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 accession to the WTO, and the Olympics in 2008, many Chinese business practices are beginning to align with more conventional methods.

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

“Recently I was involved in a business meeting that went wrong and threatened to ruin a good deal. What happened was that the Chinese group receiving the American buyer was late at his hotel. The American was furious because he had a tight schedule and stuff. They arrived late and threatened to withdraw their purchase.

The Chinese group arrived late because they were given a vague address of a lakeside hotel. You see, what happened was that the American gave 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 feared that the American would “lose face” for having given 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 sink 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 aloof 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 will be in your business relationship. Sometimes a lot of time is spent discussing matters outside of the business, but then the other party is also making a decision about your deal based on how much he sees your personal relationship with him.

Antiquity

Seniority is very important to the Chinese, especially if it is 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, i.e. 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 highest-ranking person before moving down the line. When giving or receiving an identification card, be sure to hold out both hands with the card. Remember to look at the card you are delivering in such a way that the receiving party places it in front of him correctly.

giving face

Showing one’s face (also known as giving due respect) is a very important concept in China. Due respect should be given according to rank and seniority. For example, if you’re buying gifts for an initial contact, make sure you’re buying 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 misstep.

Gifts and gifts

Unlike the days before, when China was very poor, gifts, especially those of Western origin, were especially appreciated. Today, China produces and imports just about 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’re really giving gifts, make sure seniors get 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 doesn’t have too high 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 even before any business discussion takes place! Inevitably, the restaurant will always be great, and you’ll likely be accommodated in a private room.

There is an elaborate seating arrangement for a Chinese business meal. There are fixed seating positions for host and guest and then they are re-seated 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 northern Chinese are very particular about this formal seating arrangement, while southern Chinese have relaxed the formalities a bit.

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

drinking with the chinese

The Chinese are heavy drinkers, especially in North and West China. It doesn’t matter if it’s lunch or dinner; whenever a meal is arranged, 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 of a drinker you think you are, never, ever challenge a Chinese person to a drinking contest. They will win, no doubt!

It is often considered impolite not to drink with the Chinese at a formal dinner. To maintain your sanity, claim not to be an alcoholic or invoke medical grounds 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 a while, as there will be plenty of social chatter, some karoake, and drinking contests. Most of the time, everyone is too drunk to enjoy any more after-dinner entertainment. Also, if you’re new to this association, it’s unlikely you’ll be invited to more after-dinner entertainment.

However, once you become familiar with them, you may be invited to a Karaoke, a Night Club or a Suana. Please note that if they are hosting the evening, they will pay all bills for the evening, including all entertainment, themselves. It’s impolite to fight over the bill or, worse yet, to split the bills.

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 should not 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!