China: Business Practices

Business culture

The Fundamental Principles of Business Culture

Chinese business culture is largely influenced by Confucianism. Thus, primarily, the Confucian concept of Guanxi implies that a relationship network is crucial and based on the values of solidarity, loyalty, modesty and courtesy. Second, hierarchy in China, both in business and privacy, is purely vertical and highly respected. Third, Chinese people will be careful to save face in order to protect individual reputations, influence and dignity. However it must be emphasized as well that these values have somehow slowed down over the last decade while modern Western business approaches have been increasing gaining ground. Therefore the global convergence on business culture codes and international business values can be increasingly observed in China.

The Chinese are often risk averse. Strict procedures exist for the decision-making process. Decisions are made by all the relevant people after several meetings and subordinates are not expected to express their opinion. Decision-makers will consider problems, alternatives and solutions on a long-term social perspective, as a result of which the process may be perceived as slow-moving. Deciding too quickly will be frowned upon by your Chinese partners. Hierarchical differences must be respected, and trying to circumvent them will almost always retard decision-making.

Chinese people often seek long-term relationships and create relations rather than negotiate contracts. Negligence to cultivate a personal basis of a business relationship might provoke a failure to meet business objectives. Establishing the relationship can last from several days to several months. It includes formal meetings as well as home visits, invitations to sport events, long dinners and drinks.

First Contact

In China, distrust and suspicion often characterise interactions with strangers. The most effective way to develop your relationship is to include an intermediary in the process. Your business associate must be a trusted business associate of your potential partner. The intermediary will help you to be accepted quicker (“Guanxi”); obtain better information on your potential partners and avoid a misstep on local customs.

Time Management

Chinese people value punctuality, so arrive on time for meetings. If you are late, you should call your partner to inform about your delay and be sure to offer an apology for your tardiness. Sticking to a strict meeting schedule is not common, as Chinese prefer meetings where the end of the appointment is rarely timed in advance.

Greetings and Titles

When meeting someone for the first time, the use of some Chinese words will impress. You should give a light and lingering handshake, initiated by your Chinese counterpart. It is customary to look down and physical proximity must be avoided. Nodding and smiling are also very common greetings. It is advised to address your business partners with a professional title and their name. If a person does not have a professional title, use "Mr.", "Madam", "Miss" plus the name. Note that most Chinese names use the surname first (for example a  Mr. Lee Hong would be addressed as Mr. Lee).

Gift Policy

Giving and receiving gifts symbolise the beginning of a relationship. The gift should not be too expensive and always wrapped. Gifts are often refused two or three times before being accepted and are rarely opened in front of the gift giver. The gift must be given and/or received with both hands. 

Dress Code

The dress code is formal and discreet (a suit). However, the dress code is expected to reflect success, without being ostentatious: you should wear good quality clothes, watches, shoes etc.

Business Cards

Business cards are exchanged upon meeting a new person and follow a strict protocol. The card must be printed in Chinese and English. Present your business card with both hands and ensure that the side printed in Chinese is turned towards your contact. Receive the card of your Chinese associate with both hands (never with just the left hand), read it with attention, and put it away carefully. And do not write on the card in the presence of your business partner.

Meetings Management

Business meetings are often long and will be needed several times to establish a sustainable relationship. It is advised to have recourse to interpretation services to avoid the language barrier. During discussions, it is common to have small talk to break the ice.

Most of the time, Chinese are indirect communicators. Disagreement will not be clearly expressed. Phrases such as ‘Yes but it might be difficult’ and ‘Yes, probably’ are preferred. To deliver bad news while preserving a good relationship, it is common to use an intermediary who can soften the blow. Periods of silence are an integral part of the reflection and should not be interrupted.  It is highly recommended not to interrupt the speaker.

Chinese use a very limited amount of body language. The first person of your team to enter in the room must be the highest-ranked and will seat at the place of honour directly in front of the host. He/she will handle negotiations with the Chinese team leader. The rest of the team will support the leader if asked for it. Bargaining is an integral part of Chinese culture, and one should avoid accepting a proposition without bargaining, as it can be viewed as a sign of weakness. During negotiations, do not use psychological pressure tactics, as you could be seen as a manipulator. Only a person of a higher rank will speak, so make sure to appoint a superior of your group. Keep in mind that the objective is to determine if it is possible to establish a harmonious relationship to make a deal.

 It is common that you are offered food and drinks during a meeting. Business meals are an important part of business relations and people must sit down and eat in order of importance. Do not finish all your food because your Chinese partners will think you are still hungry. If you invite someone to an activity or have a meal, you are expected to pay for it. However, try not to show your money in front of your guests.

Sources for Further Information

Commisceo Global

World Business Culture 
Culture Atlas
Expat Cape Town
AFK travel

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