A survey last month by the 1,500-member China General Chamber of Commerce-USA, an umbrella group of Chinese companies, identified cultural differences as the greatest problem members face in hiring and retaining American workers. US-China cultural divergence was among the top strategic challenges, it said.

“They don’t know what they don’t know,” said Charlie Yao, president and chief executive of YCI, the US unit of China’s Shandong Yuhuang Chemical Co, which is building a US$1.85 billion chemical plant in Louisiana.

“That’s the learning curve most Chinese companies go through, unknown to known. Typically it’s expensive in time or cost or opportunities they fail to grab.”

Chinese firms are hardly alone. Japanese companies have long faced criticism for insular management, South Koreans for blunt messaging and Americans for being obsessively short-term, quick to fire workers and insensitive to more consultative cultures.

By arriving later, Chinese companies have avoided some of their predecessors’ worst mistakes, including buying crown jewels. A 2013 Princeton University study on China’s US investments cites Shanghai Automotive Industries’ deft decision to open offices in Detroit compared with Toyota and Honda’s headline-grabbing earlier entry in non-union states and Mitsubishi’s 1980s purchase of New York’s Rockefeller Centre, which sparked a nationalistic backlash.

One problem shared by US and Chinese companies is arrogance, cross-culture experts say. Having succeeded in their giant home market, they dive into other large markets without significantly changing their playbook.

Home Depot entered China in 2006 with great fanfare only to realise that do-it-yourself construction was viewed as a mark of poverty in China where labour is cheap. The chain closed its last seven stores in 2012 with a US$160 million tax write-off.

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“Two of the worst countries are China and the US. There are more similarities than either would like to admit,” said Dan Harris, a partner in the Seattle-based law firm Harris Bricken and co-founder of China Law Blog.

“In both cases, they’re so big. They can succeed and never have to deal with the rest of the world. They end up feeling entitled and being arrogant.”

Chinese companies also struggle with hierarchy given their more chain-of-command management approach. That does not always sit well with US workers known for challenging supervisors, going over bosses’ heads and openly opposing decisions they disagree with. A 2011 Harvard Business Review article called this the difference between “saving face” and “covering your ass” cultures.

“Chinese workers tend to follow the direction of supervisors,” said Alex Liu, chief executive of Wanhua US Holding Inc, which will spend US$1.25 billion on its Louisiana chemical complex. “Here in America, everyone has their own opinion.”

Another mistake Chinese companies sometimes make is relying too heavily on transplanted Chinese managers short on language skills or cultural understanding. These managers, used to a homogenous Chinese workforce and strong work ethic, struggle to connect with American workers speaking in varied English and Spanish accents and unfamiliar with China’s more top-down approach.

“Policies are constantly changing with no warning or explanation. Culture is difficult to get used to. It is a Chinese company, so there are many differences there,” an American employee with auto-windscreen maker Fuyao Glass wrote recently on job site Indeed.com.

The China Chamber advises members to reduce their expatriate staff, citing as examples Hisense, GD Copper and International Vitamin Corp.

“We try and get our clients to hire local staff and team leaders and fund community events to narrow the cultural gap,” said Lindsay Liu, Shanghai-based office director with the Arkansas Economic Development Corp, which has lured several Chinese companies to the state. “By doing these good things, they build guanxi,” or connections, she said.

At least as important as good language skills are less obvious communication issues, experts say. Chinese interaction often is more indirect and subtle, which can be lost on American workers used to clear, direct orders.

“Chinese culture is very adverse to confrontation,” said Xiaomeng Lu, international manager with Washington-based public policy firm Access Partnership. “They beat around the bush more than Americans.”

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The ideal is fluent English- and Chinese-speaking managers able to bridge both cultures with the authority to make important decisions in real time. But inevitable shortfalls can result in Chinese seeing American corporate culture as uncaring and overbearing and Americans judging Chinese colleagues as inefficient, illogical and lacking in initiative.

These issues broke into the open in 2017 when US employees of Fuyao Glass questioned the company’s commitment to American business norms during a unionisation battle and in the midst of a lawsuit alleging discrimination by national origin filed by former manager David Burrows. Fuyao chairman Cao Dewang told The New York Times in 2017 that Burrows and another manager were fired because “they didn’t do their jobs and squandered my money”.

Also challenging are expectation gaps between companies’ US and China management. This may start when a Chinese company enters the American market with great expectations that are not immediately realised. Headquarters starts complaining that Americans are overpaid and lazy, so US salaries and expenses are cut, pushing better workers out. The company’s US reputation suffers, further eroding profits, leading to more cuts.

“It ends up being punitive,” Harris said. “In one case involving a very big company, it got so bad they needed approval from Beijing just to buy printer ink.”

Another area that has tripped up Chinese companies is strict adherence to US contracts, employment and environmental rules.

Yue Li, a Beijing-based adviser to Alipay and a cross-cultural expert, said this reflected in part the difference between America’s strong rule-of-law grounding in the Constitution and “China’s long history of feudalism based on the whim of leaders [that] has made discretion an important tempering of a contract’s ‘lifeless’ words”.

“There’s a tendency with Chinese companies to take a ‘catch me if you can’ approach,” Lu said.

Closely related is the trouble some face by not paying for or failing to follow “expensive” expert US legal, accounting and management advice. The China Chamber survey advises its members to rely on local expertise.

Fuyao Glass is facing a class-action lawsuit by 639 current and former workers alleging unpaid overtime. The company has denied all the charges. Hong Kong-based Imperial Pacific International was recently fined US$3.4 million and four of its Chinese contractors paid US$13.9 million for failing to pay minimum wage in a US$3 billion casino construction project in the Marianas Islands, a US territory.

“I can’t speak to how many times they get away with it, but I’ve seen numerous cases where they end up paying much more down the road,” said Aaron Halegua, a lawyer representing eight of the workers.

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Some Chinese managers tend to blindly follow practices that work back home, culture experts said.

“There’s a view held by a lot of Chinese companies that going the straight and narrow path is naive,” Harris said. “If you follow the law 100 per cent in China, you’ll probably go out of business because you’ll also have to pay other people for fire extinguisher approval … so you often have to evade to get by.”

YCI and Wanhua both chose lightly populated, relatively impoverished St James parish, Louisiana’s term for a county, to locate their US chemical plants because of its transport links, access to inexpensive shale gas and government welcome mat. Other than a dozen chemical plants and oil refineries, the parish is best known for its annual “Bonfires on the Levee” festival when residents build Christmas Eve fires, telling children these help guide Santa Claus when delivering their gifts.

Chinese companies, weaned in a country where police quickly squelch protests, are sometimes taken aback by the strength of US environmental, labour and community protesters. Advisers say they frequently reassure Chinese managers that this is all part of the process.

Wanhua, which had hoped to start plant construction by now, has most recently faced a challenge by environmental groups hoping to reverse site approval on the grounds that production is not the required two miles from nearby population centres.

Local activists say St James’ relatively impoverished, poorly educated population – which lives in one of the nation’s poorest states – has attracted chemical companies like Wanhua and YCI and earned it the nickname “cancer alley”.

“That’s justified,” said Clyde Cooper, a local councilman. “The trees are dying.”

YCI’s Yao said his company, with its private ownership structure, had made faster progress than Wanhua in part because it hired top local zoning, environmental, air-quality and staffing advisers, avoiding many mistakes. He also credits his experience growing up in China and working his whole professional life abroad, including over a decade with Shell, for an understanding of both cultures.

“We’re certainly far ahead of them,” Yao said. “They were indecisive, or chose wrong. We did not go through that. I know with Wanhua, they were tinkering, tinkering. It was a very long journey.”

Wanhua’s Liu acknowledges that permitting has been laborious. “We apply for permits and we always have public hearings with some activists and voices,” he said.

Despite delays, the time frame is within company expectations and shorter than it seems given that Wanhua did not get serious until 2017. Liu also said the company had relied heavily on good local advice.

Officials say that activists in St James have become more vocal lately, benefiting YCI, which moved earlier and faster.

Wanhua’s plant produces methylene diphenyl diisocyanate (MDD) – a polymer found in hard plastics and synthetic fibres – while YCI’s makes methane, used in antifreeze and fuels. MDD is considered more dangerous, which had contributed to Wanhua’s delays, Cooper said.

“They’ve had to go back to the drawing board several times,” he said.

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YCI’s Yao said his company, which is privately held, had benefited from his authority to make big decisions locally.

“At Wanhua, they don’t have that,” he said. “Local staff doesn’t have granting power, the capability to do something themselves. Often they make decisions in China.”

That had allowed YCI to largely avoid the “fatal flaw, the non-recoverable or the extremely difficult”, he said.

Wanhua’s Liu said communication between its US and Chinese operations was strong. “Our only objective is to build the plant,” he said, adding that they now hoped to break ground late this year and complete construction within two years. “So far, so good,” he said.

Both companies say they abide by all applicable environmental and safety regulations, although local activists often cite a 2016 explosion at Wanhua’s plant in Yantai, China, that killed four people and injured several more.

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Wilma Subra, head of environmental consultancy Subra Co, said that chemical companies were not great communicators but that the two Chinese companies fell below that low standard.

“Neither one has been good about outreach to the community,” she said.

Both also have been criticised for failing to create enough local construction jobs given their decision to export massive modules from China to Louisiana. Economic development officials say this is standard industry practice.

Yao said that for many Chinese companies heading to the US, the difference between failure and success was an ability to avoid major cultural pitfalls.

“We make different chemicals, but we will be two years ahead of them or more,” he said. “That will translate into better market opportunity.”