Doing Business in China

China has been moving toward a new stage of development. It is quietly and deliberately shifting from a successful low- and middle-tech manufacturing economy to a sophisticated high-tech one.

China is one of the world’s largest and most alluring markets, and as it continues to become a more attractive destination for foreign investment, entrepreneurs and investors are flocking to the country to take advantage of the many benefits of doing business here.

 But not without some trepidation.

If you know what you’re doing, it’s not hard, but if you don’t know what you’re doing, it can be very hard and costly. There are some complications, but if you’re talking to someone who knows what they’re doing in China, then they can navigate all these options and obstacles and help you get through it.

Understand the business culture

China is a world away from America or Europe, and more than a world away when it comes to doing business there. In the west, contracts, deals and other arrangements are fairly transparent between businesses working together. Not so in China.

Expecting a standard concept of time

The definition of time in China does not necessarily designate when one hour gives way to the next. For example, noon -- to a Westerner, as definite a time as any other -- is employed by the Chinese as a two-hour period from 11 a.m. to 1 p.m.

Mistrust and opportunism are endemic

There are two opposite ways of extending trust. One is to trust until given reason not to; the other is not to trust until there is enough evidence of trustworthiness. China takes the latter approach. The zero-sum competition already noted creates an incentive to take advantage of people outside the in-group. China still lacks reliable and impartial mechanisms to check such behaviour, such as a well-functioning legal system. This opens the door for opportunistic behaviour.

Why the Chinese (almost) never say no.

Generally speaking, Chinese communication is more indirect than English. Telling someone 'no' directly may seem disrespectful. Keeping in line with the concept of Mainz, many Chinese believe that saying 'no' to someone will make the other person lose 'face'. They don't want to show disrespect to you, your hard work, or your expertise, so they communicate in a more indirect style.

This information can be helpful, especially when negotiating. Many times, a Chinese person will say something like: 'I agree with what you said, but...' In this statement, the 'but' could indicate that in reality, the person totally disagrees.

If you find the need to disagree, doing so in an indirect way ('Perhaps we can come back to that' or 'I may need to check with my partner before deciding on that issue') will often be appreciated by your Chinese counterpart.

Gestures in conversation can have different meanings in China. Nodding means, “I hear what you are saying”, not necessarily “I agree with you”. Laughing can be from embarrassment rather than because something is funny.

Understand which Chinese people you're dealing with.

Stereotyping is a typically not good practice. But the sheer size of China complicates matters even more.

China is like a collection of diverse nations within a common economic boundary. Just like the British don't always see eye-to-eye with the French, similar regional differences exist in China. For example, people in Beijing are different in many ways to those in Shanghai. China is one of the most diverse countries in the world.

So, remember: What you've learned about Chinese culture will differ depending on which part of China you're dealing with. Get to know a local partner by following the relationship building. Work on building trust with them, and this can be the stepping-stone to expanding ones network.

Learning to do business with Chinese partners brings along a unique set of challenges. But a rapidly growing market and huge number of skilled professionals could make it well worth your while. Typically most western companies will employed a westerner who understand their business and Chinese cultural to over see business in China.

Chinese society is hierarchical

Company decisions are typically reached in a top-down manner, with only the very top of the pyramid involved in decision-making. Mistrust puts limits on delegation, and supervisory control at each level is high. Mid-level managers typically have little power to make decisions of consequence, and their main role is to pass on orders from the top and ensure execution.

Mistaking loud voices as a sign of hostility

It could be the sheer number of people in China trying to have their say, or a quirk of the language, but for whatever reason, the Chinese speak several decibels higher than is comfortable for Westerns.

Underestimating the importance of exchanging business cards before meetings

A double-sided Western business card with simplified Chinese on one side is the first indication of respect toward your Chinese counterpart; its conspicuous absence is not unlike refusing to shake hands at the start of a Western business meeting. Even if you are familiar with the title and position of the person to whom you have been introduced, study his card, and then deliberately place it within clear sight if you are sitting at a table.

Not coming to terms with “guanxi”

Like most idioms, guanxi is not easily translated into a single word that mirrors its meaning. “Relationships or connections outside the family” are the closest one might come to the meaning of what is at the very core of Chinese society and culture. It is, therefore, important for the Chinese to get to know the person or people with whom they wish to conduct business before business is conducted -- the how, why, and when things are done all rests on these relationships.

Forgetting table etiquette

They believe luck is brought with good table manners and shame is the result of bad. From a Western perspective, there is always too much food at the table (a sign of the host’s prosperity), but try each dish. Be sure to accept the last serving of what the host has pointed out as the best dish, which he has offered you as a sign of his hospitality. Be aware most Chinese will use their mobiles at the dinner, this is acceptable doesn’t me you have too.

Gifts

The Chinese like to give gifts, which are used to express friendship, the successful conclusion of an endeavour or appreciation for a favour done. Often, the symbolic value of the gift is of more importance than the material value.

It is a good idea to bring along small gifts for your hosts (souvenirs from your region, pens, ties, or a memento of your company). Wrap them in a colour traditionally regarded as lucky, such as gold or red. It is not customary to open presents in front of the giver, unless encouraged to do so.

There are few rules on what gifts not to give, but the Chinese expression “To give a clock” sounds like the phrase for “To attend to a dying parent”, so clocks are not popular gifts. Similarly, cut flowers are associated with funerals.

Hierarchy influences gift giving. The most senior person should receive the most valuable gift. If other gifts are also given, they can be smaller and given to other members of the Chinese team.

Presentations

Sophisticated PowerPoint and video presentations with multiple illustrations are the norm for many forward-looking Chinese companies, and it is advisable to take the same approach to create a good impression. Dual-language presentations and handouts in Chinese are essential.

Audience reactions vary. The Chinese applaud themselves when they have spoken, as well as clapping in response to others. But do not be put off if your audience is extremely passive. Throwing questions to the audience, inviting group discussion and asking for questions may not elicit much reaction, although younger participants are often more willing to ask questions. Often, audiences are happier writing down their questions rather than asking them in front of others.