Business culture in China

Chinese business culture and etiquette

Chinese business practice is very different from the Western method most of us are used to. Of course, with the opening of the Chinese economy, China’s entry into the WTO, and the Olympic Games in 2008, many Chinese business practices are beginning to align with more conventional methods.

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

“I was recently involved in a business meeting that went wrong and threatened to ruin a good deal. What happened was that the Chinese party receiving the American buyer was late for their hotel. The American was furious because he had a tight schedule and that they were late and threatened to withdraw their purchase.

The Chinese group was late because they were given a vague address of a lakeside hotel. You see, what happened was that the American listed his hotel as the Lakeside Hotel. Unfortunately, there were numerous hotels along the lake, but the Chinese were too shy to ask which lakeside hotel before because they were afraid that the American would “lose face” by giving a vague address. Instead, they spent the morning hopping from one lakeside hotel to another in search of this American gentleman.”

A simple cultural difference threatened to wreck a perfectly good working relationship. To avoid similar cultural disasters, here are some tips on how you can run a more successful business in China.

The initial approach

Chinese businesses are mostly referrals; essentially, a business relationship is established based on the recommendation of another business partner. The best prices and deals often come from a strong recommendation.

However, cold calls and direct contacts are common today, given the availability of the Internet and the competitive nature of Chinese companies. You can get information from the Internet, trade shows, catalogs and brochures, advertisements, and approach Chinese companies directly through a call or email.

Alternatively, if you are looking to invest in a factory in China, you can approach an investment committee or business adviser directly. They will be able to advise you on the best location based on your industry, raw material and labor needs. Please contact us directly if you have such a need and we will be happy to advise you accordingly.

relationship

The Chinese business relationship inevitably turns into a social relationship after a while. Unlike Western business relationships, which remain professional and perhaps distant even after a long time, Chinese business relationships become social.

The more you share your personal life, including family, hobbies, political views, and aspirations, the closer you’ll be in your business relationship. Sometimes he spends a lot of time discussing matters outside of the business, but then the other party is also making a decision about his deal based on how much he sees your personal relationship with him.

Antiquity

Seniority is very important to the Chinese, especially if you are dealing with a state or government body. Instead of addressing the other party as Mr. or Mrs. So-and-so, it is always appropriate to address the other party by their designation, ie, President, So-and-so, Director, So-and-so, or Manager, So-and-so.

When handing out business cards or brochures, be sure to start with the most senior person before continuing down the line. When giving or receiving an identification card, be sure to extend both hands with the card. Remember to face the card you are delivering in such a way that the receiving party places it in front of him correctly.

giving face

Showing your face (also known as giving due respect) is a very important concept in China. Due respect must be given according to rank and seniority. For example, if you’re buying gifts for an initial contact, make sure you buy better gifts for senior managers rather than buying similar gifts across the board.

Similarly, seating positions in a meeting room or at a dining table are assigned according to rank, importance, and seniority. It is good to seek advice before embarking on your first meeting with Chinese business contacts to avoid making a wrong move.

gifts and presents

Unlike the days before, when China was very poor, gifts, especially those of Western origin, were especially appreciated. Today, China produces and imports almost anything imaginable, and gifts are no longer a novelty.

However, gifts are always appreciated and, especially in smaller cities or towns, will continue to play an important role in your business relationship. Keep in mind that if you are actually giving gifts, make sure that seniors receive a better gift or at least gifts perceived to be of higher value than your junior staff.

Similarly, expect to receive gifts from the Chinese, especially Chinese art products. It’s polite not to say no, especially if it’s not too high of a monetary value.

Lunch dinner

There is no business conversation in China without at least one trip to a restaurant. Sometimes a trip to the restaurant is made before any business discussion even takes place! Inevitably, the restaurant will always be grand and you’ll likely be put in a private room.

There is an elaborate seating arrangement for a Chinese business lunch. There are fixed seating positions for the host and guest and then they are seated again according to seniority. This is a very important aspect of a formal dinner and it is important that you follow the rules accordingly. However, it seems that the northern Chinese are very particular about this formal seating arrangement, while the southern Chinese have loosened up the formalities a bit.

You may want to learn more about this interesting book from China.

drinking with the chinese

The Chinese are big drinkers, especially in North and West China. It doesn’t matter if it’s lunch or dinner; whenever a meal is organized, there will be alcohol.

Chinese wine is the favourite, followed by red wine and beer. Chinese wine is more of a fuel than a liquor, it has an alcohol concentration of up to 60%! No matter how good a drinker you think you are, never, ever challenge a Chinese man to a drinking contest. They will definitely win!

It is often considered impolite not to drink with the Chinese at a formal dinner. To keep your sanity, claim not to be an alcoholic or use medical reasons as an excuse. This will allow you to get out of trouble with small or minimal drinks. Better yet, bring a partner who can drink on your behalf!

entertainment after dinner

The formal business dinner usually goes on for quite some time, as there will be a lot of social chatting, the occasional karoake, and drinking contests. Most of the time, everyone is too drunk to enjoy any more entertainment after dinner. Also, if you are new to this partnership, you are unlikely to be treated to more after-dinner entertainment.

However, once you get acquainted with them, you may be invited to a Karaoke, a Night Club or a Suana. Keep in mind that if they host the evening, they will pay all bills for the evening themselves, including all entertainment. It is impolite to fight over the check or, worse yet, split the checks.

Similarly, if you are the host for the night, you are expected to pay all bills for the night.

Controverciales problems

There are some taboo areas in social conversations with the Chinese. Try to avoid these topics of conversation as much as possible. I’ve seen a lot of nasty arguments as a result of these topics:

1. You must not mention that Taiwan is an independent state or country.

2. You should NEVER praise the Japanese or be seen as a good friend to them.

3. You can condemn Mao Tse Tung but avoid criticizing Deng Hsiao Ping

4. You shouldn’t praise Shanghai in front of Beijing natives and vice versa

Other than that, you’re pretty safe to converse with the Chinese about anything under the sun!