Dos and don’ts when doing business in China

Despite the economic developments in major parts of the country, and modern Chinese people’s increasing appetite on adopting western styles of living, China is still a country with a very special character of its own. Most first time visitors to the grand old empire will without doubt find the Chinese mentality, culture, and not forgetting the food, exciting but also challenging and sometimes difficult to cope with.

Considering the many differences between Chinese culture and the "western way to do it," the success of your business efforts in China may very well depend on how well you understand and get along with your Chinese counterparts. Insight in Chinese traditions and habits and careful preparations prior to any important meetings are essential, even for the experienced executive.

In the following, please find some useful tips on how to do business in China and how to make a good impression on your Chinese counterpart.

How to negotiate in China

  • It is quite normal and very beneficial to bring your own Chinese interpreter when negotiating. The interpreter can help you understand everything that is said in a meeting, both explicitly and between the lines, which is especially  useful if English is poorly spoken or when Chinese expressions and language are used.
  • To understand how business decisions are made, sometimes knowing family relationships is more important than knowing the organizational structure of the company.
  • Expect to make several presentations and to different levels, as the structure of Chinese organizations tends to be highly hierarchical.
  • Chinese people love colors and impressive numbers and figures. Presentation materials should be eye-catching with the use of gloss paper rather than recycling paper. Don’t forget to bring enough copies for everyone.
  • Chinese executive rely largely on subjective feelings and personal experiences. First-hand impressions are therefore very important.
  • Expect that meetings can be arranged and cancelled with a very short notice and that you may have to attend a meeting during the weekend.
  • In Chinese business culture, one of the most important concepts is that of "saving face." Making a Chinese executive lose face is the same as telling them that you don’t owe them your respect. Causing embarrassment or loss of composure, even unintentionally, can be a disaster for successful negotiations.
  • The entry of any meeting comprises the ceremony of exchanging business cards. In Chinese business culture, this is the formal way to determine who the key person(s) is in the decision making process. For that reason, business cards should always show your full professional title(s).
  • To make a good impression, have special business cards made out with English on one side and Chinese on the other side. Make sure the Chinese characters are precise and correct.
  • Chinese people are keen on anything showing prestige and prosperity. If your company has a reputation of being the oldest, biggest, or best, or if you are recognized as a supplier of a royal family, don’t forget to mention it on your business card.
  • Remember always to present your card with both hands, pretending to give away something precious. The business card is your face and should be treated with respect.
  • Likewise, when you receive a business card, show your appreciation by reading the card carefully, praise the design and content, and place it gently in your portfolio, breast pocket, or on the table in front of you.
  • Since there is such a strong emphasis on hierarchy in Chinese business culture, always think of hierarchical orders when you and your colleagues enter the meeting room, shake hands, speak aloud, and lead discussions. Subordinates are not supposed to lead the way or interrupt in any discussions.
  • At the end of a meeting, you are expected to leave the room before your Chinese counterparts and in hierarchical order.
  • Compromise is key.
  • Interaction between business partners is more important than written documents.
  • Expect to make frequent trips to China. Showing up once a year does not show commitment to the relationship.
  • In China, humility and politeness towards foreigners is a true virtue. Chinese find it very difficult to say "no" directly, instead ambivalent answers such as "I need to think more about it," "maybe," "I am not sure," etc. are often used.
  • Learn that sometimes "yes" means "no" or "I’m listening."
  • "No problem" does not necessarily mean an easy road.
  • Learn to think in terms of "both" or "and" rather than "either/or."
  • Take the time to slow down and try to understand the Chinese way of doing things.
  • Hard-driving, get-right-to-the-point tactics usually backfire.
  • Chinese businesspeople have a reputation of keeping negotiations going on "forever" in order to tire you out and gain advantage. Set up a deadline, albeit don’t expect your Chinese counterparts to take too much notice of it.

Time and punctuality

  • Be aware that concepts of time differ.
  • Although being late is considered rude, expect that visitors might not be on time.
  • Being on time is great, but relationships are more important.
  • Learn patience.

Using English effectively

  • English is more and more common and is now considered the lingua franca of business in many countries.
  • Remember that this does not mean that people in other countries will speak English at the same level of competency as you do, it is probably their second or third language.
  • Accents and speech patterns affect clarity, even for native speakers (remember that your audience may have learned British English, rather than American English, and that their instructor was most likely not a native speaker).
  • Speak slowly.
  • Enunciate and pronounce words clearly.
  • Use visual aids if you are making a presentation.
  • Avoid jokes, slang and colloquialisms.

Business meals

  • Business lunches and dinners are popular in China. Business breakfasts, however, are not a part of the Chinese business culture.
  • Dinners start between 6.00 p.m. and 7.00 p.m. and rarely last for more than a few hours.
  • Chinese seating etiquette is based on hierarchy; therefore always wait to be seated.
  • Generally, the seat at the middle of the table, facing the door, is reserved for the guest of honor (senior member). The host sits beside the guest of honor to the left. Other guests are seated in descending order of status.
  • It is considered rude to begin eating or drinking before the host.
  • A typical Chinese meal consists of a great number of separate dishes, which are placed centrally on the table. Depending on the location in China, the dishes comprise a combination of meat, fish, and vegetables. And don’t worry, although the Chinese kitchen has a reputation of being exotic don’t fear to be served either dog meat or cat meat.
  • The process of eating can best be described as a social event. By using your chopsticks you nibble at one dish after the other. It is perfectly all right to reach in front of each other, although the revolving glass plate on which the dishes are located usually will bring your chosen dish well in reach. You may experience that the host as a courtesy places food for you to taste on your plate. Don’t be afraid to slop some food on the table, it is very normal for first time users of chopsticks. If you get fish bones or the like in your mouth, just leave it in the designated saucers or plates provided for the purpose.
  • In China, rice is normally considered a filling not to be served until the end of a meal, if served at all. However, if you feel more comfortable having the rice together with the exotic dishes, many western people do, do not hesitate to ask for a bowl of plain rice at any time.
  • Tea is the most common drink in China, although a complementary of alcoholic drinks in form of wine and beer is also common. Sometimes your Chinese host may even try to test your ability to handle alcohol by serving various local strong liquors. The reason for this is that the Chinese believe that alcohol brings out your true face. If you don’t like alcohol, it is however, perfectly acceptable for you to toast with a soft drink instead.
  • During the meal it is very common that the host makes a toast by giving a little speech appreciating your mutual friendship and business relationship. You may experience that the host ends the speech by saying "ganbai" which means bottoms up. You are expected to return the toast by giving a little speech later.
  • When smoking, it is polite to offer cigarettes to the rest of the table.
  • The serving of fruit and the presentation of hot towels signals that it is time to leave the dining table. According to Chinese business etiquette, it is up to you to make the first move, as the host will not initiate a guest’s departure.
  • It is well-seen to reciprocate the hospitality of your Chinese host by hosting a business lunch or dinner yourself. Despite your obvious interest in making a good impression, do not surpass your Chinese counterpart by arranging a more lavish gathering. This may cause your Chinese counterpart to lose face.
  • Chinese people love Chinese food. Take them to a good Chinese restaurant rather than a fancy Italian restaurant, unless you are very sure that your Chinese counterpart has a true taste for western food.
  • Generally, tipping is considered an insult in China rather than an expression of appreciation. Do not tip unless you are in an international restaurant or a big hotel.
  • During a meal, expressing enthusiasm about the food is normal social behavior.

Public behavior and addressing

  • Initial greetings are done by handshake. Do not attempt any intimate contact such as hugs or kisses on the cheeks, unless your Chinese counterpart initiates such gestures.
  • On formal occasions, most Chinese people should be addressed with their official title and name. Alternatively, "Mr.," "Madam," and "Miss" in conjunction with the last name will normally also do. You may find many Chinese names difficult to pronounce and remember. If a Chinese has adopted an English first name, which is very popular among young people, you can also use this name.
  • If you are invited to workplaces, conferences, or other places with many Chinese people gathered, it is likely you will be welcomed with applause. Show your gratitude by applauding back.
  • Although it has become illegal, spitting in public is still common everywhere in China. Educated people, however, usually find the behavior primitive.
  • In crowded places, pushing and jumping queues is very normal. Don’t expect too many gentlemen in the crowd.
  • If you wish to go give a present or pay for a meal, you will need to insist on it at least three times before Chinese people will give their acceptance. This is the Chinese way of showing hospitality and friendship. Don’t forget to show equal reluctance if it is you who are offered something.
  • The concept of Chinese politeness can sometimes be difficult to understand for foreign people. Because it is so essential in Chinese culture not to lose face, many Chinese people will rather tell you to go a wrong way than admitting that they don’t know the way either. Don’t get annoyed, just get used to it. You may also find that people do not open the gift you presented in front of you because according to Chinese custom it may be considered as showing greediness.

Openings and conversations

  • Chinese people prefer to chitchat before turning to serious talks or negotiations. Expect to be asked about your journey and your opinion on the city, the Chinese people, and the Chinese food. Take an active part in the small talk and be positive; that is the best way to build up a good atmosphere.
  • Chinese people are easy to impress if you can demonstrate a little knowledge of Chinese history, culture, geography, or topical issues. Do a little preparation, e.g., by reading Chinese newspapers online.
  • Be aware that certain topics are sensitive in China. Avoid initiating any discussions on the Tibet issue, the China-Taiwan dispute, and the communist party.
  • Learn a few Chinese words. Your Chinese host will appreciate your initiative, even if he finds your pronunciation difficult to understand.
  • Try to avoid negative replies, as it is generally considered impolite in Chinese culture. Do like the Chinese, say "maybe," "I’ll think about it," or 'we’ll see" when meaning "no."

Gift Giving

  • Although it may seem straight forward, giving gifts is an art form.
  • Choosing proper gifts will challenge your perceptions of what is and is not proper.
  • Do not expect that a gift will be opened immediately; however, sometimes that may not be the case.
  • Do not expect that the gift will be accepted right away. You may have to offer it a few times before it is accepted.
  • Take a camera to take pictures during gift exchange.
  • Even if your company color is green, or you travel to China over St. Patrick’s Day and want to introduce people to the holiday, never give a Chinese gentleman a green hat. It is associated with adultery.
  • Because the number four in Chinese is a homonym for the word "death" avoid giving things to people in groups of four.
  • Red is a color of good fortune. But never give someone something written in red ink as it implies the end of a relationship.
  • Do not give clocks. Clocks are associated with death.
  • Do not give knives, scissors, letter openers, etc. It implies the severing of a relationship.
  • Avoid white as it is associated with funerals.
  • If you give gifts, give gifts to everyone in the room. If not, give the gift to the most important person in the room.

Daw Ching Foong, Baker Tilly TFW
Partner
Chairman, Baker Tilly International

Asia-Pacific Region
dawching@bakertillytfw.com