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Chinese business culture for Westerners

By Ken Cheong, Webmaster
www.chinese-culture.net and www.quick-pain-relief.com

Chinese business practice is vastly different from the Western method that most of us may be used to. Of course, with the Chinese economy opening up, China's joining of WTO and the Olympics in 2008, many Chinese business practices are now beginning to align with more conventional methods.

However, the Chinese will always have their own unique business culture and etiquette, given their unique history and background.

"I was recently involved in a business meeting that went sour and threatened to scuttle a good deal. What happened was that the Chinese party receiving the American purchaser was late in reaching his hotel. The American was furious that they were late as he had a tight schedule and threatened to withdraw his purchase.

The Chinese party was late because they were given a vague address of a lake-side hotel. You see, what happened was that the American gave his hotel as Lakeside hotel. Unfortunately, there were numerous hotels along the lake but the Chinese were too shy to enquire which lakeside hotel earlier because they were afraid the American would 'lose face' for having given a vague address. Instead, they spent the morning hopping from one lakeside hotel to another looking for this American gentleman."

A simple cultural difference threatened to scuttle a perfectly good working relationship. To avoid similar cultural disasters, here are some tips on how you can conduct more successful business in China.


The initial approach

Chinese business is mostly referrals; essentially a business relationship is struck based on another business associate's recommendation. The best prices and deals often come from a strong recommendation.

However, it is common today for cold calls and direct contacts, given the availability of the Internet and the competitive nature of Chinese businesses. You may source from the Internet, trade fairs, catalogues and brochures, advertisements and approach the Chinese companies directly through a call or email.

Alternatively, if you are seeking to invest in a factory in China, you can approach an investment committee or a business advisory directly. They will be able to advise you on your best location based on your industry, raw material and manpower needs. Please contact us directly if you have such a need and we'll be glad to advise accordingly.


Relationships

Chinese business relationships inevitably become social relationships after a while.

The more you share your personal life, including family, hobbies, political views and aspirations, the closer you become in your business relationship. Sometimes, a lot of time is spent discussing matters outside of business, but often the other party is also making up his mind about your deal based on how he sees your personal relationship with him.


Seniority

Seniority is very important to the Chinese especially if you are dealing with a State owned 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 his designation, i.e. Chairman So and So, Director So and So or Manager So and So.

When giving out namecards or brochures, make sure you start with the most senior person before moving down the line. When giving out a namecard or receiving one, ensure that you are stretching out with both hands. Remember to face the card you are giving out in a manner such that the receiving party gets it facing correctly.


Giving Face

Giving face (aka giving due respect) is a very important concept in China. You must give the appropriate respect according to rank and seniority. For example, if you are buying gifts for an initial contact, make sure you buy better gifts for the senior managers instead of buying similar gifts across the board.

Similarly, sitting positions in a meeting room or a dining table is accorded 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 the wrong move.


Gifts and Presents

Unlike earlier days when China was very poor, gifts, especially of Western origin were especially appreciated. Today, China produces and imports almost anything imaginable and gifts are no longer a novelty.

However, gifts are always appreciated, especially in the smaller cities or towns and will continue to play an important part in your business relationship. Do note that if you are indeed giving gifts, make sure the senior people get a better gift or at least gifts perceived to have a higher value than their junior staff.

Similarly, expect to recieve gifts from the Chinese, especially Chinese art products. It is polite not to refuse, especially if it is not of too high a monetary value.


Lunch/Dinner

There is no business talk in China without at least one trip to a restaurant. Sometimes, a trip is made to the restaurant even before any business discussion takes place! Inevitably, the restaurant will always be a grand one and you are likely to be hosted in a private room.

There is an elaborate seating arrangement for a Chinese business meal. There are fixed seating positions for the host and the guests and they are seated again 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 the Northern Chinese are very particular about this formal seating arrangement while the Southern Chinese have loosened the formalities somewhat.


Drinking with the Chinese

The Chinese are big drinkers especially in Northern and Western China. It does not matter if it is lunch or dinner; as long as a meal is being hosted, there will be alcohol.

Chinese wine is the favourite, followed by red wine and beer. Chinese wine is more like fuel than liquor, having an alcohol concentration as high as 60%! No matter how "good" a drinker you may think yourself, never, ever challenge a Chinese into a drinking contest. They will win, hands down!

It is often seen as rude not to drink with the Chinese in a formal dinner. To maintain your sanity, either claim to never drink alcohol or plead medical grounds as an excuse. This will let you off the hook with little or minimal drinks. Better yet, bring a partner who can drink on your behalf!


After Dinner Entertainment

Formal business dinners normally drag on for quite some time as there will be much social talk, some karoake, and drinking contests. Most of the time, everyone is too drunk to indulge in further entertainment after a dinner. In addition, if you are just new to this partnership, you are unlikely to be invited to further after dinner entertainment.

However, once you are familiar with them, you may be invited to a Karaoke, or a Night Club, or a Sauna. Do note that if they are the host for the night, all bills will be picked up by them for the night, including all entertainment. It is impolite to fight for the bill or worst, split the bills.

Similarly, if you are the host for the night, you are expected to pick up all bills for the night.


Controversial Issues

There are some taboo areas in social conversations with the Chinese. Try to avoid these conversational topics as much as possible. I have seen many nasty arguements as a result of these topics:

1. You must not mention that Taiwan is an independent state or a country.

2. You must NEVER praise the Japanese or be seen to be good buddies with them.

3. You can condemn Mao Tse Tung but avoid critising Deng Hsiao Ping.

4. You must not praise Shanghai in front of natives of Beijing and similarly vice versa.

Other than that, you are pretty safe to converse with the Chinese about anything under the sun!


By Ken Cheong, webmaster of www.chinese-culture.net and www.quick-pain-relief.com



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