Are you ready to build your business in the east? Read the top 10 tips on China business that you should know to help you understand the market and people.
Are you ready to build your business in the east?
With more than 1.3 billion total population, global companies can’t overlook the tremendous opportunities in the Mainland. But the idea of doing business in China is easier said than done.
Yes, it’s a lucrative market, and it is experiencing economic growth through infrastructure, innovation, and investments.
But for global companies, there’s so much to learn and understand. Culture differences, language, and business etiquette are currencies of the trade.
Successful entrepreneurs and global companies went beyond research and reading. Cultural immersion, which requires spending many years and resources, has helped them gain a unique vantage point of this complex market.
Like in any business or investment, risk cannot be eradicated. However, it can be mitigated. These 10 tips may not guarantee your overnight success in China, but they will serve as eye-openers and guides to lead you in the right direction and the long run, achieve your goals.
China business etiquette tips
1. Guanxi: Relationships as the cornerstone of your business
Let’s be blunt. Chinese entrepreneurs will not work or partner with you if they don’t know you personally. Trust is crucial in all aspects of the business.
So, before you cold call or send a business proposal via email, build relationships with the local stakeholders and clients. Get connected.
Like setting the foundations, relationships will also have a significant factor in negotiation, signing contracts, and arrangements of legal documents in the future.
Email translation will help you in business development. Work with the locals who know your market will lessen the burden.
Here’s a power tip via Harvard Business Review:
“In China you build trust first, once that is achieved, only then you do business. In the West, on the other hand, people are used to doing business almost immediately when they work in the same industry. Westerners feel more comfortable conducting business and building trust at the same time, if the opportunity arises.”
Our founder, Sophie Ao, said, “Chinese people don’t like laying everything on the table, you need to go through verbal ping-pong with us to get an answer. Ambiguity is a protection us.”
2. Mianzi: Keep the face, you keep a business partner for life
Aside from Guanxi, another Chinese etiquette that you must know is “Mianzi (face)” an important feature that is deeply rooted in the culture. Don’t be insensitive with the face.
It is not just the physical feature of the person; it refers to the reputation and dignity of that person. China is a collective community. “Saving face” means that the person is willing to go beyond the extra mile to preserve it as it may affect how other people or peers perceive him or her.
This is critical in the Guanxi that could affect their network when they lose face – damaging business relationships, ruining business, or when they get insulted – something that a Chinese will never allow to happen.
Face management isn’t hypocritical at all. Unless you understand the cultural roots of China, Mianzi demands accountability and collectivity—a way to maintain a harmonious relationship with other people, which points us back to the Guanxi.
Sophie shared her insights, like for Americans, “It’s as usual as eating and sleeping to sue someone or get sued but people still collaborate after the lawsuit. But if you do this with your Chinese partner, you lost a partner for life; it’s hardly reversible.”
“And Chinese people have a good memory, especially the damaging relationships. So, better watch out,” she added.
3. Set aside business agenda on social events or gatherings
If your host invites you for a dinner, accept it and take advantage of the opportunity to get to know them and build relationships.
Expect that you won’t reach an agreement on this setup, so forget about your agenda and enjoy. Dinners are important in establishing relationships and mostly, just like the westerners, the Chinese people only invite honored guests to meet with the family and dine at home. When you’re invited, it means you are in the closer circle of their friendship.
Allow the hosts to walk you through the social gathering and don’t be pushy with this setup or talk about business deals.
As Sophie puts it, “Set aside your business agenda and enjoy the meal and friendly hosting. Relax and no business talking, you will be rewarded afterward.”
4. Do it the Chinese way – translation, localize and interpret
When handing out documents, ensure that they are professionally translated and localized. Bring an interpreter if there’s a business meeting. (Note: translation is for the written forms, interpretation is for the speaking form)
Having English and Chinese version of documents will make more sense. Translate your documents into Chinese is a common practice that shows respect to your Chinese audience.
A fluent bilingual speaker will also mitigate the pressures and is a big help during the meetings.
Adapting your documents to better suit Chinese culture is also advisable. For marketing collaterals and presentations, aside from translation, you can localize the copy and materials, being careful on the choice of colors and format.
So better consult an expert about these small, yet significant matters.
5. Modesty is the best policy in business meeting
Self-promotion and bragging don’t work in China. And it’s the same when you’re in the business meeting. Modesty is highly appreciated. As Sophie puts it, “We don’t like bragging people. We know they are not reliable for business.”
While it the west, it’s easy to promote the skills and making sure you have an “elevator pitch” to share when someone asks about you or what you do, Sophie suggests to “reserve the power.”
“Only show the tip of the iceberg and wow your Chinese counterparts by being modest.”
“The Chinese people tend to hide the fierce bluntness.”
Remember, the Mianzi, right? As much as possible, harmony and peace are maintained within the network. So, being straightforward in a business meeting can break your deal.
6. Work with a trusted local partner or intermediary
Who better knows the market than the local partner, right?
Someone who’s bilingual and is specializing in your industry – with extensive knowledge of your business and the legal restrictions or policy in China – is a diamond for keeps.
They are rare finds and expect that you might need to invest either paying so much money or if you’re lucky, have built a relationship with that person because you’ve been doing business together for a long time.
It’s advisable to have a local to build the groundwork in the Mainland because whether you like it or not, you should deal with contracts and deals that need be reviewed and analyzed in every stage of your business.
Dan Harris, the leading authority on Chinese legal matters advised companies to:
“Keep on triangulating to fill data gaps. Because much data is simply not available or transparent in China, foreign businesses must create and constantly maintain their own information base by interviewing officials, friends and business leaders. Put more simply, make sure that you know your Chinese partner and to know your Chinese partner you must conduct due diligence that goes beyond just documents.”
7. Be smart when handing over business cards and gifts
The way you do it matters in the handing over business cards and gifts. How you do it is crucial in body language.
When handing your business card, use both hands with the Chinese side – of course, you need business card translation and graphic design for this – facing the receiver.
If you receive one, use both of your hands as a sign of respect.
If you’re flying from the other side of the globe and plan to give gifts, make sure you know how many people will be there at the business meeting. Giving out two gifts and then there are 5 people in the room is disrespectful and improper.
And always remember, a good gift would be great from your own culture and preferrably not MADE IN CHINA.
8. DRINK. Again. Drink.
Drinking is part of Chinese entertainment and it’s a way of establishing a relationship. Mind you, just like when dining out, set aside business deals or topics. Direct your discussions and toasts (say “gan bei” which means “bottoms up”) to friendship and cooperation.
If you’re dealing with business partners in tier 2 and tier 3 cities, then you should take this opportunity to build relationships with them.
Let the host pour the drink into your cup or the person next to you to do it. Never pour a drink to your own cup or glass, but you can do this with your seatmate or the person next to you.
Take this as a golden tip: Refrain from refusing the drink. If you don’t accept the offer, Chinese people are less likely to do business with you. Please your host as much as possible and treat this very special drinking session to reciprocate their generosity.
The more you drink, the more you build stronger relationships with your colleagues.
BUT… In tier 1 or mega cities, though drinking is still being practiced, most of them have adopted western principles.
9. Always be flexible, policies can change anytime
One of the common challenges of foreign companies operating in China is the constant change of regulations or policies.
Keep an eye on the legal side especially for highly sensitive industries such as food, pharmaceutical, investments, finance, the internet, and more.
Here’s a nugget as a warning sign:
China has continued to crack down on violations of PRC law, including against foreign firms involved in the violations or close to persons who are involved. Laws and regulations in China are constantly changing as is local enforcement priorities and practices. Sectors such as pharmaceutical, infant formula, automobiles, gambling, and securities market have been affected in turn.
10. Be sensitive to hand gestures, movements, and no jokes!
You probably have certain gestures when speaking in public, including body language when explaining something.
When speaking with your Chinese host or in a business meeting, refrain from using large hand movements as the Chinese people don’t speak with hand gestures.
Being dynamic when speaking – gestures and having some movements – can distract the people in your meeting. Also, never point your index fingers while speaking, but rather use an open palm.
Another thing to take note is humor. In the west, opening remarks often include a joke to build rapport or break the tension, which should be avoided because humor doesn’t translate from one culture to another.
There might be some cultural nuances that the audience might find inappropriate.
Do you want to know more about China business? Contact us for an exciting collaboration. Building relationships in China as the cornerstone of your business!
