigade has not come to inspect the produc­tion hall. Brazi­lians just know the ways to assess and acce­le­rate these processes.

How can you speed things up?

DANIEL: Be persi­stent. The question is, of course, how should I be persi­stent? If a German comes and thinks they can just put up more resources or money to get what they want, you can really shoot yourself in the foot if you do it the wrong way. It’s a sensi­bi­lity only Brazi­lians and people who have been here for a long time possess.

Cultural dife­rences aside, what are the possi­bi­li­ties for German or European compa­nies to enter the Brazi­lian and Chinese markets?

DANIEL: The typical case in Brazil is this: I want to sell a product that is probably better quality than the local one. The price is higher, but that is okay, because people here pay for supe­rior quality too. For that, you need a partner, be it a sales partner, an importer or a trading company. You could do ever­y­thing yourself, but it is much more diffi­cult. And you need a plan B right from the begin­ning. In other markets, I would not necessa­rily come up with a plan B, but it’s needed in Brazil. And we recom­mend ente­ring the market step by step; start small and get to know the market and custo­mers in general. When a company feels safe and knows where the pitfalls are, the next step is taken; for example, foun­ding a local company.

LUTZ: China is much more predic­table. Most of the things compa­nies ask us to do, we’ve already done at least once, and usually it will work a second time. This relia­bi­lity lets you put so many resources, such as money and staff, towards plan A that you can hardly afford a plan B. The good news is that there are many German compa­nies in China, and over 6,000 are active in the Greater Shanghai region alone — three times as many as in all of Brazil. There are so many models you can choose from, like office-in-office solu­tions or service provi­ders for German compa­nies to partner with. There are 15 to 20 busi­ness models on hand. In contrast, Brazil has one or two constructs that could be cons­i­dered.

What would you say are the biggest hurdles for European compa­nies?

LUTZ: In China, you have to make a distinc­tion between entry into the market and the chal­lenges you face once you are esta­blished. When ente­ring — that is, in the first three years — you try to under­stand the basics of the country, like the language, the manners, the culture, the power struc­tures, the regional struc­tures. That’s pretty compli­cated, but once you know how it works, you’ll be fine. Owing to regu­la­tory requi­re­ments and the search for the right personnel, the early days make for inten­sive consul­ta­tion. Once inside, the hurdles that compa­nies mention are with Chinese compe­ti­tors, government distor­tions of compe­ti­tion, cyber­se­cu­rity, and limi­ta­tions on the internet and commu­ni­ca­tions. You cannot do proper rese­arch on anything in the West via legal chan­nels in China. The Chinese search engine Baidu is not at all set up to return infor­ma­tion that would be econo­mi­c­ally useful from the Western point of view.

DANIEL: For Brazil, I would raise two points. Firstly, the bureau­cracy is very deman­ding and probably worse than in Germany. And secondly, the country’s comple­xity, its size, and the logi­stical diffi­cul­ties.

And the current poli­tical situa­tion?
There’s a national crisis.

DANIEL: Brazil is unstable, but the economy works somehow. The economy always goes up and down, but there are never really any brutal swings, at least on the macro level. It is a constant wave motion. This also means, if there is a crisis like now – and we are talking about the worst crisis in decades – compa­nies don’t panic. They cut costs and fire people, but produc­tion sites are rarely closed. They produce, sell and continue their busi­ness, simply waiting until things recover. You weather the storm.

LUTZ: That’s our expe­ri­ence from the past decade in Brazil. If things go badly, the busi­ness languishes. When busi­ness is bad in China, you imme­dia­tely burn money. There­fore, there is more pres­sure to act. My percep­tion is that if German clients in China have a problem, they imme­dia­tely put a lot of effort in it, and often also money.

You are very well-versed in the national languages. Would a company that wants to enter the market make progress with English only?

DANIEL: My answer is no. You do not get far with English at all. Few people speak English and even fewer speak good English. If I want to build a busi­ness and the autho­ri­ties do not speak English and the websites do not have an English version, then it is only possible to move forward with Portu­guese.

LUTZ: If you want to operate in China, that only works with Chinese. So few people speak English that inex­pe­ri­enced compa­nies can be misled. You will find an English-speaking contact person who you can use to set up a busi­ness. I just got off the phone with a company that failed spec­ta­cu­larly with this. They set up a site in eastern China because they got along well with the site’s promo­tion manager. He was then hired by the company as the manager. The Germans thought it was a great oppor­tu­nity, because he knew ever­yone locally. But it turned out that he had no idea about the busi­ness and just brought his acquain­tances into the company. Who in Germany would hire a government employee to run a busi­ness? A classic mistake is also that compa­nies go to China and work with inter­pre­ters who do not under­stand the busi­ness, but get a perma­nent posi­tion. Some­times it works, but unfor­tu­n­a­tely it is not quite as common that the inter­preter you hired is also a good sales­person with tech­nical exper­tise.

From your expe­ri­ence, is it more difcult to enter the
Chinese or Brazi­lian market?

LUTZ: The first step to foun­ding a company is bigger in China than in Brazil. On the other hand, I would say, in general, you can do more and more inno­va­tive things in Brazil.

DANIEL: Going from zero to one hundred in Brazil is impos­sible. But if you do not stress out and say ‘in five years I want to be in the market’, it’s not diffi­cult, because you can afford the luxury of learning. We are also there as consul­tants to mini­mise the mistakes.

With years of inter­na­tional consul­ting expe­ri­ence under your belt, do you believe that the two coun­tries of exper­tise mirror your perso­na­lity as brothers?

DANIEL: As for Brazil, I would say yes.

LUTZ: As far as my own Chinese charac­te­ri­stics are concerned, I’m the wrong one to judge. I hope I got some of the posi­tive quali­ties, like flexi­bi­lity and a long-term approach, rela­ti­onship nego­tia­tion, and pati­ence. German indu­stry has an excel­lent repu­ta­tion in many coun­tries, but it some­times makes us a bit too self-assured when dealing with people over­seas. I think it is important to keep in mind that we can learn from other coun­tries as well. Inten­sive inter­na­tional activi­ties are a very effec­tive way for conti­nuous impro­ve­ment – and a fun way, too.

Daniel (left) & Lutz (right) Berners

Daniel (left) & Lutz (right) Berners

  • Lutz Berners founded Berners Consul­ting in 2009. His brother Daniel added the São Paulo office to the company one year later. With their expe­ri­ence from working at multi­na­tional corpo­rates, they assist clients with inter­na­tional market entry, mergers and acqui­si­tions, joint ventures and
    inter­cul­tural coaching. Lutz Berners has co-authored two German books about doing busi­ness in China, the latest being “Mit leichter Hand das Schaf wegführen: Chancen im chine­si­schen Markt stra­te­gisch nützen”.

Want to get to know Daniel (left) & Lutz (right) Berners?

Get in touch

Still curious?
There is more to see here:

All Articles