Are you thinking about doing business in China?
Before you go, you’ll need to become familiar with Chinese cultural practices and how they relate to business.
Things are changing in the People’s Republic of China (PRC). The country is in the midst of a social, economic and cultural transition. They are leading toward a capitalist society, yet the Communist Party is still in power, which puts them in a precarious situation. As with any transition, confusion and contradictions can arise as the Chinese – and the world – learn how to navigate this new landscape.
What business rules apply when doing business in China?
It’s important to know that in spite of colossal changes, for the Chinese, traditional cultural drivers take precedence. This means adhering to Confucian values (filial piety, humaneness, and ritual consciousness) although with a modern twist to support new business ideas.
Doing business in China begins with building trust
Patience – Patience – Patience. Trust is essential to conducting business in China, and it can take a great deal of time and patience to establish the necessary rapport to build trust.
This is in contrast to North America’s culture of ‘getting down to business,’ where a direct and efficient approach is preferred, and trust is established as companies or individuals partner together to achieve a common goal. The ‘Western’ approach to business can be at odds with China’s Guanxi, where personal relationships and trust building comes before business.
To build trust consider the following cultural customs before doing business in China.
- The Chinese are in no hurry to rush the business building process. They are much more interested in building trust first and doing business later.
- Part of the trust building process will involve observing you to see if you are honorable.
- You can display honor by showing respect to those whom they determine respect is due, the company, elders, those with seniority and higher education, and many more.
- You should always stand up when a senior person enters the room.
- When doing business in China, it’s important not to criticize, challenge or interrupt people, this is considered very disrespectful and would cause them to ‘lose face.’ It is also rude to be absolute; it’s better to be vague.
- In a meeting, the same question may be asked multiple times by the same or different people. Do not make them look stupid for asking.
- Don’t lose your temper. When hostilities erupt, everyone loses face.
- When greeting for business, look people in the eye and shake their hand. Do not bow.
- The business card is greatly respected because it has your name on it. Be sure to have cards printed with Mandarin on one side, and when exchanging, present it with both hands – Mandarin side up. Give attention to all cards received and never put it in your back pocket and sit on it.
Image by Chin Communications on website https://www.chincommunications.com.au/
- Be observant about Chinese etiquette, if confused, it’s OK to ask the host or your translator what is proper.
- For the older generation of businessmen (45-60 years of age) or in Northern China, they participate in what is called “Wine culture” or “Wine table culture.” This is a practice where they drink and/or share luxury food with you to build trust.
- Most of the younger generation of entrepreneurs (below 40 years of age) have adopted a “Tea culture.” A new fashion for building trust before discussing serious business.
- When planning to do business in China, it’s important to become familiar with both Chinese wines and teas. This will help you make friends first and then do business together.
- In the Chinese business culture, the company Chairman or decision-makers do not negotiate the business deal directly, their role is that of “red face” (the Good guy in Peking Opera).
- The company’s General Manager or Project Manager has the responsibility of negotiations and the role of “white face” (the Bad guy in Peking Opera). However, in most cases, after negotiations are finished the final decision will be made in a private meeting between the two decision-makers.
- Learn about the concept of Guanxi, it has broad cultural and business implications that stress the importance of associating oneself with others in a hierarchical manner in order to maintain social and economic order.
- If you see people that appear to be avoiding you, it’s likely they cannot speak your language, and they don’t want to be embarrassed. You will gain respect if you make an effort to speak theirs by learning several Chinese phrases.
During the trust building process, and to the chagrin of Americans, very little straight talking takes place which can result in complications. It’s important to work with someone familiar with Chinese business customs to navigate ambiguities.
In China, it takes a very long time to build trust, so you may as well enjoy the journey. Above all, be patient. Accept them for who they are, do not attempt to change their culture to adapt to yours, and do all you can to understand and participate. Your efforts will go a long way to building trust.
Tim Archer first visited China in the early 1980s with Teledyne Continental Motors to work with the Harbin Aircraft Manufacturing Co. putting engines in the Y11B aircraft. Over the past five years, he has averaged traveling to China for business 7-9 times per year. He loves the Asian culture and particularly enjoys eating the street food; grilled squid and clams are his favorite.