Unless you speak Chinese, Mandarin being the most common as well as the official dialect, it can be difficult to do business in many parts of China without the aid of a translator. English language levels are patchy and though some fluent English speakers exist, they are few and far between.
Communicating in China can be a slow, laborious activity and fraught with constant dangers in terms of misunderstanding and mistranslation. Cover the same ground several times and constantly check for understanding instead of assuming people have understood.
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 vague manner. Anything other than an unequivocal ‘yes’ probably means ‘no’. Be very wary of phrases such as ‘Yes but it might be difficult’ and ‘Yes, probably’.
It is also difficult to deliver bad news and this is often done through the use of an intermediary who can soften the blow and try to preserve as much good-will within the relationship as possible.
The Chinese have a reputation for ‘impassiveness’ and this is largely based on Western misinterpretation of Chinese body language. As with the Japanese, the Chinese use a very limited amount of visual body language. This rigidity can be interpreted as a lack of responsiveness and emotion, especially by westerners. Lack of overt body language does not mean that the Chinese do not show their reactions, it is more likely that westerners are not skilled at reading it across the cultural divide.
Finally, don’t always assume that just because somebody happens to speak ‘good’ English that they will automatically be more competent than somebody who doesn’t. Unless frequent interface into the West is tantamount, fluency in English should be seen as an added extra.
Tips for Trading in China
Guanxi, or personal relationships, are of vital importance when doing business in China. The relationship building process should not be underestimated.
People are comfortable building relationships with honourable people who show respect to those to whom respect is due.
As all relationships are unequal it is important to show respect to age, seniority and educational background if you wish to appear honourable.
Managers tend to be directive, which reflects basic Confucian concepts of the hierarchical nature of society.
Loyalty is returned by the boss showing consideration and interest in all aspects of a subordinates’ life.
There is often a close relationship between the senior management of a company and local party officials.
It is important that you do not make people ‘lose face’ in front of their group. Always respect seniority and do not openly disagree with people.
Do as many favours for people as possible – debts must always be repaid.
At the start of meetings, business cards should be formally exchanged. Business cards are treated with great respect; the card is the man.
Meetings are often long and seem to lack clear objectives. The meeting is often an exercise in relationship-building and the aim is to move the relationship forward, rather than any specific business task.
It can take several, very long meetings before any noticeable progress is made. Patience is vital if you wish to capitalise on the situation.Tip 12
The Chinese are very interested in long-term commitment. Build long-term goals and objectives into your proposals.Tip 13
Do not be too direct. Diplomacy, consensus and harmony should be sought which takes time to achieve.
Do not assume comprehension. It is often useful to go over the same point several times from different angles in order to aid comprehension.
It is difficult for the Chinese to say ‘no’ directly. Anything other than a direct ‘yes’ could mean ‘no’. Be judicious and reflect on seeming agreements reached.
It is difficult to read body language as, by western standards, it is somewhat muted. Be very wary of any changes of posture, animation etc.
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.
Always wrap gifts before giving them. Gifts are rarely opened in front of the giver.
The Chinese are intensely patriotic. Do not make disparaging remarks about China, the political situation, human rights etc.
Entertaining is very important in the relationship building process. If entertaining, do it well. If being entertained at a banquet, take you lead from your hosts – they will enjoy taking you through the process.
Whilst the traditional Moaist approaches are long gone, understanding of past approaches can be helpful when dealing with the new China which has emerged. Under the Communist regime the most important structure to which an individual was linked was his or her work group or ‘dan wei’. In the past, the ‘dan wei’ guaranteed workers security throughout their lives in a ‘cradle to grave’ arrangement; the ‘dan wei’ mentality still remains in large measure.
It was extremely risky for a worker to leave the security of the ‘dan wei’ as this meant the automatic forfeit of the rights and privileges associated with membership. This included such basics as food, accommodation and medical assistance. In order to maintain the security blanket afforded by the ‘dan wei’, and at the same time take advantage of new opportunities arising in the ‘new order’, many people have taken on two jobs until new opportunities are viable enough to risk losing the traditional support mechanisms.
Many overseas companies who set up operations in the PRC do so in the form of a joint-venture with a Chinese organisation. There certainly seems to be many benefits to be accrued from doing so. Possibly the biggest benefit from the joint-venture approach is that it helps the overseas entity to establish relations – via the Chinese part of the venture – into a complex network of Chinese relationships. Guanxi, or personal connections, are the all-important weapon in all business situations in the PRC. As has often been said, ‘In China, if you don’t have Guanxi, you don’t have anything’. Forming a joint-venture company would seem to be the quickest and most effective way of developing good quality relationships in a country such as China. However, this puts enormous pressure on an overseas company to ensure they have selected the ‘right’ joint-venture partner. It is a mistake to rush this process or to fall-in with the first potential partner who comes along. Think out of the box. Product compatibility may be less important than connections; cost may be less important than access to a skilled workforce.
As would be expected in a Confucian society, operational structures, chains of command, management style etc. tend to be hierarchical. The introduction of more matrix-oriented approaches are bound to lead to conflict with local expectations. Never underestimate how important it is to understand, and work with, a Chinese hierarchy. Trying to circumvent the hierarchy will almost always slow a process down rather than speeding it up.
It is important to show respect to those to whom respect is due; this is one of the ways in which you can show yourself to be honourable and in turn worthy of respect. Respect should be shown to age, seniority, party membership, the history and traditions of China, political sensitivities, the company, the region… the list is almost endless. One should stand up when a senior person enters the room, offer the seat of honour and be attentive even if the key person’s English is weak.
Business cards are always exchanged on first meeting a new contact. Cards are held in both hands when exchanging and then scrutinised in detail. It is best to have your card printed in Chinese on the reverse and always offer it Chinese-side up. Treat the card with great respect; the card is the man.
Handshaking is the norm. A Chinese handshake will tend to be light and lingering. It is considered impolite to look people straight in the eye, so it is customary to look down, lowering the eyes as a mark of respect.
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. Meetings are about building relationships and exchanging information – it is rare for a decision to be made within the meeting. Decisions will be made elsewhere in consensus-style discussions, which involve all the relevant people (including possibly the Party). As a result of this approach to meetings and their serial nature, patience is definitely a virtue. Impatience will achieve nothing, other than delaying things even more.
Although there is a large amount of well-documented corruption which takes place within the Chinese business environment, the giving of gifts is endemic to Chinese culture and has been for thousands of years. The giving and receiving of gifts is part of the ritual of business relationship development – and in a country where relations are placed firmly before business, gifts are an important business tool. A mere ‘thank you’ for a favour done is considered rude by the Chinese.
Avoid expensive gifts, as this could be mistaken for bribery (a serious criminal offence) and always wrap the gift. If visiting an organisation, take one gift to present to the whole group. Gifts are often refused two or three times before being accepted and, if wrapped, rarely opened in front of the giver.