KNOWLEDGE BASE Chinese Business Culture

 

Chinese Business Culture

 

RelocateYourself logo With expert input from Helene Sini, a RelocateYourself partner in China

 

Business culture in China can be very confusing for Westerners, especially for those who have never done business in the country.  And in China, understanding and operating within the cultural norms will make a big difference in the level of success you reach. On the other hand, having the opportunity to immerse oneself in a completely different culture can be incredibly exciting. 

When asked what she would tell foreigners going to do business in China, Helene Sini, a RelocateYourself partner, said her first advice to every person is to get some good cross-cultural training. The culture is run very differently from those in the West, culture drives relationships, relationships are key to doing business, and it will take a long time to build relationships with the Chinese people. Anything you can do to help you understand the cultural context in which you will be working will help you more quickly succeed.

 

Networking And Guanxiwang

In China, you must first bond with – have a relationship with – people before they will do business with you. This is distinctly different from how most business is done in the West, where you can negotiate contracts and start doing business without having a relationship. In China, your first order of business should be to begin establishing your relationships and developing your network.

Networking is crucial to success in China. To succeed, you must first understand the principle of guanxiwang in business. Guanxiwang encompasses the network of connections or relationships that operate within the Chinese market. It is important to remember that the Confucian values of trust, mutual reciprocity, and harmony form the basis of each guanxiwang network. Without guanxiwang, you will have very little chance of building your business in China. It is something you will have to nurture and grow, demonstrating that you are worthy of being a part of their network.

Consider that a good guanxiwang will allow your company access to decision-makers, local bureaucrats, and policy-makers. Having access to officials and decision-makers should not be interpreted as an opportunity to offer bribes. Corrupt practices are rarely tolerated within a reliable guanxiwang. Trust is crucial to harmony, and the Chinese value long-term viability in business. They prize mutual dependence and eschew predatory practices. 

The Chinese harbor a long-term view towards any business network relationship. As such, they rarely trust outsiders and will only explore business connections that come with recommendations from within their respective networks. Hence, relationship-building and a strong introduction is crucial to business success in China. It is critical that your company retains the services of reliable local contacts who can put you in touch with established networks. If you have colleagues, employees, or other close associates in China, rely on them to help make introductions into their networks. The Chinese would much rather work with people in their network or people who have been introduced through their network, even if they are not as good as other people or companies they do not personally know.

It is very difficult to navigate China alone without local assistance. If you start with a trusted guide to learn the ins and outs of Chinese business culture, you can then start to navigate them on your own. The Chinese will work with people they know, so getting introductions from trusted intermediaries is a good place to start. If you are trying to do business without a relationship, you could find that you’ve worked months and months and get nothing out of it.

Another way to start a relationship is to connect through economic development groups in your country, professional business organizations and professional services that have a strong and reliable network and are willing to recommend or introduce you. 

 

Negotiating

Once you have reached the point where you are in a position to negotiate, there are very important things to understand. First, know that the art of negotiating is a delicate process in China. Be prepared to be patient and to keep your good humor during any negotiation. Never criticize or complain – it will be interpreted as an insult to their company. Instead, give your advice as improvement suggestions that will lead to mutual success. It is said that the Chinese prize personal camaraderie above contract formalities. In other words, you may be apt to get a better deal if there is goodwill between you and your business counterparts. So, never rush the yanjiu yanjiu (research) process. 


Globig Tip

Business negotiations in China typically will include a formal dinner at the end of the day and more specifically if at the end of the trip with a successful meeting, there will be many types of food service and lots of alcohol! If you are the head of the delegation from your country be aware that you may be given the fish head to eat as a symbol of respect.

There will be many toasts given during the dinner. If you are not near the person who is leading toasts, you can get their attention and tap your glass on the lazy Susan table and then propose a toast.

There is a protocol around 'clinking glasses' during a toast, depending on hierarchy. To demonstrate that you consider another person your senior, tap his/her glass below their hand to show deference to them, making sure that the top of your glass is below the top of theirs. This may be difficult as they will be trying to do the same thing! If you would like to show respect to someone who would be considered your subordinate who will be trying to have their glass lower than yours in a toast, you can raise the bottom of their glass to align with yours. 


 

How to tell if a meeting went well or poorly

It can be very hard to determine how a meeting is going. In China, you often cannot tell what people are thinking and they won’t tell you. In fact, they would rather tell you things are going well, even if they aren’t. They may say yes and then nothing will happen. This is not to deceive you; it is to avoid an uncomfortable situation, since they may be embarrassed to tell you no.

Saving face is very important in China, and in order to save face the Chinese will not show emotions or feelings. Unfortunately for Westerners, emotions provide clues for how things are going.

Westerners will also often be put off by the fact that the Chinese rarely make eye contact and won’t look at you when you are talking with them. Most foreigners will take this the wrong way believing that their Chinese counterpart is not listening and is not interested in what you think. Again, this is a cultural difference that can make it hard for Westerners to know what the Chinese are thinking, who are used to reading how a person feels through their eye contact.

It can be difficult to tell if a meeting was successful or not. You may think during the meeting that it went well, then no agreement materializes. Or maybe you think it went badly and then get an order a month later. Sometimes, the yanjiu process can take months, indicating that your business contact may be hesitant about disappointing you with a rejection. Conversely, it may also mean that a great deal of internal negotiation has to occur before your proposal can be green-lighted. It’s helpful if you have a champion within the company that has influence, but the Chinese are risk adverse and may not champion your proposals unless there is internal consensus. If you suspect that there is a lack of agreement, maintain your patience and tenacity and continue to provide positive reasons for working together. Avoid accusations about the nature of the delay, and be gracious in your approach. The key is to preserve your dignity, maintain harmony, and ensure the possibility of a future, long-term partnership with your Chinese counterparts. On the other hand, if the negotiations have gone well, you will usually get an unequivocal YES after the Chinese have finished their yanjiu process. 

We highly recommend that you have good advisors who speak Chinese, are culturally informed, know how the Chinese think, and know how to read the subtle signals. Rely on them to help you understand what is really happening and to guide you through the process. Don’t negotiate without expert assistance and make sure you have very good local legal counsel to document the agreed upon deal points and write up contracts appropriately in Chinese, not English. Deals often fall apart because of cultural and legal misunderstandings.

 

Hierarchy and status

Hierarchies and status are very important in China. There are several ways this manifests in the workplace. First of all, people aim to become managers, directors, and above and will look down on lower levels. People in lower levels look up to the ones above them. It’s not common in the culture to share ideas upward; instead, people do as they are told and take little initiative. People at different levels will not discuss ideas, talk through things, or work together to solve a problem. This dynamic can lead to people disagreeing with what they are told to do, saying they will follow it through, but then won’t. If you are a foreigner trying to work in this atmosphere, it’s important that you have some cultural training and a mentor who can guide you, especially if you do not speak Mandarin. Having at least the basics of the language will help you.

This statement stands alone for a reason: it is very important to understand. It is extremely important that you pay attention to and acknowledge status in China. If you greet or introduce a lower-ranking person before their senior, you will have given offense and will also make the junior person very uncomfortable. If you sit in the wrong place in a meeting, you risk offending people. If you toast someone with your glass higher than theirs and they are your senior, you will offend them. There are many subtleties to this dynamic. Be sure to obtain cultural training and have a person deeply familiar with Chinese culture and even better, who also know the company with whom you’ll be working, to help you keep from making innocent mistakes.
Another important way that a desire for status can affect the workplace is in retaining employees. If you understand that Chinese employees are always seeking a higher status, especially if you are their manager, find ways to encourage them and show them how you will develop and promote them in the company. People in China will often leave your company for little or no pay increase, farther distances, and other ‘negatives’, to take a position with a higher title. Even things that would keep a Westerner in a job, such as good pay, a decent commute, or a pleasant atmosphere, will not be motivation enough for them to stay if they don’t think they will get a better position.

 

Language

In larger cities such as Shanghai and Beijing, and depending on your type of business, it may not be entirely necessary to know Mandarin. If you will be working in remote locations or with local service providers, you should know or learn Mandarin. Having even just the basics helps both in communicating and understanding the culture. At the very least, have a trusted person who act as translator for you in important situations. 

 

Cold Emailing in China

Typically the Chinese prefer face-to-face interactions in business rather than relying on email. With the emphasis on guanxiwang, cold emailing may not be the best method to introduce or advertise your advantages. China's recent crackdown on independent NGOs (non-governmental organizations), charities, and business foundations highlights the latent Chinese suspicion against foreigners. Such organizations must now register with state-approved government agencies and register with the police in order to operate legally in China. If you appear out of the blue, it is unlikely you will make much headway.

An alternative to the cold-email is the 'warm' email, where you are introduced to the company by another party they already trust.: contacting Chinese firms for meetings and introductions when they have already been brokered by reliable contact intermediaries will be more effective.

 

Email Etiquette

It is well known that the Chinese value courteous, refined discourse in business. While it is admirable to remember the expected social pleasantries during a meeting, it is even more crucial to understand the role that email etiquette plays after the event. Within 48 hours of a meeting, write a positive and polite email to thank your hosts for meeting with you. Briefly state the mutually advantageous terms discussed and outline the agreed-upon steps that will move the guanxiwang relationship forward. You can't go wrong with a sincere email.

Don’t expect your cold emails to get a response, you’ll want to get a warm introduction if possible. If you are not able to get a warm introduction, quickly impress with your credentials such as a PhD, book authorship, speakership, or other reputable expertise in your cold introduction. Younger people from within the startup world are more open to cold introductions as compared to traditional business people.

 

Business Cards

In China, it is important to exchange business cards upon the first meeting. Remember to use simplified Chinese characters on one side of the card and the English translation of the characters on the other side. When you meet your Chinese counterpart, present your card with the Chinese characters facing him/her. Refrain from using traditional Chinese characters if at all possible; these are usually used in Hong Kong or Taiwan. Make sure that you use a translation service that is familiar with where you’re going so your business cards are correct.

When presenting your card, remember to use both hands; it is a sign of refinement and courtesy. After accepting a card, peruse the card for a few moments before putting it away, either in a business card case or on the table next to you. Never deposit the card in your front or back pockets. If you're feeling adventurous, try using a Chinese name, either a transliteration of your English name or a specially chosen one based on your personal philosophy in life.

 

How To Dress

It's important to dress conservatively while doing business in China. Men are usually expected to turn out smartly in a suit and tie. As for ties, avoid those that exhibit garish designs and colors. Above all, refrain from showing up in casual clothes such as jeans or khaki pants. Classic and tasteful jewelry is appropriate, such as a good watch or a simple wedding band. The key is to present a sophisticated and professional image at all times.

Women are also expected to dress conservatively during business occasions. Wear pastel or darker colors, rather than brighter ones. While it is unlikely you would be tempted to do so, avoid low-cut tops and bare-backed dresses. Skirts should be well below the knees, if possible. If you wear high-heeled shoes, make sure that they're not open-toed and more than an inch or two in height. It is considered ill-mannered to tower over your business counterparts in China. If in doubt, see how Chinese female executives dress on Fortune's 50 Most Powerful Women list: Rachel Duan (CEO of GE China), Lucy Peng (co-founder of Ali-Baba), and Wang Fengying (CEO of Great Wall Motor).

 

LinkedIn on other social media connections

The top five social media platforms in China are WeChat, Weibo, QZone, Youku, and LinkedIn. WeChat alone has more than 700 million active subscribers per month. Chinese consumers use the platform to access news, purchase flight/hotel tickets, perform money transfers, and shop online.

According to LinkedIn, at least 600 million active monthly users at QZone access the site to write their own personal blogs, send pictures, watch videos, and listen to music. Your company can literally reach millions of Chinese consumers with effective social media campaigns.

It’s not easy to get connected to a Chinese business person directly by using only social media since relationships are important as a first barrier, although the younger people are more likely to ‘meet’ online for business purposes. A warm introduction from a business contact, professional titles such as PhD, authors, speakers, and experts are more likely to succeed in connecting when reaching out through social media.

As an aside, if you are using social media to promote your company, be aware that all social media used in China is closely monitored and filtered. It’s just a cost of doing business in the country. 

 

Gift giving

Your Chinese counterpart will most likely provide you with a gift at the end of your meeting and/or stay in China. Be prepared to have a gift to share with him or her. The gift should not be expensive and if possible, be something that relates to your home city. 

KNOWLEDGE BASE Chinese Business Culture