Doing business in CHINA [605954]

Doing business in CHINA
(© Copyright 2007
From Tomalin B and Nicks M ‘The World’s Business Cu ltures and How to Unlock
Them’ London, Thorogod, 2007 1
International House Cultural Training
International House. 16, Stukeley Street, London WC 2B5LQ
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Doing Business in China

Five Ways to Succeed Five Ways to Fail
• Sincerity is most important
in China. • Expecting quick results
• Spend time building the
relationship. • Losing your temper or getting
impatient –shows slack of
control
• Show respect and
consideration to senior
people and older people. • Failing to keep regular contact
• Show modesty in clothes,
in eating and drinking • Being extravagant or immodest
in dress, behaviour or personal
habits
• Doing favours is the way
to build relationships. If
you are asked to help, you
should always try. It will
be reciprocated. • Failing to reciprocate generosity
or favours.

Doing business in CHINA
(© Copyright 2007
From Tomalin B and Nicks M ‘The World’s Business Cu ltures and How to Unlock
Them’ London, Thorogod, 2007 2

Overview

When China began to reform its economy in the late 1970s, few could have
foreseen the transformation and paradoxes that woul d sweep over the country in
only three decades. China now exports more IT produ cts and services than the
USA, but poverty is rife in rural areas. It is the world’s most populous country, but
is also one of the most rapidly aging, a partial co nsequence of its one-child policy
introduced in 1979. It is ruled by a communist gove rnment, yet only a third of the
economy is now directly state-controlled.

China is now attempting to achieve a more balanced pattern of economic growth
and fairer rewards for more of its population, and will have to address some of
the severe pollution issues caused by its surging e xpansion. But that rampant
growth will continue, given a nudge by Beijing’s st aging of the Olympic Games in
2008, and business opportunities for foreign compan ies will continue to flourish.

A key organising principle in Chinese society is Co nfucianism, the code
established by the sixth century BC philosopher Con fucius. He preached that the
family is the basic unit of society, and praised th e virtues of hierarchy and filial
piety. Daoism is another strong force in China : it lays down a system of natural
justice first propounded by Lao Tse in 570 BC. Even 30 minutes absorbing the
ideas of these two movements would benefit visitors to China.

The new market-oriented economy has raised living s tandards for much of the
population. But the Chinese continue to work relent lessly hard – for six days a
week. Even government offices are open from 8am to 5pm from Monday to
Saturday. Lunch in China is taken between 12 noon a nd 2pm, when everything
shuts down.

Although reciprocity is an important principle in C hinese society (if you receive
something, you give something back) there is concer n about respect for
intellectual property rights. Companies investing i n China need to be careful
about making sure Chinese counterparts are fully aw are of the intellectual
property rights issues of their partners. Others wo uld warn of the difficulty of
protecting property rights or pursuing infringement s. China is a signatory to the
Berne Convention on literary and artistic copyright , the Universal Copyright
conventions of Berne and Paris, and the Trade Relat ed Aspects of Intellectual
Property Rights, Morocco but not the Geneva WIPO tr eaty (world copyright
treaty), which came into force in 2002.

Values and attitudes

For centuries China’s civilization was more advance d in the arts and sciences
compared to the West, so it’s not surprising that i ts people continue to believe in

Doing business in CHINA
(© Copyright 2007
From Tomalin B and Nicks M ‘The World’s Business Cu ltures and How to Unlock
Them’ London, Thorogod, 2007 3
their superiority, despite the social and military problems that afflicted the country
in the 19th and early twentieth centuries. The Chin ese admire the work ethic,
Confucian tenets, the power of the extended family and sincerity. They dislike
losing face, immodesty, disrespect towards elders a nd extravagance. They
practice guanxi – gratitude for favours – and rely on the danwei unit, which
regulates much of its members’ working, social and community lives.

Duty, self-sacrifice, gentleness and wisdom are oth er traits admired by the
Chinese. They consider that relationships are more important than tasks,
and that the search for virtue is more important th an the search for truth.

The Chinese do business with people rather than com panies. Personal contact
and loyalty is important They value, sincerity abov e all other qualities.

What the Chinese hate What the Chinese admire
Losing face Sincerity
Lack of humility Education
Extravagance Respect
Disrespect Frugality

Behaviour profile

Chinese business is based on the development good p ersonal relationships over
time, relationships, out of which the business grow s,
formal and quite ritualistic in business behaviour, although this is changing with
the return of US educated Chinese and the emergence of younger people in the
workplace. Chinese people can be quite relaxed will always be on time for
meetings and also social occasions. Cancellation or lateness may be seen as
insulting, unless very good reasons are given. Chin ese people are quite reserved
and separate emotions from business.

Communication

Introductions in China will be courteous and formal : expect to take a fair amount
of time over them on your first visit. The highest- ranking member of your group
should lead the way. You might be greeted by applau se from your hosts, in which
case the polite response is to applaud back. The Ch inese are sensitive to titles,
so use them whenever possible (E.g. Director, Engin eer). Don’t address a
Chinese person with the word ‘comrade’, a privilege reserved for Communist
Party members. If you don’t know a person’s title, use Mr, Mrs or Miss until
you’re advised otherwise. In Chinese names the surn ame comes first and the
given names second. So Mao Tsedong was known as Cha irman Mao, not
Chairman Tsedong.

Doing business in CHINA
(© Copyright 2007
From Tomalin B and Nicks M ‘The World’s Business Cu ltures and How to Unlock
Them’ London, Thorogod, 2007 4
The Chinese don’t use gestures and strong facial ex pressions, and are not
tactile, so it’s not surprising that they are often said to be inscrutable. They
appreciate conservative suits and ties, and dislike loud colours. Women tend to
wear high-necked blouses and low heels.

Interpreters are often used in discussions, but nev er make the mistake of talking
to the interpreter and not the boss. In discussions with the Chinese, check
whether they’re talking about today, tomorrow or se veral generations in the past
or future. Unlike Indo-European languages, Chinese does not use verb tenses to
differentiate between the past, present and future, so a Chinese person might
say, “I eat chicken yesterday,” rather than “I ate chicken yesterday.” Time is
indicated by the context of the sentence or by spec ific time indicators, so
Western visitors must ensure that they clarify time s and dates for appointments
and in contracts.

Allow for a moderate attention span of about 30 min utes when presenting. Stress
the benefits of your proposal for China and for the bottom line. Remember that
the Chinese rarely say ‘no’. Instead they will hint at difficulties, so be sensitive to
this. Show commitment and enthusiasm to your projec t, and repeat your key
points several times. Don’t assume that silence mea ns acceptance, and avoid
asking personal opinions.

Ice-breakers Ice-makers
• Chinese food
• What did your Daddy do in the
cultural revolution?

• Chinese art, literature and
culture
* The Tianamen Square massacre

• China’s economic growth
* Taiwan

* Tibet

* Human rights in China

Organisation
Office protocol

China is a bureaucratic country, so things are unli kely to happen fast. Don’t show
impatience or anger: this is seen as a serious char acter flaw. Keep your schedule
light to allow for long meetings.

Doing business in CHINA
(© Copyright 2007
From Tomalin B and Nicks M ‘The World’s Business Cu ltures and How to Unlock
Them’ London, Thorogod, 2007 5
The Chinese appreciate patience, soft-spokenness, a daptability, humility and
perseverance. They don’t appreciate boisterousness, impetuousness or anger.

Planning meetings

Office hours tend to me 9 am – 5 pm with half day S aturday although five day
working weeks are becoming more common . The key br eak is between noon
and 2 pm, when there is a general break in the work ing day. Note that in the
week before and following the Chinese New Year, man y offices are closed.

Teamworking

Chinese teams are groups of specialists working und er a leader, who is the
acknowledged head of the group. He may not be a spe cialist but will have high
seniority and links to the head of the company or a dministration you a dealing
with. It is important to show respect to the team l eader and to refer issues to him
in the first place. Any one to one contact between members of the team should
be authorised by the team leader first.

The Chinese like to experience harmony and consulta tion within a team. Team
members expect to see their view expressed in the o utcome of a project,
although implicit obedience to the team leader is a lso expected. There is a strict
hierarchy and a clear chain of command in Chinese b usinesses. The working
pace tends to be slow and methodological, and deadl ines are regarded as
flexible. Give praise, and make your instructions clear (but in a kindly way), and
check the team’s progress regularly. Emphasise the moral and social aims of the
project.

If there is disagreement, manage the problem in pri vate, and always use an
impersonal approach. Say, “Our partner was disappoi nted that the deadline you
missed,” not “You missed a deadline and now our par tner is angry.” Stress
harmony: “Yesterday we won four new clients,” not “ Yesterday I negotiated deals
with four new clients.”

Meetings and negotiations

Agendas are adhered to in China, but expect slow, r epetitious dealings: patience
is essential. The Chinese like to establish general principles before moving onto
detailed discussion. They also take the long view – sometimes extending over
several generations. Be prepared to discuss problem s at length to achieve total
agreement, and be ready to understand their difficu lties – these may be linked
more to social matters or relationships than to the business. Don’t push for
information, and despite any irritation that you mi ght feel internally, maintain a
flexible but firm negotiation style and remain poli te at all times. Relationships are

Doing business in CHINA
(© Copyright 2007
From Tomalin B and Nicks M ‘The World’s Business Cu ltures and How to Unlock
Them’ London, Thorogod, 2007 6
considered more important than tasks in China, so y our aim should be to develop
mutual trust in the long term.

Be prepared to restate your position – several time s. Be aware that ‘Yes’ in
China means ‘I hear you’ and not ‘I agree.’ A Chine se may also say ‘yes’ where
Britons or North Americans would say ‘no’. ‘Is it r eady?’ Englishman: ‘No, it isn’t.’
Chinese: ‘Yes, it isn’t.’ Check what’s really being said.

Subordinates in your team should not interrupt in b usiness meetings. Other tips:
don’t assume that a smile equals satisfaction, or t hat agreement equals
understanding. Business cards are important, and it can be useful to have yours
printed in Chinese on the back.

Leadership and decision-making

Organisational structures in China are vertical. A manager will seek consensus
from his team, but will take personal responsibilit y for decisions. One potential
difficulty for visitors is that a manager’s authori ty is often based on his wealth and
family background, rather than purely on his compet ence at the job. Personal
connections will also influence decisions. All of t his, together with language
difficulties, makes it hard for visitors to read me etings and negotiations
accurately. In addition, family businesses tend to belong to trade groups, which
will also exert pressures.

Decisions are made slowly in China, but will have a long-term effect: unlike many
western organisations, the Chinese are not obsessed by achieving short-term
successes that make look impressive, but have not b een fully thought through.
Be prepared to invest time and money in visiting th e decision-makers regularly.
Show respect for their decisions but modify them di screetly, behind the scenes
privately, not in open meetings. Be patient, and al low your hosts plenty of time for
reflection.

You’ll find a difference in leadership style betwee n older and newer
organisations. The latter will tend to move faster and be less formal. Even so,
don’t be too forceful, and be careful not to expres s too many differences of
opinion in public.

Women in Chinese business

The position of women in Chinese society has improv ed dramatically since the
advent of Communism in 1949, but they still hold on ly a few senior seats in
government and business. Women visitors to China th erefore receive special
respect by virtue of being foreign.

It’s important for a visiting woman to establish he r credentials and expertise. One
way might be to send an agenda, with brief biograph ies of your team members,

Doing business in CHINA
(© Copyright 2007
From Tomalin B and Nicks M ‘The World’s Business Cu ltures and How to Unlock
Them’ London, Thorogod, 2007 7
before meetings. Dress conservatively – trouser sui ts are acceptable – and be
prepared to be stared at – you’re unusual. There wi ll also be some unintentional
rudeness in the form of cigarette smoke, or a door slamming in your face. Avoid
alcohol if you can, or drink very little.

Moderation is expected of women in China, and many Chinese women don’t
drink at all. If you see women being treated in way s that you don’t like it is
important not to be cautious in your reaction. The principle of respect means that
women may be expected to be polite and respectful t o senior men, which may be
seen as sexist by some westerners. Don’t react to this. They have considerable
authority in the domestic domain and individuals ha ve considerable power in
politics and administration as well as in commerce, particularly in Hong Kong,
China and Greater China (Taiwan).

Remember you hold special status, as a foreigner.

Socializing and gift-giving

Chinese people tend to get up early and go to bed e arly, so expect to eat lunch
around noon and dinner at about six for around two hours. Hospitality is an
important tradition in China, and sharing the bill is unknown. You must
reciprocate, however. Tea is always served in mugs with lids: never refus e.

You’ll probably be honoured with at least one banqu et during your visit, and you’ll
find the following guidelines useful. Eat lightly – there may be a dozen courses.
Your host may serve the tastiest food directly to y our plate, but don’t reciprocate.
In the south soup may be served at the beginning of a meal, but in the south it
arrives at the end. There will be no dessert, but f resh fruit might be served. Rice
at the end of a meal is intended as a filler: you d on’t have to empty your plate!
Use chopsticks, not your fingers, if you need to re move food from your mouth.

The host will sit opposite the door, the honoured g uest to his right. Speeches and
toasts will happen. Remember Ganbei ! (dry glasses) is the common and
expected toast. The evening will end when the host stands, usually soon after
last course. It is important to reciprocate with a return banquet if you have time
during your stay in China. The Chinese like to invi te visitors to their homes, even
though the conditions are unlikely to match your ow n domestic circumstances.

Gifts are important, as is the wrapping. Gold and r ed are good, but avoid black,
white or blue (funeral colours). Offer gifts with b oth hands and don’t open any
that you receive in the presence of the giver. Make it clear that the gift is from
your company to their company. Post-visit gifts – c alendars, cards – are also
appreciated. Unless you invited to do so, don’t tak e partners to business
entertainment.

Doing business in CHINA
(© Copyright 2007
From Tomalin B and Nicks M ‘The World’s Business Cu ltures and How to Unlock
Them’ London, Thorogod, 2007 8
A common gift to employees and co-workers at the Ch inese new year is the hong
bao , a gift of money (even numbers) in a red envelope

Great gifts : Company pens, ashtrays, paperweights, books, whis ky.
Avoid giving : Flowers, chocolates and especially knives or cloc ks, which
represent death or the end of a relationship. Avoid black, white or blue wrapping.
Red is considered lucky. Money should be given in E VEN numbers.