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Published November 26, 2024
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Published November 26, 2024
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Many Western executives are interested in China as a location where they can expand their business. But a common obstacle they come across is the cultural differences between them and their Chinese counterparts. Organized into sections focused on business, respect, and relationships, this extensive list presents general guideposts which should help any Western executives on their mission towards business success in China.
International companies tend to fail in China when they assume that their strategies, processes and tactics can be imposed there. Any company that tries to do this eventually realizes that their business operating procedures cannot instantly overwrite 4000 years of history. That being said, this doesn’t mean that Westerners should drop their standards and policies, but should instead figure out how they need to be modified.
In the Western world, our personal time outside of work is sacred. But in China, whether you’re an employee or a business owner, it’s common for your social life to revolve around your work. In contrast to how Westerners socialize primarily with friends and family, the Chinese often hang out with colleagues having dinners, lunches, and even going to karaoke together. In fact, many of these activities happen outside of normal business hours, regularly occupying a person’s evenings and weekends.
Although it may seem that Chinese employees enjoy spending this time with their work friends, it may actually be due to unspoken obligations that the employee has to take part in these events, so be prepared to do the same.
In China, a signed contract is seen as a stage in the negotiations rather than a final agreement. In response to this, we advise Western business people to continually reinforce the contractual obligations that have already been agreed upon, so as to make the deal as solid as possible. If your Chinese associate makes additional demands, stand your ground, but don’t become overly defensive. At the end of the day, your new business partner will consider the overall relationship to be more important than the signed contract, so make sure you stay on their good side.
Negotiating is an art and skill that needs to be developed as you move along.
As always, you should have a trusted interpreter at your side, and avoid negotiating alone because this opens the doors to concession. When in doubt, verify anything that seems vague.
The role of seniority in negotiations cannot be understated. It is recommended that the head of the Western team should have considerable authority to make decisions, and that their level should match, but not exceed, that of their Chinese counterpart. Keep in mind that final decisions are sometimes made by people who are not present at the negotiation, so it’s a good idea to hold back some concessions for that ‘final squeeze’.
The last, and maybe the most important key to negotiating with businesses in China is patience.
Westerners often struggle with pauses and silence, which are commonplace in Chinese negotiations. Research shows that after 13 seconds of silence, Westerners will break the silence, and they often do this with a concession. So it’s best to remain courteous and patient as delays may actually be intended simply to wear you down. Above all, the Westerner should always be able to ‘walk away’ from the deal.
Decisions are made slowly, so as mentioned above, patience is a virtue.
It is common to be involved in a series of meetings rather than one big meeting at which all major issues are disclosed and assessed. So be prepared for a decision-making process that is difficult to map out and impossible to apply a timeline to because of its opaque nature.
Not only should Westerners respect the process, but they also need to respect their superiors. In a meeting, it is not expected that subordinates will question the decisions of superiors – that would be seen as disrespectful and could be the direct cause of loss of face for all concerned. In traditional Chinese organizations, the management style tends towards the directive, with the senior manager giving instructions to direct reports who in turn pass on the instructions down the line.
If you’re expanding your business to China, we highly recommend having an ‘on the ground support player’. Fortunately, Western firms have many options when looking for a collaborator to help navigate the cultural issues in the China market. Larger companies can hire professional consulting firms, whereas smaller companies can be better off hiring individuals with both Western and Chinese experience. Hong Kong is a great place for both large and small companies to find collaborators.
With HR, the best advice is not to depend unduly on a few HQ employees to solve all your China problems. Keeping staff is tough – local management needs to focus on this carefully and you need to be constantly monitoring this issue.
In general, meetings in China follow the same format as those in the West although with a bit more ritual. The Chinese value punctuality so arrive on time or even slightly early for meetings or other occasions. Check the Chinese calendar and avoid all national holidays, especially Chinese New Year.
Make sure you’re adequately prepared. Before attending each meeting, you should know the language capability of your hosts. If they don’t speak much English, hire a professional interpreter, and brief them thoroughly on what you need them to do.
You should also arrive with a detailed proposition of the value of your company and product, along with any Chinese-language copies that you believe are necessary.
If it’s a first meeting, hand out business cards to the most senior official first. Use both hands to give and to receive. Take a moment to look at and acknowledge the individual’s card. Do not stuff it in your wallet or pocket, actively read it and respond to it. Having your own cards translated into Chinese is recommended. Your title is important, as it determines meeting invitations, authority, and seating arrangements.
Chinese businesses rely heavily on hierarchy, and this should be respected. A formal meeting will start with the senior member of the hosting party introducing himself/herself and colleagues, then stating his/her position on the matter in question. The leading member of your party should then do the same. The Chinese emphasis on hierarchy often confuses Western businesses and executives. ReaFor a more detailed explanation of the Chinese hierarchical system, in our blog: The Pivotal Role of Hierarchy in Chinese Business.
How you present yourself to a Chinese business is equally as important as how you conduct business with them. So let’s go through some of the essentials.
Appearance is important within Chinese business circles. Successful people are expected to look successful. Wealth is admired, so wear good quality clothes, and don’t be surprised if a Chinese counterpart asks you how much something you’re wearing costs. The Western style of dress is now common – especially in commercial and urban areas.
As a sign of respect to your hosts, it’s a good idea to do some blanket research before you meet. Things like business etiquette, cultural references, local customs, and language. Even acquiring some base-level key phrases in Mandarin is a good place to start. In addition to web-based info, Westerners should draw on government and private sector trade facilitation groups to obtain references to Chinese business culture experts.
When a Western executive shows that they are learning Mandarin, it creates a bond that is helpful to the business relationship and will be referred to again and again by your Chinese counterparts. On the other hand, a complete lack of language ability can result in disaster. Take for example Kentucky Fried Chicken’s first attempt at the “Finger licking good” slogan, which came out as “Eat your fingers off” in China. For this reason, it’s best to do ‘back-to-back’ translations to get things absolutely right.
English language levels in China are patchy and although a layer of fluent English speakers exists, the layer is quite thin, and levels fall away very quickly. As always, getting a translator is recommended, and clarifying important points is key. One of the reasons that communication can be such a problem in China, is that along with many other Asians, the Chinese find it extremely difficult to say ‘no’. Saying ‘no’ causes both embarrassment and loss of face and it is therefore better to agree with things in a less than direct manner. Thus, anything other than an unequivocal yes probably means no.
The Chinese display limited body language and Westerners interpret this rigidity as a lack of responsiveness and emotion. However, this is simply because Chinese culture frowns on overt displays of positive or negative emotion which may lead to them losing their cool in front of a crowd. So don’t take it to heart if you don’t get the reaction you’re looking for.
‘Face’, or ‘Mianzi’, is integral to the Chinese business environment. Always seek out and acknowledge opportunities to give face to your Chinese colleagues and partners. Do this by ensuring that they feel respected and appreciated, particularly in front of others. As a default, Westerners should always be polite and courteous regardless of the situation. Try speaking softly and avoid raising your voice, as this is a sign of disrespect in China.
Westerners should also subtly downplay any superiority or status that they may have and allow their Chinese counterparts to feel important. For example, if they compliment you on your Chinese, respond by indicating that it is far from being as good as their English. Also avoid declining an offer from a Chinese person in front of others. Instead, try to find a way to discuss the offer in a more private setting to avoid your counterpart losing face.
We’ve talked about how business is done, and how to show respect. Now let’s look at how you can maintain long-lasting relationships with your new-found work colleagues.
The relationship between you and your counterpart is crucial, and it hinges on what’s called ‘Guanxi’. Guanxi refers to the practice of drawing on connections to secure favors in personal relations. Therefore, in a work context, relationships need to be continuously refreshed and developed, maintained, and fed. If not cared for properly, it can even lead to the loss of a business partner.
This form of connection requires both parties to share some value that their partner can’t find anywhere else. For instance, your company could treat your Chinese counterparts to a private event at an exclusive venue. And in return, they might offer a unique perspective on your industry, and so on. But make sure to adhere to your firm’s ethical standards, as accepting too large a benefit might set off legal alarm bells, or imply that you need to return a big favor with a benefit of comparable value.
Entertaining is very important in the relationship-building process. If entertaining, do it well. If being entertained at a banquet, take your lead from your hosts – they will enjoy talking you through the process. Pay attention to who invites, as they are expected to pay for the dinner, karaoke, or whatever. Similarly, if you invite, you are expected to pay the whole bill.
If you accept an invitation from your Chinese counterpart, you’ll likely be expected to return the favor. This applies even if they say it’s a ‘free’ dinner. Nothing in China is ever free, there are always strings attached and unspoken obligations, so keep an eye.
Gift giving is an everyday part of Chinese business culture. Giving and receiving gifts helps to cement relationships. Take gifts with you when visiting and put some thought and effort into the gift selection process. The advice of a Chinese friend or colleague is invaluable in doing this properly.
Avoid wrapping gifts in white or black, which are colors associated with funerals. The Chinese are fond of dark red, gold, or blue, which are all appropriate colors for gift wrapping. Always wrap gifts before presenting them, as gifts are rarely opened in front of the giver. There are also some gifts which you should avoid altogether. Avoid clocks and scissors or other sharp items such as knives or letter openers, all of which have negative associations in China.
Hopefully you found this list informative, and if you’d like further assistance on international business relations, make sure to check out our country-specific training.
For more context about the above tactics and strategies, have a look at our other blog: The Philosophy Behind Chinese Business Culture.
Keith helps clients work smarter in global, virtual and hybrid landscapes through developing greater levels of cultural fluency, improving their abilities to work in global virtual teams and by helping them navigate the challenges of transitioning to a hybrid future.
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