Interesting Facts about Doing Business in China

If you are a business owner trying to look for a more cost-effective manufacturer or to search for a new market for your products, you might consider China due to its reputation as the “world’s factory” and its huge population. But before you go to the Red Dragon, you must be prepared because many disagreements arise mostly due to our cultural differences. Be familiar with these facts about doing business in China.

1. You need to build a good relationship with your Chinese prospect.

For some other nationalities, you can seal a deal for just a couple of emails and video call meetings. But for the Chinese, you have to establish a strong relationship, or guan xi, with them before you can close a deal and do business with them. You might have to meet up in person a lot to win them. You can build rapport by making a client visit, learning about their culture and spending time with them over dinner to talk about non-business-related topics. Show interest in their culture, people or tourist attractions. Try their cuisine. It might seem wasteful for a budget-conscious American, but it will mean success or failure for your agenda. However, small firms will find it hard to build a business in China because of this.

It’s important to know that the Chinese people are more generous to people inside their network, so the time, effort and resources you will invest to be a friend to them will be worth it in the end.

2. The Chinese people’s concept of face is very important.

In China, face, or mian zi, means social reputation and personal dignity. It is important for them to never make a person “lose face” by ignoring, criticizing and making fun of them. They are sensitive to what other people think of them. A foreign CEO can give the potential Chinese partner face by accepting invitations, attending meetings, giving praise for good work, giving suitable gifts and showing sensitivity to their culture. On the other hand, they can lose face if the foreigner would insult them, refuse their gifts or invitations and behave inappropriately.

Generally speaking, the Chinese communicate more indirectly than Westerners. For them, saying “no” might be disrespectful and embarrassing to the other. During disagreements, the Chinese could say, “That’s a good point, but…” when they really meant “no.” Similarly, when disagreeing with a Chinese, you must do the same.

It will be a great help if you would acquaint yourself with their local customs and traditions. They would appreciate it very much if you show respect for their culture, but they don’t expect you to be fully adapted to them. Be careful of jokes because what might seem harmless to you may be insulting to a Chinese.

3. Be absolutely prepared during business meetings.

When arranging a meeting with a Chinese company, it is best if you would provide them details, objectives, key people and other important information beforehand. Chinese businessmen expect you to be well-prepared for the meeting so, have at least 20 copies of your proposal ready. Have at least one member of your team to have a thorough knowledge of every aspect of the deal. Give detailed presentation and discussion, but take care not to release sensitive information before you seal a deal.

Also prepare a supply of your business cards, as you would likely meet people whom you haven’t met before.  It is customary to exchange business cards when introduced. Present your card with both hands, and when receiving a card, take a look at it for two to three seconds before putting it away.

Be punctual and arrive on location on time – preferably 15 minutes earlier than the call time.

4. Expect to wine and dine with them.

Foreign companies doing business in China are often treated to a wide range of assistance. They like to show their hospitality by inviting foreigners to fancy banquets, where they offer their guests with many courses. Chinese banquets may offer 20 to 30 courses of meals, so try not to eat too much at once by trying a sample of each dish. If you leave your dish empty, they might interpret it as you were not given enough; and if you did not even touch your food, they might be offended. They may have many leftovers after dinner, but they don’t consider it wasteful because it’s hospitality for them. It’s part of their “face” mentality.

Don’t be surprised if you would get invited into karaoke bars and drinks. It is part of building a relationship with them. If you don’t want to drink, tell the Chinese host beforehand.

While it’s common for Westerners to discuss business over lunch or dinner meetings, the Chinese prefer mealtimes to be a time to have fun and build relationships. If you are invited for dinner and entertainment, avoid talking about business and products, unless the Chinese party would initiate it. When having drinks, verbal agreements made would likely be forgotten and won’t count the next day.

5. Maintain your composure during meetings.

It is important that you’d keep your cool when dealing with the Chinese. If you are too enthusiastic or excited, try to restrain it. Your best bet is to be polite, use kind words and simply smile. Showing too much emotion might be perceived as a sign of weakness and causing embarrassment could have a negative effect on the business negotiation.

6. Give gifts.

Impress your Chinese business contacts with bringing something from your country that is not available in China, preferably food or souvenirs from your region or a memento from your company. The Chinese love to give gifts and they use it to express friendship. However, be careful because some things are considered offensive or might mean something different for the Chinese.