Doing business in China
China is a uniquely challenging environment for westerners, especially those who don’t understand the culture and customs. Here’s a brief overview of what you need to know when doing business in China.
Lost in translation
Unless you’re fluent in Chinese (especially Mandarin) you may experience difficulties when attempting to deal with Chinese businesses.
Even when you’re doing business in English, the translation can get lost and communication can break down. In these situations it is crucial that you make sure that the person you are communicating with fully understands what you are saying.
If you’re communicating with someone who doesn’t speak English you need to ensure you use a translator that you can trust.
Go for good guanxi
In China, your relationships or network are known as guanxi, and your business success is often a consequence of how effective or good your guanxi is.
Whereas in Australia we tend to focus on the deal first and expect a relationship to blossom afterwards, the Chinese approach from the opposite direction. To them the relationship is paramount and they believe that the commercial transaction will take place after the proper rapport and relationship have been established.
If you’re able to visit your Chinese suppliers or customers, the building of your relationship is usually done over a shared meal – often a banquet.
"To the Chinese the relationship is paramount and they believe that the commercial transaction will take place after the proper rapport and relationship have been established."
Expect some great food (and possibly some weird food) and frequent toasts. You may offend your hosts if you don’t try every dish they order.
The words ‘gan bei’ mean ‘bottoms up’ and are a cue for you to empty your cup. Be warned that this may happen on many occasions!
Without meeting in person it’s more difficult to build relationships. You’ll have to work hard at building the relationship from the other side of the world. If you are able to engage a company that has resources on the ground in China they can act as your proxy to build the required relationship and can also perform due diligence on your suppliers.
Want more articles like this? Check out the business relationships section.
As westerners we tend to think in a very linear and logical fashion and look for clear alternatives. For example when faced with the need to make a decision, you may find yourself asking “Should I proceed with solution A or solution B?”
In contrast, the Chinese way of thinking is mostly based on early philosophers who believed in the concepts of yin and yang, or the balance of opposites in all things. So, faced with the same dilemma, your Chinese contact may look for a way to combine solutions A and B instead of choosing one over the other.
We have come across this many times when dealing with China, and the difference in philosophies sometimes results in a dispute. (An example might be your supplier announcing midway through the mass production phase that he thinks there is a better way of producing your product than the one you’ve specified).
Other tips for doing business in China include:
- Be prepared. It is very important for the Chinese to ‘save face’ and if you are unprepared and cannot fulfill your side of the relationship or deal you may lose face and be viewed as untrustworthy.
- Remain patient during negotiations and never lose your temper as this will also result in losing face.
- A firm handshake is the standard way to greet both men and women.
- Business cards should be handed to others with both hands. When someone hands you their business card receive it in two hands and spend a few moments looking at the details as a sign of respect. If possible have your business card details translated into Chinese on the reverse side.
- Learn some simple Chinese phrases and don’t be afraid to use them. It will be much appreciated.
As Australians we often try and save money and ‘do it ourselves’ which can be very risky when dealing with a complex country like China. If you don’t have experience doing business in China it’s advisable to seek assistance from professionals so that your dealings have a greater chance of success. Only go it alone if you have the necessary skills and experience.
Do you have any extra tips to share with those who are embarking on the adventure of doing business in China?