Business Culture in China

The Chinese company practice is vastly different from the Western method that most of us might be accustomed to. Needless to say, with the Chinese market opening up, China’s joining of WTO and the Olympics in 2008, many Chinese business practice are now starting to align with more traditional procedures.

However, China will always have their own unique business culture and etiquette, given their distinctive history and background.

“I was recently engaged in a company meeting that went sour and threatened to scuttle a fantastic deal. What occurred was that the Chinese party getting the American buyer was late in reaching his resort. The American was angry because he had a tight schedule and that they had been overdue and threatened to withdraw his purchase.

The Chinese party was late because they were awarded a vague speech of a lake-side resort. You see, what happened was that the American gave his hotel as Lakeside resort. Regrettably, there were many hotels along the lake but the Chinese were too bashful to enquire which lakeside resort earlier because they were fearful that the American would’lose face’ for having given a vague speech. Rather, they spent the morning leaping from a lakeside resort to another searching for this American gentleman.”

An easy cultural gap threatened to scuttle a perfectly good working relationship. To prevent similar ethnic disasters, here are a few hints on ways to run a more successful company in China.

The first approach
Chinese company are mostly referrals; basically a business relationship is struck dependent on a different business associate recommendation. The best prices and deals frequently comes from a solid recommendation.

However, it’s common now for cold calls and direct connections, given the access to the internet and the competitive nature of Chinese companies. You might source from the world wide web, trade fairs, catalogues and brochures, advertisements and approach the Chinese firms directly through a telephone or email.

Alternatively, if you’re trying to purchase a factory in China, you can approach a investment committee or a company advisory directly. They’ll have the ability to advise you on your very best location based on your industry, raw material and manpower requirements. Please contact us directly in case you’ve got such a need and we’ll be pleased to advise accordingly.

Dating
Chinese company relationship becomes a social relationship after a while. Unlike Western business relationship which remains professional and possibly, aloof, even after a long time, Chinese business relationship becomes a societal one.

The more you discuss your own personal life, including family, hobbies, political views, aspirations, the nearer you are in your business relationship. At times, a lot of time is spent discussing matters beyond company, but a lot of time, another party is also making his mind up about your deal based on how much he sees your personal relationship with him.

Seniority
Seniority is quite important to the Chinese especially if you’re handling a State owned or government body. Rather than addressing the other party as Mr or Mrs so and so, it’s always appropriate to deal with another party by his designation ie Chairman So and So, Director So and So or Manager So and So.

When giving out namecards or brochures, ensure that you begin with the most senior person before moving down the line. When giving a namecard or getting one, make certain you’re extending out with both hands with the card. Remember to deal with the card you’re giving out in a fashion such that the receiving party gets it confronting him properly.

Giving Face
Giving face (aka giving due respect) is a really important concept in China. You have to give the suitable respect according to rank and seniority. By way of instance, if you’re purchasing presents for a first contact, ensure to buy better gifts for your senior managers rather than purchasing similar gifts throughout the board.

Likewise, sitting places in a meeting room or a dining table is accorded accordingly to rank, importance and seniority. It’s better to seek guidance before embarking on your first meeting with Chinese business contacts to avoid making the wrong move.

Gifts and Gifts
Unlike previous days when China was very poor, presents, particularly of Western origin was especially valued. Today, China creates and imports almost anything possible and presents are no longer a novelty.

However, gifts are always appreciated and especially in the smaller towns or cities, will continue to play a significant role in your business relationship. Do note that if you’re indeed giving gifts, be certain that the senior individuals get a better present or at least presents perceived to have a greater value than their junior employees.

Likewise, expect to receive gifts from the Chinese, especially Chinese art solutions. It’s polite not to deny, especially if it’s not of too high a financial value.

Lunch/Dinner
There’s absolutely not any business talk in China without at least one trip to a restaurant. From time to time, a trip is made to the restaurant before any business discussion occur!

Inevitably, the restaurant will stay a grand one and you’re likely to be hosted in a private room.

There’s an elaborate seating arrangement for a Chinese company meal. There are fixed seating positions for the host and the guest and they are seated according to seniority. This is a really important element of a formal dinner and it’s crucial that you follow the rules so. However, it appears that the Northern Chinese are very special to this formal seating arrangement while the Southern Chinese has loosen the formalities somewhat.

You might want to learn more this intriguing China Book.

Drinking with the Chinese
The Chinese are big drinkers especially in Western and Northern China. It doesn’t matter if it’s lunch or dinner; provided that a meal has been hosted, there’ll be alcohol.
Chinese wine is your favorite, followed by red wine and beer. Chinese wine is more like gas than spirits, using a alcohol concentration as large as 60%! However great a drinker you may think of yourself, never, ever challenge a Chinese into a drinking contest. They’ll win, hands down!

It’s often regarded as rude to not drink with the Chinese at an official dinner. To preserve your sanity, either claim to be a non alcoholic or plead medical grounds as a justification. This will let you off the hook with little or minimal drinks. Even better, bring a spouse who can drink for your benefit!

After Dinner Entertainment
Formal company dinner normally drags for quite sometime as there’ll be much social conversation, some karoake, and drinking competitions. The majority of the time, everyone is too drunk to indulge in additional amusement after a dinner. Moreover, if you’re merely new to this venture, you’re not likely to be encouraged to further after dinner entertainment.

However, as soon as you’re familiar with them, you might be invited to a Karaoke, or a Night Club, or even a Suana. Do note that if they’re the host for the night, all invoices will be picked them up for the night, including all entertainment. It’s impolite to fight for the worst or bill, divide the bills.

Likewise, if you’re the host for the night, you’re expected to pick up all invoices for the evening.

Controversial Issues
There are a few taboo areas in social conversations with the Chinese. Stay away from these conversational topics as far as possible. I’ve seen many nasty arguments Because of these topics:
1. You shouldn’t mention that Taiwan is an independent nation or a nation.
2. You must NEVER praise the Japanese or be seen to be good friends with them
3. You can condemn Mao Tse Tung but prevent critising Deng Hsiao Ping
4. You shouldn’t praise Shanghai facing natives of Beijing and similarly vice versa

About the author